Reminder: Timely Notice of Appeal Is Jurisdictional

Posted by NCBRC - October 18, 2017

Timely filing of a notice of appeal is a jurisdictional prerequisite and an appellant must at least conform his filing to general adherence to the requirements set forth in Rule 8003(3). In re Dorsey, 2017 U.S. App. LEXIS 16905, No. 16-31085 (5th Cir. Sept. 1, 2017).

Mick Dorsey filed a chapter 7 petition with the goal of discharging over $116,000 in student loans held by the U.S. Department of Education and ECMC. He obtained his general discharge and he filed an adversary proceeding to discharge the loans as undue hardship under section 523(a)(8). While the adversary proceeding was pending his main bankruptcy case was closed. Before the adversary trial, the DOE and ECMC moved to reopen the main bankruptcy case in order to file proofs of claim. The bankruptcy court granted the motion and allowed the proofs of claim. Mr. Dorsey timely appealed that ruling. The adversary proceeding then went to trial and concluded with an order in favor of the student loan creditors. Mr. Dorsey then sought to amend his statement of issues and designation of record in the appeal of the main bankruptcy case to include issues related to the order denying discharge of his student loans. The district court granted the motion but found that it lacked jurisdiction to consider the attempted appeal of the adversary ruling. It affirmed the bankruptcy court’s orders reopening the case and allowing the proofs of claim.

On appeal, the Fifth Circuit began with the admonition that filing a timely notice of appeal is a jurisdictional requirement and that Mr. Dorsey did not specifically appeal the order denying discharge of his student loans within the fourteen day window. It turned, therefore, to the question of whether either Mr. Dorsey’s original notice of appeal of the order reopening the case, or the amendment of that appeal to include the issue of the denial of discharge were sufficient to stand as a notice of appeal and confer jurisdiction on the district court. It found that neither filing sufficed.

Because the two proceedings have different case numbers, separate parties, and distinct issues, an appeal of the main bankruptcy case cannot stand as an appeal of an adversary proceeding.

Nor could the amended statement of issues and designation of record stand as an appeal of the adversary proceeding. A notice of appeal must fulfill three requirements set forth in Rule 8003(3): 1) conform to the Official Form, 2) include the judgment or order being appealed, and 3) include the appropriate fee. While some courts have allowed wiggle room with respect to the requirements of the Rule, in this case Mr. Dorsey’s filings were insufficient to confer jurisdiction. His amendment was not designated a notice of appeal, it did not conform to the Official Form in that it listed the parties in the main bankruptcy rather than those of the adversary proceeding, he failed to include the judgment or order he sought to appeal, and he failed to pay the filing fee. The court found that these were not technical errors but an attempt to avoid paying the filing fee by piggy-backing the appeal of the adversary proceeding on the appeal of the order to reopen.

The district court, therefore, correctly held that it lacked jurisdiction over the appeal of the order in the adversary proceeding.

The circuit court went on to address the issue properly appealed: whether the bankruptcy court erred in reopening the case and allowing the DOE and ECMC to file proofs of claim. The court found that the bankruptcy court did not abuse its discretion under the standards for reopening set forth in section 350(b). That section broadly authorizes a court to reopen “to administer assets, to accord relief to the debtor, or for other cause.” Permitting the student loan creditors to reopen allowed them to establish standing in the adversary proceeding which, in turn, would have enabled Mr. Dorsey to obtain a discharge against the proper entities had he prevailed.

Permitting the creditors to file proofs of claim was also not an abuse of discretion. Because Mr. Dorsey’s chapter 7 was a no-asset case, they had no obligation to file proofs of claim at the outset. When the proof of claim became relevant at the adversary proceeding stage, the court properly allowed them to file.

Dorsey 5th Cir. opinion Sept 2017

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