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Only judge easterbrook can simultaneously dismiss an appeal and decide it

December 28, 2013 by in General

This case arose out of a bankruptcy in which the debtor sold a leasehold interest in a building to another party. The bankruptcy order approving the sale bars any claims based on pre-sale events. The lease requires the tenant to maintain the roof in good condition. The landlord sued the tenant in state court, alleging that it had failed to fulfill that obligation. The tenant filed a motion in the closed bankruptcy proceeding, asking the bankruptcy court to interpret the approval order as blocking the landlord’s claim. The bankruptcy judge dismissed the federal proceeding, holding that the approval order has no application to a continuing duty to keep the leased premises in good repair.

The district judge disagreed, holding that the landlord can enforce the roof repair clause only to the extent that defects in the roof first occurred after the lease’s assumption in bankruptcy. The district court remanded the matter to the bankruptcy court to determine what defects were involved. The district court anticipated that after the bankruptcy judge made that determination, the landlord could proceed with a specific performance action to compel the tenant to repair post-assumption defects. The landlord appealed, basing jurisdiction upon 28 U.S.C. §1292(a)(1), which authorizes appeals of interlocutory orders “granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions.”

Before getting to the jurisdictional issue, Judge Easterbrook, writing for the three-judge panel of the U.S. Court of Appeals for the Seventh Circuit, runs through a list of things that he says the district judge failed to consider in his order. Indeed, a reading of that laundry list strongly hints (at least) that Judge Easterbrook finds the district judge’s decision wanting and unlikely to survive an appeal.

But he never technically gets to that point because there is no appellate jurisdiction and, therefore, no authority for the court of appeals to do anything except dismiss the appeal. The landlord’s attempt to hang jurisdiction on the injunction provision predictably failed because there was no injunction. The bankruptcy court’s 2007 sale order is not an injunction and neither the district court nor the bankruptcy court in the new proceeding took, or was asked to take, any steps that could support jurisdiction under 28 U.S.C. §1292(a)(1).

Nevertheless, the landlord argued that the district court’s ruling would have prohibited proceedings in state court relating to matters that arose prior to the bankruptcy court’s sale approval order. Judge Easterbrook didn’t buy that, either. He found that the district judge did not purport to issue an injunction and that using potentially ambiguous language in the district court’s opinion “as a basis for tea-leaf reading is some distance from [the] simple and clear rule” for jurisdictional determinations prescribed by the U. S. Supreme Court.

Ultimately, the court dismissed the appeal. However, Judge Easterbrook expressed the hope that “the bankruptcy judge, the district judge, or both, will attend to the issued flagged at page 3 of this opinion, in order to prevent what may be wasteful hearings and decisions preceeding a future appeal to this court.” So there.

In the Matter of Rockford Products Corp., 2013 WL 6641183 (7th Cir. 2013).

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