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SUPREME COURT OF THE UNITED STATES
_________________
No. 14–116
_________________
LOUIS B. BULLARD, PETITIONER v. BLUE
HILLS BANK, fka HYDE PARK SAVINGS BANK
on writ of certiorari to the united states
court of appeals for the first circuit
[May 4, 2015]
Chief Justice Roberts delivered the opinion of
the Court.
Chapter 13 of the Bankruptcy Code affords
individuals receiving regular income an opportunity to obtain some
relief from their debts while retaining their property. To proceed
under Chapter 13, a debtor must propose a plan to use future income
to repay a portion (or in the rare case all) of his debts over the
next three to five years. If the bankruptcy court confirms the plan
and the debtor successfully carries it out, he receives a discharge
of his debts according to the plan.
The bankruptcy court may, however, decline to
confirm a proposed repayment plan because it is inconsistent with
the Code. Although the debtor is usually given an opportunity to
submit a revised plan, he may be convinced that the original plan
complied with the Code and that the bankruptcy court was wrong to
deny confirmation. The question presented is whether such an order
denying confirmation is a “final” order that the debtor can
immediately appeal. We hold that it is not.
I
In December 2010, Louis Bullard filed a
petition for Chapter 13 bankruptcy in Federal Bankruptcy Court in
Massachusetts. A week later he filed a proposed repayment plan
listing the various claims he anticipated creditors would file and
the monthly amounts he planned to pay on each claim over the
five-year life of his plan. See 11 U. S. C. §§1321, 1322.
Chief among Bullard’s debts was the roughly $346,000 he owed to
Blue Hills Bank, which held a mortgage on a multifamily house
Bullard owned. Bullard’s plan indicated that the mortgage was
significantly “underwater”: that is, the house was worth
substantially less than the amount Bullard owed the Bank.
Before submitting his plan for court approval,
Bullard amended it three times over the course of a year to more
accurately reflect the value of the house, the terms of the
mortgage, the amounts of creditors’ claims, and his proposed
payments. See §1323 (allowing preconfirmation modification).
Bullard’s third amended plan—the one at issue here—proposed a
“hybrid” treatment of his debt to the Bank. He proposed splitting
the debt into a secured claim in the amount of the house’s
then-current value (which he estimated at $245,000), and an
unsecured claim for the remainder (roughly $101,000). Under the
plan, Bullard would continue making his regular mortgage payments
toward the secured claim, which he would eventually repay in full,
long after the conclusion of his bankruptcy case. He would treat
the unsecured claim, how-ever, the same as any other unsecured
debt, paying only as much on it as his income would allow over the
course of his five-year plan. At the end of this period the
remaining balance on the unsecured portion of the loan would be
discharged. In total, Bullard’s plan called for him to pay only
about $5,000 of the $101,000 unsecured claim.
The Bank (no surprise) objected to the plan and,
after a hearing, the Bankruptcy Court declined to confirm it.
In re Bullard, 475 B. R. 304 (Bkrtcy. Ct. Mass.
2012). The court concluded that Chapter 13 did not allow Bullard to
split the Bank’s claim as he proposed unless he paid the secured
portion in full during the plan period. Id., at 314. The
court acknowledged, however, that other Bankruptcy Courts in the
First Circuit had approved such arrangements. Id., at 309.
The Bankruptcy Court ordered Bullard to submit a new plan within 30
days. Id., at 314.
Bullard appealed to the Bankruptcy Appellate
Panel (BAP) of the First Circuit. The BAP first addressed its
jurisdiction under the bankruptcy appeals statute, noting that a
party can immediately appeal only “final” orders of a bankruptcy
court. In re Bullard, 494 B. R. 92, 95 (2013)
(citing 28 U. S. C. §158(a)(1)). The BAP concluded that
the order denying plan confirmation was not final because Bullard
was “free to propose an alternate plan.” 494 B. R., at 95. The
BAP nonetheless exercised its discretion to hear the appeal under a
provision that allows interlocu-tory appeals “with leave of the
court.” §158(a)(3). The BAP granted such leave because the
confirmation dispute involved a “controlling question of law
. . . as to which there is substantial ground for
difference of opinion,” and “an immediate appeal [would] materially
advance the ultimate termination of the litigation.” 494
B. R., at 95, and n. 5. On the merits, the BAP agreed
with the Bankruptcy Court that Bullard’s proposed treatment of the
Bank’s claim was not allowed. Id., at 96–101.
Bullard sought review in the Court of Appeals
for the First Circuit, but that court dismissed his appeal for lack
of jurisdiction. In re Bullard, 752 F. 3d 483
(2014). The First Circuit noted that because the BAP had not
certified the appeal under §158(d)(2), the only possible source of
Court of Appeals jurisdiction was §158(d)(1), which allowed appeal
of only a final order of the BAP. Id., at 485, and
n. 3. And under First Circuit precedent “an order of the BAP
cannot be final unless the underlying bankruptcy court order is
final.” Id., at 485. The Court of Appeals accordingly
examined whether a bankruptcy court’s denial of plan confirmation
is a final order, a question that it recognized had divided the
Circuits. Adopting the major-ity view, the First Circuit concluded
that an order denying confirmation is not final so long as the
debtor remains free to propose another plan. Id., at
486–490.
We granted certiorari. 574 U. S. ___
(2014).
II
In ordinary civil litigation, a case in
federal district court culminates in a “final decisio[n],” 28
U. S. C. §1291, a ruling “by which a district court
disassociates itself from a case,” Swint v. Chambers
County Comm’n, 514 U. S. 35, 42 (1995) . A party can
typically appeal as of right only from that final decision. This
rule reflects the conclusion that “[p]ermitting piecemeal,
prejudgment appeals . . . undermines ‘efficient
judicial administration’ and encroaches upon the prerogatives of
district court judges, who play a ‘special role’ in managing
ongoing litigation.” Mohawk Industries, Inc. v.
Carpenter, 558 U. S. 100, 106 (2009) (quoting
Firestone Tire & Rubber Co. v. Risjord, 449
U. S. 368, 374 (1981) ).
The rules are different in bankruptcy. A
bankruptcy case involves “an aggregation of individual
controversies,” many of which would exist as stand-alone lawsuits
but for the bankrupt status of the debtor. 1 Collier on Bankruptcy
¶5.08[1][b], p. 5–42 (16th ed. 2014). Accordingly, “Congress
has long provided that orders in bankruptcy cases may be
immediately appealed if they finally dispose of discrete disputes
within the larger case.” Howard Delivery Service, Inc. v.
Zurich American Ins. Co., 547 U. S. 651, 657, n. 3
(2006) (internal quotation marks and emphasis omitted). The current
bankruptcy appeals statute reflects this approach: It authorizes
appeals as of right not only from final judgments in cases but from
“final judgments, orders, and decrees . . . in cases and
proceedings.” §158(a).
The present dispute is about how to define the
immediately appealable “proceeding” in the context of the
consideration of Chapter 13 plans. Bullard argues for a
plan-by-plan approach. Each time the bankruptcy court reviews a
proposed plan, he says, it conducts a separate proceeding. On this
view, an order denying confirmation and an order granting
confirmation both terminate that proceeding, and both are therefore
final and appealable.
In the Bank’s view Bullard is slicing the case
too thin. The relevant “proceeding,” it argues, is the entire
process of considering plans, which terminates only when a plan is
confirmed or—if the debtor fails to offer any confirmable plan—when
the case is dismissed. An order denying confirmation is not final,
so long as it leaves the debtor free to propose another plan.
We agree with the Bank: The relevant proceeding
is the process of attempting to arrive at an approved plan that
would allow the bankruptcy to move forward. This is so, first and
foremost, because only plan confirmation—or case dismissal—alters
the status quo and fixes the rights and obligations of the parties.
When the bankruptcy court confirms a plan, its terms become binding
on debtor and creditor alike. 11 U. S. C. §1327(a).
Confirmation has preclusive effect, foreclosing relitigation of
“any issue actually litigated by the parties and any issue
necessarily determined by the confirmation order.” 8 Collier
¶1327.02[1][c], at 1327–6; see also United Student Aid Funds,
Inc. v. Espinosa, 559 U. S. 260, 275 (2010)
(finding a confirmation order “enforceable and binding” on a
creditor notwithstanding legal error when the creditor “had notice
of the error and failed to object or timely appeal”). Subject to
certain exceptions, confirmation “vests all of the property of the
[bankruptcy] estate in the debtor,” and renders that property “free
and clear of any claim or inter-est of any creditor provided for by
the plan.” §§1327(b), (c). Confirmation also triggers the Chapter
13 trustee’s duty to distribute to creditors those funds already
received from the debtor. §1326(a)(2).
When confirmation is denied and the case is
dismissed as a result, the consequences are similarly
significant. Dismissal of course dooms the possibility of a
discharge and the other benefits available to a debtor under
Chapter 13. Dismissal lifts the automatic stay entered at the start
of bankruptcy, exposing the debtor to creditors’ legal actions and
collection efforts. §362(c)(2). And it can limit the availability
of an automatic stay in a subsequent bankruptcy case.
§362(c)(3).
Denial of confirmation with leave to amend, by
contrast, changes little. The automatic stay persists. The parties’
rights and obligations remain unsettled. The trustee continues to
collect funds from the debtor in anticipation of a different plan’s
eventual confirmation. The possibility of discharge lives on.
“Final” does not describe this state of affairs. An order denying
confirmation does rule out the specific arrangement of relief
embodied in a particular plan. But that alone does not make the
denial final any more than, say, a car buyer’s declining to pay the
sticker price is viewed as a “final” purchasing decision by either
the buyer or seller. “It ain’t over till it’s over.”
Several additional considerations bolster our
conclusion that the relevant “proceeding” is the entire process
culminating in confirmation or dismissal. First is a textual clue.
Among the list of “core proceedings” statutorily entrusted to
bankruptcy judges are “confirmations of plans.” 28
U. S. C. §157(b)(2)(L). Although this item hardly
clinches the matter for the Bank—the provision’s purpose is not to
explain appealability—it does cut in the Bank’s favor. The presence
of the phrase “confirmations of plans,” combined with the absence
of any reference to denials, suggests that Congress viewed the
larger confir-mation process as the “proceeding,” not the ruling on
each specific plan.
In Bullard’s view the debtor can appeal the
denial of the first plan he submits to the bankruptcy court. If the
court of appeals affirms the denial, the debtor can then revise the
plan. If the new plan is also denied confirmation, another appeal
can ensue. And so on. As Bullard’s case shows, each climb up the
appellate ladder and slide down the chute can take more than a
year. Avoiding such delays and inefficiencies is precisely the
reason for a rule of finality. It does not make much sense to
define the pertinent proceeding so narrowly that the requirement of
finality would do little work as a meaningful constraint on the
availability of appellate review.
Bullard responds that concerns about frequent
piecemeal appeals are misplaced in this context. Debtors do not
typically have the money or incentives to take appeals over small
beer issues. They will only appeal the rela-tively rare denials
based on significant legal rulings—precisely the cases that should
proceed promptly to the courts of appeals. Brief for Petitioner
43–46.
Bullard’s assurance notwithstanding, debtors may
often view, in good faith or bad, the prospect of appeals as
important leverage in dealing with creditors. An appeal extends the
automatic stay that comes with bankruptcy, which can cost creditors
money and allow a debtor to retain property he might lose if the
Chapter 13 proceeding turns out not to be viable. These concerns
are heightened if the same rule applies in Chapter 11, as the
parties assume. Chapter 11 debtors, often business entities, are
more likely to have the resources to appeal and may do so on narrow
issues. See Tr. of Oral Arg. 51. But even if Bullard is correct
that such appeals will be rare, that does not much support his
broader point that an appeal of right should be allowed in every
case. It is odd, after all, to argue in favor of allowing more
appeals by emphasizing that almost nobody will take them.
We think that in the ordinary case treating only
confirmation or dismissal as final will not unfairly burden a
debtor. He retains the valuable exclusive right to propose plans,
which he can modify freely. 11 U. S. C. §§1321, 1323. The
knowledge that he will have no guaranteed appeal from a denial
should encourage the debtor to work with creditors and the trustee
to develop a confirmable plan as promptly as possible. And
expedition is always an important consideration in bankruptcy.
III
Bullard and the Solicitor General present
several arguments for treating each plan denial as final, but we
are not persuaded.
The Solicitor General notes that disputes in
bankruptcy are generally classified as either “adversary
proceedings,” essentially full civil lawsuits carried out under the
umbrella of the bankruptcy case, or “contested matters,” an
undefined catchall for other issues the parties dispute. See Fed.
Rule Bkrtcy. Proc. 7001 (listing ten adversary proceedings); Rule
9014 (addressing “contested matter[s] not otherwise governed by
these rules”). An objection to a plan initiates a contested matter.
See Rule 3015(f). Ev-eryone agrees that an order resolving that
matter by overruling the objection and confirming the plan is
final. As the Solicitor General sees it, an order denying
confirmation would also resolve that contested matter, so such an
order should also be considered final. Brief for United States as
Amicus Curiae 19–22.
The scope of the Solicitor General’s argument is
unclear. At points his brief appears to argue that an order
resolving any contested matter is final and immediately
appealable. That version of the argument has the virtue of resting
on a general principle—but the vice of being implausible. As a
leading treatise notes, the list of con-tested matters is “endless”
and covers all sorts of minor disagreements. 10 Collier ¶9014.01,
at 9014–3. The concept of finality cannot stretch to cover, for
example, an order resolving a disputed request for an extension of
time.
At other points, the Solicitor General appears
to argue that because one possible resolution of this particular
contested matter (confirmation) is final, the other (denial) must
be as well. But this argument begs the question. It simply assumes
that confirmation is appealable because it resolves a contested
matter, and that therefore anything else that resolves the
contested matter must also be appealable. But one can just as
easily contend that confirmation is appealable because it resolves
the entire plan consideration process, and that therefore the
entire process is the “proceeding.” A decision that does not
resolve the entire plan consideration process—denial—is therefore
not appealable.
Perhaps the Solicitor General’s suggestion is
that a separately appealable “proceeding” must coincide precisely
with a particular “adversary proceeding” or “contested matter”
under the Bankruptcy Rules. He does not, however, provide any
support for such a suggestion. More broadly, it is of course quite
common for the finality of a decision to depend on which way the
decision goes. An order granting a motion for summary judgment is
final; an order denying such a motion is not.
Bullard and the Solicitor General also contend
that our rule creates an unfair asymmetry: If the bankruptcy court
sustains an objection and denies confirmation, the debtor (always
the plan proponent in Chapter 13) must go back to the drafting
table and try again; but if the bankruptcy court overrules an
objection and grants confirmation, a creditor can appeal without
delay. But any asymmetry in this regard simply reflects the fact
that confirmation allows the bankruptcy to go forward and alters
the legal relationships among the parties, while denial does not
have such significant consequences.
Moreover, it is not clear that this asymmetry
will always advantage creditors. Consider a creditor who strongly
supports a proposed plan because it treats him well. Ifthe
bankruptcy court sustains an objection from another
creditor—perhaps because the plan treats the first creditor too
well—the first creditor might have as keen an interest in a prompt
appeal as the debtor. And yet, under the rule we adopt, that
creditor too would have to await further developments.
Bullard also raises a more practical objection.
If denial orders are not final, he says, there will be no effective
means of obtaining appellate review of the denied proposal. The
debtor’s only two options would be to seek or accept dismissal of
his case and then appeal, or to propose an amended plan and appeal
its confirmation.
The first option is not realistic, Bullard
contends, because dismissal means the end of the automatic stay
against creditors’ collection efforts. Without the stay, the debtor
might lose the very property at issue in the rejected plan. Even if
a bankruptcy court agrees to maintain the stay pending appeal, the
debtor is still risking his entire bankruptcy case on the
appeal.
The second option is no better, says Bullard. An
acceptable, confirmable alternative may not exist. Even if one
does, its confirmation might have immediate and irreversible
effects—such as the sale or transfer of prop-erty—and a court is
unlikely to stay its execution. More-over, it simply wastes time
and money to place the debtor in the position of seeking approval
of a plan he does not want.
All good points. We do not doubt that in many
cases these options may be, as the court below put it,
“unappealing.” 752 F. 3d, at 487. But our litigation system
has long accepted that certain burdensome rulings will be “only
imperfectly reparable” by the appellate process. Digital
Equipment Corp. v. Desktop Direct, Inc., 511 U. S.
863, 872 (1994) . This prospect is made tolerable in part by our
confidence that bankruptcy courts, like trial courts in ordinary
litigation, rule correctly most of the time. And even when they
slip, many of their errors—wrongly concluding, say, that a debtor
should pay unsecured creditors $400 a month rather than $300—will
not be of a sort that justifies the costs entailed by a system of
universal immediate appeals.
Sometimes, of course, a question will be
important enough that it should be addressed immediately. Bullard’s
case could well fit the bill: The confirmability of his hybrid plan
presented a pure question of law that had divided bankruptcy courts
in the First Circuit and would make a substantial financial
difference to the parties. But there are several mechanisms for
interlocutory review to address such cases. First, a district court
or BAP can (as the BAP did in this case) grant leave to hear such
an appeal. 28 U. S. C. §158(a)(3). A debtor who appeals
to the district court and loses there can seek certification to the
court of appeals under the general interlocutory appeals statute,
§1292(b). See Connecticut Nat. Bank v. Germain, 503
U. S. 249 (1992) .
Another interlocutory mechanism is provided in
§158(d)(2). That provision allows a bankruptcy court, district
court, BAP, or the parties acting jointly to certify a bankruptcy
court’s order to the court of appeals, which then has discretion to
hear the matter. Unlike §1292(b), which permits certification only
when three enumerated factors suggesting importance are all
present, §158(d)(2) permits certification when any one of several
such factors exists, a distinction that allows a broader range of
interlocutory decisions to make their way to the courts of appeals.
While discretionary review mechanisms such as these “do not provide
relief in every case, they serve as useful safety valves for
promptly correcting serious errors” and addressing important legal
questions. Mohawk Industries, 558 U. S., at 111
(internal quotation marks and brackets omitted).
Bullard maintains that interlocutory appeals are
ineffective because lower courts have been too reticent in granting
them. But Bullard did, after all, obtain one layer of interlocutory
review when the BAP granted him leave to appeal under §158(a)(3).
He also sought certification to the Court of Appeals under
§158(d)(2), but the BAP denied his request for reasons that are not
entirely clear. See App. to Pet. for Cert. 17a. The fact that
Bullard was not able to obtain further merits review in the First
Circuit in this particular instance does not undermine our
expectation that lower courts will certify and accept interlocutory
appeals from plan denials in appropriate cases.
* * *
Because the Court of Appeals correctly held
that the order denying confirmation was not final, its judgment
is
Affirmed.
