In the Matter of J.t.r. Corporation, T/a the Quarterdeck, Debtor.richard M. Kremen, Trustee, Plaintiff-appellee, v. the Harford Mutual Insurance Company, Defendant-appellant, 820 F.2d 1219 (4th Cir. 1987)

Before us is a motion of the appellee, Richard M. Kremen, Trustee, to dismiss this appeal for lack of jurisdiction. For the reasons that follow we grant the motion and dismiss the appeal.

J.T.R. Corporation instituted bankruptcy proceedings under the Bankruptcy Act of 1898 on 8 June 1979. On 18 April 1980 Kremen filed a Complaint to Recover Property, seeking fire insurance proceeds from Harford Mutual Insurance Company. Harford Mutual had written a policy covering J.T.R.'s business, The Quarterdeck restaurant and bar.

The bankruptcy court, in an opinion filed 21 January 1982, found that Joseph Kenny, the sole shareholder and an officer of J.T.R., set or procured the fire at The Quarterdeck after the filing of the bankruptcy petition but while J.T.R. was operating the business as debtor-in-possession, violating the terms of the Harford Mutual policy. The bankruptcy court held that Kenny's acts precluded Kremen from collecting under the policy because Kremen was subject to the defenses good against Kenny as debtor-in-possession at the time of Kremen's appointment. The bankruptcy court, finding recovery barred, did not fix damages. Kremen appealed.

The district court, by order of 5 December 1986, reversed the bankruptcy court's conclusion that Kenny's arson precluded Kremen from collecting under the Harford Mutual policy and remanded the cases for determination of any remaining issues, fixing of damages, and entry of an order precluding Kenny from receiving any proceeds in excess of the creditors' claims. The district court found, after a de novo review, that a preponderance of the evidence supported the finding that Kenny was responsible for setting the fire. Harford Mutual appealed on 7 January 1987.

Kremen has moved to dismiss on the ground that this appeal is interlocutory and is not appealable under 11 U.S.C. § 47 (1976, repealed 1979) as an order in a proceeding in bankruptcy because it is a controversy arising from proceedings in bankruptcy. See In re Durensky, 519 F.2d 1024, 1027 (5th Cir. 1975) and Tamasha Town and Country Club v. McAlester Construction Finance Corp., 252 F. Supp. 80, 85 (S.D. Cal. 1966) for discussions of these concepts under the former Act.

Harford Mutual has responded to the motion to dismiss and, while conceding that the appeal is interlocutory and pointing out that the scope of our appellate jurisdiction under current law is narrower than it used to be, argues that the order is best characterized as having arisen as a 'proceeding' rather than as a 'controversy.'

Our jurisdiction in this appeal is controlled by "the bankruptcy jurisdictional provision effective at the time this appeal was filed." In re Goldblatt Bros., 758 F.2d 1248, 1250 (7th Cir. 1985). This appeal was filed on 7 January 1987; we must, therefore, look to 28 U.S.C. § 158(d) for jurisdiction in this appeal. See Bankruptcy Amendments and Federal Judgeship Act of 1984, Pub. L. No. 98-353 Sec. 122(a), making, inter alia, 28 U.S.C. § 158(d) effective on the date of enactment. Cf. Bankruptcy Reform Act of 1978, Pub. L. No. 95-598 Sec. 403(a) (saving provisions of the Bankruptcy Act of 1898, as amended, for cases "commenced" prior to the enactment date of the 1978 Act "as if this [1978] Act had not been enacted.") (emphasis added).

28 U.S.C. § 158(d) grants this Court jurisdiction over appeals from all "final decisions, judgments, orders, and decrees" entered by a district court sitting as a bankruptcy appellate court. Both Kremen and Harford Mutual agree that this appeal is interlocutory. Because the appeal is interlocutory, this Court lacks jurisdiction and the appeal must be dismissed.

We dispense with oral argument because the dispositive issues have recently been decided authoritatively and dismiss this appeal for lack of jurisdiction.

DISMISSED.