Unpublished Disposition, 920 F.2d 936 (9th Cir. 1990)

MEMORANDUM

Richard filed a complaint in the superior court of the State of California against Stroke seeking dissolution of partnership, accounting of assets, and a constructive trust, and Stroke cross-complained. Stroke subsequently filed a Chapter 11 petition in the bankruptcy court for the Southern District of California. The bankruptcy court entered an order granting relief from automatic bankruptcy stay and permitting Richard to proceed with the superior court action. The bankruptcy court then entered an injunction maintaining the status quo in the state action until a determination was made concerning the validity of a settlement agreement reached between Richard and the appointed trustee. Stroke appealed the bankruptcy court's injunction, which the district court affirmed on the merits. He now appeals to this court. The district court exercised jurisdiction pursuant to 28 U.S.C. § 158(a). This court lacks jurisdiction over this appeal because the bankruptcy court's order was interlocutory, and thus not a final, appealable order.

Stroke argues that we have jurisdiction over this appeal under one of two statutes: 28 U.S.C. § 1292--which governs interlocutory appeals in nonbankruptcy matters--or 28 U.S.C. § 158. With respect to section 1292, we have previously concluded that 28 U.S.C. § 158 "precludes bankruptcy appellants from relying on Sec. 1292 as a basis for appellate court jurisdiction." In re Teleport Oil Co., 759 F.2d 1376, 1378 (9th Cir. 1985). Thus, the interlocutory appeal provisions of section 1291 are inapplicable to bankruptcy proceedings.

The jurisdictional basis for our appellate review of bankruptcy court rulings is codified in 28 U.S.C. § 158(d): "The courts of appeals shall have jurisdiction of appeals from all final decisions, judgments, orders, and decrees...." (Emphasis added.) See In re Landmark Hotel and Casino, Inc., 872 F.2d 857, 860 (9th Cir. 1989).

The order in the present case is the bankruptcy court's injunction temporarily enjoining the continuation of California state superior court proceedings between Stroke and Richard. The bankruptcy court's order is clearly interlocutory, not final, as it merely temporarily enjoins state court proceedings.

The general rule in this as well as other circuits is that an interlocutory order of a bankruptcy court is not reviewable by a federal appellate court. In re Rubin, 693 F.2d 73, 76 (9th Cir. 1982). However, some Ninth Circuit cases have incorporated a minimal degree of flexibility into this rule, recognizing that the doctrine of finality should not be blindly applied to bankruptcy proceedings, and mandating "a pragmatic approach" to the issue of appealability. In re Four Seas Center, Ltd., 754 F.2d 1416, 1418 (9th Cir. 1985). We have jurisdiction over interlocutory bankruptcy judgments under a pragmatic approach when substantive rights are seriously affected and irreparable harm would otherwise result. Teleport Oil, 759 F.2d at 1377.

Stroke has made no specific argument concerning potential irreparable harm which may be suffered as a result of this court's failure to review the bankruptcy court's decision in enjoining the state court action. Stroke states that the bankruptcy court has "legally restrained Stroke ... from taking part in the [state court] action," and makes reference to "outrageous financial and emotional burdens" as a result of delay in the state court action. Appellate Brief at 16, 19. The former statement is of little assistance because it simply states the obvious result of the court's preliminary injunction. With respect to the latter statement, Stroke's allegation is not supported by facts or arguments. Richard was actually able to demonstrate to Bankruptcy Judge Meyers that she would suffer irreparable harm if the state proceeding was not enjoined due to the threat imposed upon the pending reorganization plan. The potential damage involved in jeopardizing the reorganization plan is the only proven source of irreparable harm in this case; Stroke has made no showing to the contrary.

Stroke also apparently argues that Richard's bankruptcy claims would be unsupported if Stroke were to prevail in the state court action. However, there is no indication that Stroke's interests will not be served if he should prevail in the state court action.

Even those cases in this circuit recognizing an exception to the jurisdictional prohibition on interlocutory appeals for cases involving irreparable harm have required that the appealable order "at least finally determine the discrete issue to which it is addressed, as is the case with an order entirely terminating an adversary proceeding." Four Seas Center, 754 F.2d at 1418. The order in the present case fails to satisfy this standard, as the discrete issue to which it is addressed (the state court action) is merely temporarily enjoined, not finally determined. Because the adversary proceeding has merely been postponed, not terminated, jurisdiction is lacking even under the terms of those cases recognizing a flexible, pragmatic approach to appellate jurisdiction in bankruptcy cases. See id.

It is also significant that Ninth Circuit cases approving jurisdiction over interlocutory bankruptcy orders are not only compatible with the minimum finality standard in Four Seas Center, but are also factually distinct from the present case. See In re Ellsworth, 722 F.2d 1448, 1450 (9th Cir. 1984); In re Mason, 709 F.2d 1313, 1318 (9th Cir. 1983). Ellsworth involved a judgment entirely terminating an adversary proceeding, while Mason concerned an order resolving all applicable bankruptcy issues and leaving nothing to be done but the accounting of assets. Both orders obviously involve a far greater degree of finality than is present in the instant matter.

DISMISSED FOR LACK OF JURISDICTION.