Roee Kiviti v. Naveen Bhatt, No. 22-1216 (4th Cir. 2023)
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Plaintiffs hired Defendant o renovate their home in Washington, D.C. Because Defendant told Plaintiffs he was properly licensed, they thought everything was above board. Yet, delayed and defective, the renovations did not go well. And, as it turned out, Defendant was not properly licensed. So the Plaintiff sued him in D.C.’s Superior Court. But then Defendant filed for Chapter 7 bankruptcy. Plaintiffs pursued him, filing a two-claim complaint against him in bankruptcy court. The bankruptcy court rejected Count II, finding that, if a debt existed, it was dischargeable. So it partially dismissed the adversary proceeding. But it allowed Count I to proceed toward trial to determine whether Defendant owed the Plaintiffs any money. Plaintiffs then voluntarily dismissed the surviving claim without prejudice. They could then immediately appeal the court-dismissed claim and decide afterward whether it was worth further litigating the party-dismissed claim. Plaintiffs appealed their Count II loss to the district court, who affirmed it.
The Fourth Circuit vacated the district court’s order. The court explained that bankruptcy courts are not Article III courts. So Article III constraints do not apply to them. They only apply if Congress said so in a statute. But it hasn’t. And that means whether Count I was constitutionally moot is beside the point. The bankruptcy court could still adjudicate it. Since Plaintiffs cannot argue that their adversary proceeding was constitutionally moot when Count II was dismissed, they have not shown the proceeding was legally doomed when they dismissed Count I. They are thus left arguing the order was final because Count I was practically over post-dismissal.
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