United States District Court, S.D. New York
February 26, 2004.
In re: JOHNS-MANVILLE CORP., et al., Debtors; BRUCE CARTER, Appellant, -v.- TRAVELERS INDEMNITY CO., et al., Appellees
The opinion of the court was delivered by: GERARD E. LYNCH, District Judge
OPINION AND ORDER
Bruce Carter, an attorney for certain plaintiffs who have filed
lawsuits in Ohio against appellee insurance companies, appeals from an
order of the United States Bankruptcy Court for the Southern District of
New York (Burton R. Lifland, Judge) dated June 24, 2003 ("the
Order"), temporarily enjoining further prosecution of those lawsuits.
Appellees contend that Carter lacks standing to appeal the Order
because he is not "an aggrieved person, a person directly and adversely
affected pecuniarily by the challenged order of the bankruptcy court."
In re Gucci, 126 F.3d 380, 388 (2d Cir. 1997). As appellees
emphasize, the test of standing in the bankruptcy context is "more
exacting than the constitutional case or controversy requirement imposed
by Article III." Kane v. Johns-Manville Corp., 843 F.2d 636,
642 n. 2 (2d Cir. 1988). Even though the injunction specifically binds
Carter in his capacity as attorney for the plaintiffs in the Ohio
actions, and restrains him as well as his clients from filing or
prosecuting actions, it is therefore far from clear that he has standing
to appeal the Order.
Appellees cite cases outside the bankruptcy context holding that
attorneys lack standing to appeal orders primarily affecting the rights
of their clients. See, e.g., Uselton v. Commercial Lovelace Motor
Freight, Inc., 9 F.3d 849, 854 (10th Cir. 1993) (observing that
"counsel have standing to appeal from orders issued directly against
them, but not from orders applicable only to their clients" and
collecting cases) (internal citations and quotation marks omitted). None
of those cases hold, however, that an attorney lacks standing to appeal
an order, enforceable by contempt sanctions, that restrains him
personally. The Order, as Carter notes, directly affects him. Were he to
violate it, he would be subject to contempt sanctions, surely an adverse
pecuniary effect. (Reply Br. 24.) At the same time, the Order does not
enjoin actions that Carter wishes to bring on his own behalf. He seeks to
protect alleged pecuniary rights of his clients, the Ohio plaintiffs,
none of whom appeal the Order.
The standing issue need not be resolved, however, for Carter cannot
appeal the Order as of right, and the Court declines, as a matter of
discretion, to exercise jurisdiction over this appeal. With exceptions
not relevant here, a party may obtain review as of right only from a
bankruptcy court's "final judgments, orders, and decrees."
28 U.S.C. § 158(a)(1). The Order is manifestly not final. Where a bankruptcy
court issues a preliminary injunction and contemplates a further hearing
on the merits of a permanent injunction, the preliminary injunction
cannot be appealed. See In re Ionosphere Clubs, Inc., 139 B.R. 772,
778 (S.D.N.Y. 1992). That is the case here. The bankruptcy court has
scheduled a further hearing on a permanent injunction for March 15, 2004.
Carter makes no effort to show that this case falls within the exception
for cases in which "a plaintiff seeks injunctive relief that is
preliminary only in the sense that it allows a proceeding to go forward
in another forum." Id., citing Manning v. Energy
Conversion Devices, Inc.,
833 F.2d 1096, 1100 (2d Cir. 1987). Rather, he cites
28 U.S.C. § 1292(a)(1), which gives the courts of appeals jurisdiction
over appeals from preliminary injunctions issued by the district courts.
That section is irrelevant. Title 28 U.S.C. § 158 does not vest the
district courts with any comparable jurisdiction to entertain appeals
from preliminary injunctions issued by bankruptcy courts, except where
the appellant first obtains leave from the appropriate district court.
While Carter did not seek leave to file an interlocutory appeal,
see 28 U.S.C. § 158(a)(3), he belatedly argues in his reply
brief that the conditions for such an appeal are met, and the Court
construes that argument as an application for leave to appeal. In
deciding whether to grant leave, a district court should consider whether
(1) the disputed order involves a controlling question of law; (2) there
is substantial ground for difference of opinion; and (3) an immediate
appeal will materially advance the ultimate termination of the
litigation. In re Alexander, 248 B.R. 478, 483 (S.D.N.Y. 2000);
cf. 28 U.S.C. § 1292(b). None of the issues Carter raises
meet this standard. His argument that the bankruptcy court's earlier
injunctions do not apply to the Ohio suits does not control whether the
present injunction is appropriate; his challenge to the bankruptcy
court's jurisdiction is completely without merit and does not present
substantial ground for difference of opinion; and his challenge to the
impartiality of the mediator to whom the bankruptcy court referred
Carter's clients' claims would not finally resolve the litigation.
Moreover, because the bankruptcy court will soon decide whether to make
the injunction at issue here permanent an order that, if granted,
would be appealable as of right under 28 U.S.C. § 158(a)(1)
it would in no way materially advance the ultimate termination of the
litigation for this Court to attempt to resolve the issues raised by
Carter on the necessarily incomplete record presented by an appeal from a
Accordingly, treating appellant's reply brief as a motion for leave to
appeal the June 24, 2003 interlocutory order of the bankruptcy court,
that motion is denied, and Carter's appeal is dismissed for lack of
© 1992-2004 VersusLaw Inc.