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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


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. Page 2

  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., Page 3 833 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 preliminary injunction. Page 4

  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 jurisdiction.



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