Just File Your Notice of Appeal!

February 27, 2020

Authored by: Mark Duedall

Bankruptcy Rule 8002 and Federal Rule 58 can sometimes look like this.  Carolina and Khaled have a much simpler solution.

Generally, a notice of appeal of a bankruptcy-court order must be filed “within 14 days after entry of the judgment, order, or decree being appealed.” Fed. R. Bankr. P. 8002(a)(1). But what if a litigant’s motion for attorneys’ fees or costs incurred in connection with the judgment remains pending on the fourteenth day after entry? The First Circuit recently answered this question unequivocally: File the notice of appeal!

In In re Empresas Martínez Valentín Corp., No. 18-2103, 2020 U.S. App. LEXIS 2701 (1st Cir. Jan. 28, 2020), creditor PC Puerto Rico (“PCPR”) filed its notice of appeal 237 days after the fourteen-day deadline, waiting for the bankruptcy court to decide the Debtor’s motion for attorneys’ fees and costs incurred in litigating the adversary proceeding to judgment. PCPR argued that the notice of appeal was timely because: (i) the time for appeal did not begin until entry of judgment on the Debtor’s fee motion; and (ii) Bankruptcy Rule 8002 is a waivable claim-processing rule, rather than a statutory jurisdictional requirement. The First Circuit rejected such arguments and concluded “when in doubt, file your notice of appeal, because a premature notice, unlike a late notice, can still be effective.”

The Facts of the Case

The Debtor filed an adversary proceeding against PCPR seeking damages for willful violation of the automatic stay. On April 4, 2017, the bankruptcy court entered an order awarding damages in favor of the Debtor (“Stay Violation Order”). The Stay Violation Order disposed of all claims and issues in the adversary proceeding except for the Debtor’s request for attorneys’ fees and costs incurred in the litigation.

On November 27, 2017, the bankruptcy court entered separate orders awarding the Debtor its attorneys’ fees and costs. The orders appeared on the docket that day, along with a separate two-page judgment encompassing the Stay Violation Order and the awards of fees and costs. Eleven days later, PCPR filed its appeal to the district court, which affirmed in all respects. PCPR appealed the District Court’s ruling to the First Circuit.

The Court’s Analysis

The time for appealing a final judgment begins to run when judgment is entered, even if the lower court still has before it a request for attorneys’ fees or costs incurred in litigating the case. See Ray Haluch Gravel Co. v. Cent. Pension Fund of Int’l Union of Operating Eng’rs & Participating Emp’rs, 571 U.S. 177, 186 (2014). Applying this “uniform rule,” the First Circuit put the Debtor’s request for attorneys’ fees and costs aside and determined that the Stay Violation Order was a final judgment for appeal purposes.

The court next analyzed when the Stay Violation Order was “entered” to begin the 14-day appeal period. By rule, orders such as the Stay Violation Order require a separate judgment be entered that does not contain a substantial discussion of the law and facts. If no such separate entry is made, the order is deemed “entered” for appeal purposes 150 days after its original docket entry.  See Fed. R. Civ. P. 58(a) and (c).

Because the bankruptcy court did not enter separate judgment until November 27, 2017, the First Circuit deemed the Stay Violation Order entered on September 1 (150 days after April 4) for purposes of triggering the 14-day appeal deadline. The appeal deadline thus expired on September 15, well before PCPR filed its notice of appeal on December 8.

PCPR argued that Ray Haluch’s “uniform rule” did not apply because the attorneys’ fees were compensatory damages recoverable as an element of the claim for violating the automatic stay. The First Circuit disagreed. The fees and costs at issue in the bankruptcy court were incurred in the underlying adversary proceeding and could not have been determined until after the case was litigated. Therefore, under Ray Haluch, the bankruptcy court’s decision not to resolve the fee claim in the Stay Violation Order had no effect on the finality of the rest of the order for appeal purposes.[1]

So if you intend to appeal a judgment but attorneys’ fees are still at issue, do not wait to file your notice of appeal. As the First Circuit advises, “the rules point counsel to a safe harbor that avoids all of this: when in doubt, file your notice of appeal, because a premature notice, unlike a late notice, can still be effective. See Fed. R. Bankr. P. 8002(a)(2); Fed. R. App. P. 4(a)(2).”[2]

[1]           The court also noted that the rules expressly offer bankruptcy courts the option to enter an order deeming a timely motion for attorneys’ fees to have the same effect as a motion under Rule 59, delaying the running of the time within which to appeal. The bankruptcy court had not done so in this case.

[2]           The First Circuit also discussed the issue of whether the time for filing a notice of appeal is a jurisdictional requirement or a claim-processing rule, noting that it has previously held that it is a jurisdictional requirement, but that the Supreme Court’s decision in Hamer v. Neighborhood Hous. Servs. of Chi., 138 S. Ct. 13, 17 (2017) “might warrant revisiting this holding.” The First Circuit ultimately did not consider this issue because it was not dispositive.