Written By: Alan S. Wolf
On April 26, 2007, the Ninth Circuit Court of Appeals rendered a decision in In re Brown, __ F.3d __, 2007 WL 1217739 (9th Cir. (Ariz.), 2007), diving into the analysis of what truly constitutes a bankruptcy court order. In Brown, the debtor brought an adversary proceeding against the loan servicer for its alleged violation of the automatic stay. Cross-motions for summary judgment were filed, and the bankruptcy judge ruled from the bench. Later that day, the judge signed a “minute entry” stating that the loan servicer’s motion was granted and the debtor’s motion was denied. The bankruptcy court further took under advisement a related motion for sanctions. Three months later, the bankruptcy court entered judgment on the sanctions motion, granting about $19,000 in sanctions against the debtor.
The debtor filed an appeal to the district court within 10 days of the entry of the order granting the sanctions but nearly three months after the “minute entry” on the cross summary judgment motions. The district court dismissed the appeal as untimely as to the summary judgment motions. A bankruptcy order must be appealed within 10 days of entry of the order (“[t]he notice of appeal shall be filed … within 10 days of the date of the entry of the … order … appealed from.” Bankruptcy Rule 8002(a)) and since the appeal was not filed until three months after the “minute entry” on the motions for summary judgment, the district court found that it did not have jurisdiction.
The Ninth Circuit Court of Appeals reversed. It found that the “minute entry” was not an order. There is a confusing discussion of what constitutes an order, but essentially, to be an order, it must be a document that (1) states that it is an order, (2) is mailed to counsel, (3) is signed by the clerk who prepared it, and (4) is entered on the docket sheet. The minute entry did not comply with these requirements. Accordingly, the judgment on the sanctions was the only order that could be appealed. And since the judgment incorporated the prior summary judgment issues, an appeal was timely taken on all of the issues.
When and how to appeal bankruptcy court rulings is a highly complicated area, and this ruling highlights some of that complexity. But more importantly, the case determines when an order is a true order, and that directly affects mortgage servicers and their counsel. It is not uncommon for bankruptcy judges to issue a “minute entry” or “minute order” to resolve a motion for relief from stay. Many counsel advise their servicing clients that the stay terminates by virtue of the minute entry. That may be true in other circuits, but in the Ninth Circuit, the minute entry must pass the litmus test of a true order. And if the minute entry doesn’t rise to the level of a true order, then a separate formal judgment should be prepared and entered. To add insult to injury, the Ninth Circuit also overturned the $19,000 sanctions award against the debtor. (The Ninth Circuit is comprised of Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington.)