Charles Smith v. C. Gartley
737 F.3d 997
| 5th Cir. | 2013Background
- Smith and Martin formed Mediacom and induced the Gartleys to invest by fraudulent misrepresentations; state-court litigation followed and a settlement collapsed.
- Smith (and his wife Iris Berman-Smith) filed Chapter 7 shortly before trial; the Gartleys pursued a bankruptcy adversary proceeding against Smith seeking nondischargeability under 11 U.S.C. § 523(a)(2) and (a)(4).
- The bankruptcy court (2009 Findings and 2012 Additional Findings) found Smith liable for fraud only, awarded $2,657,000 in damages, and declared that debt nondischargeable; a separate Final Judgment was entered.
- Smith appealed the bankruptcy judgment to the district court twice; after the first appeal the district court remanded for additional findings; after the second appeal the district court affirmed in part but vacated and remanded to recalculate fraud-only damages.
- The Gartleys appealed to the Fifth Circuit arguing the district court lacked jurisdiction because Smith’s second appeal to the district court was untimely under Fed. R. Bankr. P. 8002(a).
- The Fifth Circuit held that Rule 8002(a)’s 14-day appeal period is jurisdictional because 28 U.S.C. § 158(c)(2) expressly incorporates Rule 8002, and thus the untimely appeal deprived the district court (and the Fifth Circuit) of jurisdiction; the Court vacated the district-court judgment and remanded with instructions to dismiss for lack of jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court had jurisdiction to hear Smith’s second appeal given Rule 8002(a)’s 14-day deadline | Gartley: Smith’s second appeal was untimely under Rule 8002(a); untimeliness is jurisdictional so the district court lacked jurisdiction | Smith: The district court had jurisdiction; the time bar is not jurisdictional or was inapplicable here | Held: Timeliness under Rule 8002(a) is jurisdictional because § 158(c)(2) incorporates the Rule; the untimely appeal deprived the district court and the Fifth Circuit of jurisdiction, so appeal dismissed |
| Whether Kontrick and Bowles undermine prior Fifth Circuit precedent treating Rule 8002(a) as jurisdictional | Gartley: Bowles and Kontrick do not change that § 158(c)(2) makes Rule 8002(a) jurisdictional | Smith: Kontrick (procedural rules not jurisdictional) and Bowles (limitations where statute prescribes time limits) mean Rule 8002(a) is nonjurisdictional or waived | Held: Court reconciles both—because Congress in § 158(c)(2) expressly adopts the Rule’s time limit, the limit is statutory for jurisdictional purposes; In re Stangel remains good law |
| Whether the district court retained jurisdiction after remand absent express retention | Gartley: District court did not retain jurisdiction; no authority supports implicit retention | Smith: District court retained jurisdiction following the first remand | Held: No basis for implicit retention; procedural history shows the district court did not intend to retain jurisdiction |
Key Cases Cited
- In re Stangel, 219 F.3d 498 (5th Cir. 2000) (holding Rule 8002(a) untimeliness deprives district court of jurisdiction)
- Kontrick v. Ryan, 540 U.S. 443 (2004) (procedural rule time limits are not automatically jurisdictional)
- Bowles v. Russell, 551 U.S. 205 (2007) (statutory time limits prescribed by Congress are jurisdictional)
- In re Latture, 605 F.3d 830 (10th Cir. 2010) (holding § 158(c)(2)’s incorporation of Rule 8002 makes the time limit jurisdictional)
- In re Kingsley, 423 B.R. 344 (B.A.P. 10th Cir. 2010) (same: Rule 8002(a) is jurisdictional because § 158(c)(2) adopts it)
- In re Caterbone, 640 F.3d 108 (3d Cir. 2011) (adopting reasoning that Rule 8002(a) is jurisdictional)