Mark Tarczynski v. 1100 Wilshire Blvd., LLC
675 F. App'x 744
9th Cir.2017Background
- Debtor Mark Tarczynski appealed a Bankruptcy Appellate Panel (BAP) decision that had reversed dismissal of a derivative § 523 adversary action and remanded for further factual development.
- The Ninth Circuit must determine whether it has jurisdiction to hear the appeal from the BAP order.
- The BAP remanded because the bankruptcy court had relied on disputed facts and drew inferences adverse to Tarczynski on issues including adequacy of the derivative plaintiff (1100 Wilshire Blvd, LLC), the Board’s invocation of the business-judgment rule, and application of in pari delicto.
- Tarczynski argued the appeal could be resolved as a matter of law based on a judicially noticeable state-court complaint and that in pari delicto can be decided now.
- The Ninth Circuit considered the flexible finality/exception factors from Vylene (avoiding piecemeal litigation, judicial efficiency, preserving bankruptcy court factfinding, and irreparable harm) to decide whether to exercise jurisdiction over a nonfinal BAP order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Ninth Circuit has jurisdiction over the BAP order remanding for further factual development | Tarczynski: appeal ripe; issues decidable as matter of law so review appropriate now | BAP/Respondent: remand required for further factfinding; order is nonfinal | No jurisdiction — remand order is nonfinal and Vylene factors counsel against review |
| Adequacy of derivative plaintiff (1100 Wilshire Blvd, LLC) | Tarczynski: state-court complaint shows so clear a conflict that adequacy can be decided now | Respondent: status could have changed; factual development needed to assess adequacy | Adequacy cannot be resolved on current record; remand for factfinding required |
| In pari delicto (imputation to POA) | Tarczynski: issue can be decided as a matter of law now | Respondent: record lacks facts to impute board/officer misconduct to POA | Court agrees record insufficient; remand required for factual development |
| Whether declining jurisdiction causes irreparable harm | Tarczynski: continued litigation against allegedly improper derivative plaintiff is harmful (implied) | Respondent: no demonstrated irreparable harm; factual disputes remain | No clear irreparable harm shown; factor favors decline to exercise jurisdiction |
Key Cases Cited
- Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368 (U.S. 1981) (defining finality: ends litigation on the merits)
- Sahagun v. Landmark Fence Co. (In re Landmark Fence Co.), 801 F.3d 1099 (9th Cir. 2015) (discussing finality and exceptions in bankruptcy appeals)
- King v. Stanton (In re Stanton), 766 F.2d 1283 (9th Cir. 1985) (BAP affirmance/reversal of final bankruptcy orders are final)
- Dental Capital Leasing Corp. v. Martinez (In re Martinez), 721 F.2d 262 (9th Cir. 1983) (orders remanding for further factual findings are not final)
- Vylene Enterprises, Inc. v. Naugles, Inc., 968 F.2d 887 (9th Cir. 1992) (four-factor test for exercising jurisdiction over nonfinal appeals)
- In re Lakeshore Village Resort, Ltd., 81 F.3d 103 (9th Cir. 1996) (applying Vylene factors in bankruptcy context)
- Kayes v. Pac. Lumber Co., 51 F.3d 1449 (9th Cir. 1995) (earlier litigation does not conclusively prove animus for adequacy inquiry)
- Congrejo Invs., LLC v. Mann (In re Bender), 586 F.3d 1159 (9th Cir. 2009) (discussing finality flexibility and risk of piecemeal litigation)