Church Joint Venture, L.P. v. Blasingame (In Re Blasingame)Church Joint Venture, L.P. v. Blasingame (In Re Blasingame)
KETHLEDGE, Circuit Judge. Debtors Benard and Margaret Blasingame sought to settle a pending malpractice claim against their former bankruptcy lawyers over the objection of their creditors. The bankruptcy court rejected the proposed settlement. The Blasingames appealed. The Bankruptcy Appellate Panel of the Sixth Circuit dismissed their appeal for want of jurisdiction. We dismiss the Blasingames’ appeal for the same reason.
I.
In 1983, Benard and Margaret Blasingame hired tax lawyer Martin Grusin to set up the Blasingame Trust. Over the following decades, the Blasingames, together with Benard
In August 2008, the Blasingames—with Fullen‘s help—filed for bankruptcy in the Western District of Tennessee. In their bankruptcy petition, they claimed less than $6,000 in assets. In fact, as the bankruptcy court later found, the Blasingames failed to disclose millions of dollars in assets that they controlled through a complex web of family trusts, shell companies, and shifting “clearing accounts.” They failed to disclose the life estate they held in their $1.7 million homestead, title to which was held by the Blasingame Family Residence Generation Skipping Trust. They failed to disclose approximately $1.2 million in household goods. They claimed two 1985 Mercedes-Benz vehicles worth $1,100, but failed to disclose their control of a 2008 Mercedes-Benz vehicle belonging to the G.F. Corporation, of which Margaret Blasingame is the president, and for which the sole shareholder is the Blasingame Family Business Investment Trust. They likewise failed to disclose their use of a vehicle belonging to Flozone Services, Inc., a company wholly owned by the Blasingames’ daughter, and of which Benard Blasingame is the CEO. And they managed their liquid assets in unusual ways: Margaret Blasingame, a schoolteacher, routinely deposited her paycheck into a bank account belonging to her son; the Blasingames’ bookkeeper shifted money between this and other “clearing accounts,” each of which went undisclosed.
In November 2011, the trustee for the bankruptcy estate, Edward Montedonico, testified that he believed that the estate had a colorable claim against Grusin and Fullen for legal malpractice but that the estate lacked the resources to pursue the claim. He moved the bankruptcy court to permit Church Joint Venture, the Blasingames’ largest creditor, to litigate the claim on the estate‘s behalf. The court granted the trustee‘s motion, and Church—acting on the estate‘s behalf—sued Grusin and Fullen for malpractice in federal district court. The district court referred the claim to the bankruptcy court, where it remains pending as an adversary proceeding. In April 2014, the trustee and the Blasingames moved jointly, over Church‘s objection, to settle the estate‘s malpractice claim against Grusin and Fullen for $1 million. See
In December 2014, the Blasingames moved to settle the claim for $1.25 million. The trustee filed a response urging the bankruptcy court to approve the settlement. Church objected, arguing that the proposed settlement did not reflect “the value of the lawsuit.” The court denied the motion, noting that Church, which holds 95% of the estate‘s unsecured claims, is “in the best position to evaluate the potential recovery to the estate from the litigation.” The court also
The Blasingames appealed. The Bankruptcy Appellate Panel of the Sixth Circuit dismissed their appeal for lack of jurisdiction because, the panel concluded, the bankruptcy court‘s order was not a “final” order susceptible to appeal as of right. See
II.
The Blasingames argue that we have jurisdiction to consider their appeal under
Section 158 permits bankruptcy litigants to appeal bankruptcy-court orders as of right only where the orders “finally dispose of discrete disputes within the larger case[.]” Howard Delivery Serv. v. Zurich Am. Ins. Co., 547 U.S. 651, 657 n.3 (2006) (emphasis omitted). Where a bankruptcy court‘s order does not “alter[] the status quo” or “fix[] the rights and obligations of the parties[,]” it does not finally dispose of a discrete dispute. Bullard v. Blue Hills Bank, 135 S. Ct. 1686, 1692 (2015). Thus, for example, where a bankruptcy court denies a debtor‘s proposed confirmation plan and gives the debtor leave to amend the proposed plan, the denial is not final because the “parties’ rights and obligations remain unsettled.” Id. at 1693.
The Blasingames argue that the order was final because ”approval of the settlement would effectively conclude the legal malpractice action[.]” Blasingame Br. at 13 (emphasis added). But “it is of course quite common for the finality of a decision to depend on which way the decision goes. An order granting a motion for summary judgment is final; an order denying such a motion is not.” Bullard, 135 S. Ct. at 1694.
The Blasingames also argue that the order is appealable under the “collateral order doctrine.” See Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949). But that doctrine applies only where an order “finally determines claims of right[.]” In re Dow Corning Corp., 86 F.3d 482, 488 (6th Cir. 1996). As explained above, the bankruptcy court‘s order did not finally determine any claim.
The appeal is dismissed for want of jurisdiction.