In Re Fugazy Express, Inc.
Bankr. L. Rep. P 75,058
In re FUGAZY EXPRESS, INC., Debtor.
Zachary SHIMER, Chapter 7 Trustee of Fugazy Express, Inc.,
and Metromedia Company, Plaintiffs-Appellees,
v.
William D. FUGAZY, Fugazy Limousine Limited, formerly known
as R.D.F. Limousine Corp., Roy D. Fugazy,
Defendants-Appellants.
Nos. 1418, 1655, Dockets 92-5005, 92-5007.
United States Court of Appeals,
Second Circuit.
Argued April 24, 1992.
Decided Dec. 17, 1992.
Margaret Groarke, New York City (Zachary Shimer, Robert Najarian, Chadbourne & Parke, on the brief), for plaintiff-appellee Zachary Shimer.
Martin I. Shelton, New York City (Mary Gail Gearns, Shea & Gould, on the brief), for plaintiff-appellee Metromedia Co.
Anderson Kill Olick & Oshinsky, P.C., New York City (Anthony Princi, Steven Cooper, Jordan W. Siev, of counsel), for defendant-appellant William D. Fugazy, joined the brief filed by defendants-appellants Fugazy Limousine Ltd. and Roy D. Fugazy.
James Lawrence Garrity, New York City (George Kuntu-Blankson, Garrity & McCusker, on the brief), for defendants-appellants Fugazy Limousine Ltd. and Roy D. Fugazy.
Arnold I. Burns, New York City (Proskauer Rose Goetz & Mendelsohn, of counsel), fоr defendants-appellants Fugazy Limousine Ltd. and Roy D. Fugazy.
Before OAKES*, KEARSE, and WALKER, Circuit Judges.
KEARSE, Circuit Judge:
Defendants William D. Fugazy ("William Fugazy" or "William"), Fugazy Limousine Limited ("Limousine"), and Roy D. Fugazy ("Roy Fugazy" or "Roy") (collectively the "Fugazy Parties") appeal from an order entered in the United States District Court for the Southern District of New York, Kevin Thomas Duffy, Judge, affirming an order of the United States Bankruptcy Court for the Southern District of New York, Burton R. Lifland, Chief Judge, which, inter alia, (1) ruled that William Fugazy had improperly transferred a broadcast license that was рroperty of the estate of bankruptcy Chapter 7 debtor Fugazy Express, Inc. ("Debtor"), to Limousine and Roy Fugazy, and (2) ordered the payment of damages, to be determined after an accounting, and attorneys' fees to plaintiffs-appellees Zachary Shimer, who is the Chapter 7 trustee of the Debtor ("Trustee"), and Metromedia Company ("Metromedia"). Resolution of the damages and fees issues has been stayed by the bankruptcy court pending the outcomе of this appeal. On appeal, the Fugazy Parties contend that these orders should be reversed on the ground that the license was not properly regarded as property of the Debtor's estate and that its transfer was properly approved by the pertinent regulatory authority. For the reasons below, we conclude that the order of the bankruptcy court was not a final order within the meaning of
I. BACKGROUND
Prior to July 1986, the Debtor was engaged in the business of selling and servicing franchises for livery and limousine services to independent limousine operators who conducted their operations using the "Fugazy" name. William Fugazy was chairman of the Debtor's board of directors. Roy, Williаm's son, was formerly the Debtor's vice president for marketing and is the controlling shareholder of Limousine.
A. The Events
Pursuant to its franchise agreements, the Debtor provided radio dispatching services for its franchisees. The dispatches were broadcast over several radio frequencies, for which the Debtor had obtained six licenses and permits from the Federal Communications Commission ("FCC"). In July 1986, the Debtor filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code ("Code"),
In the meantime, in March 1987, the bankruptcy court entered an order converting the reorganization proceeding into one for liquidation under Chapter 7 of the Code,
Metromedia soon discovered William's purported prior transfer of the KXY License to Limousine, and in August 1987, the Trustee and Metromedia commenced the present adversarial proceeding against the Fugazy Parties, seeking, inter alia, a declaration that the purported transfer was null and void because it had occurred without the permission of the bankruptcy court, and an accounting.
William conceded that in making the transfer he had acted without authority. On the basis of this concession, the bankruptcy court promptly entered an ordеr in September 1987, which was consented to by William, the Trustee, and Metromedia ("Consent Order"), declaring the assignment null and void and directing the Trustee to convey the License to Metromedia. William and Metromedia were also directed to send a copy of the Consent Order to the FCC and to take whatever actions were requested by the FCC to effectuate the order's provisions. Counsel for Limousine and Roy Fugazy were present at all hearings relevant to the Cоnsent Order. Immediately following entry of the order, Metromedia applied to the FCC to void the unauthorized assignment of the KXY License. Limousine opposed the application, and the FCC granted Limousine temporary authorization to use the License pending resolution of the dispute.
In a letter dated October 26, 1988, the FCC refused to act on Metromedia's request that the purported transfer to Limousine be voided, stating in pertinent part as follows:
While the rights and obligаtions of the various parties vis-a-vis each other may be somewhat complex, their obligations to the Commission are quite simple. Fugazy Express, Inc., licensee of record, assigned the license for KXY-610 to R.D.F. Limousine, who then became the licensee of record for our purposes. Information submitted to us, the Consent Order of the Bankruptcy Court in particular, casts doubt upon the validity of this transaction, and would under other circumstances require an administrative inquiry оn our part. Here, however, the particular facts before us make such action unnecessary.
Affidavits submitted with the pleadings establish that KXY-610 ceased operations in December, 1986. Under Section 90.157 of our Rules,
Though the FCC letter did not state specifically as of what date the KXY License had been cancelled, the cited regulation provided that for purposes of return of licenses to the Commission, a broadcast station is considered to have been permanently discontinued if it "has not operated for 1 year or more."
B. The Decisions Below
In early 1989, Limousine and Roy moved for summary judgment dismissing the present action, asserting that thе FCC had "cancelled" the License prior to January 1987 and arguing that thereafter the License was not property that could be deemed part of the bankruptcy estate, and hence the bankruptcy court had no jurisdiction over William's transfer to Roy. William joined the motion. The Trustee and Metromedia cross-moved for summary judgment and sought sanctions against all the Fugazy Parties. In a Memorandum Decision dated May 14, 1990 ("Memorandum Decision"), the bankruptcy court granted the motion of the Trustee and Metromedia and denied the motions of the Fugazy Parties. The bankruptcy court held (1) that the KXY License was property of the Debtor's estate within the meaning of § 541(a)(6) of the Code,
In аccordance with its rulings, the bankruptcy court entered an order dated June 20, 1990 ("1990 Bankruptcy Court Order" or "Order") directing, inter alia, that there be an accounting with respect to the revenues received by Limousine with respect to its use of the KXY License:
ORDERED that Limousine shall, within fifteen (15) of [sic ] service of Notice of Entry of this Order, file with the Court and serve the Trustee and counsel for Metromedia, with an accounting setting forth the revenues received by Limousine, its predecessors and successors, attributable to use of the License, which accounting shall specify the revenues received by Limousine and its predecessors and successors for the period of January 28, 1987 through June 18, 1987, and for the period of June 19, 1987 through the date of entry of this Order; and it is further
ORDERED that Metromedia and the Trustee each shall within fifteen (15) days of service of Notice of Entry of this Order file with the Court and serve counsel for Limousine, Roy Fugazy and William Fugazy with a statement of attorney's fees and expenses incurred in connection with the claims asserted in the written adversary proceeding; and it is further
ORDERED that objections, if any, to the accounting to be filed and served by Limousine and the statements of attorneys fees and expenses to be filed and served by the Trustee and Metromedia shall (i) be filed with the Court and served upon all counsel within thirty (30) days of receipt of such information, and (ii) shall be scheduled for a hearing by the parties as soon as praсticable; and it is further
ORDERED that within fifteen (15) days after the later of (i) receipt of the respective submissions by Limousine, Metromedia and the Trustee, or (ii) resolution of any objections to the respective submissions by Limousine, Metromedia and the Trustee, the parties shall submit proposed orders and judgments consistent with the terms of the Memorandum Decision and this Order.
1990 Bankruptcy Court Order at 4-6. Though the parties have made submissions to the bankruptcy court in accordance with the Order, their time within which to file objections to the submissions has been stayed at the request of the Fugazy Parties.
The Fugazy Parties appealed the 1990 Bankruptcy Court Order to the district court pursuant to
Metromedia moved before a motions panel of this Court to dismiss the appeal for lack of appellate jurisdiction. That motion was denied without prejudice to renewal before the panel to hear the appeal.
II. DISCUSSION
On this appeal, the Fugazy Parties pursue the arguments they made to the district court. Metromedia, in addition to defending the decision below on the merits, renews its contention that thеre is no final order in this case and that this Court therefore lacks appellate jurisdiction.
When the district court has ruled on a bankruptcy matter as an appellate court pursuant to
A. The Finality Contention
1.
In the present case, the district court noted its jurisdiction over the 1990 Bankruptcy Court Order under
For purposes of appealability outside of the bankruptcy context, a final order is one that conclusively determines the rights of the parties to the litigation, leaving nothing for the district court to do but execute the order. See, e.g., Coopers & Lybrand v. Livesay,
In bankruptcy proceedings, the context of the determination оf finality is different. " '[B]ecause bankruptcy proceedings often continue for long periods of time, and discrete claims are often resolved at various times over the course of the proceedings, the concept of finality that has developed in bankruptcy matters is more flexible than in ordinary civil litigation.' " In re Hooker Investments, Inc.,
In sum, for a bankruptcy court order to be final within the meaning of
The 1990 Bankruptcy Court Order in the present case does not meet this standard of finality. It did not finally dispose of the dispute between Trustee/Metromedia on the one hand and the Fugazy Parties on the other. Only when the accounting has been completed, and it is thereby determined what damages are due the Trustee and Metromedia, will the bankruptcy court have conclusively determined this separable dispute. Accordingly, though the district court had the authority to grant the Fugazy Parties leave to appeal to the district court from the bankruptcy court's interlocutory Order, the order of the district court affirming that Order was itself nonfinal within the meaning of
2. The Automatic-Stay Argument
This Court has ruled that a bankruptcy court's denial of relief from an automatic stay in bankruptcy is a final order appealable under
Nothing in the Code suggests that a party is entitled to engage in "self-help" in derogation of the automatic stay. See In re Computer Communications, Inc.,
In the present case, none of the Fugazy Parties moved in the bankruptcy court for a lifting of the automatic stay prior to William Fugazy's January 1987 transfer of the KXY License to Limousine and Roy. Nor did they inform the court of the transfer. The court did not learn of it until several months after it had occurred, and then only because the Trustee attempted to sell the License.
Wе find it difficult even to take seriously the Fugazy Parties' suggestion on this appeal that their March 1989 motions for summary judgment should be construed as requests for relief from the automatic stay. First, their motions were not made until more than two years after the surreptitious transfer of the License. Second, these motions were made six months after the bankruptcy court had expressly declared the transfer null and void. Further, the order invalidating the transfer had been entered on the consеnt of William, and after proceedings in which Roy and Limousine had participated. It is hardly surprising, therefore, that in March 1989, the Fugazy Parties did not describe their summary judgment motions as requests for a lifting of the stay. In any event, even had the motions been so described, such a characterization would have been ineffective, given the requirement that a motion for the lifting of the stay, except in circumstances not present here, must be made prior to the purported transfer of the bankrupt's property.
B. Appealability Under
Plainly the 1990 Bankruptcy Court Order did not grant or modify an injunction; nor did it refuse an injunction or dissolve an injunction. For the reasons stated in Part II.A.2. above, the 1990 Bankruptcy Court Order also did not refuse to dissolve or to modify an injunction, for there was no request for such relief, timely or otherwise.
Nor do we think it can fairly be said that the Order "continu[ed]" an injunction as that term is used in
The 1990 Bankruptcy Court Order had no temporal impact on the automatic stay. The Order recognized the existence of the automatic stay, but did not extend its duration. The stay remained in effect simply because
In sum, the 1990 Bankruptcy Court Order was not an order of the type that
CONCLUSION
Having examined the possible bases for appellate jurisdiction and found none applicable to the present case, we dismiss the appeal for lack of appellate jurisdiction.
Notes
Judge Oakes was Chief Judge until July 1, 1992