In re: LORENZO ESTEVA, Debtor. LORENZO ESTEVA, a Florida resident, DENISE OTERO VILARINO, a Florida resident, Plaintiffs-Appellees, versus UBS FINANCIAL SERVICES INC., UBS CREDIT CORP,
No. 21-13580
United States Court of Appeals For the Eleventh Circuit
February 16, 2023
[PUBLISH]
Plaintiffs-Appellees,
Defendants-Appellants.
Appeal from the United States District Court for the Southern District of Florida
D.C. Docket No. 1:20-cv-23183-MGC
Before WILLIAM PRYOR, Chief Judge, and ROSENBAUM and MARCUS, Circuit Judges.
MARCUS, Circuit Judge:
This case raises the question whether we have jurisdiction over an appeal taken from a bankruptcy court order granting summary judgment on some, but not all of the claims brought in an adversary proceeding prior to the entry of final judgment. Because the bankruptcy court order is not final, and despite the parties’ effort to create jurisdiction by stipulating to the voluntary dismissal of the sole remaining claim during the pendency of this appeal, we hold that we do not.
Lorenzo Esteva and his wife, Denise Otero Vilarino (“Otero“) (together, “Plaintiffs“), commenced this adversary proceeding in the United States Bankruptcy Court for the Southern District of Florida against UBS Financial Services Inc. and UBS Credit Corp. (together, “UBS“), to recover funds UBS had frozen in one of its accounts to satisfy debts owed by Esteva. After the
Although the parties agree that we have jurisdiction, we are bound to dismiss this appeal because the same concepts of finality apply in appeals taken from adversary proceedings as in appeals taken from standard civil actions. The bankruptcy court left Esteva‘s unjust enrichment claim open and awaiting trial, so we cannot assert jurisdiction based on the finality of the bankruptcy court‘s order. Nor, on this record, can we find that any of three recognized exceptions to the final judgment rule -- the collateral order doctrine, the practical finality doctrine, or the marginal finality doctrine -- allows us to reach the merits of UBS‘s appeal.
In a last-ditch effort to breathe jurisdictional life into this appeal, the parties filed a stipulation for voluntary dismissal in the bankruptcy court on the eve of oral argument. While, under the doctrine of cumulative finality, the subsequent entry of final judgment may cure a premature notice of appeal, the parties’ effort to finally resolve the underlying proceeding in this case falls flat.
I.
A.
UBS hired Esteva as a financial advisor in the International Division of its Miami office in November 2015. As part of the bank‘s recruitment strategy, UBS entered into a series of agreements (the “Promissory Notes“) with Esteva, in which it agreed to loan him approximately $2 million, to be paid back over the first ten years of Esteva‘s employment using annual bonuses tied to his performance. The Promissory Notes stated that any outstanding principle would be immediately due and payable with interest if Esteva were ever fired.
Esteva deposited the loan proceeds into a UBS account (the “Account“) that he opened with Otero, shortly after he started working for UBS. Esteva and Otero also transferred $500,000 of their savings into the Account.
When they opened the Account, Esteva and Otero signed a Client Relationship Agreement -- a form agreement signed by anyone who opens an account with UBS. The Agreement granted UBS a security interest in the Account‘s funds to secure payment of any debt incurred “under this or any other agreement between you and any UBS Entity, including but not limited to any loans or promissory notes.”
Things came to a head in 2017, when UBS fired Esteva for allegedly sending falsified account statements to clients and improperly “journaling” funds between clients’ accounts without permission. Following Esteva‘s termination, UBS restricted and froze the Account to secure repayment of the Promissory Notes. UBS asserted that the Client Relationship Agreement granted it an interest in the Account‘s funds to secure Esteva‘s debts under the Notes.
On May 31, 2018, Esteva voluntarily petitioned for Chapter 7 bankruptcy (later converted to Chapter 11). In his bankruptcy petition, Esteva listed the Account as “exempt” from property of the estate due to his interest in the property as a tenant by the entirety, see
On March 4, 2019, Esteva and Otero commenced an adversary proceeding against UBS to confirm the exempt status of the Account and the unsecured nature of UBS‘s proof of claim. The adversary complaint set forth four separate counts seeking: (1) declaratory relief that the Account is exempt as a tenancy-by-the-entirety property; (2) declaratory relief that UBS does not hold a valid security interest in or any other encumbrance against the Account; (3) turnover of the funds in the Account to Esteva and Otero under
Plaintiffs moved for summary judgment on the first three counts of their adversary complaint and all four of UBS‘s counterclaims, and partial summary judgment on Count 4 of their complaint. (Because Count 4 sought disallowance of UBS‘s proof of claim, Plaintiffs asked the bankruptcy court to find that the proof of claim was unsecured.) Over UBS‘s opposition, the bankruptcy court granted the motion in its entirety. The bankruptcy court issued a “partial final judgment” fully resolving all claims in the action except, notably, Plaintiffs’ Count 4, which, the judgment said, would be set for trial later by separate order. The judgment directed UBS to transfer the remaining funds in the Account to a joint securities account designated by Plaintiffs within ten days of receiving the account information from Plaintiffs’ counsel. UBS did not seek, nor did the bankruptcy court grant certification for
UBS then appealed to this Court. Since Plaintiffs’ unjust enrichment claim was still pending in the bankruptcy court, we directed the parties to brief the basis for our jurisdiction. The parties agreed that we had jurisdiction because, they claimed, the partial final judgment could be considered “final” for purposes of appeal, at least in the bankruptcy arena. We carried the jurisdictional issue with the case, and scheduled oral argument for December 9, 2022.
The day before oral argument, the parties filed a joint motion to supplement the record on appeal with a stipulation they had filed in the bankruptcy court that day. This stipulation stated that the Plaintiffs and UBS,
under
Rule 7041 of the Federal Rules of Bankruptcy Procedure (makingRule 41(a)(1)(A)(ii) of the Federal Rules of Civil Procedure, Fed. R. Civ. P. 41(a)(1)(A)(ii) applicable in adversary proceedings), stipulate to the dismissal of Count 4 of the Adversary Complaint with prejudice. This Stipulation for Dismissal shall have no effect on or application to Plaintiffs’ remaining claims in Counts 1, 2, and 3 of the Adversary Complaint or the Partial Final Judgment entered in this adversary.
We review issues of subject-matter jurisdiction de novo. S.F. Residence Club, Inc. v. 7027 Old Madison Pike, LLC, 583 F.3d 750, 754 (11th Cir. 2009). Even when the parties agree that jurisdiction is proper, we are “obligated to inquire into subject matter jurisdiction sua sponte whenever it may be lacking.” Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 410 (11th Cir. 1999). “Because we are a court of limited jurisdiction, adjudicating an appeal without jurisdiction would ‘offend[] fundamental principles of separation of powers.‘” Corley v. Long-Lewis, Inc., 965 F.3d 1222, 1227 (11th Cir. 2020) (alteration in original) (quoting Steel Co. v. Citizens for a Better Env‘t, 523 U.S. 83, 94 (1998)).
A.
Our analysis begins (and, as it turns out, ends) with the issue of our jurisdiction.
First, the obvious: we have appellate jurisdiction over “all final decisions, judgments, orders, and decrees” by a district court in reviewing a bankruptcy court decision.
At the time UBS noticed its appeal in our Court, no final decision had yet been entered. To be final, we have held that an adversary proceeding decision must resolve all of the claims brought by all of the parties -- anything less, and “no appeal may be taken absent
Citing two recent Supreme Court cases, Bullard v. Blue Hills Bank, 575 U.S. 496 (2015), and Ritzen Group, Inc. v. Jackson Masonry, LLC, 140 S. Ct. 582 (2020), the parties try to avoid our unambiguous case law, arguing that a bankruptcy order may be
This argument comes up short. Neither Bullard nor Ritzen concerned an appeal from an adversary proceeding. Bullard held that the bankruptcy court‘s denial of a debtor‘s proposed Chapter 13 repayment plan was not a final order because it did not terminate the process of submitting and entering a court-approved repayment plan. 575 U.S. at 501-03. And Ritzen held that the denial of a creditor‘s request for relief from the automatic stay was final because the adjudication of the stay motion was a discrete “proceeding” within the larger bankruptcy. 140 S. Ct. at 588-90. Neither case abrogated our holding in In re Boca that a bankruptcy court order in an adversary proceeding must resolve all claims against all parties to be considered final. 184 F.3d at 1287. Thus, we do not have jurisdiction based on the finality of the bankruptcy court‘s judgment. See United States v. Kaley, 579 F.3d 1246, 1255 (11th Cir. 2009) (noting that, under our “prior panel precedent rule,” we must follow our past decisions unless the Supreme Court or this Court sitting en banc overrules those decisions in a case that is “clearly on point” (quotation marks and citation omitted)).
B.
There are, however, some situations where we will consider appeals taken from otherwise non-appealable interlocutory orders
We do not apply these exceptions lightly. Important policy considerations undergird our general hesitance to hear appeals from interlocutory orders. Appeals taken before the entry of final judgment are “inherently disruptive, time-consuming, and expensive“; they “increase[] the workload of the appellate courts” and might require us “to consider issues that may be rendered moot“; they “undermine[] the district court‘s ability to manage the action“; and they open the door to “abuse by litigants seeking to delay resolution of a case.” Prado-Steiman ex rel. Prado v. Bush, 221 F.3d 1266, 1276 (11th Cir. 2000) (quotation marks and citation omitted). This case is no exception: none of the judicial carve-outs to the final judgment rule provide us jurisdiction.
The first of these exceptions, the collateral order doctrine, “permit[s] review of an interlocutory order if it involves a separable claim that has been conclusively determined and is collateral to the merits, too important to be denied review, and too independent of the merits to defer review until a final decision has been rendered.”
Second, under the “‘most extreme’ exception to the final judgment rule, we will review immediately ‘even an order of marginal finality ... if the question presented is fundamental to further conduct of the case.‘” In re F.D.R. Hickory House, 60 F.3d at 727 (citation omitted) (quoting Blythe, 890 F.2d at 376). But this exception is limited to cases that “concern[] an unsettled issue of national significance.” Acheron Cap., Ltd. v. Mukamal as Tr. of Mut. Benefits Keep Pol‘y Tr., 22 F.4th 979, 992 (11th Cir. 2022) (quotation marks and citation omitted). Plainly, this case does not present the sort of “unique facts” which would allow us to assert jurisdiction.
Third, and finally, under the practical finality doctrine, we may review an interlocutory order that “decides the right to the property in contest, and directs it to be [immediately] delivered up by the defendant to the complainant.” In re F.D.R. Hickory House, 60 F.3d at 726 (quoting Forgay v. Conrad, 47 U.S. (6 How.) 201, 204 (1848)). The order must “subject[] the losing party to irreparable harm if appellate review is delayed until conclusion of the case.” Acheron, 22 F.4th at 992 (quotation marks and citation omitted).
Based on the record before us, we cannot find that UBS will suffer irreparable harm if appellate review is delayed until the
C.
That leaves us with one other possible avenue to reach the merits of UBS‘s appeal: the doctrine of cumulative finality. Sometimes referred to by our Court as the “Jetco exception” to finality, this doctrine permits us to hear appeals that were prematurely taken from an interlocutory order, if (but only if) the interlocutory order would have been appealable under
1.
To start, the parties have asked us to take notice of their stipulation for voluntary dismissal by filing a motion to supplement the record on appeal. Whether to supplement the appellate record is “a matter left to our discretion,” and we primarily consider “whether acceptance of the proffered material into the record would establish beyond any doubt the proper resolution of the pending issues.” CSX Transp., Inc. v. City of Garden City, 235 F.3d 1325, 1330 (11th Cir. 2000).
Because a subsequent final judgment can sometimes cure a premature notice of appeal, see Robinson, 798 F.2d at 1385, we grant the parties’ motion to supplement the record in this case, so
2.
Under the doctrine of cumulative finality, a “premature notice of appeal is valid if filed from an order dismissing a claim or party and followed by a subsequent final judgment without a new notice of appeal being filed.” Robinson, 798 F.2d at 1385; accord Govern v. Meese, 811 F.2d 1405, 1408 (11th Cir. 1987) (subsequent voluntary dismissal of remaining defendant following dismissal of other defendants vested us with jurisdiction); United States v. Olavarrieta, 812 F.2d 640, 642 (11th Cir. 1987) (subsequent entry of summary judgment as to claims against remaining defendant cured premature notice of appeal); Kramer v. Unitas, 831 F.2d 994, 997 (11th Cir. 1987) (same); Fehlhaber v. Fehlhaber, 941 F.2d 1484, 1486 n.1 (11th Cir. 1991) (same); 9A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 3950.5 (5th ed. 2022) (observing that a notice of appeal “filed after an order disposing of some claims or issues but before another order or orders disposing of the remaining claims or issues relates forward to effect an appeal after the disposition of all remaining claims or issues“).
Our research has not identified a case in which we have applied this doctrine to an appeal from an order of a bankruptcy court, but we see no reason why it should not apply in appeals from adversary proceedings. After all, we have previously extended the cumulative finality doctrine to apply in other instances -- namely, to appeals from administrative agency decisions. See Jimenez-Morales v. U.S. Att‘y Gen., 821 F.3d 1307, 1309 (11th Cir. 2016) (cit-
We therefore assume for the purposes of this appeal that the doctrine of cumulative finality applies to appeals taken from adversary proceedings, and may permit us to hear a premature appeal under the appropriate procedural circumstances.
3.
The problem with the application of cumulative finality in this case is that one of the procedural requirements is absent -- there has been no entry of final judgment in the adversary proceeding, not by the bankruptcy court, and not by operation of the
We reach this conclusion for several reasons. First, we look to the text of
(A) Without a Court Order. Subject to Rules 23(e), 23.1(c), 23.2, and 66 and any applicable federal statute, the plaintiff may dismiss an action without a court order by filing:
(i) a notice of dismissal before the opposing party serves either an answer or a motion for summary judgment; or
(ii) a stipulation of dismissal signed by all parties who have appeared.
A plain reading reveals that the Rule does not authorize the voluntary dismissal of individual claims; rather, the Rule requires that a plaintiff dismiss the entire action. See Pavelic & LeFlore v. Marvel Ent. Grp., 493 U.S. 120, 123 (1989) (“We give the Federal Rules of Civil Procedure their plain meaning.“), superseded in part on other grounds by rule,
Moreover, reading
Finally, our case law has unambiguously concluded that
A panel of this Court held that the parties’ stipulation was “invalid” because it failed to comply with the text of
Perry presents almost identical procedural circumstances to those presented in this case. Like the district court there, the bankruptcy court here resolved all but one of the pending claims. And like the parties there, the parties here stipulated to dismiss the sole remaining claim following the entry of the partial final judgment to facilitate immediate appellate review -- for good measure, they even specified that “[t]his Stipulation for Dismissal shall have no effect on or application to Plaintiffs’ remaining claims in Counts 1, 2, and 3 of the Adversary Complaint or the Partial Final Judgment entered in this adversary.” The only difference between Perry and this case is that UBS‘s appeal arose from an adversary proceeding in a bankruptcy court, rather than from a standard civil action in a district court. But this is a distinction without a difference because, subject to exceptions that are not relevant here,
Perry does not stand alone. Our cases have consistently observed that
Further, by our count, all of our sister Circuits that have squarely addressed this issue have reached the same conclusion. See Berthold, 242 F.3d at 776-77; Gobbo Farms & Orchards v. Poole Chem. Co., 81 F.3d 122, 123 (10th Cir. 1996); Ethridge v. Harbor House Restaurant, 861 F.2d 1389, 1392 (9th Cir. 1988); Exxon Corp. v. Md. Cas. Co., 599 F.2d 659, 662 (5th Cir. 1979); Gronholz v. Sears, Roebuck & Co., 836 F.2d 515, 518 (Fed. Cir. 1987); Mgmt. Invs. v. United Mine Workers, 610 F.2d 384, 394-95 & n.22 (6th Cir. 1979); see also Harvey Aluminum, 203 F.2d at 108 (holding that
The long and short of it is that the parties’ stipulation for voluntary dismissal was invalid upon filing. It did not resolve Esteva‘s unjust enrichment claim or terminate the adversary proceeding, and thus it did not denude the bankruptcy court of jurisdiction over the proceeding; it did not “leave[] nothing for the [bankruptcy] court to do but execute the judgment,” CSX, 235 F.3d at 1327 (quotation marks and citation omitted); and it did not cure UBS‘s premature notice of appeal under the doctrine of cumulative finality, see Robinson, 798 F.2d at 1385. The bankruptcy court still must address or otherwise dispose of the unjust enrichment claim in some way. See Perry, 891 F.3d at 958.
As a court of limited jurisdiction, we are bound by law, by the Federal Rules of Civil Procedure, and by our case precedent to
Still another procedural alternative is to move to amend the adversary complaint under
The result we reach today is not some technical application of a silly or obscure rule. “Congress has the constitutional authority to define the jurisdiction of the lower federal courts, and, once the lines are drawn, limits upon federal jurisdiction ... must be
DISMISSED.
Notes
(a) VOLUNTARY DISMISSAL.
(1) By the Plaintiff.
(A) Without a Court Order. Subject to Rules 23(e), 23.1(c), 23.2, and 66 and any applicable federal statute, the plaintiff may dismiss an action without a court order by filing:
(i) a notice of dismissal before the opposing party serves either an answer or a motion for summary judgment; or
(ii) a stipulation of dismissal signed by all parties who have appeared.
(B) Effect. Unless the notice or stipulation states otherwise, the dismissal is without prejudice. But if the plaintiff previously dismissed any federal- or state-court action based on or including the same claim, a notice of dismissal operates as an adjudication on the merits.
(2) By Court Order; Effect. Except as provided in
(b) INVOLUNTARY DISMISSAL; EFFECT. If the plaintiff fails to prosecute or to comply with these rules or a court order, a defendant may move to dismiss the action or any claim against it. Unless the dismissal order states otherwise, a dismissal under this subdivision (b) and any dismissal not under this rule -- except one for lack of jurisdiction, improper venue, or failure to join a party under
(c) DISMISSING A COUNTERCLAIM, CROSSCLAIM, OR THIRD-PARTY CLAIM. This rule applies to a dismissal of any counterclaim, crossclaim, or third-party claim. A claimant‘s voluntary dismissal under
(1) before a responsive pleading is served; or
(2) if there is no responsive pleading, before evidence is introduced at a hearing or trial.
(d) COSTS OF A PREVIOUSLY DISMISSED ACTION. If a plaintiff who previously dismissed an action in any court files an action based on or including the same claim against the same defendant, the court:
(1) may order the plaintiff to pay all or part of the costs of that previous action; and
(2) may stay the proceedings until the plaintiff has complied.