Understand the complexities and nuances of the Bankruptcy Code to better advise clients and prepare for court.
By Diane Davis
March 29 — Bankruptcy Appellate Panels aren't “established by Act of Congress” and lack jurisdiction to issue writs of mandamus under the All Writs Act, the Ninth Circuit held March 25.
The ruling was accompanied by a partial concurrence in the judgment only by Judge Jay S. Bybee that said the panel unnecessarily delved into issues that raise constitutional concerns over separation of powers.
Vacating the BAP's denial of a petition for a writ of mandamus and remanding the case, Senior Circuit Judge J. Clifford Wallace of the U.S. Court of Appeals for the Ninth Circuit concluded that the BAP lacked jurisdiction under the All Writs Act, 28 U.S.C. § 1651(a), to consider the petition.
The appeals court also overruled In re Salter, 279 B.R. 278 (B.A.P. 9th Cir. 2002), which held that the BAP's powers “must include the traditional power to issue writs that aid in their jurisdiction.”
Judge Bybee concurred in the judgment only but otherwise dissented in what he called a “nothing” case “even among flyspecks.” “We are dealing with the denial of a writ of mandamus filed by a party with a penchant for repeat (and likely frivolous) bankruptcy filings,” he said.
According to Bybee, the majority's opinion raises constitutional problems because it is doubtful that Congress can delegate its powers to create courts to the judicial branch. “The majority opinion is needless, wrong, and raises serious constitutional concerns with the separation of powers,” Bybee said.
“[I]nstead of stopping with the most obvious answers to a most obviously meaningless case, the majority forges ahead, without even calling for briefing, and grinds an axe with which to cut the BAP off at the knees,” Bybee said. He said he would resolve this case on another basis, such as that this case is res judicata, which is a legal principle that bars re-litigation of the same issue between the same parties. Another way to resolve the case, he said, would be that the BAP lacked jurisdiction. The BAP's appellate jurisdiction is predicated on the consent of the parties before it, he said, and the facts in this case suggest that there is a lack of evidence of the appellees' consent and therefore the BAP didn't have jurisdiction to consider “this particular writ, not all writs in general.”
This appeal arose from debtor Gary L. Ozenne's home foreclosure 15 years ago. The debtor filed pro se multiple, uniformly unsuccessful proceedings in bankruptcy court and on appeal, alleging that the foreclosure violated the Bankruptcy Code's automatic stay.
Several years after his bankruptcy case was closed, the debtor filed a motion for sanctions in the bankruptcy court. The bankruptcy court held that it lacked jurisdiction to grant relief. Ozenne filed a petition for writ of mandamus before the BAP. Relying on In re Salter, the BAP held that it had jurisdiction under 28 U.S.C. § 1651 to consider the petition, and then denied the petition.
The debtor appealed to the Ninth Circuit.
Congress gave the judicial council of each circuit discretion to establish a bankruptcy appellate panel service, the appeals court said, citing 28 U.S.C. § 158(b)(1). “The BAP is, in effect, a temporary panel to be used only so long as the judicial council chooses to keep it operational,” and “BAP membership is also on a temporary basis, as it is staffed by bankruptcy judges who serve by request, in addition to their assigned role as bankruptcy judges,” the court said.
The Judicial Council of the Ninth Circuit established a BAP and has continued the BAP's service “from time to time since then,” the court said. “Because the BAP is a panel service established by the Judicial Council of the Ninth Circuit, not a ‘court established by Act of Congress,' it does not have writ power under the All Writs Act,” the court said. Its “service” status is “demonstrated by the authority of the Judicial Council of the Ninth Circuit to terminate the BAP at any time,” the court said.
The court rejected , in which the BAP reasoned that it possessed writ power because the purpose of the All Writs Act was to “give federal courts the power to issue writs in aid of their jurisdiction.” According to the court, the BAP was created by the Judicial Council of the Ninth Circuit based on its own independent decision and action, and the BAP wasn't “established by Act of Congress” even though a “Congressional Act first suggested and authorized its creation.”
The appeals court noted that its decision didn't leave the parties without recourse to mandamus relief from decisions by a bankruptcy judge, since “subsection (a) of the All Writs Act applies to federal district courts.”
The dissent “contends that our opinion neuters the BAP,” the court said. However, the dissent “ignores the BAP's historically subordinate role within the federal judiciary, and the constitutional issues that would arise should the BAP be afforded power under the All Writs Act,” the Ninth Circuit said.
Judge Edward Leavy joined the opinion.
Appellant Gary Lawrence Ozenne, Corona, Calif., represented himself, pro se; Jeffrey S. Allison and Eric D. Houser, Houser & Allison, Irvine, Calif., represented appellees Chase Manhattan Bank, Ocwen Loan Servicing, and Ocwen Federal Bank FSB.
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