OAKES, Circuit Judge:
This appeal, involving inter alia the state law of Connecticut on strict foreclosures, comes to us without enlightenment from a Connecticut district judge: the parties have agreed to come directly to the court of appeals by virtue of a provision of the new Bankruptcy Code, 28 U.S.C. § 1293(b) (Supp. II 1978).
The order in question denied confirmation of the Chapter 13 debtors' plan, sustaining
Nothing in the legislative history of the Bankruptcy Reform Act of 1978 bears on this question directly.
Nor do we find it incongruous that orders granting or denying recovery of property from a creditor or rejection or assumption of unexpired leases or executory contracts may have been held sufficiently final to be appealable as of right. Each of these situations involves a determination of a third party's rights on the one hand and the
Nor do we find it strange as a matter of policy that an order confirming a plan which would, we agree, be final, is appealable by an objecting creditor while an order rejecting a proposed plan is not final and not appealable by the Chapter 13 debtor, absent leave from the district court under 28 U.S.C. § 1334(b). So long as the petition is not dismissed, note 3 supra, it is open to the debtor to propose another plan, and for all that an appellate court would know in any given case such a plan might well be acceptable to the parties or bankruptcy judge concerned. From a policy point of view, we believe there is something to be said in a day of burgeoning appellate dockets for taking care not to construe jurisdictional statutes — particularly those conferring power on the parties to agree to a direct appeal to the court of appeals — with great liberality. Otherwise, at every stage of the bankruptcy proceedings the parties will run to the court of appeals for higher advice. In any event, there is a safety valve for the occasional unjust situation where grave hardship is involved in that leave to appeal may be sought of the district court under 28 U.S.C. § 1334(b). We simply do not believe that the district judges are or will be unwilling in appropriate cases to grant the leave to appeal permitted by the complex act of Congress.
We note also that the bankruptcy judge did not deal with the automatic-stay provisions of 11 U.S.C. § 362(a)(2) and their effect upon the operation of the law day, or discuss whether the judgment itself could be modified under id. § 1322(b)(2). Any final judgment should address itself to these matters as well.
Were this all there was to the case there would be nothing further for us to do. However, we must deal with In re Riddervold, 647 F.2d 342 (2d Cir. 1981), where a panel looked to § 405(c)(1) of the Bankruptcy Reform Act, 92 Stat. 2685,
1. May the parties, by agreement, bring an appeal to the circuit court from an interlocutory decision of the bankruptcy court?
2. Would a negative answer to question 1 require that the holding in Riddervold be overruled, a matter which can be done only en banc?
We answer both in the negative.
Question 1. Quite plainly the language of Riddervold would put the Second Circuit into conflict with the decision of the Fifth Circuit in Kutner, supra, and the Tenth Circuit in Callister, supra. The panel majority agrees with Kutner's and Callister's conclusion that interlocutory orders of bankruptcy courts cannot be appealed to the circuit court by agreement of the parties. It is supported by the language of the new statute, a reasonable understanding of the intent of Congress, and the rules of the various circuit courts of appeals.
B. The intent of Congress. Nevertheless, while the language of the statute may be difficult to comprehend, a construction of it which read 405(c)(1) as an independent jurisdictional grant would lead to strange and surely unintended results. First, reading 405(c)(1) as an independent grant of jurisdiction leads to the anomalous result that Congress would have allowed appeals to be brought to the circuit courts of whole classes of bankruptcy court decisions that could not have been appealed either before or after the transitional period. Under the old Bankruptcy Act, courts of appeals had jurisdiction only over final orders entered in bankruptcy controversies, but had jurisdiction over both final and interlocutory orders entered in bankruptcy proceedings. Bankruptcy Act § 24(a), 11 U.S.C. § 47(a) (1976). See, e.g., In re Durensky, 519 F.2d 1024, 1027 (5th Cir. 1975). The Bankruptcy Reform Act disposes of the troublesome distinction between "controversies" and "proceedings," Pub.L. No. 95-598, 92 Stat. 2549, 2667, U.S.Code Cong. & Admin.News 1978, p. 5787 (1978) (adding § 1293 to Title 28), and permits only final orders of the bankruptcy court to be appealed to the circuit courts. Free appeal by agreement would mean that during the transition period Congress has allowed the once forbidden appeal of interlocutory orders in bankruptcy controversies and has allowed the soon-to-be-forbidden appeal of interlocutory orders in both what were once called proceedings and controversies. It is hard to imagine what would motivate Congress to create this incongruous interval. We should avoid the construction leading to it absent some evidence that Congress meant to do so. No
Second, as the dissent in this case reminds us, our rulings on the permissible scope of appeals in the circuit courts will also decide the range of appeals that district courts and bankruptcy panels would be obliged to consider. The Riddervold reading would not only remove the finality requirement from appeals to the circuit courts, but would waive the requirements otherwise governing appeals to district courts and bankruptcy panels under 405(c)(2) as well. Those courts could very well be deluged during the transition period with interlocutory appeals that they could otherwise decline to hear. Because the "... court's construction ... in substance renders all such orders appealable, ... apart from all other reasons [it] is therefore objectionable insofar as it is inconsistent with judicial economy." Pettit v. Olean Industries, Inc., 266 F.2d 833, 840 (2d Cir. 1959) (Lumbard, J., dissenting) (objecting to majority's permission of interlocutory appeals in bankruptcy "proceedings").
C. Rules of the circuit courts. The relevant rules of the circuits relating to bankruptcy appeals, where they address the issue, see Advisory Committee on Bankruptcy Rules, Preliminary Draft of Proposed New Bankruptcy Rules and Official Forms 221 (March 1982), speak with one voice on the appealability of interlocutory orders by agreement of the parties to the court of appeals: Such appeals are not permitted. 1st Cir. R. 2(c), 23(a); 3d Cir. R. 24; 5th Cir. R. 23.2; 6th Cir. R. 17; 7th Cir. R. Appendix I, as amended June 30, 1981; 8th Cir. R. 29; 11 Cir. R. 21(b). See also, Proposed Rules, supra, at 193-94. Thus, the Second Circuit is not alone in specifically requiring bankruptcy appellants to show that they appeal by agreement from a "final judgment" or "final order or final decree" of a bankruptcy court. 2d Cir. R. 49.
Question 2. If the language of Riddervold misconceived the interpretation of transition-period appellate jurisdiction over interlocutory appeals, then there is not only a split within and among the circuits on the reading of the statutes, but the Riddervold court may have exercised jurisdiction when it had none. Arguably, however, the Riddervold court did have proper jurisdiction over the case before it because the appeal in that case was from a final order. The court indicated "considerable doubt," 647 F.2d at 343, concerning appellate jurisdiction of Riddervold's claim to void an execution on his wages by his employer under a final order rule because Riddervold's separate suit to cancel judgment liens by four judgment creditors that allegedly unjustly impaired the equity on the Riddervold residence remained pending, and multiple claims are not final unless the bankruptcy judge certifies these as final under F.R.Civ.P. 54(b).
But it seems to us that no such issues colored the appealability of the bankruptcy court's decision in Riddervold to dismiss Riddervold's claim against the employer for wages withheld. This claim was entirely distinct from Riddervold's separate claim against four creditors with a judgment lien impairing the equity on Riddervold's residence. The four creditors with a lien on Riddervold's house would not have been harmed — and could have been benefitted — by an appellate judgment upsetting the status quo. Their interests were surely not undermined by the panel's affirmance of the employer's right to deduct wages. The only thing that "joins" these two claims is that they concern the same petition in bankruptcy. But, as Judge Lumbard emphasizes in his dissent in this case, "[u]nlike an ordinary suit .... a single bankruptcy `case' involves many `proceedings,' each of which terminates in a `final decision.'" Thus, particularly in bankruptcy matters, courts should not frustrate the intent of Congress that truly separate final decisions be separately appealable; by taking the appeal of Riddervold's claim against the hospital, that end was served. Thus, the Riddervold court properly reached the merits of the appeal in that case for the reasons
LUMBARD, Circuit Judge, dissenting:
I respectfully dissent.
The majority carefully holds only that the Maiorinos may not agree with Branford Savings Bank to appeal directly to this court from the bankruptcy judge's rejection of their Chapter 13 plan. The majority holds that denial of confirmation of a Chapter 13 plan is not a "final order" appealable by agreement to this court under 28 U.S.C. § 1293(b). But the statute providing for appeal to the district court, 28 U.S.C. § 1334(a), requires the same final order.
Unlike an ordinary suit, which terminates in a final judgment, a bankruptcy case usually involves many decisions by the bankruptcy judge which are undeniably final and appealable. See 1 COLLIER ON BANKRUPTCY ¶ 3.03(d)(iii) (L. King 15th ed. 1981). Both houses of Congress recognized that a single bankruptcy "case" involves many "proceedings," each of which terminates in a "final decision." See H.R.Rep. 595, 95th Cong., 1st Sess. 444 (1977); H.R. 8200 95th Cong. 1st Sess. § 238 (1978); S.Rep. 989, 95th Cong. 2d Sess. 153-55 (1978); S. 2266, 95th Cong., 2d Sess. § 216 (1978). Given this legislative history, the familiar words which limit our jurisdiction to "final judgments, orders and decisions" should not be read to allow only appeals from the termination of a "case" by either confirmation or dismissal.
So many less important decisions by a bankruptcy judge are "final" and appealable. These include orders granting or denying
— recovery of property from a creditor under the preference, fraudulent conveyance or turnover statutes, 11 U.S.C. §§ 542, 544(b), 547, 548;
— rejection or assumption of an unexpired lease or executory contract, 11 U.S.C. § 365;
— relief from the automatic stay under 11 U.S.C. § 362(e). In re Taddeo, 685 F.2d 24, 26 n. 4 (2d Cir. 1982).
There is even an indication in the Code's legislative history that Congress thought appointment of a trustee was a "final" order. H.R.Rep. 595, 95th Cong., 1st Sess. 444 (1977). All of these orders would be appealable as of right. Yet each is merely a preliminary step in the process of formulating and confirming a plan in Chapter 11 or Chapter 13. Though these intermediate decisions would be appealable, the majority today rules that a final rejection of a plan is not appealable.
The majority supplies no analysis sufficient to support its ruling. It relies solely on In re Kutner, 656 F.2d 1107 (5th Cir. 1981). But Kutner held only that a decision
The procedural holding adopted by the majority may have serious substantive consequences. Only the debtor may propose a Chapter 13 plan. 11 U.S.C. § 1321; H.R.Rep. 595, 95th Cong., 1st Sess. 428 (1977); S.Rep. 989, 95th Cong., 2d Sess. 141 (1978). Therefore the debtor is always the party who seeks to confirm a plan; the creditor is always the party who seeks to deny confirmation. The effect of today's holding is that when creditors lose and a plan is confirmed, creditors may appeal immediately as of right; when debtors lose and a plan is rejected, they may appeal only by leave of the district court. Their only alternative is to wait until a less favorable plan is confirmed, which may be months away, or until the bankruptcy court dismisses the case or dissolves the automatic stay, which the debtors will try to postpone for as long as possible. In either event, a bankruptcy court ruling which is final as to a plan of arrangement will be reviewable long after it is made, perhaps long after the plan can be revived. Congress enacted Chapter 13 to aid consumer debtors; we should not delay their access to relief on appeal.
I would take jurisdiction of this appeal.
See 1978 U.S.Code Cong. & Ad.News 6399-6400.