Klestadt & Winters, LLP v. Cangelosi

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

KLESTADT & WINTERS, LLP; TRACY 

L. KLESTADT,

Petitioners-Appellants,

v.

DONNA CANGELOSI; CERTAIN DIRECT No. 10-16970

LENDERS,  D.C. No.

Respondents-Appellees, 09-32824-RCJ

and

WILLIAM A. LEONARD, Chapter 7

Trustee,

Trustee-Appellee.



BRYAN CAVE LLP; KATHERINE M. 

WINDLER,

Petitioners-Appellants,

v.

DONNA CANGELOSI; CERTAIN DIRECT No. 10-16972

LENDERS,  D.C. No. BK-S-

Respondents-Appellees, 09-32824-RCJ

and

WILLIAM A. LEONARD, Chapter 7

Trustee,

Trustee-Appellee.



2549

2550 KLESTADT & WINTERS v. CANGELOSI

SILAR ADVISORS, LP; SARA 

PFROMMER; ROBERT LEEDS; JAY

GRACIN,

Petitioners-Appellants,

No. 10-16974

v.

D.C. No.

DONNA CANGELOSI; CERTAIN DIRECT

LENDERS,  BK-S-

09-32824-RCJ

Respondents-Appellees,

OPINION

and

WILLIAM A. LEONARD, Chapter 7

Trustee,

Trustee-Appellee.



Appeals from the United States District Court

for the District of Nevada

Robert C. Jones, Chief District Judge, Presiding

Argued and Submitted

October 27, 2011—San Francisco, California

Filed March 6, 2012

Before: Susan P. Graber and Sandra S. Ikuta, Circuit Judges,

and Gordon J. Quist,* Senior District Judge.

Opinion by Judge Ikuta;

Concurrence by Judge Quist;

Partial Concurrence and Partial Dissent by Judge Graber

*The Honorable Gordon J. Quist, Senior United States District Judge

for the Western District of Michigan, sitting by designation.

KLESTADT & WINTERS v. CANGELOSI 2553

COUNSEL

Stanley J. Panikowski (argued), DLA Piper LLP, San Diego,

California, for petitioners-appellants Klestadt & Winters, LLP

and Tracy Klestadt.

J. Stephen Peek, Holland & Hart LLP, Las Vegas, Nevada,

for petitioners-appellants Bryan Cave LLP and Katherine

Windler.

J. Thomas Beckett (argued), Mark W. Dykes, Parsons Behle

& Latimer, Salt Lake City, Utah, for petitioners-appellants

Silar Advisors LP, et al.

Robert M. Millimet (argued), Michael J. Collins, Bickel &

Brewer, Dallas, Texas; Janet L. Chubb, Armstrong Teasdale

LLP, Reno, Nevada; Lisa A. Rasmussen, Las Vegas, Nevada,

for respondents-appellees Donna Cangelosi and Certain

Direct Lenders.

OPINION

IKUTA, Circuit Judge:

Silar Advisors, LP, Robert Leeds, Jay Gracin, and Sara P

frommer (collectively “the Silar Parties”), and Tracy

2554 KLESTADT & WINTERS v. CANGELOSI

Klestadt and Klestadt & Winters, LLP, Katherine M. Windler,

and Bryan Cave, LLP (collectively “Counsel”), appeal the

district court’s order imposing sanctions on them pursuant to

Rule 9011 of the Federal Rules of Bankruptcy Procedure and

the district court’s inherent powers. We must decide whether

the district court’s order is immediately appealable. We hold

that it is not and dismiss the appeal for lack of jurisdiction.

I

The Silar Parties are the owners and officers of Asset Reso-

lution, LLC, which serviced loans that were funded in part by

appellee lenders. Asset Resolution is the sole member and

manager of fourteen special purpose limited liability compa-

nies. Asset Resolution and these special purpose companies

(collectively “Debtors”) have each filed a petition in bank-

ruptcy. The appellees here are the lenders (now creditors in

the bankruptcy proceeding) and the bankruptcy trustee, both

of whom were awarded sanctions against the Silar Parties and

Counsel.

Debtors’ bankruptcy proceedings are the latest in a compli-

cated series of legal proceedings involving these various par-

ties. In 2007, before the bankruptcy proceedings commenced,

the lenders and Silar Advisors’ predecessor-in-interest began

to dispute their respective rights to proceeds under the rele-

vant loan servicing agreements. As a result, the lenders

brought a lawsuit in Nevada district court to clarify their con-

tractual rights under these servicing agreements. While this

contract dispute was ongoing, Silar Advisors, which held a

security interest in the disputed servicing agreements, fore-

closed on its collateral and assigned its interest in the agree-

ments to its newly formed subsidiary, Asset Resolution.

Subsequently, the lenders added Silar Advisors and Asset

Resolution as defendants in the contract dispute lawsuit.

During the summer of 2009, the Nevada district court pre-

siding over the contract suit issued a series of orders regarding

KLESTADT & WINTERS v. CANGELOSI 2555

the compensation owed to Asset Resolution under the dis-

puted loan servicing agreements. Among other things, the

orders awarded Asset Resolution substantially less than the

full amount of servicing fees it had requested. In October

2009, Debtors filed chapter 11 petitions in the bankruptcy

court for the Southern District of New York. This bankruptcy

case was transferred to the bankruptcy court for the District

of Nevada in November 2009. On January 25, 2010, the

Nevada district judge presiding over the contract dispute

entered an order withdrawing the reference for the entire

bankruptcy case. Four days later, that Nevada district court,

now sitting as a bankruptcy court, converted Debtors’ chapter

11 bankruptcy filing to a chapter 7 proceeding.

On February 9, 2010, the lenders filed a motion for sanc-

tions against the Silar Parties and Counsel. The district court

granted the motion, holding that sanctions under Federal Rule

of Bankruptcy Procedure 90111 and the court’s inherent pow-

ers were appropriate because the underlying bankruptcy case

was filed “for improper purposes and [was] frivolous.” In sup-

port of this holding, the district court found that the Silar Par-

ties “never had any intention or ability to reorganize” Asset

Resolution, which was merely a “shell entity” without any

assets to reorganize. Further, the Nevada district court found

that Debtors’ bankruptcy filing in the Southern District of

New York was solely an attempt to evade the district court’s

jurisdiction and, specifically, the allegedly adverse impact of

its orders over the summer of 2009.

The district court’s sanctions order made the Silar Parties

and Counsel jointly and severally liable for some $279,615 in

1

Rule 9011 is the bankruptcy equivalent of Rule 11 of the Federal Rules

of Civil Procedure. See Miller v. Cardinale (In re DeVille), 361 F.3d 539,

550 n.5 (9th Cir. 2004). It allows a court to issue sanctions if, among other

things, the court determines that a filing is “presented for any improper

purpose, such as to harass or to cause unnecessary delay” or “the claims,

defenses, and other legal contentions” in the filing are frivolous. Fed. R.

Bankr. P. 9011(b)-(c).

2556 KLESTADT & WINTERS v. CANGELOSI

sanctions, an amount based on the lenders’ attorney’s fees and

expenses. The district court also ordered Counsel to disgorge

its retainers ($300,000 each) received for filing and litigating

the underlying bankruptcy case. The Silar Parties and Counsel

appealed.

II

[1] We have jurisdiction over appeals from a district court

sitting in bankruptcy under 28 U.S.C. § 1291.2 Klenske v. Goo

(In re Manoa Fin. Co.), 781 F.2d 1370, 1372 (9th Cir. 1986)

(per curiam). Section 1291 provides that federal appellate

courts, with certain exceptions not applicable here, “shall

have jurisdiction of appeals from all final decisions of the dis-

trict courts of the United States.” A “final decision” is one

that “ends the litigation on the merits and leaves nothing for

the court to do but execute the judgment.” Catlin v. United

States, 324 U.S. 229, 233 (1945). The Supreme Court has

construed § 1291 slightly more broadly than its narrow lan-

guage would suggest, holding that it gives appellate courts

jurisdiction over a “small class” of interlocutory orders that

are nevertheless appealable “final decisions.” See Cohen v.

Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949).

These appealable collateral orders “must [1] conclusively

determine the disputed question, [2] resolve an important

issue completely separate from the merits of the action, and

[3] be effectively unreviewable on appeal from a final judg-

ment.” Coopers & Lybrand v. Livesay, 437 U.S. 463, 468

(1978). “Because collateral jurisdiction requires all three ele-

ments, we lack collateral order jurisdiction if even one is not

2

Section 1291 provides, in pertinent part:

The courts of appeals (other than the United States Court of

Appeals for the Federal Circuit) shall have jurisdiction of appeals

from all final decisions of the district courts of the United States,

. . . except where a direct review may be had in the Supreme

Court.

28 U.S.C. § 1291.

KLESTADT & WINTERS v. CANGELOSI 2557

met.” McElmurry v. U.S. Bank Nat’l Ass’n, 495 F.3d 1136,

1140 (9th Cir. 2007).

The Silar Parties and Counsel do not claim that the sanc-

tions order in this case meets Cohen’s tests. Instead, they

assert that we may hear their appeal of the sanctions order in

light of the more flexible jurisdictional principles that apply

in bankruptcy. See Benny v. England (In re Benny), 791 F.2d

712, 718 (9th Cir. 1986) (recognizing that “the general stan-

dards for appealability of bankruptcy orders are broader and

more flexible than those that apply to ordinary civil cases.”).

[2] This argument overlooks the fact that the order in this

case was issued by a district court sitting in bankruptcy. Our

more flexible standard for interlocutory appeals in the bank-

ruptcy context applies only to appeals from orders issued by

a bankruptcy appellate panel or by a district court hearing an

appeal from a bankruptcy court. See Cannon v. Haw. Corp.

(In re Haw. Corp.), 796 F.2d 1139, 1141 (9th Cir. 1986); see,

e.g., Congrejo Invs., LLC v. Mann (In re Bender), 586 F.3d

1159, 1163 (9th Cir. 2009). We have made this distinction

because our jurisdiction over these two types of appeals arises

from different statutes. We have jurisdiction to hear appeals

from district courts sitting in bankruptcy under § 1291, but

have jurisdiction to hear appeals from district courts review-

ing bankruptcy court decisions under 28 U.S.C. § 158(d)(1),3

as well as § 1291. See Conn. Nat’l Bank v. Germain, 503 U.S.

249, 253 (1992). While § 1291 gives us jurisdiction only over

“final decisions,” the scope of § 158(d) is broader: it gives

appellate courts the authority to hear appeals from “final deci-

sions, judgments, orders, and decrees” entered by district

3

28 U.S.C. § 158(d)(1) provides: “The courts of appeals shall have juris-

diction of appeals from all final decisions, judgments, orders, and decrees

entered under subsections (a) and (b) of this section.” Subsection (a) gives

district courts jurisdiction to hear appeals from rulings by the bankruptcy

court, and subsection (b) gives a bankruptcy appellate panel jurisdiction

to hear such appeals. § 158(a), (b).

2558 KLESTADT & WINTERS v. CANGELOSI

courts. We have interpreted this jurisdictional grant to give us

flexibility in asserting jurisdiction over interlocutory orders,

because “certain proceedings in a bankruptcy case are so dis-

tinct and conclusive either to the rights of individual parties

or the ultimate outcome of the case” that their resolution

should be immediately appealable, even if such resolution

does not end the entire litigation on the merits. Mason v.

Integrity Ins. Co. (In re Mason), 709 F.2d 1313, 1316-17 (9th

Cir. 1983).4 We recognized that because § 158 is an “appellate

jurisdictional provision[ ] specifically designed for bank-

ruptcy appeals,” a flexible definition of finality in that context

is in accord with Congress’s intent to ensure prompt resolu-

tion of matters involving estate property. In re Haw. Corp.,

796 F.2d at 1142, n.1.5

[3] We have made clear, however, that these flexible juris-

dictional principles “do not apply to [§ 1291] appeals from

district judges sitting in bankruptcy.” In re Haw. Corp., 796

F.2d at 1141 (emphasis added). Hawaii Corp. considered the

appealability of an order, issued by a district court sitting in

bankruptcy, requiring the debtor’s director to make an imme-

diate transfer of certain stock to the bankruptcy trustee. Id. at

1140. Although the parties agreed that we had jurisdiction

under the flexible finality rules enunciated in Mason, we dis-

4

In re Mason actually interpreted 28 U.S.C. § 1293 (repealed in 1984),

the precursor to § 158. Id. at 1315. However, we have held that decisions

regarding finality under former § 1293 are applicable to cases arising

under § 158. Allen v. Old Nat’l Bank of Wash. (In re Allen), 896 F.2d 416,

418 n.3 (9th Cir. 1990) (per curiam). Thus, for ease of reference, we use

§ 158 in the opinion to refer to both § 158 and its repealed precursor,

§ 1293.

5

Under this flexible approach to finality, we may deem a bankruptcy

court order to be final and appealable if it (1) finally determines the dis-

crete issue to which it is addressed and (2) resolves and seriously affects

substantive rights, such that the losing party would suffer irreparable harm

if the appeal could only be brought at the end of the entire bankruptcy

case. Alexander v. Compton (In re Bonham), 229 F.3d 750, 761 (9th Cir.

2000); see In re Mason, 709 F.2d at 1316-18.

KLESTADT & WINTERS v. CANGELOSI 2559

agreed. Id. at 1141. We held that Mason’s determination that

Congress intended § 158 to give appellate courts more flexi-

bility in asserting jurisdiction did not apply to § 1291, because

there was no evidence that Congress retroactively intended to

enlarge our jurisdiction under that statute with the passing of

§ 158. Id. at 1142 n.1. Accordingly, we rejected reliance on

flexible finality when determining our jurisdiction to hear

appeals from district courts sitting in bankruptcy, holding that

these appeals, arising exclusively under § 1291, would be

governed by the finality rule applicable to all civil appeals. Id.

at 1141-42.

We disagree with the concurrence’s suggestion that, not-

withstanding § 1291 and Cohen, we should “simply treat

jurisdiction of bankruptcy appeals under § 1291 in the same

way that we treat bankruptcy appeals under § 158(d)(1).” Gra-

ber, J. concurrence at 2575. First, as the concurrence itself

acknowledges, we are bound by our decision in Hawaii Corp.,

and as a three-judge panel, we cannot overrule it. Hart v.

Massanari, 266 F.3d 1155, 1171 (9th Cir. 2001) (“Once a

panel resolves an issue in a precedential opinion, the matter

is deemed resolved, unless overruled by the court itself sitting

en banc, or by the Supreme Court.”).

[4] But even if Hawaii Corp. were erased, we would

remain bound by Supreme Court decisions interpreting the

scope of § 1291’s jurisdictional grant, because our power to

hear appeals from district courts sitting in bankruptcy arises

solely from that provision. We cannot expand our jurisdiction

under § 1291 to match what we have under § 158(d), even

when it arguably makes sense from a policy perspective. We

have previously recognized this limitation. In SEC v. Capital

Consultants LLC, the appellants argued that we should apply

flexible finality principles to review interlocutory appeals

arising in a receivership context because such cases raise the

same policy concerns as bankruptcy appeals. 453 F.3d 1166,

1170 & n.4 (9th Cir. 2006) (per curiam). We held that we

lacked the authority to do so because “Title 28 U.S.C. § 158

2560 KLESTADT & WINTERS v. CANGELOSI

governs bankruptcy appeals . . . and provides the more ‘flexi-

ble’ approach to which appellants refer. Title 28 U.S.C.

§ 1291 governs here.” Id. at 1170-71 n.4. Because § 1291 also

governs appeals from orders issued by a district court sitting

in bankruptcy, we are likewise precluded from applying the

flexible approach allowed by § 158(d), regardless of the pur-

ported policy benefits of this approach.6

The Supreme Court has acknowledged that the strict

requirement of finality under § 1291 may be harsh in some

cases: “Many interlocutory decisions of a trial court may be

of grave importance to a litigant, yet are not amenable to

appeal at the time entered, and some are never satisfactorily

reviewable.” Carroll v. United States, 354 U.S. 394, 406

(1957). But Congress has not left parties without recourse in

these situations. District courts may certify an interlocutory

order for appeal, see 28 U.S.C. § 1292(b), or may enter final

judgment “as to one or more, but fewer than all, claims or par-

ties,” Fed. R. Civ. P. 54(b). Thus in Capital Consultants, dis-

cussed above, we declined to apply flexible finality principles

to evaluate an interlocutory order but nevertheless asserted

jurisdiction over claims by the receivership claimants who

had sought and received Rule 54(b) certification from the dis-

trict court. 453 F.3d at 1170.

Relying on Van Cauwenberghe v. Biard, 486 U.S. 517

(1988), the concurrence argues that because a bankruptcy case

is a bankruptcy case, whether arising under § 1291 or

§ 158(d), we have the authority to apply “a special rule of

finality for a category of bankruptcy cases.” Graber, J., con-

currence at 2570. This misinterprets Supreme Court prece-

6

While commentators and other circuits have extolled the benefits of

applying “liberalized rules of finality” under § 158(d) to cases arising

under § 1291, see Graber, J., concurrence at 2571-73, they provide little

explanation of the legal basis for adopting those rules. See, e.g., A.H. Rob-

ins Co. v. Piccinin, 788 F.2d 994, 1009 (4th Cir. 1986) (declining to

explain how the collateral order at issue met the Cohen test, because it

“prefer[red]” to apply flexible finality principles).

KLESTADT & WINTERS v. CANGELOSI 2561

dent, which holds that a “category” is a type of judicial order,

not a substantive area of law. In Van Cauwenberghe, the

Court held that an order denying a motion to dismiss on the

ground of forum non conveniens was not immediately appeal-

able under Cohen, because in general “the question of the

convenience of the forum is not completely separate from the

merits of the action.” 486 U.S. at 527 (quoting Coopers &

Lybrand, 437 U.S. at 468). The Court acknowledged that this

reasoning might not be correct in every case: sometimes, the

forum non conveniens determination is separate from the mer-

its and in those cases “an immediate appeal might result in

substantial savings of time and expense for both the litigants

and the courts.” Id. at 529. Nevertheless, the Court rejected a

case-by-case appealability determination, stating that “[i]n

fashioning a rule of appealability under § 1291,” courts must

“look to categories of cases, not to particular injustices.” Id.;

see also Richardson-Merrell, Inc. v. Koller, 472 U.S. 424, 439

(1985). By holding that determinations of forum non conve-

niens are not immediately appealable regardless of the legal

context or facts of a particular case, the Supreme Court made

clear that a determination of appealability applies to claims

involving the same type of orders, not to claims arising in the

same area of substantive law. See, e.g., Mohawk Indus., Inc.

v. Carpenter, 130 S. Ct. 599, 605-06 (2009) (holding that all

disclosure orders adverse to the attorney-client privilege are

not immediately appealable); Richardson-Merrell, 472 U.S. at

439 (holding the same for orders disqualifying counsel).

Under the concurrence’s interpretation of Van Cauwenber-

ghe, by contrast, different jurisdictional rules would apply to

different substantive areas of law. If a court can adopt “a spe-

cial rule of finality for a category of bankruptcy cases,” Gra-

ber, J., concurrence at 2570, then it may also adopt special

rules of finality for the category of antitrust cases or the cate-

gory of securities cases. This means, for example, that a

forum non conveniens determination might be immediately

appealable in an antitrust case, but not in a securities case. No

Supreme Court decision supports this approach.

2562 KLESTADT & WINTERS v. CANGELOSI

III

Because our jurisdiction in this case does not arise under

§ 158(d)(1), the test for flexible finality set forth in Mason is

inapplicable.7 Therefore, we must consider whether the dis-

trict court’s sanctions order, issued under both Rule 9011 and

the court’s inherent power, meets Cohen’s three-prong test.

A

The Supreme Court has given us guidance on how we

should apply Cohen to determine the immediate appealability

of a sanctions order. See Cunningham v. Hamilton County,

Ohio, 527 U.S. 198 (1999). In Cunningham, a magistrate

judge determined that an attorney had flouted discovery

orders by, among other things, failing to produce required

documents and providing insufficient responses to interroga-

tories. Id. at 200-01. Relying on Federal Rule of Civil Proce-

dure 37(a), which allows a court to sanction a party or

attorney that fails to cooperate in discovery, the magistrate

judge ordered the attorney to pay the relevant attorneys’ fees

and costs of the opposing party. Id. at 201. The district court

affirmed the order and the attorney immediately appealed. Id.

at 201-02. The Sixth Circuit dismissed the appeal for lack of

jurisdiction. Id. at 202.

[5] The Supreme Court affirmed. Id. at 203. The Court first

held that a sanction order “neither ended the litigation nor left

the court only to execute its judgment.” Id. at 204. Turning to

Cohen’s three-prong test, the Court held that the discovery

sanction did not fall into the “small category of orders” that

are immediately appealable because, among other reasons,

appellate review of a discovery sanction generally cannot

remain completely separate from the merits of the underlying

7

Our analysis of the finality of the sanctions order is limited to the stan-

dards that apply under § 1291; it should not be read to foreclose a different

outcome to finality under § 158(d)(1).

KLESTADT & WINTERS v. CANGELOSI 2563

action. Id. at 205. The Court reasoned that “[a]n evaluation of

the appropriateness of sanctions may require the reviewing

court to inquire into the importance of the information sought

or the adequacy or truthfulness of a response.” Id. This sort

of inquiry, the Court held, “would differ only marginally from

an inquiry into the merits and counsels against application of

the collateral order doctrine.” Id. at 206. While acknowledg-

ing that some discovery sanctions might not be “inextricably

intertwined with the merits” of a case, the Court rejected “a

case-by-case approach to deciding whether an order is suffi-

ciently collateral.” Id.

Our cases have recognized that the logic of Cunningham

applies equally to other types of sanctions. In Stanley v.

Woodford, a district court sanctioned an attorney for willfully

disobeying a court order prohibiting the attorney from making

further appearances in a certain case. 449 F.3d 1060, 1062

(9th Cir. 2006). We applied Cunningham to hold that the

sanctions order was not a collateral order. Id. at 1064-65.

Although the district court in Stanley issued the sanctions

order under its inherent powers and 28 U.S.C. § 1927 (allow-

ing sanctions for vexatious litigation tactics), we held that

“the policies undergirding Rule 37(a) sanctions are not rele-

vantly different from those justifying sanctions under § 1927

or a court’s inherent powers,” and that Cunningham should be

construed as “applying more broadly than to Rule 37(a) sanc-

tions alone.” Id. at 1064. In reaching this conclusion, we

relied on other cases, both in and out of our circuit, that did

not “distinguish between types of sanctions” when applying

Cunningham to bar immediate review of their respective sanc-

tions orders. Id. at 1065; see, e.g., Cato v. Fresno City, 220

F.3d 1073, 1074 (9th Cir. 2000) (per curiam) (applying Cun-

ningham to bar immediate review of sanctions imposed under

Federal Rule of Civil Procedure 16(f), which authorizes a

court to impose sanctions for noncompliance with scheduling

or pretrial conference orders); Williams v. Midwest Employers

Cas. Co., 243 F.3d 208, 208-09 (5th Cir. 2001) (holding the

same for a sanctions order under Federal Rule of Civil Proce-

2564 KLESTADT & WINTERS v. CANGELOSI

dure 11).8 Similarly, in Markus v. Gschwend (In re Markus),

we relied on Cunningham to hold that a bankruptcy court’s

Rule 9011 sanctions order issued against an attorney who

filed a frivolous motion was not a collateral order. 313 F.3d

1146, 1151 (9th Cir. 2002).

B

[6] Our precedents applying Cunningham to various sanc-

tions orders effectively decide this case.9 We have already

decided that the reasoning in Cunningham precludes us from

hearing immediate appeals of sanctions orders under a court’s

inherent powers, see Stanley, 449 F.3d at 1065, or under Rule

9011, see Markus, 313 F.3d at 1151. Although neither Stanley

(which did not arise in a bankruptcy context) nor Markus

(which considered our jurisdiction under § 158, rather than

§ 1291) is identical to the case before us, the distinctions are

not material. The inherent authority of a district court to

impose sanctions does not change when it is sitting in bank-

ruptcy, given that a court draws its inherent power by nature

of its status as a court of justice, rather than from the type of

case it is hearing. See Chambers v. NASCO, Inc., 501 U.S. 32,

43 (1991); Caldwell v. Unified Capital Corp. (In re Rainbow

Magazine, Inc.), 77 F.3d 278, 284 (9th Cir. 1996). Similarly,

a sanctions order under Rule 9011 advances the same policy

whether it is issued by a bankruptcy court as in Markus or, as

8

We did not have occasion to apply Cunningham to Rule 11 sanctions

because we had determined well before Cunningham was decided that

such sanctions were not collateral orders. See Kordich v. Marine Clerks

Ass’n, 715 F.2d 1392, 1393 (9th Cir. 1983) (per curiam).

9

The concurrence argues that we should not apply Cunningham in the

context of a district court sitting in bankruptcy, because Cunningham was

a civil case. Graber, J., concurrence at 2576. We disagree. Cunningham is

applicable because it determines whether a category of orders similar to

those at issue here is subject to interlocutory appeal under Cohen. Markus

reached the same conclusion: it applied Cunningham to a district court’s

sanctions order in a bankruptcy case arising under § 158(d) and concluded

that the order was not immediately appealable. Markus, 313 F.3d at 1115.

KLESTADT & WINTERS v. CANGELOSI 2565

here, by a district court sitting in bankruptcy. See Cooter &

Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990) (identify-

ing the central policy goal of Rule 11 as “deter[ring] baseless

filings”). Therefore, the logic of Stanley and Markus is

equally applicable here.10

Moreover, the reasoning in Cunningham, that discovery

sanctions are not completely separate from the merits of the

underlying action, applies to this case as well.11 As noted

above, the district court imposed the order on the Silar Parties

on the ground that Debtors’ bankruptcy petition was frivolous

and filed for an improper purpose. But the parties vigorously

dispute this issue. First, the Silar Parties allege that the filing

was not frivolous because Asset Resolution was not in fact an

empty shell company. Rather, it could be properly reorga-

nized because it owned several assets, including fractional

10

The Silar Parties, Counsel, and the concurrence argue that Markus is

distinguishable because the sanctions order in Markus was issued in an

adversary proceeding, whereas the sanctions order here was not issued in

such a proceeding, and therefore is deemed to be a “contested matter.”

Graber, J., concurrence at 2576. Although this is indeed a distinction

between this case and Markus, it does not affect the determination that the

sanctions order here is not an appealable interlocutory order under the

tests set forth in Cohen and Cunningham. Cunningham’s determination

that discovery sanctions are not completely separate from the merits of the

underlying action is applicable regardless whether the proceeding in a spe-

cific case is an “adversary proceeding” (i.e., included in the list of adver-

sary proceedings set forth in Federal Rule of Bankruptcy Procedure 7001)

or a contested matter (i.e., not set forth in that list).

11

The concurrence gets it backward in stating that our reliance on Cun-

ningham is “unnecessary,” Graber, J., concurrence at 2576, because the

sanctions order here is not separable from the merits. To the contrary, we

conclude that the sanctions order here is not separable from the merits

because Cunningham so held. See Cunningham, 527 U.S. at 205 (holding

that “appellate review of a sanctions order” cannot “remain completely

separate from the merits.”). But for Cunningham, the status of sanctions

orders under this Cohen prong would be much murkier. See, e.g., River-

head Sav. Bank v. Nat’l Mortg. Equity Corp., 893 F.2d 1109, 1114 (9th

Cir. 1990) (holding that a sanctions order was “separate from the merits

of the case”).

2566 KLESTADT & WINTERS v. CANGELOSI

real property interests in many of the properties that were sub-

ject to the loan servicing agreements, claims for servicing

fees, and third-party tort claims. Second, the Silar Parties and

Counsel argue that the bankruptcy filing was proper because

bankruptcy’s automatic stay would prevent harmful tax fore-

closures on some of these serviced properties. Third, they

argue that the bankruptcy rules provided procedural advan-

tages necessary for achieving proper resolution of the ongoing

contract litigation between Silar Advisors, Asset Resolution,

and the lenders. Finally, they argue that filing for bankruptcy

in New York was not an attempt to evade the Nevada District

Court’s jurisdiction because Nevada was an improper venue

at the time of its filing.

While the lenders disagree on all these issues, we cannot

resolve these questions without carefully inquiring into all

aspects of the Silar Parties’ financial and legal position lead-

ing up to the bankruptcy filing, as well as assessing the atten-

dant benefits of filing for bankruptcy given those positions.

Like the evaluation of discovery sanctions in Cunningham,

such appellate review “would differ only marginally from an

inquiry into the merits” of the bankruptcy proceeding and thus

“counsels against application of the collateral order doctrine.”

527 U.S. at 206.

[7] Because the sanctions order here is not completely sep-

arate from the merits of the underlying bankruptcy case, it

does not meet the Cohen test. See McElmurry, 495 F.3d at

1140. We therefore conclude that the sanctions order issued

by the district court sitting in bankruptcy, whether supported

by the district court’s inherent powers or Rule 9011, was not

an appealable collateral order.12

12

The Silar Parties’, Counsel’s, and the concurrence’s reliance on Stasz

v. Gonzalez (In re Stasz), 387 B.R. 271 (B.A.P. 9th Cir. 2008), is mis-

placed. In holding that a civil contempt order is immediately appealable,

Stasz determined it was not bound by Cunningham because in that case the

Court considered discovery sanctions, not civil contempt orders. Id. at

KLESTADT & WINTERS v. CANGELOSI 2567

IV

[8] We recognize “the hardship that a sanctions order may

sometimes impose on an attorney.” Cunningham, 527 U.S. at

209-10. Nevertheless, we are bound by the Court’s conclusion

that an “expansive interpretation of § 1291’s ‘final decision’

requirement” is not the preferred solution for alleviating such

burdens. Id. Therefore, we hold that the district court’s sanc-

tions order was not an appealable final order.13 Because appel-

lants are unable to satisfy the threshold requirement of

appellate jurisdiction, the appeal is DISMISSED.

QUIST, Senior District Judge, concurring:

All judges on the panel, including the undersigned, agree

that Ninth Circuit precedent, particularly Cannon v. Hawaii

Corp. (In re Hawaii Corp.), 796 F.2d 1139 (9th Cir. 1986),

requires this Court to dismiss this appeal because appellants

275. Indeed, Cunningham expressly distinguished between these catego-

ries of orders based on the general characteristics of each category. See

Cunningham, 527 U.S. at 207-08 (noting that “[c]ivil contempt is designed

to force the contemnor to comply with an order of the court,” while a dis-

covery sanction “lacks any prospective effect and is not designed to com-

pel compliance”) (internal quotation marks omitted). Thus, Cunningham

answers the concurrence’s question: “civil contempt is one category, and

other sanctions form another category,” regardless of the “procedural con-

text” in which these respective orders arise. Graber, J., concurrence at

2571 & n.2 (emphasis added). Unlike the facts in Stasz, Cunningham’s

analysis is applicable here because we are faced with a sanctions order,

not an order for civil contempt. See Markus, 313 F.3d at 1151.

13

We reject the Silar Parties’ and Counsel’s alternative request that we

treat their notices of appeal as petitions for mandamus. Mandamus is not

appropriate in this case because the Silar Parties and Counsel have not

shown that the district court clearly erred in issuing the sanctions order.

“This factor alone is sufficient to deny mandamus.” Z-Seven Fund, Inc. v.

Motorcar Parts & Accessories, 231 F.3d 1215, 1219-20 (9th Cir. 2000).

2568 KLESTADT & WINTERS v. CANGELOSI

“are unable to satisfy the threshold requirement of appellate

jurisdiction.” In my judgment, once appellants fail to satisfy

this threshold issue, the case is concluded—subject, of course,

to whether the Ninth Circuit revisits the continuing viability

of In re Hawaii Corp. As to whether the rule of In re Hawaii

Corp. should be revisited or changed is not for me to say. If

the rule of In re Hawaii Corp. is changed en banc, the issue

of appellate jurisdiction can be revisited under the facts of this

particular case, which are accurately set forth in Part I of

Judge Ikuta’s Opinion.

GRABER, Circuit Judge, concurring in part and in the judg-

ment, and dissenting in part:

I concur in the majority’s holding that our jurisdiction

arises solely from 28 U.S.C. § 1291, not 28 U.S.C.

§ 158(d)(1). As a result, I also must agree that we cannot

examine the finality of the sanctions order under the flexible

approach that typically applies to bankruptcy appeals. Cannon

v. Haw. Corp. (In re Haw. Corp.), 796 F.2d 1139, 1141-42

(9th Cir. 1986). But I write separately because I disagree with

the rule announced in Hawaii Corp. and because, although I

agree with the majority’s finality conclusion under § 1291, I

disagree with the analysis in Parts III.A-B.

A.

Six years after we decided Hawaii Corp., we reexamined

and reaffirmed its holding that the flexible finality approach

used in bankruptcy appeals arises under § 158(d)(1), making

it unavailable for an appeal that arises solely under § 1291.

Vylene Enters., Inc. v. Naugles, Inc. (In re Vylene Enters.,

Inc.), 968 F.2d 887, 893 (9th Cir. 1992). In Vylene Enter-

prises, we recognized that our rule was inconsistent both with

a leading treatise and with the implications of a then-recent

Supreme Court decision. Id. at 892 (noting disagreement

KLESTADT & WINTERS v. CANGELOSI 2569

between Ninth Circuit precedent and Conn. Nat’l Bank v.

Germain, 503 U.S. 249, 252-53 (1992), and 16 Charles A.

Wright et al., Federal Practice and Procedure § 3926, at 119

(Supp. 1991)1). As we said in Vylene Enterprises, “Hawaii

Corp. unequivocally requires us to apply different finality

standards depending on which statute affords jurisdiction.” Id.

at 893.

In my view, Hawaii Corp. was wrongly decided.

1.

Hawaii Corp. is unconvincing on its own terms. For

instance, the panel worried that the inquiry as to whether an

appeal is or is not in a bankruptcy case could be “difficult”

and create a practical “problem.” 796 F.2d at 1142 n.1. Not

so. A bankruptcy case is commenced by filing a bankruptcy

petition. 11 U.S.C. §§ 301-303. It does not become something

other than a bankruptcy case even if ordinary contract claims

(for example) must be resolved in the course of the proceed-

ing. A civil action (or adversary proceeding) is commenced

by filing a complaint. Fed. R. Civ. P. 3; Fed. R. Bankr. P.

7003. It does not become something other than a civil action

even if (for example) a party files for bankruptcy and the case

proceeds, with or without substitution of the trustee, upon lift-

ing the automatic stay. The inquiry is straightforward and

uncomplicated, as all our sister circuits to have confronted the

issue have recognized.

1

The current version of the treatise states:

Only the Ninth Circuit has refused to apply expanded bank-

ruptcy concepts of finality when an order is entered by the district

court acting in bankruptcy. The better rule, followed by other cir-

cuits, is that in bankruptcy proceedings § 1291 finality should be

treated the same way as § 158(d) finality.

16 Charles A. Wright et al., Federal Practice and Procedure § 3926.2, at

115 n.26 (2d ed. Supp. 2011).

2570 KLESTADT & WINTERS v. CANGELOSI

The other rationale underlying the Hawaii Corp. rule was

the concern that a contrary holding would amount to treating

the adoption of the Bankruptcy Code as “an implied, retroac-

tive amendment of 28 U.S.C. § 1291 enlarging our jurisdic-

tion beyond the bounds of established finality principles.” 796

F.2d at 1142 n.1. But “[i]n fashioning a rule of appealability

under § 1291, . . . we look to categories of cases.” Van Cau-

wenberghe v. Biard, 486 U.S. 517, 529 (1988). Thus, it is

proper and prudent to adopt a special rule of finality for a cat-

egory of bankruptcy cases. The Bankruptcy Code and its asso-

ciated framework of appellate jurisdiction surely counsel in

favor of that approach.

Contrary to the majority’s assertion, maj. op. at 2560-61,

my view (and the view of every circuit except ours) is consis-

tent with Van Cauwenberghe. There, in considering the final-

ity of an order denying a motion to dismiss on grounds of

forum non conveniens, the Supreme Court wrote:

It is thus undoubtedly true that in certain cases, the

forum non conveniens determination will not require

significant inquiry into the facts and legal issues

presented by a case, and an immediate appeal might

result in substantial savings of time and expense for

both the litigants and the courts. In fashioning a rule

of appealability under § 1291, however, we look to

categories of cases, not to particular injustices. See

Carroll v. United States, 354 U.S. 394, 405 (1957)

(“Appeal rights cannot depend on the facts of a par-

ticular case”)[.]

Van Cauwenberghe, 486 U.S. at 529 (emphases added).

To be sure, “categories of cases” exist in the eye of the

beholder. The Supreme Court’s discussion in Van Cauwen-

berghe does not explain exactly how to decide what consti-

tutes a “category.” In my view, though, the best reading of

that passage is that the “finality” determination stands inde-

KLESTADT & WINTERS v. CANGELOSI 2571

pendent of the facts and equities of a particular case, but still

allows the court to categorize an order in light of its proce-

dural context. Under that reading, the category of sanctions

orders in civil cases does not overlap with the category of

sanctions orders in main bankruptcy cases.2

2.

I am not alone in my view of Hawaii Corp. In the two-and-

a-half decades since we issued our opinion, no other circuit

has agreed with us. The Third Circuit, for example, has

rejected our reasoning and concluded that § 1291 jurisdiction

“mirrors” jurisdiction under § 158(d). Metro Transp. Co. v. N.

Star Reinsurance Co., 912 F.2d 672, 676 (3d Cir. 1990) (cit-

ing United States v. Nicolet, Inc., 857 F.2d 202, 205 (3d Cir.

1988)). In Nicolet, the Third Circuit observed that, “[i]n fash-

ioning rules of appealability under section 1291, the courts’

focus should lie on ‘categories of cases’ rather than mere case

labels.” 857 F.2d at 205 (quoting Van Cauwenberghe, 486

U.S. at 529).

The Fifth Circuit has similarly rejected the Hawaii Corp.

approach:

[B]ecause of considerations unique to bankruptcy

appeals—such as the protracted nature of bankruptcy

proceedings and the large number of parties inter-

ested in them—courts have applied liberalized rules

of finality for bankruptcy appeals. The appellees, cit-

ing Matter of Hawaii Corp., argue that these liberal-

ized rules apply only to appeals from a district

2

The majority appears to lump together all sanctions orders, no matter

the type of sanction, the context, or the nature of the case. Maj. op. at 2564

n.9, 19 n.10. On the other hand, the majority also distinguishes between

civil contempt and other kinds of sanctions. Maj. op. at 2566-67 n.12.

Does this mean that civil contempt is one category, and other sanctions

form another category? I think that Van Cauwenberghe plainly permits the

latter, just as it permits the categorization that I have suggested.

2572 KLESTADT & WINTERS v. CANGELOSI

court’s review of a bankruptcy court’s decision pur-

suant to 28 U.S.C. § 158(d) (“Section 158(d)”), not

to appeals from a district court sitting in bankruptcy

pursuant to Section 1291. Other circuits, however,

have refused to follow Matter of Hawaii Corp. . . .

We too see no reason to apply different rules of

finality for Section 1291 appeals, and will apply the

same rules that we apply to Section 158(d) appeals.

Cajun Electric Power Coop., Inc. v. Cent. La. Electric Co. (In

re Cajun Electric Power Coop., Inc.), 69 F.3d 746, 747-48

(5th Cir. 1995), as amended, 74 F.3d 599 (9th Cir. 1996) (cit-

ing Tringali v. Hathaway Mach. Co., 796 F.2d 553, 558 (1st

Cir. 1986); A.H. Robins Co. v. Piccinin, 788 F.2d 994, 1009

(4th Cir. 1986); In re UNR Indus., Inc., 725 F.2d 1111, 1115

(7th Cir. 1984)).

The Second Circuit has reached a similar conclusion:

Our cases appear not to have addressed the question

of whether the standards for determining finality

under Section 158(d) apply to bankruptcy appeals

under Section 1291 or whether resort must be had to

the principles established in Cohen v. Beneficial

Loan Corp., 337 U.S. 541 (1949). We perceive noth-

ing to be gained by creating a second set of standards

—which, when painstakingly developed, might not

differ significantly from those already in place under

Section 158(d)—for reviewing identical cases. We

therefore follow the Third Circuit in holding that

decisions regarding finality under Section 158(d)

apply under Section 1291.

Sonnax Indus., Inc. v. Tri Component Products Corp. (In re

Sonnax Indus., Inc.), 907 F.2d 1280, 1283 (2d Cir. 1990) (cit-

ing Nicolet, 857 F.2d at 205).

Finally, the First Circuit has “held that interpretation of the

word ‘final’ in appeal of bankruptcy proceedings should not

KLESTADT & WINTERS v. CANGELOSI 2573

depend on whether jurisdiction is invoked under 28 U.S.C.

§ 1291 or § 1293(b) (currently 28 U.S.C. § 158(d)).” In re

Spillane, 884 F.2d 642, 644 n.1 (1st Cir. 1989).

In view of this substantial contrary authority, commentators

agree that the Ninth Circuit’s unique position is imprudent.

The courts generally agree that in this context the

term “final” in section 1291 should be construed just

as it is in section 158, but the Ninth Circuit holds to

the contrary.

The majority view is more persuasive. As

reflected in the case law developed from decisions

such as Cohen . . . , the courts have found section

1291 adaptable to the concerns presented by varying

litigative contexts. There is no reason not to expect

similar responsiveness in bankruptcy. More funda-

mentally, . . . any defensible modification of general

finality principles for use in bankruptcy derives from

the number and interrelationships of the disparate

disputes each case may encompass. Those complexi-

ties obtain regardless of the forum in which the liti-

gation begins. Adhering to a single notion of finality

at least avoids another layer of complexity.

John P. Hennigan, Jr., Toward Regularizing Appealability in

Bankruptcy, 12 Bankr. Dev. J. 583, 598 (1996) (footnotes

omitted); see also Sarah E. Vickers, Comment, Interlocutory

Appeals in Bankruptcy Cases: The Conflict Between Judicial

Code Sections 158 and 1292, 8 Bankr. Dev. J. 519, 531

(1991) (“No policy goal justifies penalizing litigants for

bringing their cases initially before the district court. . . . In

addition, the Supreme Court’s guidance in focusing on ‘cate-

gories of cases’ should outweigh focusing on where the case

originated. Finally, it should be noted that the Ninth Circuit

is apparently alone in its view on this subject.”).

2574 KLESTADT & WINTERS v. CANGELOSI

3.

Indeed, our analysis of finality under the usual § 1291 stan-

dards, as required by Hawaii Corp., amply demonstrates the

flawed nature of that rule. In resolving this appeal, we ask

whether the sanctions order here falls under the collateral

order exception identified in Cohen, 337 U.S. at 546. “The

requirements for collateral order appeal have been distilled

down to three conditions: that an order [1] conclusively deter-

mine the disputed question, [2] resolve an important issue

completely separate from the merits of the action, and [3] be

effectively unreviewable on appeal from a final judgment.”

Will v. Hallock, 546 U.S. 345, 349 (2006) (internal quotation

marks omitted) (alterations in original) (emphasis added).

The third prong of this test shows that the collateral order

doctrine is ill-suited to application in the bankruptcy context.

It is not clear to me what, exactly, constitutes a “final judg-

ment” in a bankruptcy case: “Unlike an adversary proceeding

or a civil action outside bankruptcy, the culmination of [a]

bankruptcy case does not result in a final judgment.” Stasz v.

Gonzalez (In re Stasz), 387 B.R. 271, 276 (B.A.P. 9th Cir.

2008).

In the absence of a final judgment, perhaps we must look

for something procedurally analogous. One close match

would be the final order approving distribution of funds under

chapter 7 of the Bankruptcy Code. Once that order issues,

though, the heart of a bankruptcy case—the debtor’s assets—

will have disappeared, pro-rata, into a multitude of hands, pre-

cluding effective review of most, if not all, questions involv-

ing those assets. Cf. Riverhead Sav. Bank v. Nat’l Mortg.

Equity Corp., 893 F.2d 1109, 1114 (9th Cir. 1990) (conclud-

ing that, where an order required immediate payment of

money to a likely insolvent entity, review of that order “effec-

tively would be denied if return of the money awarded were

impossible”). Thus, the collateral order doctrine is simply not

helpful for determining finality in the bankruptcy context; the

KLESTADT & WINTERS v. CANGELOSI 2575

flexible approach developed under § 158(d)(1) seems far

more appropriate.

Sufficient finality might also arise from other types of

orders. Certainly, dismissal of a bankruptcy petition is final.

But a meritorious motion to dismiss a chapter 11 petition

may, at the court’s discretion, be resolved by conversion to

chapter 7. 11 U.S.C. § 1112(b). When a party succeeds on a

motion to dismiss, but the court converts the case, is that

result any less final than if the court had dismissed the peti-

tion? Formally, yes. Functionally, it is not so clear. Although

the bankruptcy case would still be pending and open, control

of the debtor would have changed hands, from management

of the debtor-in-possession to a chapter 7 trustee. For some

types of decisions, that change of control might impart suffi-

cient finality; for others, perhaps not. I have little doubt that

identifying a final judgment analogue would be just as diffi-

cult for cases under other chapters of the Bankruptcy Code.

In view of those difficulties, a more flexible approach seems

prudent in all bankruptcy appeals, regardless of where they

originate.

At the very least, the lack of a clear “final judgment” in a

main bankruptcy case means we will need to decide precisely

what “categories” of bankruptcy orders are sufficiently final.

This inquiry might well lead to the development of rules that

parallel the flexible approach already developed under

§ 158(d)(1). The better solution, in my view, is to simply treat

jurisdiction of bankruptcy appeals under § 1291 in the same

way that we treat bankruptcy appeals under § 158(d)(1).

In short, I see no convincing justification for continuing to

disagree with our sister circuits; we should reevaluate Hawaii

Corp.’s lonely rule en banc.

B.

As a final matter, in applying the three-pronged collateral

order test to the sanctions order in this case, the majority

2576 KLESTADT & WINTERS v. CANGELOSI

relies on Cunningham v. Hamilton County, 527 U.S. 198

(1999). I dissent from that part of the analysis, in Parts III.A-

B, for two reasons.

First, it is unnecessary; as the majority correctly states at

the end of Part III.B, the sanctions order fails to meet the sec-

ond prong of the collateral order test, which requires that the

issue be separable from the merits. That observation alone is

sufficient to decide the issue.

Second, for the reasons identified by this circuit’s Bank-

ruptcy Appellate Panel, I see a material distinction between a

main bankruptcy case, like this one, and the civil cases cited

by the majority. See In re Stasz, 387 B.R. at 274-76. The

majority cites only one bankruptcy case, Markus v. Gschwend

(In re Markus), 313 F.3d 1146 (9th Cir. 2002). That case

involved an adversary proceeding, which is more like a tradi-

tional civil case than it is like a main bankruptcy case. I would

adopt the reasoning from Stasz, including its reasonable dis-

tinctions between this situation and the situation in Markus

and Cunningham. Accordingly, I do not join the majority

opinion where it diverges from Stasz and holds that Cunning-

ham applies to a main bankruptcy case.

C.

For the reasons stated above, I dissent in part, and concur

in part and in the judgment. But I hope that my colleagues

will take this opportunity to reexamine the wisdom of the rule

established in Hawaii Corp.