Opposition Brief — Dunkley v. Rega Properties, Ltd., 111 S. Ct. 251 (1990) (No. 90-287)

Supreme Co@rt, U.S.

FILE

sep 12 1990

(2) JOSEPH F. SPANIOL, JR.

K

No. 90-287 cae

THE SUPREME COURT OF THE UNITED STATES |

OCTOBER, 1990

J. REED DUNKLEY, and GRACE DUNKLEY,

husband and wife,

Petitioners,

v.

REGA PROPERTIES, LTD., et. al.

Respondents.

RESPONSE TO PETITION

FOR WRIT OF CERTIORARI

TO THE NINTH CIRCUIT COURT OF APPEALS

BRIEF IN OPPOSITION TO PETITION

Counsel of Record for

REGA PROPERTIES, LTD.:

Robert J. McKanna

North 122 University Road

Spokane, Washington, 99106-5297

(509) 924-8144

BEST AVAILABLE COPY }

No. 90-287

THE SUPREME COURT OF THE UNITED STATES

OCTOBER, 1990

J. REED DUNKLEY, and GRACE DUNKLEY,

husband and wife,

Petitioners,

Vv.

REGA PROPERTIES, LTD., et. al.

Respondents.

RESPONSE TO PETITION

FOR WRIT OF CERTIORARI

TO THE NINTH CIRCUIT COURT OF APPEALS

BRIEF IN OPPOSITION TO PETITION

Counsel of Record for

REGA PROPERTIES, LTD.:

Robert J. McKanna

North 122 University Road

Spokane, Washington, 99106-5297

(509) 924-8144

cy)

a

I.

QUESTIONS PRESENTED FOR REVIEW

Respondent does nct cross appeal,

and therefore presents no questions to

the Court for review. However, the

Petition for Certiorari necessarily

raises questions which must be addressed

at this point in the proceedings. These

questions are:

he Wnere the appellate court has

declined to consider an appeal

of an interlocutory order based

upon jurisdictional grounds

under 28 USC 158(d), should the

Supreme Court hear an appeal on

the merits of that

interlocutory order?

Ya Should the Supreme Court

consider questions not squarely

placed before the lower court?

QUESTIONS

FOR REVIEW i

II.

LIST OF PARENT COMPANIES AND SUBSIDIARIES

FOR REGA PROPERTIES, LTD.

PARENTS :

SUBSIDIARIES: Rega Properties, Ltd. and

Rhea Farms Ltd., are family corporations.

They are solely owned by the Wonnacutt

family and have no parents or

subsidiaries within the meaning of Rule

29.1.

SUBSIDIARIES wer |

III.

TABLE OF CONTENTS

QUESTIONS PRESENTED FOR REVIEW......... i

LIST OF PARENT COMPANIES AND SUBSIDIARIES

FOR REGA PROPERTIES, LTD..........224.4. ii

TABLE OF CONTENTS... 2... 2c eccccccccces iii

TABLE OF AUTHORITIES. .......2 2c eeeeeees iv

OPINIONS BELOW... ccccccccccccccccccces 1

SUPREME COURT JURISDICTION.............. 1

STATUTES AND RULES... ..ccccccccccccccccs 2

STATEMENT OF THE CASE.......cceccccccces 4

SUMMARY OF THE ARGUMENT..........22e200. 8

ARGUMENT . ccc cccccccccccccccccccsccccce 1l

CONCLUSION... ccccccccscccccccccccccccces 20

TABLE OF CONTENTS iii

IV.

TABLE OF AUTHORITIES

CASES

American Construction Co. v. Jacksonville

Railway, 148 US 372, 37 S. Ct. 486

(1892) oc cc cdvccccsccccccccccccccsececs 14,

Cobbledick v. U.S., 309 U.S. 323, 60

S.Ct. 540, 84 L.Ed 783 (1940)......... 13,

Goodman v. Lukens Steel Co., 482 US 656,

107 §.Ct. 2617, 96 L.Ed.2d, 572

Ss cna aessx hs knndenshnhe tens sdse es 19,

In Re Northeast Corporation, 519 F.2d

1360, 1363 (1975) .cccccccccccccesececs 20,

Lauro Lines s.r.l. v. Chasser, 490 US,

, 109 S. Ct. 1974, 104 L.Ed.2d,

SEG (19G9) oc cccccccccccccsccsccecsccees i3,

Mcullough v. Kammerer Corp., 323 U.S.,

Jat, @G3 §.€0. 2397, 8 L-84. 273,

Se a rene ae ey 17,18,

U.S. v. Johnston, 268 US 220, 45 S.Ct.

496, 69 L.Ed. 925 (1924) .ccccccccccces 19,

U.S. v. Nixon, 418 U.S. 683, 41 L.Ed 2d

1039, 94 S.Ct. 3090 (1974)....... r Pet Ft

TABLE OF AUTHORITIES

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Marae! 1

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TABLE OF AUTHORITIES continued

STATUTES

NN eta ie Gu eno en eee e en 3

A Ee re 2,3,5,8

at ae ny eee 4,11

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TABLE OF AUTHORITIES

Vv

V.

OPINIONS BELOW

For ease of reference, this brief

will refer to opinions as reproduced in

the Appendix to the Petition for

Certiorari. Page numbers will correspond

to those used therein.

VI.

PREME RT JURISDICTION

The Supreme Court does not have

jurisdiction to hear this appeal under 28

USC 1254. The decision below was not a

final decision of the bankruptcy court

and therefore the case was not "in" the

appellate court within the meaning of 28

USC § 1254. U.S. v. Nixon 418 U.S. 683,

41 L.Ed 2d 1039, 94 S.Ct. 3090 (1974).

The Ninth Circuit Court of Appeals

properly determined that it did not have

jurisdiction to hear the appeal on the

BRIEF 1

issue of the motion to dismiss because

the refusal to dismiss was not a final

decision of the bankruptcy court as

required under 28 USC 158(d).

VII.

STATUTES AND RULES

The bankruptcy code sections and the

bankruptcy rule cited by Petitioner are

not relevant to a determination of this

appeal. The sole issue that might

properly be before the Court is whether

the Ninth Circuit Court of Appeals

correctly determined that it had no

jurisdiction to review the bankruptcy

court’s refusal to dismiss the action.

That question has not been raised by

appellant.

The statutes involved in the

determination of this Court’s

jurisdiction are 28 USC § 158(a)&(d) and

BRIEF 2

28 USC §1254, the relevant portions of

which

BRIEF

are reprinted below.

§158. Appeals

(a) The district courts of the

United States shall have

jurisdiction to hear appeals from

final judgments, orders, and

decrees, and, with leave of the

court, from interlocutory orders and

decrees, of bankruptcy judges

entered in cases and proceedings

referred to the bankruptcy judges

under section 157 of this title

[28 USCS § 157]

(d) The courts of appeals shall

have jurisdiction of appeals from

all final decisions, judgments,

orders, and decrees entered under

subsections (a) and (b) of this

section.

§1254. Courts of appeals;

certiorari; certified questions

Cases in the courts of appeals may

be reviewed by the Supreme Court by

the following methods:

(1) By writ of certiorari granted

upon the petition of any party to

any Civil or criminal case, before

or after rendition of judgment or

decree;

VIII.

STATEMENT OF THE CASE

Respondent believes that Petitioner

has made numerous misstatements of fact

and law in the Petition For Writ of

Certiorari. These misstatements include:

1.

At page 2, Petitioner incorrectly

states: "The Ninth Circuit has

decided an important question

concerning jurisdiction of the

Bankruptcy Court...." In fact, the

Ninth Circuit Court of Appeals

opinion dealt with its own

jurisdiction to consider the appeal

before it. The court ruled that

under 28 USC 158(d),

"the bankruptcy court’s order

denying Dunkley’s motion to

dismiss for bad faith filing is

not a final order, and thus

this court does not _ have

jurisdiction over Dunkley’s

appeal of that portion of the

district court’s order which

BRIEF +

BRIEF

affirmed such denial."

Appendix to Petition, page 8.

The factual questions extensively

argued throughout the Petition are

not before the Court. The transfers

of property and other business

transactions in Canada which are

described in pages 6-7 were

thoroughly reviewed in evidentiary

hearings before the bankruptcy court

and were subsequently reviewed in

the district court upon the record

of the bankruptcy court. Similarly,

Petitioner’s factual arguments

regarding bad faith, at p. 18 and

pp. 27-36, were fully considered and

decided adversely on the record

below. The trial judge and the

district court judge were satisfied

that there was no substantial

BRIEF

evidence of bad faith, fraud, abuse

Or mismanagement. See opinion of

District Court Judge McNichols,

Appendix page 21-22 and his extended

quotation from the decision of the

Bankruptcy Judge at Appendix pages

19-20.

Petitioner incorrectly states at

page 12, that the Ninth Circuit

indicated that the question

presented was whether the bankruptcy

court should “burden the Canadian

Corporation by appointment of a

trustee". The motion for trustee

was heard and decided in the

bankruptcy court but was not

appealed to the Ninth Circuit.

In his argument at page 12-13,

Petitioner incorrectly implies that

the question of jurisdiction over

a=

BRIEF

Canadian assets was somehow critical

to the lower courts’ determinations

regarding the appointment of a

trustee and dismissal for bad faith.

The opinion of the district court

and the quotations from the

bankruptcy court contained therein

make it clear that the courts’

decisions on the question of

appointment of trustee were based

upon factual evidence regarding bad

faith and abuse. Each court found

no factual justification for the

appointment of ae trustee. The

question of the court’s jurisdiction

over Canadian assets was not

decisive.

Finally, at pages 24-27 and again at

page 35-36, Petitioner attempts to

reargue the bankruptcy court’s

approval of the rejection of the

real estate contract. That issue is

clearly not before the court. See

Judge McNichol’s opinion, Appendix

pp 16-17. The decision of the

bankruptcy court became final and

unappealable on March 3, 1986. No

appeal was perfected from that order

and it is, therefore, the law of the

case.

Ix.

SUMMARY OF THE ARGUMENT

A. Petitioner purports to present

three tightly drawn legal questions for

the Court’s consideration. However, this

case is not the proper vehicle with which

to raise either the legal questions

listed or the factual questions argued.

The question before the Ninth Circuit

Court of Appeals was whether’ the

BRIEF 8

bankruptcy should have been dismissed for

bad faith. The district court had

examined the evidence before the

bankruptcy court and refused to find

error. The Ninth Circuit Court of

Appeals reviewed the question again and

determined that it had no jurisdiction to

consider that issue. Since the initial

decision was not a final appealable

order, it was not properly in the Ninth

Circuit Court of Appeals. Therefore,

this Court should not accept jurisdiction

to determine an appeal on that issue

under 28 USC §1254.

B. The questions argued in the

Petition were not presented to the lower

courts. Although Petitioner did raise

the question of jurisdiction over

Canadian assets in the context of a

Motion for Appointment of Trustee, the

BRIEF 9

court ultimately decided the motion on

the basis of factual evidence before it

regarding good faith, etc. Furthermore,

even if the court’s decision on the

appointment of trustee or rejection of

the contract involved questions regarding

its jurisdiction over Canadian assets,

Petitioner did not appeal either of those

decisions.

The time for raising the issues

Petitioner now tries to raise has passed.

The bankruptcy court has determined the

amount of Petitioner’s claim and damages

are fixed. Respondent has set aside

sufficient money to pay those damages.

It is appropriate that appellate

proceedings should cease and this

bankruptcy should be completed.

BRIEF 10

X.

ARGUMENT

1. THE SUPREME COURT DOES NOT HAVE

JURISDICTION TO HEAR AN APPEAL FROM THE

BANKRUPTCY COURT’S ORDER DENYING A MOTION

TO DISMISS.

The first order of business for the

Court is that it must determine whether

it has jurisdiction under 28 USC §1254.

That issue turns on whether the case was

properly "in" the court of appeals when

the Petition for Certiorari was filed in

this court. U.S. v. Nixon, 418 U.S. 683,

690, 41 L. Ed.2d 1039 94 Sup.Ct. 3090,

(1974). The case was properly in the

court of appeals only if the court of

appeals had jurisdiction under 28 USC §

158(d). That section states: "the court

of appeals shall have jurisdiction of

BRIEF 1l

appeals from all final decisions,

judgments, orders, and decrees entered

under subsections (a) and (b) of this

section." The Ninth Circuit Court of

Appeals correctly determined that:

"the bankruptcy court’s order

denying Dunkleys motion to

dismiss for bad faith filing is

not a final order, and thus

this court does not have

jurisdiction over Dunkley’s

appeal of that portion of the

district court’s order which

affirmed such denial."

Appendix, Page 8.

The circuit court.’s decision is

consistent with this Court’s decisions in

Similar cases. In Lauro Lines s.r.l. v.

Chasser, 490 U.S. , 109 Sup.Ct.

1974, 104 L. Ed.2d 548(1989), this Court

determined that a denial of a motion to

dismiss a damages action based upon a

contractual forum selection clause was

not a final order and therefore not

appealable under 28 USC § 1291.

BRIEF 12

———

The Lauro case is but a recent

example of this Court’s long standing

policy against deciding litigation in a

piecemeal fashion. See, Cobbledick v.

U.S., 309 U.S. 323, 324, 60 S.Ct. 540, 84

L.Ed. 783 (1940). "Finality as a

condition of review is an historic

characteristic of federal appellate

procedure." Cited in Nixon at 690. In

1892, this Court construed its

jurisdictional statute, the Judiciary Act

of 1789,to limit appellate jurisdiction

to “final judgments at law and final

decrees in equity and admiralty."

American Construction Co. v. Jacksonville

Railway, 148 U.S. 372, 378, Be: es XG s

486 (1892).

The Court should apply these well =

established principles to this case. The

bankruptcy action is very near. to

BRIEF 13

a

my

pk ee pw

; aera “he

> = eer ate a nea y

conclusion. The damages for rejection of

the contract have been determined and the

decision regarding those damages has not

been appealed to this Court. Respondents

have placed more than suditietent eeney in

the control of the court, to cover the

damages assessed. This matter can and

should be terminated.

2. THIS COURT SHOULD NOT CONSIDER ISSUES

WHICH WERE NOT SQUARELY PRESENTED TO THE

COURTS BELOW.

The Petition for Certiorari seems to

present the Court with the intellectually

interesting question of the U.S.

Bankruptcy Court’s jurisdiction over

foreign assets. However, that issue is

not presented by the case that is

actually Sefore the Court. The question

BRIEF 14

of the bankruptcy court’s jurisdiction

over Canadian assets arose briefly below

in the context of arguments supporting

and opposing the motion to appoint a

trustee. The decision not to appoint a

trustee was made on the basis of evidence

regarding claims of improper management

of Canadian assets, preferential

treatment of Canadian creditors, and

related matters. The bankruptcy judge’s

observations on those issues are quoted

in Judge McNichols’ opinion at Appendix

pages 19 and 20. In a nutshell, the

bankruptcy judge found no basis’ for

finding mismanagement of assets and

therefore refused to appoint a trustee.

The refusal to appoint a trustee was

not appealed to the Ninth Circuit Court

of Appeals. Petitioner specifically

stated in his Appellant’s Brief before

BRIEF 15

the Ninth Circuit: "part [of the order

appealed from] denied was for’ the

appointment of a trustee. The Dunkleys

do not appeal from that decision."

Appellants Brief Page l.

Only two issues were presented to

the Ninth Circuit Court of Appeals by

petitioners. These were the choice of

the measure of damages applied etenr the

rejection of the real estate contract and

the refusal to dismiss the bankruptcy for

bad faith. The appellate court upheld

the bankruptcy court’s decision on the

measure of damages and determined that it

did not have jurisdiction under 28 USC §

158(d) to hear the appeal from the

decision on the motion to dismiss.

Petitioners have not appealed the

ruling on the measure of damages, nor

have they appealed the decision on

BRIEF 16

jurisdiction. It would be improper for

this Court to review findings of fact or

conclusions of law regarding the motion

to appoint a trustee where the appellant

had not raised those issues before the

circuit court of appeals. See McCullough

v. Kammerer Corp., 323 U.S., 327, 328. 65

S.Ct. 297, 89 L.Ed. 273, (1945).

Similarly, Petitioner’s arguments

regarding the appropriateness of

rejection of the contract were not

presented to the appellate court below.

The decision of the bankruptcy court on

rejection was not appealed. As Judge

McNichols stated in his opinion "the

Order authorizing such rejection was not

appealed and the efficacy of that Order

is not before this court." (Appendix

pages 16-17). Furthermore that issue was

not presented to the Ninth Circuit Court

BRIEF 17

of Appeals. Under the McCollough

rationale, the Supreme Court’ should

refuse to consider that issue as well.

Equally inappropriate would be a

reconsideration of the evidence regarding

petitioner’s' bad faith allegations.

Although he did not iist the issue as a

question for review, Petitioner has

devoted a substantial portion of his

brief to the reargument of his claims of

bad faith. An example is Petitioner’s

statement at page 27: "The facts of this

case clearly show that dismissal for lack

of good faith is an appropriate

sanction."

Petitioner is attempting to get this

Court to review the facts as presented in

evidentiary hearings before the

bankruptcy court and to reach a different

conclusion than the trial judge. This is

BRIEF c 18

|

,

contrary to the Court’s often expressed

policy against reviewing factual

questions. See, e.g. Goodwin v. Lukens

Steel Co., 482 US 656, 665, 107 S.Ct.

2617, 96 L.Ed. 2d, 572 (1987), and see

U.S. v. Johnston, "we cannot grant

certiorari to review evidence and discuss

specific facts." 268 U.S. 220, 227, 45S.

Ct. 496, 69 L.Ed 925 (1924).

It is well established that a

court’s finding as to good faith in the

context of a bankruptcy is a factual

determination that cannot be set aside

unless it is clearly erroneous. In Re

Northeast Corporation, 519 F.2d 1360,

1363 (1975).

This Court, should not accept

Petitioner’s invitation to delve into the

findings. - The Petitioner has not

properly set out the findings with which

BRIEF 19

he disagrees nor has he candidly stated

to the Court that he proposes a review of

the evidence. Furthermore, because of

its decision on its own jurisdiction, the

Ninth Circuit Court of Appeals never

considered or ruled upon the _ factual

issues raised in that court. If ever

there was a case where the Court should

refuse to examine the evidence for

correction of errors, this is such a

case. Under either of the McCollough or

the Goodman rationale, the Court should

refuse certiorari.

Al. °

CONCLUSION

Petitioner has presented no _ good

reason for this Court to grant the Writ

of Certiorari. Petitioner has shown no

conflict among the circuits, no question

of wide impact under the Constitution, no

BRIEF 20

rw # *

reason to exercise supervisory power over

lower courts. Petitioner has attempted

to package his appeal as an

intellectually interesting problem. In

fact, however, all that this case

presents is a factual dispute between

litigants in a single bankruptcy

proceeding.

The amount in dispute here has been

determined by the bankruptcy court and

the propriety of the measure of damages

was affirmed by the Ninth Circuit Court

of Appeals. That amount of Petitioner’s

claim as determined by the bankruptcy

court is $4,969.00 which, together with

pre-petition attorney fees, $6,361.40,

places the total amount in controversy at

$11,330. Respondent has funds available

and set aside to pay that amount.

BRIEF 21

Respondent respectfully requests

that the Petition for Writ of Certiorari

be denied.

YK

DATED this ad lien of August,

1990.

Pra Po submitted,

“Robert J.

McK

BRIEF 22