O'Toole v. McTaggart et al

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK FOR PUBLICATION
In re:
TRINSUM GROUP, INC., f/k/a
MARAKON ASSOCIATES, INC., and
INTEGRATED FINANCE LIMITED, LLC,
Debtors.
Case No. 08-12547 (MG)
(Jointly Administered)
MARIANNE T. O’TOOLE, as Distributing
Agent for the Estates of Trinsum Group, Inc.,
and Integrated Finance Limited, LLC,
Plaintiff,
v.
JAMES McTAGGART, BRIAN BURWELL,
RONALD LANGFORD, KENNETH
FAVARO, JOSE LUIS DAZA, DAVID
DEMING, NEAL KISSEL, MASON
KISSELL, ROBERTO MENDOZA, ROBERT
MERTON, AND EUGENE SHANKS, JR.,
Defendants.
Adv. Pro. No. 11-01284 (MG)
OPINION DENYING PLAINTIFF’S MOTION TO MODIFY ORDER
A P P E A R A N C E S
NEUBERT, PEPE & MONTEITH
Counsel to Marianne T. O’Toole, Distributing Agent for the Estates of Trinsum Group, Inc, and
Integrated Finance Limited, LLC
195 Church Street
13th Floor
New Haven, Connecticut 06510
By: Simon I. Allentuch, Esq.
GERSTEN SAVAGE LLP
Counsel to Brian Burwell, Kenneth Favaro, Ronald Langford, and James McTaggart
600 Lexington Avenue
New York, New York 10022
By: Paul Rachmuth, Esq.
11-01284-mg Doc 154 Filed 04/09/12 Entered 04/09/12 17:12:33 Main Document
Pg 1 of 13

2
MARTIN GLENN
UNITED STATES BANKRUPTCY JUDGE
This case raises an important issue regarding when a bankruptcy court must enter
proposed findings of fact and conclusions of law under Rule 9033 of the Federal Rules of
Bankruptcy Procedure in non-core matters, or in core matters in which the bankruptcy court may
not enter a final order or judgment consistent with Article III of the U.S. Constitution. In this
case, an adversary complaint was filed against eleven defendants alleging claims that are non-
core, or core but not subject to entry of a final order or judgment by the bankruptcy court
consistent with Article III of the U.S. Constitution, absent consent of the parties. Seven of the
defendants consented to the bankruptcy court’s entry of final orders or judgment, while four did
not.
The bankruptcy court dismissed with prejudice two of four claims in the adversary
complaint and entered partial judgment under Rule 7054 of the Federal Rules of Bankruptcy
Procedure with respect to the dismissal of the two claims against the consenting defendants. The
dismissal order stated that the order was an interlocutory order as to the non-consenting
defendants, but would become the proposed findings of fact and conclusions of law upon the
final disposition of the adversary proceeding. The plaintiff now seeks to have the dismissal order
amended to provide that the dismissal of the claims against the non-consenting defendants
constitutes the proposed findings of fact and conclusions of law, entitling the plaintiff to
immediate review by the district court. For the reasons explained below, the Court rejects that
argument and denies the motion.
BACKGROUND
This adversary proceeding arises out of the merger of a Marakon Associates, Inc.
(“Marakon”) and Integrated Finance Limited, LLC (“IFL,”) in February 2007, which created
11-01284-mg Doc 154 Filed 04/09/12 Entered 04/09/12 17:12:33 Main Document
Pg 2 of 13

3
Trinsum Group, Inc. (“Trinsum,” and with IFL, the “Debtors”).1 The merger was ultimately
unsuccessful, and in July 2008, an involuntary case under chapter 7 was commenced against
Trinsum. On January 29, 2009, the Debtor consented to an order of relief and the case was
converted to one under chapter 11. (Case No. 08-12547, ECF # 12.) On February 24. 2009, IFL
filed a voluntary petition under chapter 11 of the Bankruptcy Code, and on March 6, 2009, the
Court entered an order directing joint administration of the Trinsum and IFL bankruptcy cases.
On November 10, 2010, Chief Judge Gonzalez confirmed the Debtors’ First Modified
Joint Plan of Liquidation. (Case No. 08-12547, ECF # 358.) On that same date, Marianne T.
O’Toole (the “Distributing Agent”) was appointed as the Distributing Agent of the Debtors’
estates. On January 27, 2011, the Distributing Agent filed a complaint (as amended on August
16, 2011, the “Amended Complaint”), alleging: (I) breach of fiduciary duty as to the Marakon
Directors; (II) gross negligence and/or recklessness as to the Marakon Directors; (III) breach of
fiduciary duty as to the Trinsum Directors; and (IV) corporate waste as to the Trinsum Directors.
Thereafter, the defendants moved to dismiss counts III and IV of the Amended Complaint.
Some of the Distributing Agent’s claims in this case are non-core, or core but not subject
to entry of a final order or judgment by the bankruptcy court consistent with Article III of the
U.S. Constitution, absent consent of the parties. Accordingly, on August 8, 2011, Chief Judge
Gonzalez entered an order instructing the Defendants to file express statements, in accordance
with Rules 7008(a) and 7012(b) of the Federal Rules of Bankruptcy Procedure, stating whether
they admit or deny that the Adversary Proceeding is core or non-core and, if they contend it is
non-core, whether they consent to entry of a final order. (ECF Doc. # 77.) The Trinsum
1 During its existence, Trinsum was managed by the prior board of directors of Marakon—James McTaggart,
Brian Burwell, Ronald Langford, and Kenneth Favaro (the “Marakon Directors”), as well as Jose Luis Daza, David
Deming, Neal Kissel, Mason Kissell, Roberto Mendoza, Robert Merton, and Eugene Shanks, Jr. (together with the
Marakon Directors, the “Trinsum Directors”).
11-01284-mg Doc 154 Filed 04/09/12 Entered 04/09/12 17:12:33 Main Document
Pg 3 of 13

4
Directors (the “Consenting Defendants”) filed statements denying that the Adversary Proceeding
is a core proceeding but nevertheless consenting to the Court’s entry of final orders or judgment.
The Marakon Directors (the “Non-Consenting Defendants”) filed statements denying that the
Adversary Proceeding is a core proceeding and stating that they do not consent to the Court’s
entry of final orders or judgment.
On September 15, 2011, the Defendants either filed or renewed earlier motions to
dismiss, in whole or in part, the Amended Complaint. (ECF Doc. ## 93, 96, 98-99, 101.) On
January 20, 2012, Chief Judge Gonzalez issued an opinion dismissing Counts 3 and 4 of the
Amended Complaint with prejudice and denying the Distributing Agent’s motion for leave to
amend with respect to those counts of the Amended Complaint. (ECF Doc. # 133.) On January
28, 2012, Chief Judge Gonzalez entered the Dismissal Order. (ECF Doc. # 141.) As to the
Consenting Defendants, Chief Judge Gonzalez concluded it was appropriate to enter partial
judgment on the dismissed claims under Rule 54(b) of the Federal Rules of Civil Procedure
(“Rule 54(b)”), made applicable to adversary proceedings by Rule 7054. As to the Non-
Consenting Defendants, the Dismissal Order makes clear that the order is an interlocutory order,
but would become the Court’s proposed findings of fact and conclusions of law at the conclusion
of the adversary proceeding.2 Id. ¶¶ 7-8.
The Distributing Agent now seeks to modify the Dismissal Order.3 (ECF Doc. # 146.)
The Marakon Directors filed a statement indicating that they do not object to the relief sought by
2 The Dismissal Order provides as follows: “In accordance with 28 U.S.C. § 157(c)(1), and further subject to
the provisions of Rule 9033, as to Defendants James McTaggart, Brian Burwell, Ronald Langford, and Kenneth
Favaro, upon the final disposition of the adversary proceeding before this Court, the Court’s January 20, 2012
Opinion and this Order shall constitute this Court’s proposed findings of fact and conclusions of law which shall be
submitted to the United States District Court for the Southern District of New York.” Dismissal Order ¶ 8.
3 Chief Judge Gonzalez retired as a bankruptcy judge on March 1, 2012. The Trinsum case and all Trinsum-
related adversary proceedings were transferred to me on February 10, 2012 in anticipation of Chief Judge
Gonzalez’s retirement. While the Dismissal Order was entered on February 28, 2012, Chief Judge Gonzalez’s
11-01284-mg Doc 154 Filed 04/09/12 Entered 04/09/12 17:12:33 Main Document
Pg 4 of 13

5
the Distributing Agent. (ECF Doc. # 149.) The Distributing Agent argues that the Dismissal
Order improperly prevents her from appealing the Dismissal Order with respect to the non-
consenting defendants; she filed a timely notice of appeal with respect to the consenting
defendants. In support of her argument, the Distributing Agent asserts that the Dismissal Order
has the “unintended consequence” of prejudicing her rights, and that it “constitute[s] an
unconstitutional assertion of Article III power in a non-core proceeding.” (ECF Doc. # 147
[hereinafter “Memo”] at 1.) Additionally, she argues that in a non-core proceeding under 28
U.S.C. § 157(c)(1) and Rule 9033, “every order is immediately reviewable as a matter of law.”
Memo. at 6-7. Finally, the Distributing Agent argues that under Stern v. Marshall, a bankruptcy
judge lacks authority to issue a final order in a non-core proceeding. See 131 S. Ct. 2594, 2620
(2011) (holding that the bankruptcy court “lacked the constitutional authority to enter a final
judgment on a state law counterclaim that is not resolved in the process of ruling on a creditor’s
proof of claim.”). Although this is a true statement, absent consent, the Distributing Agent
misapplies the holding in Stern v. Marshall, as well as relevant statutory authority.
As explained below an order dismissing fewer than all of the claims in the complaint is
an interlocutory order. There is no absolute right to an immediate appeal from an interlocutory
order; rather, an appeal from an interlocutory order is permitted only with leave of the district
court pursuant to 28 U.S.C. § 158(a)(3) and Rule 8003 of the Federal Rules of Bankruptcy
Procedure. Contrary to the argument of the Distributing Agent, nothing in the Bankruptcy Code
or in Rule 9033 requires the bankruptcy court to file proposed findings of fact and conclusions of
opinion granting the defendants’ motion to dismiss was entered on January 20, 2012. See O’Toole v. McTaggart,
Adv. Pro. No. 11-01284 (AJG) (Bankr. S.D.N.Y. Jan. 20, 2012) (ECF Doc. # 133) (the “Opinion”).
Although not specifically denominated as such, the Court treats the present Motion as a motion to amend or
make additional findings and amend judgment under Rule 52(b) of the Federal Rules of Civil Procedure, made
applicable in this case by Rule 7052 of the Federal Rules of Bankruptcy Procedure.
11-01284-mg Doc 154 Filed 04/09/12 Entered 04/09/12 17:12:33 Main Document
Pg 5 of 13

6
law, and to trigger immediate district court review, at the time an interlocutory order dismissing
fewer than all claims is first entered.
Although the Bankruptcy Code and Rules may permit a bankruptcy court to accelerate
review of an otherwise interlocutory order by filing proposed findings of fact and conclusions of
law before the end of the case, the strong federal policy against piecemeal appeals ordinarily
counsels against it unless judicial efficiency or other factors support it. The Dismissal Order
entered partial judgment under Rule 54(b) with respect to the Consenting Defendants, but only
an interlocutory order with respect to the Non-Consenting Defendants. If the parties want the
Opinion granting the motion to dismiss reviewed at one time as to all defendants, section
158(a)(3) provides the parties with a path to seek such review as to the Non-Consenting
Defendants. It is now a matter, however, for the district court to decide. Accordingly, the
Distributing Agent’s Motion is denied.4
DISCUSSION
The Distributing Agent’s argument that every order is immediately reviewable as a
matter of law in a non-core matter is unsupported by any statute, rule, or case law. To the
contrary, both before and after Stern v. Marshall, it is clear that the bankruptcy court may handle
all pretrial proceedings, including the entry of an interlocutory order dismissing fewer than all of
the claims in an adversary complaint, as occurred in this case. The Dismissal Order did not, as
the Distributing Agent contends, transform “proposed findings of fact and conclusions of law
into an interlocutory order appealable only at the end of the case.” Memo. at 4. Rather, the
Dismissal Order simply made clear what was already true: as to the Non-Consenting Defendants,
4 Since the Court concludes that the Motion seeks relief pursuant to Rule 7052, the Distributing Agent has
fourteen days from the entry of this opinion and order to file a motion for leave to appeal from the Dismissal Order
as to the Non-Consenting Defendants under Rule 8002(b)(1) of the Federal Rules of Bankruptcy Procedure.
11-01284-mg Doc 154 Filed 04/09/12 Entered 04/09/12 17:12:33 Main Document
Pg 6 of 13

7
the Dismissal Order is interlocutory because it did not dispose of all claims in the Amended
Complaint. Unless and until the bankruptcy court enters proposed findings of fact and
conclusions of law, triggering application of Rule 9033,5 appellate review by the district court of
interlocutory orders is limited to discretionary review pursuant to 28 U.S.C. § 158(a)(3).6 This
same result follows whether the interlocutory order relates to non-core claims, or to core claims
as to which the bankruptcy court cannot enter final orders or judgments consistent with Article
III of the U.S. Constitution absent consent of the parties.
Bankruptcy judges are permitted to hear non-core proceedings that are “otherwise related
to a case under title 11.” 28 U.S.C. § 157(c)(1). In such instances, “any final order or judgment
shall be entered by the district judge.” Id. Pre-Stern case law clearly established that, in such
instances, bankruptcy courts may enter interlocutory orders; only entry of a final order or
judgment requires the bankruptcy court to submit proposed findings of fact and conclusions of
5 Rule 9033 provides, in pertinent part:
(a) Service. In non-core proceedings heard pursuant to 28 U.S.C. §157(c)(1),
the bankruptcy judge shall file proposed findings of fact and conclusions of
law. The clerk shall serve forthwith copies on all parties by mail and note
the date of mailing on the docket.
FED. R. BANKR. P. 9033(a).
6 Section 158(a) provides as follows:
(a) The district courts of the United States shall have jurisdiction to hear appeals
(1) from final judgments, orders, and decrees;
(2) from interlocutory orders and decrees issued under section 1121 (d) of
title 11 increasing or reducing the time periods referred to in section 1121
of such title; and
(3) with leave of the court, from other interlocutory 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. An appeal under this
subsection shall be taken only to the district court for the judicial district in
which the bankruptcy judge is serving.
28 U.S.C. § 158(a).
11-01284-mg Doc 154 Filed 04/09/12 Entered 04/09/12 17:12:33 Main Document
Pg 7 of 13

8
law to the district court.7 See In re Pan Am Corp., 159 B.R. 396, 400 (S.D.N.Y. 1993); Lesser v.
A-Z Assocs., Inc (In re Lion Capital Grp.), 46 B.R. 850, 854 (Bankr. S.D.N.Y. 1985) (reasoning
that a contrary position “would require wholesale deferral of all interlocutory matters . . . to the
district courts thereby swamping district court calendars.”); 1 COLLIER ON BANKRUPTCY
¶ 3.03[2] (“Answering a question not addressed by the statute, it has been held that a bankruptcy
judge may retain jurisdiction over pretrial proceedings and enter interlocutory orders in a [non-
core] matter.”). This position was also embraced in Elkins v. X-Alpha International, Limited (In
re Kennedy), 48 B.R. 621 (Bankr. D. Ariz. 1985) (“only final orders need be entered in noncore
proceedings”). The court in Kennedy remarked that “[a] contrary interpretation would require
wholesale referral to the District Court of every order concerning discovery, continuances or
every other interlocutory order of substantive or procedural import. Congressional intent to
impose such a burden . . . will not be presumed.” Id. at 622.
After Stern v. Marshall, the ability of bankruptcy judges to enter interlocutory orders in
non-core proceedings, or in core proceedings as to which the bankruptcy court may not enter
final orders or judgments consistent with Article III absent consent, has been reaffirmed by the
courts that have had occasion to address the issue. See, e.g. Ameriwest Bank v. Starbuck
Bancshares, Inc. (In re Americanwest Bancorporation), Case No. CV-11-0448-LRS, 2012 WL
394379, at *2 (E.D. Wash. Feb. 3 2012) (referring all pretrial matters, including pending
summary judgment motion, to the bankruptcy court); Boyd v. King Par, LLC (In re B&P Baird
7 The distinction between final and interlocutory orders in the context of bankruptcy courts has been a source
of confusion. However, a number of commentators have provided useful guidance for distinguishing between a
final and interlocutory order. See, e.g., 16 CHARLES A. WRIGHT, ARTHUR R. MILLER & EDWARD H. COOPER,
FEDERAL PRACTICE & PROCEDURE § 3926.2 [hereinafter WRIGHT, MILLER & COOPER]. Additionally, then-Judge
Breyer provided a thorough explanation of the rule of “flexible finality” in the context of bankruptcy. See In re Saco
Local Dev. Corp., 711 F.2d 411, 444 (1st Cir. 1983). In Saco, Judge Breyer reasoned that finality in bankruptcy was
best understood in the context of discrete adversary proceedings and contested matters within the larger bankruptcy
case itself. Once the relevant “judicial units” of the bankruptcy case are properly defined, “ordinary concepts of
finality apply.” 1 COLLIER ON BANKRUPTCY ¶ 5.08[1][b]. An order dismissing fewer than all of the claims in an
adversary complaint is unquestionably an interlocutory order.
11-01284-mg Doc 154 Filed 04/09/12 Entered 04/09/12 17:12:33 Main Document
Pg 8 of 13

9
Holdings, Inc.), Case No. 11-CV-1106, 2011 WL 5509873, at *5 (W.D. Mich. Nov. 10, 2011)
(“[U]ncertainty regarding the bankruptcy court’s ability to enter a final judgment . . . does not
deprive the bankruptcy court of the power to entertain all pretrial proceedings, including
summary judgment motions.”); Hill v. New Concept Energy (In re Yazoo Pipeline Co., L.P.), 459
B.R. 636, 642 (Bankr. S.D. Tex. 2011) (holding that “Stern restricts a bankruptcy court’s
authority to enter a final order or judgment”).8
8 Some commentary and decisions analogize bankruptcy judges’ authority in non-core proceedings to
magistrate judges’ authority in referred matters. See, e.g., Dev. Specialists, Inc. v. Orrick, Herrington & Sutcliffe,
LLP (In re Coudert Bros., LLP), Case No. 11-civ-6337(CM), 2011 WL 6780600, at *3-4 (S.D.N.Y. Dec. 23, 2011)
(comparing authority of a bankruptcy judge in non-core matters to the role of a magistrate judge); see also 9
COLLIER ON BANKRUPTCY ¶ 9033 (“[A] bankruptcy judge in [a non-core] matter may make preliminary findings as
to the sufficiency of the pleadings, evidentiary matters and the like, pending the trial of the matter, resulting in
proposed findings of fact and conclusions of law.”). While instructive, the analogy of referrals to bankruptcy judges
and magistrate judges may be misleading—while the objection procedures in Rule 9033 and Rule 72 are quite
similar, the scope of the referral differs. The Advisory Committee Notes to Rule 9033 states that “Section 157(c)(1)
of title 28 requires a bankruptcy judge to submit proposed findings of fact and conclusions of law to the district
court when the bankruptcy judge has heard a non-core proceeding. This rule, which is modeled on Rule 72
F.R.Civ.P., provides the procedure for objecting to, and for review by, the district court of specific findings and
conclusions.” ADVISORY COMMITTEE NOTE TO FED. R. BANKR. P. 9033 (1987).
Pursuant to 28 U.S.C. § 157 and the Amended Standing Order of Reference, M-431 (S.D.N.Y. Jan. 31,
2011), “any or all cases under title 11 and any or all proceedings arising under title 11 or arising in or related to a
case under title 11 are referred to the bankruptcy judges in this district.” Unless the reference is withdrawn, the
entire adversary proceeding proceeds in the bankruptcy court; the bankruptcy court rules on all pretrial motions,
including motions to dismiss or for summary judgment, and unless a jury trial is properly demanded, the bankruptcy
court tries the case. In a “related to” matter, and in a “core” matter in which the bankruptcy court may not enter a
final order or judgment consistent with Article III, absent consent, the bankruptcy court must file proposed findings
of fact and conclusions of law; a final order or judgment in such matters must be entered by the district court. But a
bankruptcy judge may enter interlocutory orders in all cases; and appellate review of interlocutory orders is
discretionary by the district court under 28 U.S.C. § 158(a)(3) and Rule 8003.
The referral procedure for magistrate judges is governed by 28 U.S.C. § 636 and Rule 72. For “dispositive
motions,” section 636(b)(1)(B) applies: “[A] judge may also designate a magistrate judge to conduct hearings,
including evidentiary hearings, and to submit to a judge of the court proposed findings of fact and recommendations
for the disposition, by a judge of the court, of any [pretrial matter dispositive of a claim or defense] . . . .” 28 U.S.C.
§ 636(b)(1)(B); see also FED. R. CIV. P. 72(b)(1) (“A magistrate judge must promptly conduct the required
proceedings when assigned, without the parties’ consent, to hear a pretrial matter dispositive of a claim or defense
. . . . A record must be made of all evidentiary proceedings and may, at the magistrate judge’s discretion, be made
of any other proceedings. The magistrate judge must enter a recommended disposition, including, if appropriate,
proposed findings of fact. The clerk must promptly mail a copy to each party.”). A district judge may refer motions
to dismiss or for summary judgment to a magistrate judge for a recommended disposition, but the actual disposition
is entered by the district judge. A referral to a magistrate judge under the applicable statute and rule is narrower
than the referral of cases to the bankruptcy court.
11-01284-mg Doc 154 Filed 04/09/12 Entered 04/09/12 17:12:33 Main Document
Pg 9 of 13

10
In adversary proceedings, orders dismissing fewer than all claims are considered to be
interlocutory. See Pan Am Corp., 159 B.R. at 400; see also In re Russell, 957 F.2d 534, 535 (8th
Cir. 1992); In re M.S.V., Inc., 892 F.2d 5, 6 (1st Cir. 1989); In re King City Transit Mix, Inc., 738
F.2d 1065, 1066 (9th Cir. 1984). Additionally, orders granting summary judgment as to some or
not all claims are generally regarded as interlocutory. See In re Chateaugay Corp., 922 F.2d 86,
90 (2d Cir. 1990). The results in these cases comport with the doctrine of flexible finality
articulated in Saco as well as with the traditional parameters of finality. Case law also supports
the conclusion that an order granting a motion to dismiss some, but not all, claims with prejudice
is interlocutory. Kushner v. Winterthur Swiss Ins. Co., 620 F.2d 404, 408 (3d Cir. 1980)
(holding that in the absence of certification under Rule 54(b), an order granting a motion to
dismiss with prejudice as to some defendants in a multi-party action was not a final order
appealable to the circuit court). The adversary proceeding being the relevant judicial unit, the
order ending the adversary proceeding would generally be the only final order.
Although an interlocutory order of a bankruptcy judge is only subject to discretionary
review by the district court under section 158(a)(3), Rule 54, made applicable to adversary
proceedings by Rule 7054, provides an avenue for entering a partial final judgment, and for
immediate appellate review under section 158(a)(1). Under Rule 54, a court may order entry of a
“final judgment as to one or more, but fewer than all, claims or parties . . . if the court expressly
determines that there is no just reason for delay.” FED. R. CIV. P. 54(b).9 But entering a partial
9 Rule 54(b). Judgment on Multiple Claims or Involving Multiple Parties.
When an action presents more than one claim for relief—whether as a claim,
counterclaim, crossclaim, or third-party claim—or when multiple parties are
involved, the court may direct entry of a final judgment as to one or more, but
fewer than all, claims or parties only if the court expressly determines that there
is no just reason for delay. Otherwise, any order or other decision, however
designated, that adjudicates fewer than all the claims or the rights and liabilities
of fewer than all the parties does not end the action as to any of the claims or
11-01284-mg Doc 154 Filed 04/09/12 Entered 04/09/12 17:12:33 Main Document
Pg 10 of 13

11
judgment under Rule 7054 assumes the authority of the bankruptcy court to enter a final order or
judgment, something the bankruptcy court cannot do, absent consent, in non-core matters or core
matters as to which a bankruptcy judge cannot enter a final order or judgment consistent with
Article III. An appeal of a partial judgment entered under Rule 7054 proceeds in the manner of
an appeal from any other final order or judgment under 28 U.S.C. § 158(a)(1).10 See 10 COLLIER
ON BANKRUPTCY ¶ 7054.03 (“When the court makes the direction and executes the certificate,
the judgment becomes final and then effective upon entry by the clerk.”). And, importantly, an
otherwise interlocutory order that has not resulted in entry of a partial judgment under Rule 54(b)
“may be revised at any time before the entry of a judgment adjudicating all the claims and all the
parties’ rights and liabilities.” FED. R. CIV. P. 54(b).
Here, the Dismissal Order dismissed only two of four causes of action in the Amended
Complaint. Therefore, the Dismissal Order was interlocutory. And although Rule 7054 permits
entry of a final judgment as to fewer than all claims or parties, a partial judgment could not be
entered with respect to the claims asserted against the Non-Consenting Defendants; a partial
judgment could be and was entered with respect to the claims against the Consenting
Defendants.
parties and may be revised at any time before the entry of a judgment
adjudicating all the claims and all the parties’ rights and liabilities.
FED. R. CIV. P. 54(b).
10 Some commentators have advocated that in bankruptcy cases strict adherence to Rule 54(b) should not
always be required, but they readily acknowledge that within a single adversary proceeding, full adherence to Rule
54(b) is consistent with the theory of flexible finality. WRIGHT, MILLER & COOPER § 3926.2.
11-01284-mg Doc 154 Filed 04/09/12 Entered 04/09/12 17:12:33 Main Document
Pg 11 of 13

12
Neither section 157(c)(1)11 nor Rule 9033 required that proposed findings of fact and
conclusions of law be entered at the time the Court rendered the Opinion or when the Dismissal
Order was entered.12 The policy against piecemeal appeals generally counsels against
prematurely submitting proposed findings of fact and conclusions of law under Rule 9033.
Because the Distribution Agent can seek to take an interlocutory appeal under 28 U.S.C.
§ 158(a)(3) and Rule 8003, the district court can make the decision in the exercise of its
discretion whether to review the Opinion and Dismissal Order with respect to the dismissal of
Counts III and IV against all defendants at this time.13
11 Section 157(c)(1) provides as follows:
A bankruptcy judge may hear a proceeding that is not a core proceeding but that
is otherwise related to a case under title 11. In such proceeding, the bankruptcy
judge shall submit proposed findings of fact and conclusions of law to the
district court, and any final order or judgment shall be entered by the district
judge after considering the bankruptcy judge’s proposed findings and
conclusions and after reviewing de novo those matters to which any party has
timely and specifically objected.
28 U.S.C. § 157(c)(1).
12 There is nothing in the language of the statute or rule that precluded the Court from entering proposed
findings of fact and conclusions of law along with the Dismissal Order. Despite the strong policy against piecemeal
appeals, a bankruptcy court could conclude that judicial efficiency or other factors favor entry of findings of fact and
conclusions of law with respect to the recommended dismissal of claims against the Non-Consenting Defendants if,
for example, an appeal has been taken from the dismissal of the same claims for the same reasons against the
Consenting Defendants and Non-Consenting Defendants.
13 It is more appropriate for the district court to address that issue than for me to do so because the Opinion
and Dismissal Order in this case were entered by another bankruptcy judge. Of course, the decision of the district
court on an appeal with respect to the dismissal of the claims against the Consenting Defendants is likely to resolve
the same issues as to the Non-Consenting Defendants whether or not an interlocutory appeal is permitted because
the interlocutory order with respect to the Non-Consenting Defendants “may be revised at any time before the entry
of a judgment adjudicating all the claims and all the parties’ rights and liabilities.” FED. R. CIV. P. 54(b).
11-01284-mg Doc 154 Filed 04/09/12 Entered 04/09/12 17:12:33 Main Document
Pg 12 of 13

13
CONCLUSION
For the reasons explained above, the Dismissal Order remains an interlocutory order as to
the Non-Consenting Defendants. The Distributing Agent’s Motion to amend the Dismissal
Order is denied, but the time within which the Distributing Agent may seek to take an
interlocutory appeal begins to run with the entry of this Order.
Dated: April 9, 2012
New York, New York
______/s/Martin Glenn_______
MARTIN GLENN
United States Bankruptcy Judge
11-01284-mg Doc 154 Filed 04/09/12 Entered 04/09/12 17:12:33 Main Document
Pg 13 of 13