United States District Court, W.D. Virginia, Harrisonburg Division
MICHAEL W. DECKER Appellant,
W. STEPHEN SCOTT, Appellee.
APPEAL FROM THE UNITED STATES BANKRUPTCY COURT FOR THE
WESTERN DISTRICT OF VIRGINIA ROANOKE DIVISION No. BK 17-50297
Elizabeth K. Dillon, United States District Judge.
W. Decker, the appellant, filed a voluntary Chapter 7
petition on March 30, 2017, in the U.S. Bankruptcy Court for
the Western District of Virginia. On June 27, 2018, the
Chapter 7 Trustee, W. Stephen Scott, (Trustee) filed a motion
seeking permission to examine Decker and Decker’s two
accounting firms-Winchester Accounting and Consulting, Inc.,
(WACI) and Winchester Accounting, LLC (WAL) -pursuant to
Federal Rule of Bankruptcy Procedure 2004. The bankruptcy
court granted the motion over Decker s
objections by order entered August 1, 2018. (R. at
4-9, Dkt. No. 2.) Pursuant to the bankruptcy court’s
order authorizing a Rule 2004 examination, the Trustee began
issuing discovery requests to Decker and his companies.
(Id. at 44-66, 75-113.) Decker objected to the
Trustee’s discovery requests, and the Trustee issued a
subpoena duces tecum to WAL. (Id. at 114-19.) Decker
then filed a motion to quash the subpoena, reasserting nearly
word-for-word the issues he raised in his objections to the
Trustee’s motion for a Rule 2004 examination.
(Id. at 33-43.) The bankruptcy court, explaining
that it had already considered and overruled Decker’s
arguments once, denied Decker’s motion with prejudice.
(Id. at 120-22.)
appeals the bankruptcy court’s order, asserting that
the bankruptcy court erred by denying his motion with
prejudice. Specifically, he argues that by denying
his motion with prejudice, the bankruptcy court effectively
precluded him from raising the same issues at later stages of
the proceeding even though the bankruptcy court never reached
the merits of his arguments. (Appellant Br. 6-7, Dkt. No. 4.)
response, the Trustee argues that Decker effectively seeks to
appeal an issue decided in the bankruptcy court’s order
granting the Trustee’s motion to conduct a Rule 2004
examination, for which the time to file an appeal has already
passed. He further notes that the bankruptcy court did not
make any determination as to the issues raised in
Decker’s motion to quash but merely ordered Decker to
comply with the bankruptcy court’s discovery order.
(Appellee Br. 8-12, Dkt. No. 6.) The Trustee also moves to
dismiss the appeal on the grounds that it is moot, the appeal
seeks to overturn a non-appealable order, and Decker lacks
standing to file the appeal. (Mot. to Dismiss 3–7, Dkt.
the parties do not address whether the bankruptcy
court’s order is final and appealable, the court will
raise the issue sua sponte. Finding that the
bankruptcy court’s order denying Decker’s motion
to quash is not a final order as required for the court to
assert jurisdiction pursuant to 28 U.S.C. § 158(a), the
court will dismiss the appeal for lack of subject-matter
court has subject-matter jurisdiction over bankruptcy appeals
pursuant to 28 U.S.C. § 158(a). See In re Yellow
Poplar Lumber Co., Inc., 598 B.R. 833, 836 n.2 (W.D. Va.
2019). Section 158(a) provides that “the district
courts of the United States shall have jurisdiction to hear
appeals from final judgments, orders, and decrees .
. . entered in cases and proceedings referred to the
bankruptcy judges under Section 157 of this title.” 28
U.S.C. § 158(a)(1) (emphasis added). While the Trustee
suggests that “[t]his is an appeal of a final order of
the Bankruptcy Court, ” (Appellee Br. 6.),
“[s]ubject-matter jurisdiction cannot be conferred by
the parties, nor can a defect in subject-matter jurisdiction
be waived by the parties. Accordingly, questions of
subject-matter jurisdiction may be raised at any point during
the proceedings and may (or, more precisely, must) be raised
sua sponte by the court.” Brickwood
Contractors, Inc. v. Datanet Eng’g, Inc., 369 F.3d
385, 390 (4th Cir. 2004) (citing United States v.
Cotton, 535 U.S. 625, 630 (2002); Bender v.
Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986)).
Because the court doubts the finality of the bankruptcy
court’s order, the court must, as a preliminary matter,
review whether it has subject-matter jurisdiction over this
appeal pursuant to 28 U.S.C. § 158(a).
“a case in federal district court culminates in a
‘final decisio[n], ’ . . . a ruling ‘by
which a district court disassociates itself from a
case.’ A party can typically appeal as of right only
from that final decision.” Bullard v. Blue Hills
Bank, 135 S.Ct. 1686, 1691 (2015) (alteration in
original) (quoting Swint v. Chambers Cty.
Comm’n, 514 U.S. 35, 42 (1995)). However,
“[t]he rules are different in bankruptcy. A bankruptcy
case involves ‘an aggregation of individual
controversies, ’ many of which would exist as
stand-alone lawsuits but for the bankrupt status of the
debtor.” Id. at 1692 (quoting 1 Collier on
Bankruptcy ¶ 5.08 (16th ed. 2014)). Thus, the
“concept of finality in bankruptcy cases ‘has
traditionally been applied in a more pragmatic and less
technical way . . . than in other situations.’”
In re Computer Learning Ctrs., Inc., 407 F.3d 656,
660 (4th Cir. 2005) (quoting A.H. Robins Co. v.
Piccinin, 788 F.2d 994, 1009 (4th Cir. 1986)). As a
guiding principal, “Congress has long provided that
orders in bankruptcy cases may be immediately appealed if
they finally dispose of discrete disputes within the larger
case.” Bullard, 135 S.Ct. at 1692.
the context of bankruptcy court, the Supreme Court has held
“that one to whom a subpoena is directed may not appeal
the denial of a motion to quash that subpoena but must either
obey its commands or refuse to do so and contest the validity
of the subpoena if he is subsequently cited for contempt on
account of his failure to obey.” United States v.
Ryan, 402 U.S. 530, 532 (1971) (citing Cobbledick v.
United States, 309 U.S. 323 (1940)). Similarly, the
Fourth Circuit has held that “[o]rders enforcing
subpoenas issued in connection with civil and criminal
actions, or with grand jury proceedings, are normally not
considered final. To obtain immediate review of such a
district court enforcement order, the party to whom it is
issued must defy it so that a contempt order, which is
considered final, is entered against him.” Reich v.
Nat’l Eng’g & Contracting Co., 13 F.3d
93, 95 (4th Cir. 1993) (citations omitted). Considering the
more pragmatic approach taken in bankruptcy cases, however,
it is less clear whether an order compelling production
pursuant to an order authorizing a Rule 2004 examination
similarly lacks finality.
numerous courts have held generally that a bankruptcy
court’s discovery orders lack finality and are
interlocutory for the purposes of § 158(a). See,
e.g., In re Tullius, 500 Fed.Appx. 286, 289 n.8
(5th Cir. 2012); Coleman v. Simpson (In re Coleman
Craten, LLC), 15 Fed.Appx. 184 (Table), 2001 WL 987034
(4th Cir. 2001); Vance v. Lester (In re Vance), 165
F.3d 34 (Table), 1998 WL 783728, at *1 (7th Cir. 1998);
In re Jeannette Corp., 832 F.2d 43, 46 (3d Cir.
1987); W.S. Badcock v. Corp. v. Beaman, No.
4:14-CV-169-BO, 2015 WL 575422, at *2 (E.D. N.C. Feb. 11,
2015); Countrywide Home Loans v. Office of the U.S.
Trustee, No. 08-617, 2008 WL 2388285, at *3–4
(W.D. Pa. June 11, 2008) (finding that a bankruptcy
court’s order denying in part Countrywide’s
objections and motion to quash was not a final order).
several courts have held that orders specifically compelling
discovery- including those denying motions to quash subpoenas
issued pursuant to Rule 2004 orders-are interlocutory and not
subject to immediate appeal. See In re Coleman Craten,
LLC, 2001 WL 987034, at *1 (dismissing an appeal of a
bankruptcy court’s order granting in part and denying
in part a trustee’s motion to compel); Joseph v.
Lindsey (In re Lindsey), 212 B.R. 373, 375 (B.A.P. 10th
1997) (holding that a bankruptcy court order denying a motion
for a protective order did not constitute a final order);
In re Midwest Video Games, Inc, No. 98 C 3836, 1998
WL 395152, at *1 (N.D. Ill. July 9, 1998); Hotel
Syracuse, Inc. v. City of Syracuse Indus. Dev. Agency (In re
Hotel Syracuse, Inc.), No. 90-02921, 1991 WL 274253, at
*4 (N.D.N.Y. Dec. 19, 1991) (“Because the main thrust
of the September 20 Order was to compel the parties to
proceed with discovery, the Order in its entirety cannot be
classified as a final order and therefore is not appealable
as of right.).
court joins the above cases in holding that a bankruptcy
court’s order compelling discovery is not a final
order, judgment, or decree subject to immediate
appeal. The bankruptcy court’s order in this
case denied Decker’s motion to quash the
Trustee’s subpoena, compelling him, as the
representative of WAL, to comply with the bankruptcy