In Re Ernest Dykes Charlene Dykes, Debtors. General Motors Acceptance Corporation v. Ernest Dykes and Charlene Dykes, Charles J. Dehart, Iii, Trustee, 10 F.3d 184, 3rd Cir. (1993)

10 F.
3d 184
62 USLW 2403, Bankr. L. Rep. P 75,615
In re Ernest DYKES; Charlene Dykes, Debtors.

GENERAL MOTORS ACCEPTANCE CORPORATION
v.
Ernest DYKES and Charlene Dykes, Appellants,
Charles J. Dehart, III, Trustee.
No. 93-7235.
United States Court of Appeals,

Third Circuit.
Submitted under Third Circuit LAR 34.1(a)
Oct. 1, 1993.
Decided Nov. 30, 1993.
Dorothy M. Feldman, Harrisburg, PA, for appellants.

J. Stephen Feinour, John C. Sullivan, Nauman, Smith, Shissler & Hall,
Harrisburg, PA, for appellee.
Before: SCIRICA, ALITO and ALDISERT, Circuit Judges.
OPINION OF THE COURT
ALDISERT, Circuit Judge.
The major question for decision in this appeal from a district court judgment
affirming a bankruptcy court order is whether Debtor-Appellants Ernest and
Charlene Dykes were "persons aggrieved" by the bankruptcy court's order,
thereby conferring upon them standing to appeal the order to the district court
and, in turn, to appeal that judgment to this court. We hold that Appellants are
not "persons aggrieved." We therefore dismiss this appeal and remand this case
to the district court with a direction to dismiss Appellants' appeal from the
bankruptcy court.
The district court had subject matter jurisdiction pursuant to 28 U.S.C. Sec.
158(a). Because the district court's order of March 3, 1993 affirming the
decision of the bankruptcy court was a final judgment, we have jurisdiction
pursuant to 28 U.S.C. Sec. 158(d). This appeal was timely filed on April 2,
1993.
3
We review findings of fact in bankruptcy matters under the clearly erroneous

standard but in this case, as the district court observed, "the facts are
undisputed." In re Dykes, No. 92-1852 (M.D.Pa. March 3, 1993). We exercise
plenary review over questions of law. Universal Minerals, Inc. v. C.A. Hughes
& Co., 669 F.2d 98, 102 (3d Cir.1981).
I.
4
Appellants Ernest and Charlene Dykes purchased a Pontiac 6000 automobile in

November 1989 under an installment sales contract. The automobile dealership
then assigned its rights under the contract to Appellee, General Motors
Acceptance Corporation (hereinafter "GMAC"). Appellants made 19 of the
required 48 payments before defaulting on their agreement in November 1991.
Appellants filed for relief under Chapter 13 of the Bankruptcy Code on October
24, 1991 and, concurrent with their bankruptcy petition, they submitted their
Chapter 13 plan (hereinafter "the Plan"). Under the Plan, Appellants would
make monthly payments of $120 over 48 months to two creditors. The first ten
monthly payments would be made solely to Debtors' lawyer, Dorothy M.
Feldman, to satisfy her claim of $1,200. Thereafter, the payments would be
made to GMAC to satisfy its claim. Specifically, Debtors' Plan stated:
5Class 3 Allowed Secured Claim shall be dealt with as follows:

6. . . . .
7
Loan
secured by lien on 1986 Pontiac 6000 will be paid lesser of fair market value
of vehicle (cramdown--$2,787.50 at contract rate of interest) or balance of loan owed
on date of bankruptcy filing.
8
App. at A41.
Thus, under the Plan submitted, no creditor except the attorney for Debtors
would receive payments for the first ten months. As the secured creditor,
GMAC would begin receiving payments on the eleventh month. GMAC
objected to the Plan, contending that the value of its collateral, the 1986 Pontiac
automobile, would be diminished if GMAC were forced to wait 11 months
before receiving its first payment under the Plan.
10
On November 13, 1992, after notice and a hearing on GMAC's objections, the
bankruptcy court concluded that payments to Debtors' attorney were entitled to
some priority consideration under 11 U.S.C. Secs. 507(a)(1) and 503(b).
Relying on 11 U.S.C. Sec. 1326(b), the court also determined that, although
GMAC's claim was not entitled to super-priority status under Section 507(b), it
would require that installment payments under an amended plan be equally
divided between the Debtors' attorney and GMAC until the attorney received
her $1,200.00 fee, at which time remaining installments would be paid to
GMAC alone.
11
In reaching its decision, the bankruptcy court noted statistics introduced by

GMAC demonstrating the likelihood of Chapter 13 failures. The court
determined that "the statistics do establish a significant risk of plan failure in
the context of Chapter 13 cases" and that "[t]here is no question that GMAC's
collateral will depreciate over the period in which it would await its first
payment under the Plan as proposed. Thus, if the Plan would fail, GMAC most
likely would not obtain the value of its collateral." App. at A155-A156.
12
Accordingly, the bankruptcy court approved the amended plan in which

Debtors' counsel and GMAC would share equally the monthly payments of
$120 until counsel received her $1,200 fee. Thereafter, remaining payments
would be made to GMAC.
13
We deem it significant that Appellants themselves are wholly unaffected by the

terms of the amended plan. The number of payments that they are required to
make and the amount of each payment are identical under both proposals. The
only difference between the Plan originally offered and that approved by the
bankruptcy court is the allocation of payments among the payees. Under the
original Plan, Debtors' attorney was to be paid in full after 10 months, and
under the amended plan she would have to wait 10 additional months. Under
the original Plan, GMAC was required to wait 11 months before receiving any
payment, and under the amended plan it would receive payments immediately
and concurrently with Debtors' counsel.
14
Nevertheless, Appellants appealed to the district court, and later to us, seeking
reversal of the bankruptcy court's order and reinstatement of the original Plan
so that their attorney could receive her fee in full at an earlier date. Essentially,
Appellants argue that the bankruptcy court erred as a matter of law in relying
upon Section 1326(b) as authority to order the concurrent payments, and that
the district court erred in affirming that order. They contend that the bankruptcy
court's order "is inconsistent with case law, Congressional intent and public
policy." Brief for Appellants at 12.
15
We will not meet the central issue presented by Appellants relating to the
interpretation of Section 1326(b). We have concluded that, because the
amended plan ordered by the bankruptcy court has no effect upon the payment
schedule of Appellants and only affects the time period in which their counsel
receives payment of her fee, Appellants are not "persons aggrieved" and
therefore lack standing to appeal the bankruptcy court's order.
II.
16
The requirement of appellate standing in bankruptcy proceedings derives from

Section 39(c) of the former Bankruptcy Act of 1898, 11 U.S.C. Sec. 67(c)
(repealed 1978). This section limited appellate standing to a "person aggrieved
by an order of a referee." A "person aggrieved" has been defined as a person
whose rights or interests are "directly and adversely affected pecuniarily" by the
order or decree of the bankruptcy court. In re Fondiller, 707 F.2d 441, 443 (9th
Cir.1983). Although former Section 39(c) has no direct counterpart in the 1978
Bankruptcy Code, courts of appeals have recognized that the requirement of
standing continues to be a prerequisite for appellate review in proceedings
under the current Code. See In re Marcus Hook Dev. Park, Inc., 943 F.2d 261,
269 n. 1 (3d Cir.1991) (Hutchinson, J., concurring); see also In re Andreuccetti,
975 F.2d 413, 416 (7th Cir.1992); In re Clark, 927 F.2d 793, 795 (4th
Cir.1991); In re Revco D.S., Inc., 898 F.2d 498, 499 (6th Cir.1990); Holmes v.
Silver Wings Aviation, Inc., 881 F.2d 939, 940 (10th Cir.1989); Kane v. JohnsManville Corp., 843 F.2d 636, 641 (2nd Cir.1988); In re Hipp, Inc., 859 F.2d
374, 375 (5th Cir.1988); In re El San Juan Hotel, 809 F.2d 151, 154 (1st
Cir.1987); In re Fondiller, 707 F.2d 441 at 442-43 (9th Cir.1983).
17
As the Court of Appeals for the Second Circuit noted:
18
These
decisions reflect the understandable concern that if appellate standing is not
limited, bankruptcy litigation will become mired in endless appeals brought by the
myriad of parties who are indirectly affected by every bankruptcy court order.
19
Kane, 843 F.2d at 642.
A.
20
Litigants are "persons aggrieved" if the order diminishes their property,

increases their burdens, or impairs their rights. In re Fondiller, 707 F.2d at 442.
Our court has long adhered to the "person aggrieved" standard. See, e.g., In re
United States Overseas Airlines, Inc., 419 F.2d 932, 933 (3d Cir.1969). We
have continued to invoke the "person aggrieved" terminology as it applies to
bankruptcy appeals following the enactment of the current Bankruptcy Code.

See In re Marcus Hook, 943 F.2d at 269 n. 1 (Hutchinson, J., concurring) ("[A]t
least some of the objectors are aggrieved parties directly affected by the
conflict between the order of sale and the final decree and as such should be
able to assert their rights directly in the bankruptcy court.").
21
Although we did not specifically address the continued viability of the "person
aggrieved" standard in In re Marcus Hook, we find no indication that Congress
intended to "alter the right to appellate review by leaving undefined in the
[current] Code the requisites for standing." In re Fondiller, 707 F.2d at 443.
Moreover, bankruptcy courts in this judicial circuit consistently have relied
upon the "person aggrieved" standard in cases subject to the current Bankruptcy
Code. In In re Specialty Foods of Pittsburgh, Inc., 91 B.R. 364, 373
(Bankr.W.D.Pa.1988), for example, the court held that the appellant lacked
standing because he was not an individual whose " 'rights and interests were
directly and adversely affected pecuniarily' " or whose "property has been
diminished, burdens increased, or rights impaired." (quoting In re El San Juan
Hotel, 809 F.2d at 154); see also In re Record Club of America, 28 B.R. 996,
997 (M.D.Pa.1983); Connellsville Plaza v. Jiffy Foods Corp., 92 B.R. 136, 138
(W.D.Pa.1988); In re Orlando Investors, L.P., 103 B.R. 593, 596-97
(Bankr.E.D.Pa.1989). We are satisfied that an appellant must qualify as a
"person aggrieved" to be eligible for appellate review of a bankruptcy court
order.
22
Whether an appellant is a "person aggrieved" is generally considered a question

of fact for the district court. In re E.C. Ernst, Inc., 2 B.R. 757, 760
(D.C.N.Y.1980). In the instant case, the district court did not consider the
standing issue. Because the relevant facts and necessary evidence are clearly
before us and not in dispute, we consider it proper to address the issue
ourselves. See In re El San Juan Hotel, 809 F.2d at 154 n. 3; In re Fondiller, 707
F.2d at 443.
B.
23
The Court of Appeals for the Tenth Circuit addressed a scenario similar to the
one before us in Holmes v. Silver Wings Aviation, Inc., 881 F.2d at 940. There
a debtor objected to the order of a district court affirming the bankruptcy court's
decision to award the creditor attorney's fees as administrative expenses. In
denying standing to the debtors, the court reasoned that the debtors had agreed
to pay a fixed sum under their Chapter 13 plan. Consequently, the debtors had
no interest in how that sum was allocated:
24 [debtors'] Chapter 13 plan has been confirmed.... [T]he total amount to be paid
The
by the [debtors] under the latest plan is $13,050.00.... Inasmuch as the [debtors]
have agreed to a payout totalling $13,050.00, they make no effective argument as to
how they can be aggrieved by its allocation among the payees. They are, apparently,
not liable for any further payout. Thus, since they are not directly and adversely
affected pecuniarily beyond the extent to which they have already agreed, they have
no standing to contest the award of attorney's fees at issue here.
25
Id.
26
We accept the reasoning of the Tenth Circuit and conclude that Debtors in this
action similarly lack standing. Under both the original Plan submitted by
Debtors and the plan as modified by the bankruptcy court, Debtors were
required to pay $120.00 per month and to make the same number of monthly
installments. The only difference between the two plans was that under the
modified plan the attorney was no longer the exclusive beneficiary of the first
series of payments; she was required to share them equally with GMAC and to
wait an additional 10 months before payment in full. As was the case in
Holmes, Appellants in this appeal have no pecuniary interest in the particular
allocation of fixed payments.
C.
27
The "person aggrieved" standard in bankruptcy appeals can be analogized to

traditional doctrines of standing. See Charles A. Wright, Arthur R. Miller &
Edward H. Cooper, Federal Practice & Procedure Sec. 3531 (2nd ed. 1984)
("At times courts are tempted to draw from standing decisions in addressing
such matters as the ... procedural rights of bankrupts."). A court employs
standing doctrines when it refuses to consider a legal claim on the ground that,
even though the claim may be meritorious, the litigant advancing it is not
properly situated to raise it before the court. The focus is on the party, not the
claim itself. "The requirement of standing 'focuses on the party seeking to get
his complaint before a federal court and not on the issues he wishes to have
adjudicated.' " Valley Forge Christian College v. Americans United for
Separation of Church and State, Inc., 454 U.S. 464, 484, 102 S.Ct. 752, 765, 70
L.Ed.2d 700 (1982) (quoting Flast v. Cohen, 392 U.S. 83, 99, 88 S.Ct. 1942,
1952, 20 L.Ed.2d 947 (1968)).
28
Based upon our analysis of bankruptcy appellate review standing requirements,

we hold that Ernest and Charlene Dykes are neither proper appellants in this
court nor were they proper appellants in the district court. To appeal from an
order of a bankruptcy court one must show that the order diminishes one's
property, increases one's burdens or impairs one's rights. Under the undisputed
facts here, Appellants were not so affected. Their appeal will be dismissed.
III.
29
Appellate costs are taxed in the manner provided by Rule 39(a) of the Federal
Rules of Appellate Procedure:
30
Except
as otherwise provided by law, if an appeal is dismissed, costs shall be taxed
against the appellant unless otherwise agreed by the parties or ordered by the court.
31
Under the circumstances of this case, we conclude that costs should not be
assessed against Appellants. Costs will be assessed against Appellants' counsel,
Dorothy M. Feldman, because only she stood to gain in the event of a
successful appeal to the district court and to us.
32
Moreover, we are directing the Clerk to forward a copy of this opinion to the
bankruptcy court with the suggestion that no attorney's fees be approved if
claimed against Appellants or any bankrupts' estate for the prosecution of
appeals to the district court or to this court in this matter.
IV.
33
The appeal will be dismissed and the proceedings remanded to the district court
with the direction to vacate its judgment and to enter an order dismissing the
appeal from the bankruptcy court.

In Re Ernest Dykes Charlene Dykes, Debtors. General Motors Acceptance Corporation v. Ernest Dykes and Charlene Dykes, Charles J. Dehart, Iii, Trustee, 10 F.3d 184, 3rd Cir. (1993)

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10 F.

In re Ernest DYKES; Charlene Dykes, Debtors.

United States Court of Appeals,

Dorothy M. Feldman, Harrisburg, PA, for appellants.

We review findings of fact in bankruptcy matters under the clearly erroneous

Appellants Ernest and Charlene Dykes purchased a Pontiac 6000 automobile in

5Class 3 Allowed Secured Claim shall be dealt with as follows:

In reaching its decision, the bankruptcy court noted statistics introduced by

Accordingly, the bankruptcy court approved the amended plan in which

We deem it significant that Appellants themselves are wholly unaffected by the

The requirement of appellate standing in bankruptcy proceedings derives from

As the Court of Appeals for the Second Circuit noted:

Kane, 843 F.2d at 642.

Litigants are "persons aggrieved" if the order diminishes their property,

bankruptcy appeals following the enactment of the current Bankruptcy Code.

Whether an appellant is a "person aggrieved" is generally considered a question

The "person aggrieved" standard in bankruptcy appeals can be analogized to

Based upon our analysis of bankruptcy appellate review standing requirements,

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