Supreme Court backs masonry contractor bankruptcy case order

Sources: CP staff; U.S. Supreme Court; Dorsey & Whitney LLP, Denver

A unanimous Supreme Court decision affirms the U.S. Court of Appeals for Sixth Circuit’s finding in Ritzen Group Inc. v. Jackson Masonry LLC, a case demonstrating U.S. Bankruptcy Court complexities. In a January 14 opinion, Justice Ruth Bader Ginsburg details a tight framework for creditors seeking relief in bankruptcy court decisions, including a 14-day window for individual party appeals.

The case stemmed from a proposed 2013 deal involving Tennessee contractor Jackson Masonry’s sale of a $1.5 million Nashville parcel to local real estate developer Ritzen Group. A failure to close the transaction in 2014 was followed by state court action and Jackson Masonry’s mid-2016 Chapter 11 filing in U.S. Bankruptcy Court for the Middle District of Tennessee. The parties pursued additional actions or motions, leading to the Sixth Circuit finding that a Ritzen appeal for relief was not timely.

“Because there is so much litigation brought within a bankruptcy case by motion or outside of an adversary proceeding, it is not always easy to determine whether the court’s ruling on a motion constitutes a final, appealable order,” observes Annette Jarvis, Dorsey & Whitney partner and nationally recognized expert the in the insolvency field. “In ruling that a bankruptcy’s court’s denial of a relief from the stay motion is a final, appealable order, the Supreme Court opened the door for more and earlier appeals in bankruptcy cases. Motions for relief from the stay are typically brought early in a bankruptcy case and often, as in this case, determine the forum for resolving a larger dispute.”

“It is clear now that denial of these motions must be appealed if the forum decision is to be challenged,” she adds. “It may also lead to confusing situations because, even after denial of a motion for relief from the stay, a new motion seeking such relief can be later filed, based on changed circumstances. How a later motion for relief from the stay will be treated if either an appeal from the earlier denial is pending or the denial was not appealed may create some difficult procedural questions as a result of [the Ritzen v. Jackson] ruling.”