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In re Flanagan

submitted: May 17, 1993.


Appeal from the United States District Court for the Middle District of Pennsylvania. (D.C. Civil Action No. 92-00792). (D.C. Civil Action No. 92-00793). (D.C. Civil Action No. 92-00794).

Present: Sloviter, Chief Judge, Hutchinson and Roth, Circuit Judges,.

Author: Hutchinson


HUTCHINSON, Circuit Judge.

Appellants, John W. Flanagan, Joseph F. Valverde and Michael Savich, prisoners proceeding pro se,*fn1 appeal orders of the United States District Court for the Middle District of Pennsylvania dismissing as untimely their appeals from Chapter 13 bankruptcy court orders. The bankruptcy court dismissed without prejudice their petitions under Chapter 13 of the Bankruptcy Code for failure to meet the § 109(e) income requirements for relief under that Chapter. The district court dismissed their appeals as untimely because their joint notice of appeal was not received and stamped filed by the Clerk of the Bankruptcy Court until eight days after the ten-day period that Bankruptcy Rule 8002 allows for filing an appeal. The prisoners assert that their deposit of the notice of appeal with prison authorities for forwarding to the clerk within the ten days allowed should be deemed a timely filing.

All three prisoners' cases present the question whether the rule announced in Houston v. Lack, 487 U.S. 266, 101 L. Ed. 2d 245, 108 S. Ct. 2379 (1988) applies to a pro se prisoner's appeal to a district court from an order of a bankruptcy court. This is an issue of first impression in this Court.

For the reasons that follow, we hold that the rationale of Houston controls this case and that the prisoners' notice of appeal was timely filed when it was deposited with prison officials, addressed to the clerk with postage prepaid, on the last day for filing. Accordingly, we will vacate the order of the district court and remand for further proceedings consistent with this opinion. We also hold the district court erroneously considered Savich's appeal of the bankruptcy court's order denying his motion for sanctions against a government attorney as moot following the order dismissing his underlying bankruptcy proceeding. On remand, therefore, the district court is instructed to reconsider that issue on its merits.


The bankruptcy court had jurisdiction over the prisoners' cases under 28 U.S.C.A. § 157(a) (West Supp. 1993). It dismissed their Chapter 13 bankruptcy petitions without prejudice, see 11 U.S.C.A. § 349(a) (West 1993) (favoring dismissals without prejudice), because none of them had regular incomes sufficient to meet 11 U.S.C.A. § 109(e)'s income preconditions for Chapter 13 relief. We have held, in other contexts, that orders dismissing a complaint without prejudice are not final unless plaintiff can no longer amend the complaint. See Borelli v. City of Reading, 532 F.2d 950, 951-52 (3d Cir. 1976) (per curiam) (order dismissing case without prejudice not final or appealable because "the deficiency may be corrected by the plaintiff without affecting the cause of action"); see also Newark Branch, NAACP v. Town of Harrison, 907 F.2d 1408, 1416-17 (3d Cir. 1990); Czeremcha v. International Assoc. of Machinists and Aerospace Workers, AFL-CIO, 724 F.2d 1552, 1554 (11th Cir. 1984) (noting distinction between dismissal of the action and dismissal of the complaint).

We have never applied that principle to an order dismissing a bankruptcy petition. We have, however, adopted an exception to the rule that a dismissal without prejudice is not final and appealable when a "plaintiff cannot or will not bring a second action" because that inability or unwillingness eliminates the "risk of multiple litigation" which is at the core of the finality principle. Trevino-Barton v. Pittsburgh Nat'l Bank, 919 F.2d 874, 878 (3d Cir. 1990). In Welch v. Folsom, 925 F.2d 666, 668 (3d Cir. 1991), we applied this exception to Borelli 's non-finality rule in holding the dismissal of a pro se in forma pauperis complaint for failure to effect service of process was final and appealable when the prisoner had no means of paying for the service necessary to cure the defect because that inability eliminated the possibility of a second suit. Id. Similarly, when the prisoners in these cases had their petitions for relief under Chapter 13 dismissed because of a lack of income, they were faced with a situation they cannot cure so long as they are incarcerated. Therefore, a second action posing that problem is not likely, and the order dismissing their petitions for relief without prejudice is, in practical effect, a final order that conclusively determines the prisoners' rights to avoid the Bureau of Prisons' regulation diverting their prison wages to payment of the obligations they seek to avoid.

Accordingly, we believe the rationale of our cases holding orders dismissing a complaint without prejudice lack the finality that is a prerequisite to appeal has no application here. Therefore, the district court had jurisdiction over the orders of the bankruptcy court in question under 28 U.S.C.A. § 158(a) (West Supp. 1993). We have jurisdiction over the appeal from the district court's final order dismissing the bankruptcy appeals as untimely under 28 U.S.C.A. § 158(d) (West Supp. 1993). The issue of whether the prisoners' appeals to the district court were timely is, on this record, a jurisdictional issue involving interpretation of Bankruptcy Rule 8002, over which we exercise plenary review. In re Universal Minerals, Inc., 755 F.2d 309, 312 (3d Cir. 1985) (failure to file timely notice of appeal from bankruptcy court order deprives district court and also this Court of jurisdiction).

II. Application of Houston v. Lack

Appellants had filed voluntary Chapter 13 bankruptcy petitions in the United States Bankruptcy Court for the Middle District of Pennsylvania under 11 U.S.C.A. §§ 1301-30 (West 1979 & Supp. 1993) after the United States Bureau of Prisons introduced a "Financial Responsibility" program to collect money that prisoners owed to the federal government. The Bureau of Prisons devised a program of payments said to be voluntary but which the prisoners allege punishes any prisoner who does not agree to make the payment. The three prisoners who filed these appeals had agreed to a proposed payment plan and made payments on it for over a year and a half. After the bankruptcy court agreed to accept payment of the filing fee in each of the bankruptcies in installments, the United States filed motions to dismiss*fn2 and the Chapter 13 Trustee filed objections to the prisoners' proposed wage earner plans. In each case, the bankruptcy court treated the Trustee's objections as motions to dismiss. Because the appellants did not have the regular income 11 U.S.C.A. §§ 109(e), 101(3) requires, it dismissed the prisoners' Chapter 13 petitions without prejudice by order dated May 8, 1992.*fn3 The prisoners received the orders dismissing their petitions from prison authorities on Monday, May 11. On May 18, the last day for filing, they signed a joint notice of appeal dated that day and deposited it with prison authorities addressed to the Clerk of the Bankruptcy Court with postage prepaid. The last sentence in the notice states that the prisoners filed it on May 18 "by placing same in the legal mail box at USP-Lewisburg properly packaged and addressed with the proper amount of postage thereon in accordance with the dictates of Houston v. Lack, 487 U.S. 266, 101 L. Ed. 2d 245, 108 S. Ct. 2379 (1988)." Brief for Appellant Flanagan at 27-28. These facts are not contested.*fn4 The bankruptcy court stamped the notice of appeal as filed on May 26, 1992, eight days after the appeal period had expired.

On June 30, 1992, the district court entered an order affirming the bankruptcy court. A written opinion addressing the merits of the bankruptcy court's actions accompanied the order. It gave two reasons for affirming the bankruptcy court's dismissal of the petitions, only one of which the bankruptcy court had addressed. The district court agreed with the bankruptcy court's holding that the petitions should have been dismissed because the prisoners had insufficient regular income to meet the requirement of 11 U.S.C.A. ยง 109(e). Alternately, the ...

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