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As every first-year law student knows, the final decisions of a higher court in a particular system become binding precedent on all the courts below. While this is just as truthful a statement for our bankruptcy courts, it has been an increasingly difficult principle to apply. To help illustrate this point, this article will examine a decision from a bankruptcy judge in Connecticut that puts further in doubt what higher precedents, if any, are to be applied to individual bankruptcy cases. In a respectful yet provocative decision, this bankruptcy court puts into question the continued viability of the so-called “BAPs,” the Bankruptcy Appellate Panels implemented in various circuits across the nation. Given the distinct possibility that the BAPs have now proved themselves to be a noble yet failed experiment, this decision may bring to the fore the need for further clarification of the bankruptcy appellate process. The underlying bankruptcy case in Daly v. Deptula( In re Carrozzella & Richardson), 255 B.R. 267 (Bankr. D. Conn. 2000), dealt with the insolvency of a law firm that had been accused of perpetrating fraud on its clients and absconding with client funds in a period spanning two decades. In the aftermath of the firm’s insolvency, Daly, the court-appointed trustee, initiated a number of adversary proceedings to recover the fraudulently obtained funds. This resulted in a number of lawsuits implicating critical provisions of local state law. The individual litigations proceeded, each at its own pace before the bankruptcy court and then on subsequent appeals. In certain of the earlier cases, the BAP for the 2nd U.S. Circuit Court of Appeals reversed the bankruptcy judge below on the basis of significantly different interpretations of the prevailing state law. Against this backdrop, the instant adversary proceeding came before Bankruptcy Judge Albert S. Dabrowski. PULLING NO PUNCHES From the outset, Judge Dabrowski pulled no punches. Noting that the trustee was prosecuting various summary judgment motions based on the earlier decisions of the BAP, the bankruptcy court noted its “respectful, yet profound, disagreement with certain of the BAP opinion’s conclusions of law,” and therefore decided that it would rule here in a manner contrary to that higher opinion. All this was predicated on Judge Dabrowski’s conclusion that he “should regard BAP opinions as persuasive, but not binding, precedent.” Id.at 271. The Dalycourt focused its attention on an “obscure, yet important, area of federal jurisdiction implicated by these proceedings,” that being the proper stare decisis relationship between the bankruptcy courts and the Bankruptcy Appellate Panel. What obligation, if any, does the bankruptcy court have to adopt the conclusions of law of a BAP as a rule of decision in other cases, asked Judge Dabrowski? Finding the judicial authority scant and without uniformity, this bankruptcy court decided that it could only resolve this pressing issue from a common sense analysis of the constitutional statutory framework of bankruptcy appellate jurisdiction. After outlining the aforementioned appellate pathways set forth by statute, Judge Dabrowski observed that BAPs themselves are not universally accepted. Their very existence depends on being authorized by the circuit court, and then having the judges of the district courts below accept the functioning of their service. Thereafter, appeals from orders of bankruptcy judges within that particular district can be handled by the BAP or by a district judge. A critical step in this process, indicated Judge Dabrowski, is that the BAP can hear the appeal only on the parties’ consent. Otherwise, the appeal is handled by a district judge. Id.at 272. See28 U.S.C. � 158(c)(1) (any party may elect to have the district court hear the appeal). QUESTIONS RAISED BY ‘DALY’ Against the foregoing jurisdictional background, Dalyraised the following question: What is the precedential effect of a given BAP decision on a bankruptcy court’s deliberation in a different case? Searching for a relevant starting point, this bankruptcy judge decided that the answer is best found by first approaching the stare decisis effect of district court decisions on the lower bankruptcy courts. The Dalycourt started with the fundamental proposition that the decision of one federal district court judge is not binding on another federal district judge, even when both judges preside within the same district. Id.at 272. See also Threadgill v. Armstrong World Industries Inc., 928 F.2d 1366 (3d Cir. 1991). “Logically then,” said Judge Dabrowski, “a judge of the Bankruptcy Court — a unit of the District Court — is not bound by the decision of a single district court judge.” Id.at 272. See also City of Olathe v. KAR Development Associates L.P.( In re KAR Development Associates L.P.), 180 B.R. 629, 640 (D. Kansas 1995). The Connecticut bankruptcy judge logically deduced that if one was to view district court decisions as binding on bankruptcy judges, but not on other district court judges, that would potentially place a bankruptcy judge in the “impossible position of simultaneously following two or more conflicting district precedents.” In this fashion, Judge Dabrowski persuasively argued as to why the decision of a higher district court judge is merely persuasive on a bankruptcy judge, but not binding. From this solid foundation, the Dalycourt moved on to apply the maxim to BAP decisions. Indeed, Judge Dabrowski noted that such conclusions applied with at least equal force to decisions rendered by a Bankruptcy Appellate Panel. “There is no principled reason why decisions of a BAP panel should have more precedential weight than those of a district court.” Id.at 272. Compare Bank of Maui v. Estate Analysis Inc., 904 F.2d 470, 472 (9th Cir. 1990). Consider that BAP panels are composed of Article I judges whose “appellate license” depends entirely on the permission of the Article III judges of the district court, the judicial council of the prevailing circuit court and the consent of the parties to any given appeal. Id.at 272-273. UNIFORM BODY OF LAW The history of the BAPs does not give any support whatsoever to the suggestion that Congress’ authorization to create BAPs was motivated substantially by a desire to create a uniform body of bankruptcy law within the circuits. Indeed, the events leading up to the promulgation of the BAPs instead suggests they were conceived primarily as tools for relieving district court judges of the “ofttimes undesirable and burdensome aspect of their workload.” Id.at 273, citing “Report of the Federal Courts Study Committee,” Part II, Section 4.B.1.a. (1990) (indicating major motivation for mandating BAPs was merely to create “additional capacity within the judicial branch,” and not to create substantive law). Moreover, Judge Dabrowski pointed out that regarding these intermediate decisions as binding precedent would imbue the BAPs with power to “create a kind of provisional circuit law,” something that might rile the constitutional waters by permitting a panel of Article I judges sitting as a BAP to make law before the Article III circuit courts (or even the district courts) have spoken. This bankruptcy court found that possibility at the least to be “odd and unseemly,” if not outright unconstitutional. “[I]f Congress had intended the decisions of an Article I court to have the same binding precedential effect as decisions of a circuit court of appeals, it needed to say so in unequivocal language,” declared Judge Dabrowski. But since the lawmakers had not, at most, bankruptcy courts can regard BAP decisions as persuasive, but not binding, precedent. Such was the bold decision of one bankruptcy judge. Yet Dalybrings into light a serious issue of constitutional import for our nation’s bankruptcy courts, one arising from the very infrastructure of the court system. As said at the outset, BAPs were embarked on as a noble experiment to hasten bankruptcy appeals. But is it time to admit that the venture has, if not failed, run into such serious obstacles that it must be jettisoned? It is axiomatic that the bankruptcy courts have suffered almost regular cataclysms because their jurisdiction is so limited, all due to the fact that bankruptcy judges have such limited authority as Article I “legislative” judges, and not true Article III jurists. After nearly 25 years of suffering under this hindrance, any possibility of expanding the powers of bankruptcy judges is still extremely remote, so the solution does not lie there. A DISASTER OF CONSTITUTIONAL PROPORTIONS If our bankruptcy judges must then continue to exercise such circumscribed powers, then why exacerbate these shortcomings with the BAPs? As so rightly pointed out by the court in Daly, Article III district judges cannot bind each other; that is a power reserved only for the circuit courts of appeal. Certainly then, it is “unseemly,” as Judge Dabrowski said, to deem BAP decisions to hold conclusive weight, and it may even invite a disaster of constitutional proportions. Consider also that BAPs have not been established nationwide, for a variety of good reasons. Nevertheless, the Constitution itself requires uniform laws of bankruptcy throughout the land. U.S. Const., Art. I, � 8. Should not the system of adjudicating the Bankruptcy Code be as uniform as that body of law itself? To be sure, BAPs have made their contribution. As aforenoted, they operate fully throughout five circuits and partially within one. Research indicates that over 140 BAP decisions have been issued from the beginning of 1999 to the present. By and large, these well-reasoned opinions not only resolved crucial matters in the cases then before them, but also provided guidance across the nation for rulings yet to come. SYSTEMIC FLAW Nonetheless, when one considers that BAPs present a sporadic pattern spread out randomly over our bankruptcy courts, that their decisions cannot lawfully be said to be binding even within their own borders, and, finally, that the operation of BAPs reveals a systemic flaw that might provoke yet another constitutional crisis for the bankruptcy courts, one must seriously question their continued viability. In sum, it could well be that Dalyis the harbinger of that danger, and we should heed its warning before it becomes too late. Both attorneys, Anthony Michael Sabino is an associate professor of law and Lawrence A. Wander is an assistant professor of law in the Graduate Division, Peter J. Tobin College of Business at St. John’s Universityin New York.

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