Business Law

Amendments to the Federal Rules of Bankruptcy Procedure and Federal Rules of Appellate Procedure Effective December 1, 2021

In April 2021, the Supreme Court submitted to Congress proposed revisions to the Federal Rules of Bankruptcy Procedure (“FRBP”) and the Federal Rules of Appellate Procedure (“FRAP”).  Because Congress did not reject or defer the proposed amendments, the proposed revisions went into effect on December 1, 2021.

The entire package of materials transmitted to Congress may be accessed here.  Some of the proposed revisions are described below.

Amended FRBP 3007(a)(2)(A)(ii) – Service of Claim Objections on Insured Depository Institutions

FRBP 3007(a)(2)(A)(ii) provides that an objection to a claim of an insured depository institution must be served on the person designated on the claimant’s proof of claim as the person to receive notices and in the manner provided by Rule 7004(h).  The rule has been amended to reflect that “insured depository institution” means such an institution as defined in section 3 of the Federal Deposit Insurance Act.

This amendment will ensure that the term “insured depository institution” has the same meaning in FRBP 3007(a)(2)(A)(ii) as it does in FRBP 7004(h).  It also will confirm that FRBP 3007(a)(2)(A)(ii) does not apply when serving credit unions (which are instead insured by the National Credit Union Administration).

Amended FRBP 9036 – Service by Electronic Transmission

Generally, FRBP 9036 provides that when a rule requires or permits service by mail, the clerk may send the notice to, or serve the paper on, a registered user by filing it with the court’s electronic filing system.  Service or notice is complete upon filing or sending, unless the filer or sender receives notice that it did not reach the intended recipient.  The rule does not apply to pleadings or papers required to be served pursuant to FRBP 7004.

The rule has been reorganized and divided into subparts.  The only substantive amendment takes account of the Administrative Office’s program regarding notices served by courts on high-volume paper-notice recipients.

Although the amended rule still says that electronic notice or service is complete upon filing or sending, but is not effective if the filer or sender receives notice that it did not reach the intended recipient, the amended rule also says, “It is the recipient’s responsibility to keep its electronic address current with the clerk.”  A memo from the advisory committee reflects that this was added in the hope that it reduces the number of bounce-backs.

Other Conforming Amendments to the FRBP

FRBP 2005(c), which applies to the conditions of release for a debtor who has been apprehended to compel attendance at an examination, has been amended to refer to 18 U.S.C. § 3142 instead of 18 U.S.C. § 3146(a) and (b).

FRBP 7007.1, which applies to corporate ownership statements, has been amended to conform to recent amendments to FRBP 8012 and FRAP 26.1.  Also, the rule’s corporate-disclosure requirement has been extended to would-be intervenors.

Amended FRAP 3(c)(1)(B) and New FRAP 3(c)(4) and (6) – Contents of the Notice of Appeal (Generally)

FRAP 3(c)(1)(B) previously stated that a Notice of Appeal must “designate the judgment, order, or part thereof being appealed.”  This has been changed to say that the Notice of Appeal must “designate the judgment—or the appealable order—from which the appeal is taken.”

New FRAP 3(c)(4) states, “The notice of appeal encompasses all orders that, for purposes of appeal, merge into the designated judgment or appealable order.  It is not necessary to designate those orders in the notice of appeal.”

New FRAP 3(c)(6) states, “An appellant may designate only part of a judgment or appealable order by expressly stating that the notice of appeal is so limited.  Without such an express statement, specific designations do not limit the scope of the notice of appeal.”

According to the advisory committee, these changes are consistent with the limited purpose of a Notice of Appeal – to provide notice that a party is appealing and to invoke the jurisdiction of the court of appeals.  It is the role of the briefs, not the Notice of Appeal, to focus the court on the issues on appeal.

The advisory committee comments that some view the current rule as an invitation (if not a requirement) to list every order the appellant wants to challenge in the appeal.  The revision is intended to confirm that the Notice of Appeal is only supposed to designate the final judgment.  Designation of the final judgment confers appellate jurisdiction over prior interlocutory orders that merge into the final judgment.  In most cases, it is appropriate to designate only the judgment or appealable order. 

New FRAP 3(c)(6) still allows an appellant to deliberately choose to limit the scope of the Notice of Appeal.  However, the notice must expressly say that the appellant is doing so.  Otherwise, under new FRAP 3(c)(4), designating the final judgment or appealable order will by default encompass any and all of the interlocutory judgments and orders that merged into the final judgment or order.

Readers should note that these rule changes will apply only to the FRAP, which governs procedure in the U.S. courts of appeals.  Corresponding revisions have not been made (yet) to the FRBP, which generally governs appeals from bankruptcy courts to district courts and bankruptcy appellate panels.  For example, Official Form 417A (Notice of Appeal and Statement of Election) still asks the appellant to describe the judgment, order, or decree appealed from, and FRBP 8003(a)(3)(B) requires that a notice of appeal “be accompanied by the judgment, order, or decree, or the part of it, being appealed.”  In addition, even though it is the role of the briefs to focus the appellate court on the issues on appeal, FRBP 8009(a)(1)(A) still requires an appellant to file a statement of the issues to be presented.

New FRAP 3(c)(5) – Contents of the Notice of Appeal (Summary Judgment Orders Resolving Remaining Claims, and Orders on Motions for Reconsideration)

New FRAP 3(c)(5) states, “In a civil case, a notice of appeal encompasses the final judgment, whether or not that judgment is set out in a separate document under [FRCP] 58, if the notice designates: (A) an order that adjudicates all remaining claims and the rights and liabilities of all remaining parties; or (B) an order described in Rule 4(a)(4)(A).”

This new rule deals primarily with two situations.

First, assume that early on in a case the district court grants the defendant’s motion to dismiss some claims, and then a year later grants the defendant’s motion for summary judgment as to the rest of the claims.  The latter order is a final judgment because it resolves all of the remaining claims.  But if the Notice of Appeal describes the order as an order granting summary judgment, instead of as a final judgment, some courts would limit appellate review to the summary judgment order and refuse to consider a challenge to the earlier dismissal order.  This especially might occur if the district court complies with FRCP 58 and enters a separate document denying all relief.  New FRAP 3(c)(5)(A) is designed to avoid this result.

Second, assume that the district court enters a final judgment, the losing party files a motion for a new trial (FRCP 59) or for relief from the judgment (FRCP 60), the district court enters an order denying the motion, and then the losing party files a Notice of Appeal designating only the latter order as the order on appeal.  Some courts would treat the Notice of Appeal as being limited to the second order, not to the underlying final judgment.  New FRAP 3(c)(5) is intended to “reduce the unintended loss of appellate rights in this situation.”

Again, readers should note that these rule changes apply only to the FRAP, which governs procedure in the U.S. courts of appeals.  Corresponding revisions have not been made (yet) to the FRBP, which generally governs appeals from bankruptcy courts to district courts and bankruptcy appellate panels.

Amended FRAP 3(c)(7) (formerly (c)(4)) – Notices of Appeal that Designate Only Interlocutory Orders

FRAP 3(c)(4) previously stated that an appeal may not be dismissed “for informality of form or title of the notice of appeal, or for failure to name a party whose intent to appeal is otherwise clear from the notice.”  This has been moved from (c)(4) to (c)(7), and has been revised to also say that an appeal may not be dismissed “for failure to properly designate the judgment if the notice of appeal was filed after entry of the judgment and designates an order that merged into that judgment.”

This covers a scenario in which an appellant files the Notice of Appeal after a final judgment is entered, but instead of designating the final judgment in the Notice of Appeal the appellant designates only an interlocutory order.  The advisory committee was concerned that if FRAP 3(c)(1)(B) requires that either a final judgment or an appealable order be designated, an appellate court might conclude that a notice designating only an interlocutory order would be ineffective.  Pursuant to the new language in newly-designated FRAP 3(c)(7), the court will treat the Notice of Appeal as if it had properly designated the final judgment.

These materials were written by former ILC co-chair John N. Tedford, IV, of Danning, Gill, Israel & Krasnoff, LLP, in Los Angeles, California (jtedford@DanningGill.com).  Editorial contributions were provided by Ed Hays of Marshack Hays LLP in Irvine, California (ehays@marshackhays.com). 


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