Seventh Circuit Has Jurisdiction Over Goldblatt’s Bankruptcy Remand

LaSalle Bank, the principal creditor in the Goldblatt’s Bargain Stores bankruptcy, claimed Great American Group committed fraud when it purchased inventory from Goldblatt’s stores that were closing. LaSalle had a security interest in the inventory, and was obliged to reimburse Great American for overpayment of the estimated inventory value. The bankruptcy judge agreed that Great American committed fraud, but ruled that LaSalle had not been damaged by the fraud. The bankruptcy court ruled that LaSalle had to reimburse Great American more than $1 million for the inventory.

LaSalle appealed to the district court. The district court reversed the bankruptcy court because “fraud vitiated the contract and thus excused LaSalle Bank from any obligation to perform.” The district court also remanded the case back to the bankruptcy court “for further proceedings consistent with” its order.

Great American then appealed to the Seventh Circuit Court of Appeals. The first issue was whether the appellate court had jurisdiction to hear the appeal. The sticking point was the district court’s remand to the bankruptcy court, which usually would render the district court’s ruling non-appealable. But the Seventh Circuit Appellate Court took Great American’s appeal because the remand was perfunctory and there was nothing left for the bankruptcy court to do.

[A]s far as we can tell, nothing has actually been remanded in this case. The bankruptcy judge entered a money judgment, which the district judge reversed; there is nothing more for the bankruptcy judge to do. The “remand” in the district judge’s opinion seems to have been an inapt entry from a word processor’s store of standard phrases. This dispute is over; the decision is final, and we have jurisdiction.

In the end, the Seventh Circuit Appellate Court reversed the district court and reinstated Great American’s judgment. Read the whole case, Leibowitz v. Great American Group, No. 07-3693 (3/18/09), by clicking here.