Litigators Beware! Judge Gorsuch is a Stickler on Procedural Matters (Except When He Isn't)

This continues a series on the bankruptcy opinions of Neil Gorsuch, President Trump's nominee for the Supreme Court seat vacated by the death of Antonin Scalia.   One point which is clear is that Judge Gorsuch strongly believes that rules should be followed and is not sympathetic to arguments that procedural failures may be excused.

No case illustrates Judge Gorsuch's tendency to strictly enforce the rules better than Blausey v. United States Trustee, 552 F.3d 1124 (10th Cir. 2009).    In that case, he dissented from a majority opinion where he stated "I admire and agree with the court's thoughtful treatment of the merits of the case."  He dissented because he would have dismissed the appeal rather than affirming the rulings of the lower courts.   While the result would be the same, he felt that the procedural deadlines needed to be respected.

What was the heinous failure that doomed the court's jurisdiction?   In taking a direct appeal from the bankruptcy court, the debtors obtained a certification from the bankruptcy court but forgot to file a petition requesting permission to appeal with the court of appeals.    The majority ignored this failure and moved to the merits, but not Judge Gorsuch,  Finding that the debtors had conceded that they failed to file the petition, he stated "That concession should end this appeal."   

The case involved whether private disability payments should be included in the means test.   The lower courts ruled that they did count and that the debtors' case should be dismissed as an abuse.  Rather than accepting a result he admired and agreed with, he dissented.  It takes a true believer to dissent from a result he agrees with.

In five out of ten majority opinions that I read, Judge Gorsuch relied at least in part on failure to properly raise an issue in the appellate process.    This sometimes led to unusual result.   In Loveridge v. Hall (In re Renewable Energy Dev. Corp.), 792 F.3d 1274 (10th Cir. 2015), Judge Gorsuch found that the District Court could refer a case that was filed based on diversity jurisdiction to the bankruptcy court for a report and recommendation.   While this seems contrary to the referral power of 28 U.S.C. Sec. 157, Judge Gorsuch found that the appellant had waived the argument by failing to raise it below.    

In LTF Real Estate Co. v. Expert S. Tulsa, LLC (In re Expert S. Tulsa, LLC), 619 Fed.Appx. 779 (10th Cir. 2015)(unreported), he was asked to rule on whether funds in an escrow account were property of the estate. The debtor argued that the funds were fully property of the estate on the petition date.   Judge Gorsuch ruled that the funds were subject to conditions so that they were not fully property of the estate on the petition date.   He reached this result by rejecting "the one argument Expert South has fairly presented in this case."    Having made this ruling, he then went on to explain all the things that the court had not decided, including whether the estate had a contingent interest in escrow funds that could "mature into a current right to possession if the escrow agreement's contingencies are satisfied after the bankruptcy begins."    It is not entirely clear to me why he couldn't have ruled that the estate had some interest in the funds but that it was governed by the terms of the escrow agreement.   

Going against this trend, Judge Gorsuch had two opinions in which he showed creativity in ruling upon a dispute.   In a case which presaged Bullard v. Blue Hills Bank, 135 S.Ct. 1686 (2015), Judge Gorsuch considered whether the court had jurisdiction to entertain an appeal from an order denying confirmation of a plan. Woolsey v. Citibank, N.A. (In re Woolsey), 696 F.3d 1266 (10th Cir. 2012).   Judge Gorsuch found, as the Supreme Court would later conclude, that an order denying confirmation of a plan was not a final, appealable order.  However, in this case, Judge Gorsuch found that an order confirming an amended plan had been approved while the appeal was pending.   Thus, there was a final order that could be appealed and the earlier appeal that had been filed prior to the confirmation order was merely premature.   This was a creative way to avoid dismissing the appeal for lack of jurisdiction.   

In TW Telecom Holdings, Inc. v. Carolina Internet, Ltd., 661 F.3d 495 (10th Cir. 2011), Judge Gorsuch used a panel opinion to reverse a long-standing Tenth Circuit precedent.   The Tenth Circuit had ruled that the automatic stay did not appeal to an appeal by a debtor of a judgment against it.   Its original ruling was based on Collier on Bankruptcy.   Meanwhile, nine circuits reached the contrary result, finding that an appeal of a judgment against the debtor was a continuation of a proceeding against the debtor and subject to the stay.   Additionally, Collier on Bankruptcy changed its position on the appeal.   In the face of overwhelming opposition to the Tenth Circuit's position, Judge Gorsuch wrote, "Accordingly we overrule this circuit's prior interpretation of Sec. 362(a)(1) . . . ."   Just how did Judge Gorsuch get the authority to overrule his circuit's precedent?   He included a footnote stating that he had circulated the opinion to the en banc court which had unanimously agreed to overrule the precedent.    Thus, rather than mechanically following the prior wrong precedent and waiting for the en banc court to act, he took the initiative to get the whole court on board and fix the erroneous ruling.

What do these cases show us?   On the one hand, he has a Scalia-like tendency to accept a bad result when Congress or the litigants messed up.   On the other hand, he can be creative and avoid a bad result when he wants to.    Based on this limited sample of cases, I would recommend that litigants be ultra-careful about preserving error and making the right arguments below.   While Judge Gorsuch may do something surprising, you can't count on it.