-1- 06-3722-mb In re: Weber UNITED STATES COURT OF APPEALS 1 FOR THE SECOND CIRCUIT… v. -- 12 13 United States Trustee, 14 15

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06-3722-mb
In re: Weber
UNITED STATES COURT OF APPEALS 1
FOR THE SECOND CIRCUIT 2
3
August Term 2006 4
(Submitted: September 29, 2006 Decided: April 13, 2007) 5
Docket No. 06-3722-mb 6
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TODD M. WEBER, SR., TAMMY J. WEBER, 8
9
Debtors, 10
11
-- v. -- 12
13
UNITED STATES TRUSTEE, 14
15
Appellant. 16
17
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19
B e f o r e : WALKER, LEVAL AND CALABRESI, Circuit Judges. 20
Motion for leave to take a direct appeal from a decision of 21
the United States Bankruptcy Court for the Northern District of 22
New York (Stephen D. Gerling, Chief Judge) denying a request by 23
creditor CFCU Community Credit Union that the bankruptcy court 24
limit debtors-appellees’ homestead exemption to $20,000. 25
DENIED. 26
GUY A. VANBAALEN, Assistant United 27
States Trustee, Utica, New York, 28
for United States Trustee. 29
30
RALPH W. NASH, The Crossmore Law 31
Office, Ithaca, New York, for 32
Creditor-Appellant. 33
34
LAURA M. HARRIS, Harris Law Office 35
PLLC, Syracuse, New York, for 36
Debtors-Appellees. 37
38

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JOHN M. WALKER, JR., Circuit Judge: 1
In this motion for leave to take a direct appeal to the 2
United States Court of Appeals from the order of the United 3
States Bankruptcy Court for the Northern District of New York 4
(Gerling, Chief Judge), creditor-appellant CFCU Community Credit 5
Union (“CFCU”) invokes § 1233 of the Bankruptcy Abuse Prevention 6
and Consumer Protection Act of 2005 (“BAPCPA”). 28 U.S.C. § 7
158(d)(2). CFCU contests the bankruptcy court’s retroactive 8
application of New York’s homestead exemption to debtors- 9
appellees’ property. See In re Weber, No. 06-60457 (Bankr. 10
N.D.N.Y. July 10, 2006). The scope of § 1233, which authorizes 11
direct appeals under certain defined circumstances, is a matter 12
of first impression. Cf. In re Bayless, No. 06-31517, 2006 WL 13
2982101, at *1 n.2 (Bankr. E.D. Tenn. Oct. 18, 2006) (noting 14
Sixth Circuit’s decision to accept a direct appeal). We deny the 15
motion for a direct appeal in this case. 16
BACKGROUND 17
In March 2006, Todd M. Weber, Sr. and Tammy J. Weber filed 18
for bankruptcy pursuant to Chapter 7 of Title 11 of the United 19
States Code. In their petition for release, the debtors claimed 20
a combined homestead exemption in the amount of $100,000 with 21
respect to real property located in Richford, New York. 22
Creditor-appellant CFCU, holder of an unsecured claim dating from 23
2002, objected, see Opp’n to Objection to Homestead Exemption at 24

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1; CFCU argued that a 2005 amendment to the New York Civil 1
Practice Law and Rules, see L. 2005, c. 623, § 1 (eff. Aug. 30, 2
2005), amending N.Y. C.P.L.R. § 5206(a), which raised the 3
homestead exemption from $10,000 to $50,000 per person, should 4
not be applied retroactively, Aff. in Supp. of Mot. at 2. 5
Relying on In re Little, No. 05-68281 (Bankr. N.D.N.Y. 2006), the 6
bankruptcy court denied CFCU’s motion to limit the exemption to 7
$10,000 per person. CFCU, wishing to bypass appeal to the 8
district court, then sought leave from the bankruptcy court to 9
appeal directly to this court. The bankruptcy court granted 10
leave. See Certification to the U.S. Ct. of Appeals from the 11
U.S. Bankruptcy Ct. for the Northern District of New York 12
Pursuant to 28 U.S.C. § 158(d)(2)(A). Section 1233 of the BAPCPA 13
confers jurisdiction on the Courts of Appeals in such 14
circumstances, but grants them discretion to accept or decline 15
the direct appeal. We now must decide whether to exercise our 16
discretionary jurisdiction. 17
ANALYSIS 18
I. 28 U.S.C. § 158(d)(2)(A) 19
Section 1233 of the BAPCPA, see P.L. 109-8, 119 Stat. 23 20
(2005), amends 28 U.S.C. § 158(d) in pertinent part to provide 21
that this court “shall have jurisdiction of appeals” from a 22
bankruptcy court if the bankruptcy court certifies that either 23
“(i) the judgment, order, or decree involves a question of law as 24

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1 For instance, one bankruptcy court apparently felt 1
unconstrained even by the decisions of the district courts within 2
its district. See In re Shattuc Cable Corp., 138 B.R. 557, 565 3
(Bankr. N.D. Ill. 1992) (“[I]t is not clear whether a bankruptcy 4
court is bound by decisions of the district courts in that 5
district.”). This has long been a matter of concern to 6
bankruptcy-law practitioners. Prior to passage of an earlier 7
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to which there is no controlling decision . . . or involves a 1
matter of public importance; (ii) the judgment, order, or decree 2
involves a question of law requiring resolution of conflicting 3
decisions; or (iii) an immediate appeal from the judgment, order, 4
or decree may materially advance the progress of the case.” 28 5
U.S.C. § 158(d)(2)(A)(i)-(iii). This court may in its discretion 6
exercise, or decline to exercise, that jurisdiction. 28 U.S.C. § 7
158(d)(2)(A) (“and if the court of appeals authorizes the direct 8
appeal of the judgment, order, or decree”) (emphasis added). 9
We find guidance for when we should exercise jurisdiction in 10
the text of § 1233, the reasons why Congress passed the statute, 11
and in jurisprudential considerations. The focus of the statute 12
is explicit: on appeals that raise controlling questions of law, 13
concern matters of public importance, and arise under 14
circumstances where a prompt, determinative ruling might avoid 15
needless litigation. 16
Legislative history confirms that Congress intended § 1233 17
to facilitate our provision of guidance on pure questions of law. 18
Among the reasons for the direct appeal amendment was widespread 19
unhappiness at the paucity of settled bankruptcy-law precedent.1
20

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amendment to the bankruptcy code, Senator Howell Heflin noted the 1
importance of “establish[ing] a dependable body of case law.” 2
140 Cong. Rec. S14463 (daily ed. Oct. 6, 1994). 3
For a discussion of Congress’s concern at the lack of 4
bankruptcy precedent, see Paul M. Baisier & David G. Epstein, 5
Resolving Still Unresolved Issues of Bankruptcy Law: A Fence or 6
an Ambulance, 69 Am. Bankr. L.J. 525 (1995); Judith A. McKenna & 7
Elizabeth C. Wiggins, Alternative Structures for Bankruptcy 8
Appeals, 76 Am. Bankr. L.J. 625, 627 (2002) (“The bankruptcy 9
appellate system is not well structured to produce binding 10
precedent.”); Long Range Plan for the Fed. Cts., Dec. 1995, 11
Judicial Conference of the U.S., p. 47 (recommending changes to 12
bankruptcy law to “foster coherent, consistent development of 13
bankruptcy precedents”). 14
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The House Report that accompanied the BAPCPA emphasized that 1
“decisions rendered by a district court as well as a bankruptcy 2
appellate panel are generally not binding and lack stare decisis 3
value.” See H.R. Rep. No. 109-31, at 148 (2005); see also H.R. 4
Rep. No. 107-3, Prt. 1, at 112 (2001) (same). Indeed, Congress 5
believed direct appeal would be most appropriate where we are 6
called upon to resolve a question of law not heavily dependent on 7
the particular facts of a case, because such questions can often 8
be decided based on an incomplete or ambiguous record. See H.R. 9
Rep. No. 109-31, at 148-49 (noting that Congress did not expect 10
that § 1233 would be used to facilitate direct appeal of 11
“fact-intensive issues,” but rather “anticipated that . . . [for 12
such issues] district court judges or bankruptcy appellate 13
panels” would suffice). When a discrete, controlling question of 14
law is at stake, we may be able to settle the matter relatively 15
promptly. 16

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2 See McKenna & Wiggins, supra, at 635; Long Range Plan, 1
supra, at 48 (discussing cases “when the stakes are sufficiently 2
high”). 3
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Legislative history also confirms that direct appeal may be 1
appropriate where a judgment of this court would “materially 2
advance the progress of the case.”2 For instance, where a 3
bankruptcy court has made a ruling which, if correct, will 4
essentially determine the result of future litigation, the 5
parties adversely affected by the ruling might very well fold up 6
their tents if convinced that the ruling has the approval of the 7
court of appeals, but will not give up until that becomes clear. 8
Where that ruling is manifestly correct or manifestly erroneous, 9
the parties would profit from its immediate review in this court. 10
In parsing the text and legislative history of § 1233, we 11
are also assisted by our prior analysis of other grants of 12
“discretionary jurisdiction,” both in Title 28, see 28 U.S.C. § 13
1292(b), and the Federal Rules of Civil Procedure, see Fed. R. 14
Civ. P. 23(f). For instance, § 1292(b) provides that this court 15
may assume jurisdiction of an interlocutory appeal if the 16
district court certifies that the “order involves a controlling 17
question of law as to which there is substantial ground for 18
difference of opinion and that an immediate appeal from the order 19
may materially advance the ultimate termination of the 20
litigation.” As we have explained, Congress passed 28 U.S.C. § 21
1292(b) primarily to ensure that the courts of appeals would be 22

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3 Congress did not intend 28 U.S.C. § 1292(b) to serve an 1
error-correction function. See Note, Interlocutory Appeals in 2
the Federal Courts Under 28 U.S.C. § 1292(b), supra, at 631 (“The 3
statutory history of the Act plainly shows that . . . supervision 4
. . . [is not] a proper justification for a section 1292(b) 5
appeal.”). 6
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able to “rule on . . . ephemeral question[s] of law that m[ight] 1
disappear in the light of a complete and final record.” Koehler 2
v. Bank of Bermuda Ltd., 101 F.3d 863, 864 (2d Cir. 1996); see 3
also id. at 865-66 (Congress passed § 1292(b) to “avoid 4
protracted litigation”) (citing Milbert v. Bison Labs., 260 F.2d 5
431, 433-35 (3d Cir. 1958) (discussing legislative history of § 6
1292(b))). Congress also sought to assure the prompt resolution 7
of knotty legal problems. See Note, Interlocutory Appeals in the 8
Federal Courts Under 28 U.S.C. § 1292(b), 88 Harv. L. Rev. 607, 9
609 (1975); see, e.g., Klinghoffer v. S.N.C. Achille Lauro, 921 10
F.2d 21, 23-24 (2d Cir. 1990) (resolution of complicated legal 11
questions, while perhaps not essential to litigation of 12
particular case, might ease court congestion); Brown v. Bullock, 13
294 F.2d 415, 417 (2d Cir. 1961) (en banc); Gottesman v. Gen. 14
Motors Corp., 268 F.2d 194, 197 (2d Cir. 1959); cf. Schlagenhauf 15
v. Holder, 379 U.S. 104, 110-12 (1964) (use of mandamus proper to 16
settle “new and important problems”).3 Similarly, Congress hoped 17
that § 1233 would permit us to resolve controlling legal 18
questions expeditiously and might foster the development of 19

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4 Unlike § 1292(b), § 1233 expressly provides that the lower 1
court may certify that a decision is susceptible of direct appeal 2
solely because there is no governing legal precedent. Cf. Flor 3
v. Bot Fin. Corp., 79 F.3d 281, 284 (2d Cir. 1996) (per curiam); 4
Williston v. Eggleston, 410 F. Supp. 2d 274, 277 (S.D.N.Y. 2006) 5
(“Simply because a question of law has not been authoritatively 6
addressed . . . does not make the question grounds for a 7
substantial difference of opinion [under 28 U.S.C. § 1292(b)].”). 8
9
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coherent bankruptcy-law precedent.4
1
Federal Rule of Civil Procedure 23(f) also permits us to 2
exercise discretion in accepting an interlocutory appeal from a 3
district court’s decision to grant or deny class certification. 4
We have pointed to several purposes underlying Rule 23(f) that 5
are similar to those underlying § 1113. See generally In re 6
Sumitomo Copper Litig., 262 F.3d 134 (2d Cir. 2001). First, it 7
ensures that courts of appeals may review district court 8
decisions that, although not “final” within the meaning of 28 9
U.S.C. § 1291, see Coopers & Lybrand v. Livesay, 437 U.S. 463, 10
468 (1978), overruling Eisen v. Carlisle & Jacquelin, 370 F.2d 11
119 (2d Cir. 1966), sound a “death-knell,” see Sumitomo, 262 F.3d 12
at 139 (permitting direct appeal if “the certification order will 13
effectively terminate the litigation”); Blair v. Equifax Check 14
Servs., Inc., 181 F.3d 832, 834 (7th Cir. 1999). Second, Rule 15
23(f) affords the courts of appeals an opportunity to intervene 16
early to correct lower-court errors in class certification, 17
which, if not corrected at that stage, would result in wasteful 18
proceedings, often requiring re-litigation. See Sumitomo, 262 19

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5 Although some circuit courts have suggested that Rule 23(f) 1
may also serve a precedent-creation function, we disagree. 2
Compare Equifax, 181 F.3d at 835, with Sumitomo, 262 F.3d at 140 3
(permitting direct appeal to review a “novel legal question” only 4
if it is “likely to escape effective review after entry of final 5
judgment”). 6
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F.3d at 139 (permitting direct appeal if “the certification order 1
implicates a legal question about which there is a compelling 2
need for immediate resolution”); see also In re Lorazepam & 3
Clorazepate Antitrust Litig., 289 F.3d 98, 105 (D.C. Cir. 2002) 4
(concluding that “[w]here a district court class certification 5
decision is manifestly erroneous . . . that error . . . should 6
not entirely be ignored”); Lienhart v. Dryvit Sys., Inc., 255 7
F.3d 138, 144 (4th Cir. 2001) (“[r]ecognizing that Rule 23(f) was 8
explicitly promulgated to replace the use of mandamus in 9
reviewing manifestly erroneous class certifications”); Newton v. 10
Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 164 11
(3d Cir. 2001).5 Like our construction of § 1292(b), our 12
discussion in the Rule 23(f) context of the need to correct 13
errors that sound a “death-knell” is relevant here. 14
Nevertheless, although Congress emphasized the importance of 15
our expeditious resolution of bankruptcy cases, it did not wish 16
us to privilege speed over other goals; indeed, speed is not 17
necessarily compatible with our ultimate objective –- answering 18
questions wisely and well. In many cases involving unsettled 19
areas of bankruptcy law, review by the district court would be 20

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most helpful. Courts of appeals benefit immensely from reviewing 1
the efforts of the district court to resolve such questions. 2
Permitting direct appeal too readily might impede the development 3
of a coherent body of bankruptcy case-law. See Ohio v. Roberts, 4
448 U.S. 56, 64 (1980) (explaining that “the common-law 5
tradition” is a “process [that is] gradual, building on past 6
decisions, drawing on new experience, and responding to changing 7
conditions”), abrogated on other grounds by Crawford v. 8
Washington, 541 U.S. 36 (2004); Benjamin N. Cardozo, The Nature 9
of the Judicial Process 24 (1921) (explaining that the common law 10
process “goes on inch by inch”). Moreover, since district courts 11
tend to resolve bankruptcy appeals faster than the courts of 12
appeals, see Judith A. McKenna & Elizabeth C. Wiggins, 13
Alternative Structures for Bankruptcy Appeals, 76 Am. Bankr. L.J. 14
625, 629 (2002) (“District courts are, on the whole, faster at 15
deciding bankruptcy appeals than are the courts of appeals.”); 16
Long Range Plan for the Fed. Cts., Dec. 1995, Judicial Conference 17
of the U.S., at 47-48 (same), and because this court has relaxed 18
the meaning of “finality” in bankruptcy cases, see, e.g., Flor, 19
79 F.3d at 283 (“[T]he concept of ‘finality’ is more flexible in 20
the bankruptcy context than in ordinary civil litigation.”), the 21
cost in speed of permitting district court review will likely be 22
small. 23
We believe that Congress was aware of the dangers of 24

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leapfrogging the district court in the appeals process. 1
Initially divided over whether to make direct appeals mandatory 2
in certain circumstances, or to grant discretion to the courts of 3
appeals to accept or decline such direct appeals, Congress wisely 4
adopted the latter path, probably in recognition of the salutary 5
effects of allowing some cases to percolate through the normal 6
channels. See H.R. Rep. No. 107-617, at 297 (2002) (“Section 7
1233 reflects a compromise between the House and Senate 8
conferees. The House provision [would have] . . . deem[ed] a 9
judgment, decision, order, or decree of a bankruptcy judge to be 10
a judgment, decision, order, or decree of the district court 11
entered 31 days after an appeal . . . [wa]s filed with the 12
district court.”); see also Randolph J. Haines & William L. 13
Norton III, Norton Bankruptcy Reform Act Newsletter: Bankruptcy 14
Reform Legislation of 2001, Summary of the Bankruptcy Reform Act 15
of 2001, 2001 WL 533346, at *18-19 (2001). 16
We must also bear in mind that in most cases, even without 17
certification, the parties will have an opportunity to appeal 18
both to the district court and to this court before the 19
termination of the entire bankruptcy proceeding, thereby 20
satisfying many of the objectives here that also underlie § 21
1292(b) and Rule 23(f). Moreover, Congress has explicitly 22
granted us plenary authority to grant or deny leave to file a 23
direct appeal, notwithstanding the presence of one, two, or all 24

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three of the threshold conditions, see H.R. Rep. No. 109-31, at 1
148 (“Jurisdiction for the direct appeal would exist in the 2
circuit court of appeals only if the court of appeals authorizes 3
the direct appeal.”); cf. Koehler, 101 F.3d at 866. 4
With the statute’s text and history as well as these 5
jurisprudential considerations in mind, and recognizing that 6
broad varieties of cases may be eligible for direct appeal, we 7
will be most likely to exercise our discretion to permit a direct 8
appeal where there is uncertainty in the bankruptcy courts 9
(either due to the absence of a controlling legal decision or 10
because conflicting decisions have created confusion) or where we 11
find it patently obvious that the bankruptcy court’s decision is 12
either manifestly correct or incorrect, as in such cases we 13
benefit less from the case’s prior consideration in the district 14
court and we are more likely to render a decision expeditiously, 15
thereby advancing the progress of the case. On the other hand, 16
we will be reluctant to accept cases for direct appeal when we 17
think that percolation through the district court would cast more 18
light on the issue and facilitate a wise and well-informed 19
decision. Bearing the foregoing guidance in mind, some of it 20
dicta to be sure, future panels remain free to authorize a direct 21
appeal if they believe it would be consonant with Congress’s 22
goals in passing § 1233 to do so. 23
II. Application of the 28 U.S.C. § 158(d)(2)(A) Standard 24

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While it was not improper for the bankruptcy court to permit 1
the parties to request leave to file a direct appeal and to 2
certify the appeal, we decline to exercise our discretion to hear 3
this appeal. We do not perceive a conflict of such a nature that 4
creates uncertainty in the bankruptcy courts, as all three of the 5
courts within this circuit to have considered the question have 6
held that New York’s homestead exemption applies retroactively. 7
See Certification at 2 n.1; cf. In re Pappas, 207 B.R. 379, 381- 8
82 (2d Cir. BAP 1997) (discussing disputed question of bankruptcy 9
law suitable for interlocutory review). There is no showing, 10
furthermore, that evaluation of the bankruptcy court’s decision 11
at this time would lead to a more rapid resolution of the case, 12
in part because the decision does not appear to be either 13
manifestly correct or manifestly incorrect. The 2005 amendment 14
to the C.P.L.R. is plausibly remedial within the meaning of 15
McKinney’s Statutes § 54. See In re Little, No. 05-68281, at 16
*21-22. Moreover, it is unlikely that the retroactive 17
application of New York’s homestead exemption would violate the 18
Contracts Clause. Cf. In re Seltzer, 104 F.3d 234, 235-37 (9th 19
Cir. 1996) (holding that the retroactive application of a Nevada 20
exemption did not violate the Contracts Clause). 21
In sum, we think that prior consideration by the district 22
court would be beneficial and there is no compelling reason for 23
this court to address the issue in the first instance. 24

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CONCLUSION 1
For the reasons set forth above, we DENY the motion for 2
leave to take a direct appeal and remand the case to the 3
bankruptcy court for further proceedings consistent with this 4
opinion. 5
6

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