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MONTH-IN-BRIEF (Dec 2019)

Bankruptcy Law

Stipulating Away Your Appeal

By Michael Enright

Stipulations entered into by the parties heading into a trial can narrow the issues and expedite resolution. But they can also eliminate important rights the parties may retain in the absence of the stipulation. That risk of losing an important right was highlighted recently in In re Odyssey Contracting Corp., Case Nos. 19-1150 & 19-1151 (3d Cir. Dec. 12, 2019). The debtor was a subcontractor involved in painting the Queensboro Bridge, and claimed that it had been underpaid. In an adversary proceeding to resolve the underpayment issue, the parties entered into a final pretrial stipulation that provided that if the Bankruptcy Court determined that Odyssey was the party that breached the contract, then “all of the [p]arties’ pending claims will be withdrawn and disposed of in their entirety with prejudice” and the adversary proceeding “shall be deemed to be finally concluded in all respects.” Odyssey lost that fight when the Bankruptcy Court decided that it was Odyssey that breached the contract.  Odyssey appealed, and the defendant sought to dismiss the appeal, arguing that, under the terms of the stipulation, Odyssey had released its claims and waived its right to appeal. The Third Circuit agreed, and dismissed the appeal. The court noted that the stipulation did not expressly waive the right to appeal, or even mention that right, but reasoned that the intent of the parties was clear enough to support a waiver. In particular, the use of the term of art “with prejudice” indicated a level of finality inconsistent with any right to appeal. Furthermore, the court found support in the defendant’s reliance on cases holding that a party cannot appeal from a consent judgment if it did not expressly reserve its right to do so. The moral of the story is clear: If you stipulate to a resolution process that suggests finality, be clear in expressing the parties’ intention regarding any relief from the trial court’s determination, or risk waiving your appeal rights.

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