In Acheron Capital, Ltd. v. Mukamal, No. 21-13052 (11 th Cir. Jan. 6, 2022), a panel of the Eleventh Circuit holds that an order authorizing a court-appointed trustee’s auctioning off of life-insurance policies was neither a “final decision” subject to appellate review, nor did it fall into any of the exceptions that permitted interlocutory review of non-final orders.
In 2004, the Securities and Exchange Commission sued Mutual Benefits Corporation, which “sold fractional investment interests in viatical settlements . . . . ‘A viatical settlement is a transaction in which a terminally ill insured sells the benefits of his life insurance policy to a third party in return for a lump-sum cash payment equal to a percentage of the policy’s face value.’” It was alleged that Mutual Benefits fraudulently represented to investors that the life expectancies of the insureds were determined by “independent physicians.” The district court put the policies into receivership and investors were given “the option of retaining their investments [Keep Policies] or directing the court-appointed receiver to sell their interests.” The Keep Policies were eventually transferred to a court-appointed trustee named Mukamal.
Acheron Capital owned fractional interests in the Keep Policies held in trust. As it came time to wind down the trust and distribute the assets, Acheron and the trustee clashed over future of the Keep Policies. Acheron wanted them transferred to itself, while the trustee proposed to sell them off. The district court accepted the trustee’s plan. Resolving remaining disputes between themselves, Acheron and the Trustee entered into the 2015 Agreement, which “provided that, in the event that the Trustee sells ‘the entire portfolio of policies owned by the Trust,’ ‘Acheron will have the right to bid upon any sale of a policy in which it has an interest and the right to top any bid submitted by another party.’”
In 2021, Acheron objected that the trustee proposed to sell the Keep Policies in violation of the 2015 Agreement. But the district court, siding with the trustee, held that the “2015 Agreement d[id] not require the Trustee to sell or value the policies on a policy by policy basis when liquidating the Trust” (the Instructions Order).
Acheron appealed the Instructions Order. The Eleventh Circuit requested supplemental briefing on whether the Instructions Order was in fact appealable.
The Eleventh Circuit dismisses the appeal. It first holds that the Instructions Order is not a “final decision” for purposes of appellate review under 28 U.S.C. § 1291. “[A] postjudgment order is an appealable final decision if the order ‘finally dispose[s] of the question . . . raised by the post-judgment motion,’ ‘and there are no pending proceedings raising related questions.’” Under this definition, the Instructions Order was not a final decision because the wind-up was not complete and other issues remained to be decided. “The dispute over the Trustee’s power to sell Keep Policies . . . first arose when Acheron and the Trustee filed competing motions to wind down the trust and sell the Keep Policies.” But this issue was just one of several involved in the wind-up process, including Acheron’s other objections to the plan. For instance, Acheron had also “asked for an order directing the Trustee to ask other investors whether they wish to opt out of the Trustee’s plan to sell their interests in the Keep Policies.” Indeed, “[o]nly after the district court approves the sale will there be a final decision.”
The panel also rejects application of other doctrines that would permit an interlocutory appeal of the Instructions Order.
First, the “Instructions Order is not appealable under the collateral order doctrine” because it “cannot satisfy the . . . requirement—that the order ‘resolve an important issue completely separate from the merits of the action,’” being neither “sufficiently important” nor “completely separate from the merits of the remaining post-judgment proceedings. Moreover, “the Instructions Order may be effectively reviewed on appeal from the order approving the sale” if Archeron obtains a stay.
Second, the doctrine of “practical finality” does not apply. The “doctrine of practical finality,” permits review of an order that “‘decides the right to the property in contest, and directs it to be delivered up by the defendant to the complainant, or directs it to be sold, or directs the defendant to pay a certain sum of money to the complainant.’” But here, the Instructions Order did not direct the sale of property, but prospectively resolved one aspect of a future sale. Likewise, the doctrine of “marginal finality” did not apply, a doctrine limited by the Supreme Court to the “unique facts” of Gillespie v. United States Steel Corp., 379 U.S. 148 (1964), to resolve “an unsettled issue of national significance,” i.e., “whether the Jones Act provided the exclusive remedy for the alleged wrongful death of a deceased seaman.”
Finally, 28 U.S.C. § 1292(a)(2) – which applies to “[i]nterlocutory orders appointing receivers, or refusing orders to wind up receiverships or to take steps to accomplish the purposes thereof, such as directing sales or other disposals of property” – did not apply, because “the order is not of the kind mentioned in section 1292(a)(2)” and “does not direct a receiver to sell receivership property.”