The Seventh Circuit Interprets Wisconsin Exemption Law On College Savings Accounts And Retirement Annuities, But Did It Have Jurisdiction? (Part 2 Of 2)

As we explained in a post yesterday, the Seventh Circuit in In re Bronk (Cirilli v. Bronk), No. 13-1123 (7th Cir. Jan. 5, 2015), made some new law on Wisconsin's college savings account (Edvest) and annuity exemptions for debtors.

But in deciding that it had jurisdiction to decide the annuity issue on the merits, despite the trustee's failure to cross-appeal the bankruptcy court's decision in the debtor's favor to the district court, the Seventh Circuit seems to have missed the jurisdictional boat. As we noted, the court relied entirely, slip op. at 7 n.2, on its decision in Luevano v. Wal-Mart Stores, Inc., 722 F.3d 1014 (7th Cir. 2013), an employment discrimination case under Title VII, not a bankruptcy case.

Luevano was a civil action that spent its entire lower-court career in a district court, which dismissed the initial pro se complaint without prejudice but ultimately (after several repleadings) dismissed the action with prejudice on statute of limitations grounds. The key jurisdictional issue was whether the appeal from the final judgment of dismissal allowed the Seventh Circuit to review the initial dismissal order, since the original complaint had clearly been timely filed. The court allowed the appeal to proceed, citing the "general rule . . . that an appeal from a final judgment allows the appellant to challenge any interlocutory actions by the district court along the way toward that final judgment." Id. at 1019.

But how could the Seventh Circuit apply this "general rule" to a case that was in the district court only on appeal from another court? The court appears, by its reference to "interlocutory actions by the district court along the way toward that final judgment," to refer to the district court's non-final decision resolving the first appeal and remanding the case to the bankruptcy court for further proceedings on the annuity issue. Had the trustee properly invoked the district court's jurisdiction to get to that court a second time, the district court's first decision (i.e., its rationale for allowing the annuity exemption) would have been subsumed in its second, summary decision affirming the bankruptcy court. The problem is that the district court seems not to have had jurisdiction to issue the second decision to the extent that it affirmed the bankruptcy court's order on the annuity issue.

The Bronk court's essential holding on the jurisdictional issue is that the debtor's notice of appeal from the bankruptcy court...