IN RE WOODBRIDGE FOREST APARTMENTS JOINT VENTURE, (Bankr.E.D.Va. 1997)

STEPHEN MITCHELL, Bankruptcy Judge

Before the court is a motion filed by the debtor in possession on May 12, 1997, for reconsideration of a portion of this court's order dated April 28, 1997, requiring Ocwen Federal Bank, FSB ("Ocwen"), the movant in this relief from stay proceeding, to provide certain discovery. The parties have agreed that oral argument is not necessary.

The debtor, Woodbridge Forest Apartments Joint Venture, is a general partnership the sole asset of which consists of a 152-unit apartment and townhouse project in Woodbridge, Virginia. It filed a voluntary petition under chapter 11 of the Bankruptcy Code in this court on November 19, 1996, and has continued since that date in operation of its business as debtor in possession. Ocwen Federal Bank, FSB, holds a first-lien deed of trust against the property with a claimed principal balance of $4,782,243. On March 4, 1997, Ocwen filed a motion for relief from the automatic stay in order to foreclose under the deed of trust securing its note. On April 18, 1997, the debtor filed a proposed plan of reorganization and disclosure statement.

When Ocwen refused to furnish certain information that the debtor had requested in discovery, the debtor filed a motion to compel discovery. On April 25, 1997, an expedited hearing on that motion was held at which the court ruled from the bench that Ocwen would be required to disclose (1) the purchase price paid by Ocwen for the note secured by the debtor's real estate; (2) the sales agreement and other documents by which the note was sold and assigned to Ocwen; and (3) any analysis of income and expenses for the property used or referred to directly, or indirectly, by any Ocwen employee providing input to any appraiser employed by Ocwen. An order reflecting the court's ruling was signed on April 28, 1997, and was entered on the docket on May 2, 1997.

On May 8, 1997, Ocwen filed a notice of appeal of the April 28 order. On May 12, 1997, the debtor filed the motion for reconsideration that is presently before the court. On May 14, 1997, Ocwen filed a motion for leave to appeal the April 28 order. That motion has been forwarded to the United States District Court for determination.

At the outset, the court must determine whether it has authority to consider and rule upon the motion for reconsideration in light of the notice of appeal that had previously been filed by Ocwen. The general rule is that the timely filing of a notice of appeal divests the lower court of jurisdiction over the issues raised by the appeal until the appeal is decided by the appellate court. Ingersoll-Rand Financial Corp. v. Kendrick Equipment Corp. (In re: Kendrick Equipment Corp.), 60 B.R. 356 (Bankr. W.D. Va. 1986) (bankruptcy court lacked jurisdiction to consider a motion to reimpose the automatic stay where the debtor's appeal from the order terminating the stay was still pending before the District Court). The purpose of this rule is "to avoid confusion and waste of time that might flow from putting the same issues before two courts at the same time . . . [and] to assure the integrity of the appeal process." Id. This rule does not prevent a bankruptcy court, however, from ruling on other issues in the case, even though they may involve the same property as the order that has been appealed. In re Strawberry Square Assocs., 152 B.R. 699 (Bankr. E.D.N.Y. 1993) (debtor's appeal of order granting relief from the automatic stay did not deprive bankruptcy court of jurisdiction to approve disclosure statement for creditor's plan that provided for the surrender of the property to the secured creditor); Urban Development Ltd., Inc. v. Hernando New York Assocs. (In re Urban Development Ltd., Inc.), 42 B.R. 741 (Bankr. M.D. Fla. 1984) (pendency of appeal from order granting relief from the automatic stay did not deprive bankruptcy court of jurisdiction over debtor's motion to sell the property free and clear of liens but did preclude the bankruptcy court from granting an injunction to prevent the secured creditor from foreclosing before the property could go to settlement).

In this case, the matter is further complicated because the order that Ocwen is appealing is not a final order and, under 28 U.S.C. § 158(a)(3), may be appealed only with leave of the District Court. Under F.R.Bankr.P. 8001(b), an appeal from an interlocutory order of a bankruptcy judge is taken "by filing a notice of appeal . . . accompanied by a motion for leave to appeal prepared in accordance with Rule 8003[.]" (emphasis added). Under F.R.Bankr.P. 8002(a), a notice of appeal must be filed within 10 days of the date of the entry of the judgment, order, or decree appealed from. Ocwen's notice of appeal was filed within the ten day period prescribed by Rule 8002(a) but was not "accompanied by" the motion for leave to appeal, which was not filed until after the ten day appeal period had run. The debtor's motion for reconsideration, as noted above, was filed in the period between the filing of the notice of appeal and the motion for leave to appeal.

However, regardless of whether the debtor's motion for reconsideration was filed before or after the notice of appeal, the relative order of filing does not appear to affect the court's power to rule on it. Under F.R.Bankr.P. 8002(b) ("Effect of Motion on Time for Appeal,") if a party makes a timely motion under F.R.Bankr.P. 9023 to alter or amend a judgment or order, "the time for appeal for all parties runs from the entry of the order disposing of the last such motion outstanding." Additionally, "[a] notice of appeal filed after . . . entry of the judgment, order, or decree but before disposition of any of the above motions is ineffective to appeal from the judgment, order, or decree, or part thereof, specified in the notice of appeal, until the entry of the order disposing of the last such motion outstanding." The plain language of Rule 8002, therefore, appears to contemplate that, provided a motion under Rule 9023 is "timely," a notice of appeal, even if it has already been filed "is ineffective" until an order is entered disposing of the motion. Since the debtor's Rule 9023 motion was timely, I conclude that the antecedent filing of the notice of appeal does not divest this court of jurisdiction to consider and rule on the motion.

The only part of the court's order addressed by the motion for reconsideration is the language limiting Ocwen's duty to produce any internal analyses of income and expenses to those used or referred to by Ocwen's employees in briefing any appraiser hired by Ocwen to appraise the property. Of course, the debtor, as the owner of the property, is undoubtedly in the best position to determine the income and expenses related to the operation of the property. Indeed, it is doubtful what probative value any internal analysis by Ocwen would have, considering that Ocwen has no independent source of information as to historical revenues and expenses. In this case, however, the debtor presented evidence that an appraiser hired by Ocwen to testify at the hearing on the motion for relief from the automatic stay had modified his pro forma income projections (a central component of any discounted cash flow analysis) based on input from Ocwen employees.

The value of the real estate securing Ocwen's claim is central to a great many issues in this case, and to the extent it may be permissible under Fed.R.Evid. 703 — an issue the court need not now decide — for an appraiser to consider and rely on an interested third party's income and expense analysis in reaching an opinion of value, the debtor is clearly entitled to fully explore the basis for the appraiser's opinion. But except for that limited purpose, what Ocwen thinks the income and expenses of the property ought to be — assuming that differs from the historical experience — is simply irrelevant to any issue to be determined by the motion for relief from the automatic stay. Even if Ocwen's management fervently believes, for example, that the property is worth significantly more (or less) than value determined by its own appraiser (or the debtor's appraiser), such belief would not be probative as evidence of what the property is actually worth.

Ocwen objected to the requested discovery on the ground that disclosure of its internal analysis of income and expenses could reveal sensitive proprietary information related to how it formulates bid packages for distressed loans. In ruling on the motion, the court attempted to strike a reasonable balance between Ocwen's legitimate need to protect proprietary information and the debtor's need to obtain evidence and to prepare for the relief from stay hearing. Having carefully considered the arguments advanced by the debtor for requiring Ocwen to disclose any analysis it may have conducted — even though such analysis is not to be introduced into evidence and is not being used by its witnesses, directly or indirectly — the court declines to amend its order to require such disclosure.

For the foregoing reasons, it is

1. The motion for reconsideration is denied.

2. The clerk will mail a copy of this order to counsel for the debtor, counsel for Ocwen, and the United States Trustee.