In Re Rega Properties, Ltd., Debtor. J. Reed Dunkley v. Rega Properties, Ltd.

We consider the questions of whether a bankruptcy court order denying a motion to dismiss a petition in bankruptcy is an appealable “final order” and what is the appropriate measure of damages resulting from a rejected executory contract.

I

In February 1981, Rega Properties, Ltd. (“Rega”) contracted to purchase land in the Spokane Valley from Tanglewood Enterprises, Inc., a Canadian corporation owned solely by Dunkley and his wife. Dunkley dissolved Tanglewood in 1984 and succeeded to all its rights, claims, and liabilities.

The contract required Rega to make annual payments to Dunkley. As the payments were made, certain selected properties were severed and deeded to Rega. Rega’s payments entitled it to receive free and clear, eleven, ten-acre parcels of land; 340 acres remained untransferred under the contract.

In November 1982, Dunkley borrowed $157,000 from Pacific Securities Company (“Pacific”). The loan was secured by a deed of trust which Dunkley executed in favor of Pacific on the properties still covered by Dunkley’s contract of sale to Rega. Dunkley used the loan proceeds for purposes unrelated to this appeal. Subsequently, Dunkley defaulted on his obligation to…