Central Mississippi Credit Corporation v. Vaughn

Filing 12

OPINION. Signed by Honorable Judge Myron H. Thompson on 8/3/16. (djy, )

IN THE DISTRICT COURT OF THE UNITED STATES FOR THE
MIDDLE DISTRICT OF ALABAMA, EASTERN DIVISION

IN RE

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PEGGY ANN VAUGHN,
Debtor.
CENTRAL MISSISSIPPI
CREDIT CORPORATION,
Appellant,
v.
PEGGY ANN VAUGHN,
Appellee.

CIVIL ACTION NO.
3:15cv579-MHT
(WO)

OPINION
In this bankruptcy case, appellee-debtor Peggy Ann
Vaughn, who previously filed a petition for Chapter 13
bankruptcy, seeks damages and injunctive relief against
appellant

Central

Mississippi

Credit

Corporation

for

violation of the automatic stay imposed pursuant to 11
U.S.C. § 362(a).

This case is currently before the

court

Mississippi’s

appeal

on
a

Central

discovery

order

motion

entered

by

for
the

leave

to

bankruptcy

judge.

Jurisdiction is proper under 28 U.S.C. § 158.

For the reasons explained below, Central Mississippi’s
motion will be denied.
The discovery dispute between the parties arises
out of a series of actions by the bankruptcy court: its
consideration

of

Vaughn’s

motion

to

deem

attorney-client privilege waived to a limited extent,
its sua sponte conversion of that motion to a motion to
compel, and its entry of an order granting the motion
to compel and imposing attorneys’ fees against Central
Mississippi.
that

Central Mississippi seeks leave to appeal

order

bankruptcy
Vaughn’s

to
court

motion

support

a

setting

aside

order’)

and,

evidence.
to

this

court;

should
because

time-barred
the

it

have
she

declined
sought

challenge

default

accordingly,

contends

to

did

not

the

consider

information

a

judgment

to

that

previous
(the

seek

to

order

‘set-aside

discoverable

Vaughn admits that she sought the discovery

challenge

the

set-aside

order,

but

contends

that

such a challenge was not time-barred and, therefore,

2

that it was proper for the bankruptcy court to both
consider her motion and grant it.
The

parties

agree

that

the

challenged

order

is

interlocutory and, therefore, that there is no appeal
as of right; as a result, Central Mississippi must seek
leave of this court to appeal under Federal Rule of
Bankruptcy Procedure 8004.

The parties further agree

that, in order for the court to grant leave for the
appeal, it must evaluate Central Mississippi’s motion
using the factors outlined in 28 U.S.C. § 1292(b), each
of which must be shown by the appellant: (1) whether
the

order

being

appealed

“involves

a

controlling

question of law” (2) “as to which there is substantial
ground

for

difference

of

opinion”

(3)

such

that

“immediate appeal from the order may materially advance
the ultimate termination of the litigation.”
§ 1292(b).
620

n.5

28 U.S.C.

See also In re Charter Co., 778 F.2d 617,

(11th

Cir.

1985)

(explaining

that

because

district courts are not provided with “any criteria for
determining

whether

to

exercise

3

their

discretionary

authority to grant leave to appeal [in a bankruptcy
case],

the

court

looked

to

28

U.S.C.

§ 1292(b) ... which governs discretionary interlocutory
appeals

from

the

district

courts

to

the

courts

of

appeals”).
The Eleventh Circuit has provided helpful guidance
on how a court should exercise its discretion under
§ 1292(b).

In McFarlin v. Conseco Services, LLC, 381

F.3d 1251 (11th Cir. 2004), discussing interlocutory
appeals generally, it explained:
Ҥ 1292(b) appeals were intended, and
should be reserved, for situations in
which the court of appeals can rule on
a pure, controlling question of law
without having to delve beyond the
surface of the record in order to
determine the facts. ...
The legal
question must be stated at a high
enough level of abstraction to lift
the question out of the details of the
evidence or facts of a particular case
and give it general relevance to other
cases in the same area of law.
And
the answer to that question must
substantially reduce the amount of
litigation left in the case.”
381 F.3d at 1259.

Guidance from other courts specific

to

context

the

bankruptcy

counsels
4

against

granting

such motions in the vast majority of cases.

See, e.g.,

In Re Royce Homes LP, 466 B.R. 81, 94 (S.D. Tex. 2012)
(Rosenthal,
should

be

J.)

(“Interlocutory

limited

to

cases

bankruptcy

presenting

appeals

exceptional

circumstances.”); In re Am. Freight Sys., Inc., 194
B.R.

659,

661

generally
appeals

(D.

Kan.

recognize
are

that

reserved

circumstances.”).

1996)

(Crow,

J.)

interlocutory

for

cases

of

(“Courts

bankruptcy
exceptional

Applying these guiding principles to

Central Mississippi’s appeal, the court finds that the
dispute

at

question

issue

of

law

does
the

not

present

resolution

of

“substantially shorten the litigation.”
F.3d at 1259.

a

controlling
which

would

McFarlin, 381

Because Central Mississippi has failed

to show at least two of the three factors listed in
§ 1292(b),

its

motion

for

leave

to

appeal

will

be

denied.
The court reached this conclusion on two bases.
First, the question on appeal presents a mixed question
of law and fact rather than the sort of pure question

5

of

law

determine

contemplated
whether

by

§ 1292(b).

Vaughn’s

In

discovery

order

motion

to
was

time-barred, the court would need contend with two key
questions: (1) whether, assuming Vaughn’s allegations
are correct, Central Mississippi’s statements at the
hearing on its motion to set aside the default judgment
could constitute a basis for relief under Federal Rule
of Civil Procedure 60(b) from the order setting aside
the default judgment; and (2) whether, even assuming a
challenge

by

Vaughn

to

the

set-aside

order

was

time-barred, the information sought by Vaughn was not
otherwise subject to discovery.

As to each question,

the court would need to “delve beyond the surface of
the record,” id. at 1259, to examine the substance of
the

statements

set-aside

made

hearing

by
and

Central

Mississippi

determine

whether

at

the

Vaughn’s

discovery requests were permissible under Federal Rule
of Civil Procedure 26(b).
presented

by

Central

In that sense, the question

Mississippi’s

motion

is

quite

unlike those pure questions of law the Eleventh Circuit

6

has

deemed

reviewable

under

§ 1292(b).

See

id.

(citing decisions granting § 1292(b) review of issues
such as whether a “district court has jurisdiction over
class

members

who

do

not

satisfy

controversy

requirement”

and

parent

recover

of

may

wrongful

death

loss

of

his

the

“whether
society

minor

a

amount

nondependent

damages

child

in

for

under

the

general

maritime law”).
Second,

even

if

the

court

were

to

resolve

the

question presented by Central Mississippi’s appeal, it
is

unlikely

litigation

that
to

its

its

resolution

conclusion.

would

usher

Regardless

of

this
the

court’s ultimate determination on the merits of the
appeal, the key issue in this case--whether Central
Mississippi should be held liable for a violation of
the

automatic

stay--would

remain

to

be

litigated.

Thus, while the parties would undoubtedly benefit from
some

resolution

presented

here,

on
such

the

discrete

a

resolution

discovery
would

issue
neither

substantially shorten the duration of the litigation

7

nor have any clear bearing on the ultimate matter at
issue

in

granting

this
a

case.

party

Under
leave

to

these

circumstances,

appeal

would

be

inappropriate.
An appropriate judgment will be entered.
DONE, this the 3rd day of August, 2016.
/s/ Myron H. Thompson
UNITED STATES DISTRICT JUDGE