In re Thinkfilm LLC

Filing 35

MINUTES (IN CHAMBERS) ORDER DENYING Appellant's Leave to Appeal Bankruptcy Court Order by Judge Philip S. Gutierrez denying 8 Motion for Leave to Appeal: For the foregoing reasons, Appellant's motion is DENIED. (see document for further details) (bm)

O
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
JS-6(lc)
CIVIL MINUTES - GENERAL
Case No.

CV 12-9795 PSG (consolidated with 12-9983 PSG,
12-10037 PSG, 12-10039 PSG, 12-10085 PSG)

Title

Date

February 21, 2013

In re Thinkfilm, LLC

Present:

The Honorable Philip S. Gutierrez, United States District Judge

Wendy K. Hernandez
Deputy Clerk

Not Present
Court Reporter

Attorneys Present for Plaintiff(s):

Attorneys Present for Defendant(s):

Not Present
Proceedings:

n/a
Tape No.

Not Present

(In Chambers) Order DENYING Appellant’s Leave to Appeal
Bankruptcy Court Order

Before the Court is a motion by David Bergstein (“Appellant”) seeking leave to appeal a
Bankruptcy Court order. Dkt. # 8.1 The Court finds the matter appropriate for decision without
oral argument. See Fed. R. Civ. P. 78(b); L.R. 7-15. Having considered the papers submitted in
support of and in opposition to the motion, the Court DENIES the motion.
I.

Background
This case arises from a number of involuntary Chapter 11 bankruptcy cases filed by creditors
Aramid Entertainment Fund, Ltd., Screen Capital International Corp., and other petitioning
creditors against ThinkFilm, R2D2, LLC (“R2D2”), CT-1 Holdings, LLC (“CT-1”), Capco
Group, LLC (“Capco”), and Capitol Films Development, LLC (“CFD”) (collectively, the
“Debtors”). On December 18, 2012, Appellant moved for leave to appeal a Bankruptcy Court
order denying Appellant’s motion to dismiss. Mot. 3:4-6. Appellant’s underlying motion to
dismiss was based on allegations that the related cases (the “Cases”) were filed in bad faith as

1

David Bergstein filed five separate appeals before the cases were consolidated. Two of
the five appeals sought to appeal a November 2, 2012 order, and the other three orders sought to
appeal a November 6, 2012 order. However, the content of the November 2, 2012 order and the
November 6, 2012 orders are the same, as are the corresponding requests for leave to appeal.
Accordingly, the Court treats the motions as one motion.
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O
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
JS-6(lc)
CIVIL MINUTES - GENERAL
Case No.

CV 12-9795 PSG (consolidated with 12-9983 PSG,
12-10037 PSG, 12-10039 PSG, 12-10085 PSG)

Title

Date

February 21, 2013

In re Thinkfilm, LLC

part of a fraudulent scheme to attempt to deceive the court as to the existence of legitimate
claims.2 Mot. 3:16-20. On November 2, 2012 and November 6, 2012, the Bankruptcy Court
denied Appellant’s motions. Mot. Ex. 1. Appellant now seeks leave to appeal the Orders,
contending that this Court should reverse the Bankruptcy Judge’s decision and dismiss the
Cases.
II.

Legal Standard
District courts have jurisdiction to hear appeals from final judgments, orders and decrees, and
interlocutory orders and decrees with leave of the court. 28 U.S.C. § 158(a)(1) and (3). Leave
to appeal an interlocutory order must be sought by timely motion. Fed. R. Bank. P. 8003(a).
A party may appeal a bankruptcy court’s interlocutory order only “with leave of the court.” See
28 U.S.C. § 158(a)(3). While district courts have discretionary authority to hear interlocutory
appeals, review of interlocutory orders is generally disfavored. See In re Fones4all Corporation,
No. CV-01443 JHN, 2010 WL 1172246, at *1 (C.D. Cal. Mar. 23, 2010). Specifically, the
Ninth Circuit has explained that courts should not grant leave to appeal from an interlocutory
order of a bankruptcy judge unless the following requirements are met: “(1) that there be a
controlling question of law, (2) that there be substantial grounds for difference of opinion, and
(3) that an immediate appeal may materially advance the ultimate termination of the litigation.”
In re Cement Antitrust Litigation, 673 F.2d 1020, 1026 (9th Cir. 1982).3
2

The Cases consist of the Chapter 11 bankruptcy cases of R2D2, LLC, 2:10-bk-19924BR; In re ThinkFilm, LLC, 2:10-bk-19912-BR; In re CT-1 Holdings, LLC, 2:10-bk-19927-BR;
In re Capco Group, LLC, 2:10-bk-19929-BR; and In re Capitol Films Development, LLC, 2:10bk-19938-BR.
Courts have also applied the analogous standard set forth in 28 U.S.C. § 1292(b) to
bankruptcy appeals, requiring that the appeal involves a controlling question of law as to which
there is a substantial ground for difference of opinion and that immediately appealing the order
would materially advance the ultimate termination of the litigation. In re Price, 79 B.R. 888,
889 (9th Cir. BAP 1987) (“Although section 1292(b) deals with appeals of interlocutory orders
from district courts to courts of appeals, it is appropriate for this Panel to adopt such standards
for appeals from the bankruptcy court.”).
3

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O
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
JS-6(lc)
CIVIL MINUTES - GENERAL
Case No.
Title
III.

CV 12-9795 PSG (consolidated with 12-9983 PSG,
12-10037 PSG, 12-10039 PSG, 12-10085 PSG)

Date

February 21, 2013

In re Thinkfilm, LLC

Discussion
Here, Appellant seeks leave to challenge the Bankruptcy Court’s November 2, 2012, and
November 6, 2012 Orders denying Appellant’s Motion to Dismiss. Mot. Ex. 1. Appellant
argues that the Orders are a final order. However, the Ninth Circuit has held that the denial of a
motion to dismiss is an interlocutory order. Dunkley v. Rega Properties, Ltd. (In re Raga
Properties, Ltd.), 894 F.2d 1136, 1138, n.4 (9th Cir. 1990), cert denied, 498 U.S. 898 (1990);
Leisure Dev. Inc. v. Burke (In re Burke), 95 B.R. 716, 717 (9th Cir. BAP 1989) (citation
omitted); In re Bertain, 215 B.R. 438, 441 (9th Cir. BAP 1997) (same).
Appellant argues that if the appeal is not considered a final order, the Court should
exercise its discretion and grant Appellant leave to appeal the Order pursuant to 28 U.S.C. §
158(a)(3). Generally, interlocutory orders are not appealable as of right. In re Bertain, 215 B.R.
at 441.
Here, Appellant fails to show that the matter involves a “controlling question of law as
to which there is a substantial ground for difference of opinion.” In re NSB Film Corp., 167
B.R. at 180. A “controlling question of law” is a question in which “the resolution of the issue
on appeal could materially affect the outcome of litigation in the district court.” In re Cement
Antitrust Litigation, 673 F.2d at 1026. Here, the alleged “controlling question” is whether a
Bankruptcy Court, in an involuntary bankruptcy case after entry of an order for relief, can deny
the Motion to Dismiss without analyzing the affirmative defense that an involuntary petition was
not filed in good faith. Mot. 5-6; Opp. 10-11.
While Appellant has presented a controlling question of law, Appellant fails to show that
there is substantial ground for difference of opinion. Appellant has only cited to one case from a
bankruptcy court in a different jurisdiction that reaches a different conclusion than the
Bankruptcy Court reached here. See In re Basil Street Partners, LLC, 477 B.R. 846, 848, 854
(M.D. Fla. 2012). In Basil, the court ruled on the issue of whether an involuntary petition was
filed in good faith, denying a motion to dismiss. Id. at 848. However, in Basil, an order for
relief had not been entered, nor had the court imposed terminating sanctions. Id. at 854. By
contrast, in this case, the Bankruptcy Court entered an order for relief in each of the Cases long
before Appellant filed the Motion to Dismiss. The Ninth Circuit has recognized that where an
order for relief has been entered, the Court need not reach the affirmative defense that the
involuntary petition was not filed in good faith. Marciano v. Fahs (In re Marciano), 459 B.R.
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O
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
JS-6(lc)
CIVIL MINUTES - GENERAL
Case No.

CV 12-9795 PSG (consolidated with 12-9983 PSG,
12-10037 PSG, 12-10039 PSG, 12-10085 PSG)

Title

Date

February 21, 2013

In re Thinkfilm, LLC

27, 44-45 (9th Cir. BAP 2011) (citing In re Ross, 63 B.R. 951, 955 (Bkrtcy. S.D.N.Y. 1986)
(“the Court need not reach the affirmative defense that the involuntary petition was not filed in
good faith if an order for relief is entered.”).
Moreover, even if Basil were directly opposed to this case, the caselaw interpreting the
“substantial ground for difference of opinion” requirement has shown that the threshold showing
is high. See In re Stewart, 157 B.R. 893, 896 (9th Cir. BAP 1993) (finding a “substantial ground
for difference of opinion” where two unpublished opinions in the Bankruptcy Court of the
Central District of California took opposing positions on the issue of limitations on the payment
of interim compensation); In re Magno, 216 B.R. 34, 38 (9th Cir. BAP 1997) (finding a
“substantial ground for difference of opinion” where there was “a legal issue as to which there is
no Ninth Circuit case law precisely on point.”). By contrast, in this case, Appellant attempts to
show a “substantial ground for difference of opinion” based on a case that is not binding on any
court in this circuit. See In re Barakat, 173 B.R. 672, 278 (C.D. Cal. 1994) (“Since bankruptcy
decisions are subject to appellate review by the district court of that district, but not of any other
district, they cannot be binding on bankruptcy courts from other districts.”).
Likewise, Appellants fail to establish that “immediate appeal [would] materially advance
the ultimate termination of the litigation.” Appellant argues that interlocutory review of the
Bankruptcy Court’s order will not delay resolution of the cases. To the contrary, appealing an
interlocutory order that denied a motion to dismiss will require the parties to spend their time
and resources litigating the appeal before this Court and will delay the ultimate resolution of the
litigation. Shurance v. Planning Control Int’l, Inc., 839 F.2d 1347, 1348 (9th Cir. 1988) (“an
interlocutory appeal might well have the effect of delaying the resolution of this litigation”).
Accordingly, because Appellant fails to establish that interlocutory review is appropriate
under the three-factor standard articulated by the Ninth Circuit, the Court declines to exercise its
discretionary authority to grant Appellant leave to appeal the Bankruptcy Court’s Order.
IV.

Conclusion
For the foregoing reasons, Appellant’s motion is DENIED.

IT IS SO ORDERED
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O
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
JS-6(lc)
CIVIL MINUTES - GENERAL
Case No.

CV 12-9795 PSG (consolidated with 12-9983 PSG,
12-10037 PSG, 12-10039 PSG, 12-10085 PSG)

Title

Date

February 21, 2013

In re Thinkfilm, LLC

cc: Bankruptcy Court
Bankruptcy Appellate Court

CV-90 (03/11)

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