In re: IMMC Corporation f/k/a Immunicon Corporation et al.,
Filing
7
MEMORANDUM OPINION granting Appellant's Certification Motion pursuant to 28 U.S.C. Sec 158(d)(2)(A)(i). Signed by Judge Gregory M. Sleet on 1/28/2016. (asw)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
Chapter 11
INRE:
IMMC CORPORATION,
f/k/a IMMUNICON CORPORATION, et al.,
Banla. Case No. 08-11178 (KJC)
Debtors.
ROBERT F. TROISIO, as Liquidating Trustee
ofIMMC CORPORATION,
f/k/a IMMUNICON CORPORATION,
Adv. Proc. No. 10-53063 (BLS)
Civ. No. 15-1043 (GMS)
Appellant,
v.
EDWARD L. ERICKSON, BYRON HEWETT,
LEON TERSTAPPEN, JAMES L. WILCOX,
ELIZABETH E. TALLETT, J. WILLIAM
FREYTAG, ZOLA P. HOROWITZ, JAMES
G. MURPHY, BRIAN GEIGER, JONATHAN
COOL, and ALLEN J. LAUER,
Appellees.
MEMORANDUM OPINION
Presently before the court is the motion (D.I. 2) ("Certification Motion") of Robert F.
Troisio ("Appellant"), liquidating trustee of IMMC Corporation (f/k/a Immunicon Corporation),
seeking certification of this appeal (D.I. 1) ("Appeal") directly to the United States Court of
Appeals for the Third Circuit pursuant to 28 U.S.C. § 158(d)(2)(A).
1.
Background 1
A.
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The Adversary Proceeding
On June 11, 2008, the above-captioned debtors filed a petition for relief under Chapter 11
of the Bankruptcy Code. On November 7, 2008, the Bankruptcy Court confirmed the debtors'
1
Because the court writes primarily for the benefit of the parties, the court presumes familiarity
with the pertinent background facts.
1
plan of liquidation. Pursuant to the plan, Appellant was appointed as liquidating trustee to
implement wind-down of the debtors' affairs and liquidation of the debtors' property, and also to
pursue certain causes of action. On September 18, 2010, Appellant filed a complaint initiating the
above-captioned adversary proceeding and asserting breach of fiduciary duty claims against the
debtors' former officers and directors ("Appellees").
(See Adv. Proc. No. 10-53063-KJC
(hereinafter "B.D.I.") 1.)
By Memorandum Order dated December 29, 2011 (B.D.I. 33), the Bankruptcy Court
determined that it was without jurisdiction to decide the claims asserted in the adversary
proceeding but scheduled a further hearing to consider Appellant's request that the Bankruptcy
Court transfer the adversary proceeding to the District Court for the Eastern District of
Pennsylvania (the "E.D.Pa. Court") pursuant to 28 U.S.C. § 1631, rather than dismiss the case for
want of jurisdiction. See Troisio v. Erickson (Jn re !MMC Corp.), Adv. No. 10-53063-KJC, 2011
WL 6832900, *4 (Banla. D. Del. Dec. 29, 2011).
B.
Motion to Transfer the Case
Whether the Banlauptcy Court has authority to transfer the adversary proceeding to the
E.D.Pa. Court is governed by 28 U.S.C. § 1631, which provides:
Whenever a civil action is filed in a court as defined in section 610 of this title
or an appeal, including a petition for review of administrative action, is noticed
for or filed with such a court and that court finds that there is a want of
jurisdiction, the court shall, if it is in the interest of justice, transfer such action
or appeal to any other such court in which the action or appeal could have been
brought at the time it was filed or noticed, and the action or appeal shall proceed
as if it had been filed in or noticed for the court to which it is transferred on the
date upon which it was actually filed in or noticed for the court from which it
is transferred.
2
28 U.S.C. § 1631. In response to Appellant's request to transfer the case, Appellees argued that
the Bankruptcy Court lacked authority to transfer the adversary proceeding under § 1631 because
a bankruptcy court is not a "court" as defined in 28 U.S.C. § 610. Section 610 provides:
As used in this chapter the word "courts" includes the courts of appeals and
district courts of the United States, the United States District Court for the
District of the Canal Zone, the District Court of Guam, the District Court of the
Virgin Islands, the United States Court of Federal Claims, and the Court of
International Trade.
28 U.S.C. § 610. Appellees argued that bankruptcy courts are not included in the express
language of 28 U.S.C. § 610 and that a review of legislative history demonstrates
Congressional intent to limit the transfer power of § 1631 and likewise to exclude
bankruptcy courts from the definition of "courts" under § 610. Conversely, Appellant
argued that the Third Circuit has recognized a bankruptcy court's authority to transfer
cases pursuant to § 1631 in the Seven Fields case, in which the Third Circuit stated in a
footnote that bankruptcy courts are units of the district courts and authorized to transfer a
case. See Seven Fields Dev. Corp., 505 F.3d 237, 247 n.8 (3d Cir. 2007).
C.
The 2012 Decision
Following briefing and oral argument, the Bankruptcy Court denied the request to transfer
the adversary proceeding to the E.D.Pa. Court. See Troisio v. Erickson (In re !MMC Liquidating
Estate), Adv. No. 10-53063-KJC, 2012 WL 523632, at *4 (Bankr. D. Del. Feb. 14, 2012). In
reaching its conclusion, the Bankruptcy Comi noted that the footnote in Seven Fields was dicta,
and the exclusion of bankruptcy courts from the express language of §§ 1631 and 610, together
with the legislative history of those sections, casted doubt as to the Bankruptcy Court's authority
to transfer the adversary proceeding. See id at *2. As part of that ruling, however, the Bankruptcy
Court granted Appellant's request for an opportunity to file a motion with this court to withdraw
3
the reference, as district courts are authorized under the statute to make transfers to other courts.
See id. at *4. On February 9, 2015, this court denied Appellant's motion to withdraw the reference,
concluding that because bankruptcy jurisdiction was lacking, the action was never properly
"referred" to the Bankruptcy Court, and this court could not withdraw a reference that never
existed. See Troisio v. Erickson (Jn re !MMC Corp.), Civ. No. 12-406-GMS (D. Del. Feb. 9, 2015)
(citing 28 U.S.C. § 157(d) ("The district court may withdraw, in whole or in part, any case or
proceeding referred under this section ...") (emphasis added)).
D.
The 2015 Decision
On February 19, 2015, the Trustee filed with the Bankruptcy Court a renewed motion to
transfer the adversary proceeding to the E.D.Pa. Court, which cited In re DMW Marine, LLC, 509
B.R. 497 (Bankr. E.D. Pa. 2014) in support. (See B.D.I. 58.) In support of the renewed motion,
Appellant also submitted a Notice of Supplemental Authority, which cited Wellness Int'! Network,
Ltd. v. Sharif, 135 S. Ct. 1932 (2015). (See B.D.I. 64.) Following oral argument (see B.D.I. 65),
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the Bankruptcy Court denied the renewed motion and dismissed the complaint, finding that neither
of the decisions cited by Appellant addressed the transfer issue and that the Bankruptcy Court
"remain[ed] convinced that the express language and legislative history of§ 610 support the
proposition that Congress did not intend to include bankruptcy courts in the definition of 'courts.'"
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See Troisio v. Erickson (In re !MMC Liquidating Estate), Adv. No. 10-53063-KJC, 2015 WL
6684638, at *2 (Bankr. D. Del. Oct. 30, 2015) (the "2015 Decision").
On November 11, 2015, Appellant filed a notice of appeal of the 2012 Decision and the
2015 Decision. (See B.D.I. 70.) On the same day, Appellant filed the Certification Motion. (See
B.D.I. 72; D.I. 2.) The Certification Motion states that the question presented is "Whether
bankruptcy judges have the authority to order a transfer of an adversary proceeding pursuant to 28
4
U.S.C. § 1631." (See D.I. 2 at 1.) The court considers the relief sought in the Certification Motion
pursuant to Federal Rule of Bankruptcy Procedure 8006(b) and (d). 2
2.
.
Parties' Contentions
.
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With respect to the Certification Motion, Appellant contends that certification is
required because each of the criteria of28 U.S.C. § 158(d)(2)(A) is met. (See D.I. 2 at 4.)
First, Appellant argues that there is no controlling decision of the Supreme Court or the
Third Circuit adjudicating a bankruptcy court's right to transfer a case pursuant to § 1631.
(See D.I. 6 at 2.) Appellant further argues that "resolution of conflicting decisions also
detailed in the parties' submissions and [the Bankruptcy] Court's orders" is required. (See
D.I. 2 at 4.) 3 Appellant further contends that a direct appeal to the Third Circuit will
advance the progress of the case by avoiding intermediate appeal in this court. (See id.)
Conversely, Appellees argue that certification should be denied because the issue
on appeal does not meet any of the statutory criteria set forth in 28 U.S.C. § 158(d)(2)(A).
(See D.I. 5 at 5.) Appellees argue that direct appeals are not intended for circumstances
where a statute is clear, but rather to "settle unresolved questions of law." (See id.)
Appellees argue that the statutes are clear and unambiguous and constitute controlling
authority in themselves, obviating the need for appellate interpretation.
(See id.)
2
Fed. R. Bankr. P. 8006(d) provides "Only the court where the matter is pending, as provided in
subdivision (b), may certify a direct review on request of parties ... " See Fed. R. Bankr. P.
8006(d). Fed. R. Bankr. P. 8006(b) provides that any certification must be filed with the clerk of
the court where the matter is pending, and, for purposes of this rule, a matter remains pending in
the bankruptcy court for 30 days after the effective date of the first notice of appeal (pursuant to
Fed. R. Bankr. P. 8002) for which direct review is sought, and is thereafter pending in the district
court. See Fed. R. Bankr. P. 8006(b).
3
Appellant does not cite any specific conflicting decisions in the Certification Motion and
appears to simply refer to its prior arguments made in support of the motion to transfer (B.D.I.
58.)
5
Appellees further argue that the only reported case in the Third Circuit on the issue, In re
Grocott, 507 B.R. 816, 823 n.25 (E.D. Pa. 2014), affirmed the Bankruptcy Court's 2012
and 2015 decisions that it lacked authority to transfer the case, and that the Third Circuit's
footnote in Seven Fields is not a holding and thus the decision is not precedential. (See
id. at 13-14.) Finally, Appellees argue that direct appeal will not materially advance the
case because the case has been dismissed, and Appellant's argument that direct appeal
will avoid expenses and delay could be made by any party to any appeal. (See id. at 16.)
3.
Legal Standards
Pursuant to 28 U.S.C. § 158(a), district courts have mandatory jurisdiction to hear
appeals "from final judgments, orders and decrees" and discretionary jurisdiction over appeals
"from other interlocutory orders and decrees." 28 U.S.C. § 158(a)(l), (3). Motions for direct
appeal to the court of appeals are governed by 28 U.S. C. § 15 8(d)(2), which provides that a
district court may certify a final order for immediate appeal to a federal court of appeals. In
accordance with section 158(d)(2)(A) and (B), certification is mandatory if the court determines
that any of the following exist:
(i) the judgment, order, or decree involves a question of law as
to which there is no controlling decision of the court of appeals
for the circuit or of the Supreme Court of the United States, or
involves a matter of public importance;
(ii) the judgment, order, or decree involves a question of law
requiring resolution of conflicting decisions; or
(iii) an immediate appeal from the judgment, order, or decree
may materially advance the progress of the case or proceeding
in which the appeal is taken.
28 U.S.C. § 158(d)(2)(A). Subsection 158(d)(2)(B) provides that certification to the Third Circuit
Court of Appeals is mandatory if the court determines that circumstances specified in (i), (ii), or
6
(iii) of subparagraph (A) exists. 28 U.S.C. § 158(d)(2)(B); Jn re Tribune Co., 477 B.R. 465, 470
__(Bankr. D. Del. 2012) (construing 158(d)(2)(B)). "While the section contains three subparts, there
are actually four disjunctive criteria as subpart (i) sets forth two separate benchmarks for
certification." In re Millennium Lab Holdings, II, LLC, No. 15-12284-LSS, 2016 WL 155500, *4
_
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_:-- __ (Bankr. D. Del. Jan. 12, 2016).
4.
Analysis
Upon consideration of the parties' arguments as set forth in the briefs, the 2012 Decision
and 2015 Decision, the statutes at issue, and applicable precedent, the court concludes that
certification to the Third Circuit is required under 28 U.S.C. § 158(d)(2)(A)(i).
- - -- - - - A. Controlling Decision
______________________ Certification of the appeal is mandatory where "the judgment, order, or decree involves a
question of law as to which there is no controlling decision of the court of appeals for the circuit
or of the Supreme Court of the United States." 28 U.S.C. § 158(d)(2)(A)(i). "A 'controlling
-decision' of the Third Circuit for the purposes of§ 158(d)(2)(A)(i) is one that admits of no
ambiguity in resolving the issue." Stanziale v. Car-Ber Testing, Inc. (In re Conex Holdings,
l-LC), Civ. No. 14-179-LPS (D. Del. March 23, 2015) (citing In re Goody's Family Clothing,
Inc., Civ. No. 09-409-RMB, 2009 WL 2355705 at *5 (D. Del. Jul. 30, 2009)). Appellant argues
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~-that neither
the Bankruptcy Court nor the Appellees cite to a controlling decision from the
- Supreme Court or the Third Circuit adjudicating a bankruptcy court's authority to transfer a case
pursuant to 28 U.S.C. § 1631, and, therefore, the appeal must be certified. (See D.I. 6 at 2.)
Appellees argue that "there is controlling authority in the form of unambiguous statutory
_ language that bankruptcy courts have no power to transfer cases under Section 1631 because
bankruptcy courts are not one of the 'courts' identified in Section 610." (See D.I. 5 at 1.)
7
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Appellees argue further that "Courts consistently hold that certification is not warranted where,
=',y:'~: __ ::=_~°'.~~~~ifi.1efj5rel:ation." (See D.I. 5 at 6.) In support of this argument, Appellees cite two cases: In re
...: . -·--~:::;:- -
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~~:tt_;=:~f-~~~:-;_J{fFtsKeYAutomotive Holdings, Inc., Civ. No. 14-99-GMS, 2014 WL 576370, *4 (D. Del. Feb. 12,
;
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-2014), and In re Am. Home Mortg. Inv. Corp., 408 B.R. 42, 44 (D. Del. 2009). (See D.I. 5 at 6-
>~ _
'=--=--~:::::'_:_=.:: ---7:. )--Appellees argue that in Fisker, this court denied certification on the issue of whether
::;- ,~~,---_-_bankruptcy courts are authorized to limit or deny a secured creditor's right to credit bid on the
I~~-~i:::~~~;-:--'b~~~}~Jfiaj:there was "controlling authority" in the form of 11 U.S.C. § 363(k), which expressly
~
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~-=,:::::__:=~-::=:~-.::-_authorizes
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bankruptcy courts to outright deny a lender the right to credit bid as long as denial is
cause." (See id.) However, the court's decision in Fisker did not rest on the statutory
-~-:- ::-=:---_ __- _: -- -·:._:}apg~age alone. There, the court noted that, "[ c]onsistent with the statutory language [of§
;,
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_:~---= _- __ _ -____ ,3-63(k)], the Third Circuit explained in Philadelphia Newspapers that the 'for cause exception to
_
-credit bidding' is entirely within a Bankruptcy Court's authority." See Fisker, 2014 WL 576370,
~~_::_-:-:=;-:-_-:~::-~": :-~-at-,*-:r(citing In re Philadelphia Newspapers, LLC, 599 F.3d 298, 315-16 (3d Cir. 2010)). In
:r~-:~~~~~~~=:~d;J;~i~g~certification under 28 U.S.C. § 158(d)(2)(A)(i), the court expressly stated: "The Third
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-_:~=-~~!:;:g1~~11ifs ·decision Philadelphia Newspapers
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.
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opinion is a 'controlling decision.'" See Fisker,
.Appellees also rely on American Home Mortgage, arguing that the Bankruptcy Court
! - - - ·: _ _ --·--·-:··-
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- - - there "declin[ed] certification where [the] issues required a straightforward interpretation of New
____
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7) (citing American Home Mortgage, 408 B.R. at 44). In American Home Mortgage, the court
- indeed denied certification, but on a different basis than Appellants argue here. There, the court
found that mixed questions that implicate the particular circumstances of the case are not pure
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