United States of America v. Staton et al
Filing
344
ORDER DENYING DEFENDANTS RONALD AND BRENDA STATONS' MOTION FOR LEAVE TO FILE AN INTERLOCUTORY APPEAL re 328 Notice of Appeal, filed by Ronald B. Staton, Brenda L. Staton. Signed by JUDGE ALAN C. KAY on 04/19/2018. (eps, )COURTS CERTIFICATE of Service - Non-Registered CM/ECF Participants served by First Class Mail on 04/20/2018 to: Ronald B. Staton; Brenda L. Staton; 233 Kalalau St.; Honolulu, HI 96825 to the addresses of record listed on the Notice of Electronic Filing (NEF)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
___________________________________
UNITED STATES OF AMERICA,
)
)
Plaintiff,
)
)
v.
) Civ. No. 12-00319 ACK-KSC
)
RONALD B. STATON, BRENDA STATON,
)
NAVY FEDERAL CREDIT UNION,
)
CAPSTEAD MORTGAGE CORPORATION,
)
and STATE OF HAWAII,
)
)
Defendants.
)
___________________________________)
ORDER DENYING DEFENDANTS RONALD AND BRENDA STATONS’
MOTION FOR LEAVE TO FILE AN INTERLOCUTORY APPEAL
For the reasons discussed below, the Court DENIES
Defendants Ronald and Brenda Statons’ Motion for Leave to File
an Interlocutory Appeal.
BACKGROUND
For purposes of the current motion, the Court
discusses only those facts relevant to Defendants Ronald (“Mr.
Staton”) and Brenda (“Mrs. Staton” and together with Mr. Staton,
the “Statons”) Statons’ Motion for Leave to File an
Interlocutory Appeal (the “Motion”).
1
ECF No. 328.
A more
complete recitation of this case’s extensive factual background
1
As the Court explained in its Minute Order entered April 10, 2018, ECF No.
329, the Court will construe the Statons’ notice of appeal, ECF No. 328, as a
motion to permit an interlocutory appeal under 28 U.S.C. § 1292. E.g., In re
Van Zandt, No. BR 12-03184-HLB, 2014 WL 1422973, at *1 (N.D. Cal. Apr. 11,
2014) (“The Court construes Debtor's notice of appeal . . . to be a motion
for leave to appeal an interlocutory order.”).
1
can be found in the Court’s prior Order Confirming Sale,
Approving Commissioner’s Report, and Determining Order of
Priority for Future Disbursements (the “April 10, 2018 Order”).
ECF No. 330.
On December 29, 2014, Plaintiff United States (the
“Government”) filed a Motion for Summary Judgment on the Third
Claim in the Complaint.
ECF No. 109.
The motion requested that
the Government’s federal tax liens and judgments be foreclosed
and that the Statons’ home (the “Residence”) be sold free and
clear of all liens pursuant to the terms of the Government’s
Proposed Order of Foreclosure and Judicial Sale.
ECF No. 109-1.
Id.; see also
The motion further requested that the proceeds
of the foreclosure sale first be applied to the costs of sale
and any outstanding property taxes on the Residence, and
thereafter be distributed among the parties through a
stipulation or order of the Court.
ECF No. 109.
The Court issued an order granting the Government’s
Motion for Summary Judgment on the Third Claim in the Complaint
on August 31, 2015, ECF No. 157 (“August 31, 2015 Order”), which
thoroughly set forth why the inclusion of the foreclosure of
Defendants Capstead Mortgage Corporation (“Capstead”) and Navy
Federal Credit Union’s (“NFCU” and together with Capstead, the
“Lender Defendants”) mortgage was proper, id. at 16-23.
That
same day, the Court issued an Order of Foreclosure and Judicial
2
Sale (“Foreclosure Order”) of the Residence, ordering that the
Residence be sold free and clear of all liens, including Lender
Defendants’ mortgage.
ECF No. 158.
On September 1, 2015, however, Mr. Staton filed a
petition for relief under 11 U.S.C. § 301 in the United States
Bankruptcy Court for the District of Hawaii.
ECF No. 160-1.
In
view of Mr. Staton’s bankruptcy petition, the Court stayed this
case.
ECF No. 161.
The Court reinstated the Foreclosure Order
on December 7, 2015, in response to the Bankruptcy Court’s Order
Granting United States’ Motion for Relief from Automatic Stay.
ECF No. 168.
On November 16, 2016, Mr. Staton filed a second
petition for relief under 11 U.S.C. § 301 in the United States
Bankruptcy Court for the District of Hawaii.
ECF No. 208.
Again, in view of Mr. Staton’s bankruptcy petition, the Court
stayed this case.
ECF No. 209.
Mr. Staton’s second petition
for relief under 11 U.S.C. § 301 was dismissed, however, and on
April 24, 2017, the Court reinstated its Foreclosure Order and
directed the parties to proceed in accordance therewith.
ECF
No. 212.
The day before the scheduled foreclosure sale auction,
on June 20, 2017, Mrs. Staton filed a petition for relief under
11 U.S.C. § 301 in the United States Bankruptcy Court for the
3
District of Hawaii.
ECF No. 214.
Based on Mrs. Staton’s
bankruptcy petition, the Court stayed this case.
ECF No. 215.
The following month, on August 7, 2017, the Government
filed a Motion for Relief from Automatic Stay in the Bankruptcy
Court.
The Bankruptcy Court entered an order on October 6,
2017, granting the Government’s Motion for Relief from Automatic
Stay.
Accordingly, the Court unstayed this case and reinstated
its Foreclosure Order, directing the parties to proceed in
accordance therewith.
ECF No. 219.
The foreclosure sale of the Residence was set for
December 20, 2017.
ECF No. 230.
But on December 8, 2017, Mr.
Staton filed an Emergency Motion to Strike Notice of Lis Pendens
(NOPA), ECF No. 226, along with a Supplement to the Emergency
Motion, ECF No. 227.
Mr. Staton represented that he obtained
financing in the amount of $1,032,000—sufficient to satisfy all
liens on the property—with a closing date set for December 8,
2017.
ECF No. 226.
The Court held a hearing on this matter on
December 11, 2017 and ordered the parties to have a settlement
conference with Magistrate Judge Chang.
ECF No. 234.
On December 18, 2017, Magistrate Judge Chang held the
settlement conference, which he ended when the Statons could not
produce a loan commitment from the lender for the abovedescribed financing.
ECF No. 244.
The Statons filed an
Emergency Motion Regarding Foreclosure and Request for a Hearing
4
and Stay Pending Hearing later that day.
ECF No. 241.
And—
still on December 18, 2017—the Court held a hearing on the
Statons’ motion, concluding that once again the Statons failed
to obtain a loan commitment which would pay off all the liens on
the Residence and that the foreclosure of the Residence would
proceed on December 20, 2017.
ECF No. 243.
The day before the foreclosure sale, on December 19,
2017, the Statons filed a Notice Re: Conditional Loan Approval
Letter and requested a stay of the foreclosure sale.2
245.
ECF No.
The Court held a hearing the morning of December 20, 2017
regarding the Statons’ Notice,3 at which the Court denied the
Statons’ request for a stay and ordered the foreclosure sale to
proceed.
ECF No. 251.
The foreclosure sale occurred on December 20, 2017
around 12:00 p.m. on the steps of the United States District
Court for the District of Hawaii.
Following the foreclosure
sale, on December 21, 2017, the Commissioner filed a Notice of
2
The conditional loan approval letter stated that the Residence was “[n]onowner occupied” and that “the borrower’s current intention is to rent the
property.” ECF No. 245-1 at 1.
3
At the December 20, 2017 hearing, factual circumstances were brought to the
attention of the Statons’ potential lender—who was in attendance by
telephone—which caused the lender to confirm that it could not provide a loan
to the Statons. ECF No. 262-1 at 3-4. Specifically, Mrs. Staton disclosed
at the hearing that she had formed a business entity for the purpose of
obtaining business financing to pay down Mr. Staton’s debts, which the
Statons were claiming were “business debts.” Id. Moreover, the issue of
whether the Statons continued to reside in the Residence or instead intended
to use it as an investment property or other business venture was discussed.
Id. at 4. Because it became apparent that the Statons were seeking a loan
for personal rather than business purposes, the lender withdrew its offer of
conditional loan approval. Id.
5
Sale, informing the Court that the Residence was sold one day
earlier for $1,135,000.00, subject to confirmation by the Court.
ECF No. 254.
On December 21, 2017, however, the Government filed a
Notice of Defendant Ronald Staton’s Bankruptcy Case, which
stated that: (1) Mr. Staton filed a new bankruptcy case on
December 20, 2017 and (2) the Government intended to seek relief
from the stay in that case so that the Commissioner’s sale could
be confirmed.
ECF No. 253.
On December 22, 2017, Mrs. Staton filed a notice of
lis pendens, asserting that she was contesting the validity of
the foreclosure sale as having been filed in violation of Mr.
Staton’s bankruptcy, which she contended was filed at 11:54 a.m.
before the foreclosure sale.
ECF No. 255.
She also asserted
that the foreclosure sale failed “to protect defendant interests
in the property.”
ECF No. 255 at 2.
The Court entered a minute
order on January 5, 2018, setting a hearing on Mrs. Staton’s
claim for January 31, 2018 and directing the parties to file
briefs.
ECF No. 258.
The Bankruptcy Court granted the Government’s Motion
for Relief from Automatic Stay on January 31, 2018, and applied
the lifting of the stay retroactively to December 20, 2017.4
4
On February 26, 2018, Lender Defendants moved in the Bankruptcy Court for
relief from the automatic and codebtor stay, nunc pro tunc. On April 4,
(continued . . . .)
6
This Court continued the hearing on Mrs. Staton’s claim
originally scheduled for January 31, 2018 until February 16,
2018 because the Government: (1) did not seek a waiver of the
14-day stay provided under Fed. R. Bankr. P. 4001(a)(3) in Mr.
Staton’s bankruptcy case; and (2) failed to record the
Bankruptcy Court’s Order in Mrs. Staton’s prior bankruptcy case
granting relief from the stay, which provided for “‘in rem’
relief, i.e. this order is binding with respect to the subject
property for 240 days after the date of the entry of this order
in any other bankruptcy case that has been or may be filed.”
ECF No. 268.
The Government subsequently recorded the
Bankruptcy Court’s in rem Order with the Hawaii Bureau of
Conveyances.
ECF No. 296 at 3 (citing ECF No. 294-1).
On February 12, 2018, Mr. Staton filed a Motion to
Vacate, Alter, or Amend Order Granting Relief from Automatic
Stay Retroactive to December 20, 2017 in the Bankruptcy Court.
On February 15, 2018, the Bankruptcy Court denied this Motion.
That same day, Mr. Staton filed a Notice of Appeal of the
Bankruptcy Court’s Order and its subsequent denial of his Motion
to Vacate, Alter, or Amend.
The Court held a hearing on February 16, 2018 (after
expiration of the 14-day stay provided under Fed. R. Bankr. P.
(continued . . . .)
2018, the Bankruptcy Court granted Lender Defendants’ motion and applied the
lifting of the stay retroactively to December 20, 2017.
7
4001(a)(3)) to consider Defendant Brenda Staton’s assertion that
there has been a failure “to protect defendant interests in the
property.”
Following the February 16, 2018 hearing, the Court
entered an Order Finding Defendant Brenda Staton’s Claim that
the Foreclosure Sale Fails to Protect Her Interest in the
Property to be Without Merit.
ECF No. 276.
The Court also entered a minute order on February 16,
2018, setting a briefing schedule and hearing dates on the
issues of whether the foreclosure sale should be confirmed, the
order of priority, and the disbursement of the foreclosure sale
proceeds.
ECF No. 275.
On March 19, 2018, Mrs. Staton filed a notice of
appeal, ECF No. 297, appealing from the Court’s February 16,
2018 Order, ECF No 276.
The Court entered a minute order on
March 21, 2018, construing Mrs. Staton’s notice of appeal as a
motion for leave to file an interlocutory appeal, as well as
setting a briefing schedule and hearing on the motion.
299.
ECF No.
The Government filed its Opposition on March 23, 2018, ECF
No. 303, to which the Lender Defendants and Defendant State of
Hawaii joined, ECF Nos. 304, 305.
The Statons filed a
Memorandum in Support of Brenda L. Staton’s Motion to Certify
Interlocutory Appeal on March 27, 2018.
ECF No. 312.
Lender
Defendants filed an opposition to Mrs. Staton’s memorandum on
March 29, 2018.
ECF. No. 317.
8
In light of Mrs. Staton’s notice of appeal, the
minute order entered on March 21, 2018 also stated that the
hearing on whether the foreclosure sale should be confirmed
(originally scheduled for March 23, 2018, ECF No. 275) would be
combined with the hearing on the issues of priority and
disbursement of the foreclosure sale proceeds.
ECF No. 299.
The Court set the combined hearing for Friday, April 6, 2018.
Id.
On March 26, 2018, however, the Statons filed a Motion
for Continuance of Hearings Scheduled for March 29, 2018 and
April 6, 2018. ECF No. 307.
The Government filed an opposition
on March 28, 2018, ECF No. 309, to which Lender Defendants
joined, ECF No. 314.
The Court entered a minute order on March
28, 2018, denying the Statons’ motion for a continuance and
directing that the hearings set for March 29, 2018, and April 6,
2018, would be held as scheduled.
ECF No. 311.
The Court
granted Mrs. Staton permission to appear at the March 29, 2018
and April 6, 2018 hearing by telephone.
Id.; ECF No. 322.
The
Courtroom Manager contacted Mrs. Staton the day before the March
29, 2018 hearing to confirm these details and arrange Mrs.
Staton’s appearance by telephone.5
5
On March 28, 2018, Mr. Staton filed an Emergency Motion for Stay Pending
Appeal with the United States Bankruptcy Court Appellate Panel for the Ninth
Circuit. Mr. Staton’s motion requested an order staying the foreclosure of
the Residence pending resolution of his February 15, 2018 appeal of the
(continued . . . .)
9
On March 29, 2018, the Court held the hearing on Mrs.
Staton’s motion for leave to file an interlocutory appeal.
Despite the Courtroom Manager’s prior coordination with Mrs.
Staton, she was unable to reach Mrs. Staton by telephone after
several attempts.
ECF No. 318.
However, Mr. Staton, who
appeared at the March 29, 2018 hearing in person, stated that he
represented Mrs. Staton and would present their joint statement.
Id.
On April 3, 2018, the Court issued a written order denying
Mrs. Staton’s motion for leave to file an interlocutory appeal
(the “April 3, 2018 Order”).
ECF No. 321.
Pursuant to the minute order entered on March 21,
2018, ECF No. 299, the Court held a hearing on April 6, 2018 on
whether the foreclosure sale should be confirmed, the
Commissioner’s Report approved, and the issues of priority and
disbursement of the foreclosure sale proceeds. ECF No. 327.
Mr.
Staton appeared at the hearing in person, while Mrs. Staton
appeared by telephone.
At the conclusion of the April 6, 2018
hearing, the Court announced that it would enter a written order
granting the Government’s Motion for an Order Confirming Sale,
Approving Commissioner’s Report and Distributing Proceeds to the
extent that it would: (1) confirm the sale; (2) approve the
(continued . . . .)
Bankruptcy Court’s Order Granting Relief from Automatic Stay Retroactive to
December 20, 2017 and subsequent denial of his Motion to Vacate, Alter, or
Amend.
10
Commissioner’s Report; and (3) approve the Government’s proposed
order of priority for future disbursements.
See ECF No. 327.
The Court also stated that it would reserve
consideration of the disbursement of sale proceeds pending the
resolution of several outstanding issues, including the
determination of: (1) the reasonable amount of attorneys’ fees
and costs to which the Lender Defendants are entitled, which has
been referred to Magistrate Judge Kevin Chang for a Findings and
Recommendation; and (2) the amount of accrued interest and any
penalties to which the Government is entitled.
Id.
The Court
announced that it would rule on the ultimate amount of sale
proceeds to be distributed to each party, and order the
appropriate distribution, following a separate hearing.
Id.
Hours after the April 6, 2018 hearing, the Statons
filed a hand-written notice of appeal.
ECF No. 328.
The notice
of appeal cited no statutory or legal authority and appealed
from the Court’s “Order Confirming Sale, Approving
Commissioner’s Report and Distributing Proceeds. . . .”
Id.6
On April 10, 2016, the Court entered a minute order
stating that it would construe the Statons’ April 6, 2018 notice
of appeal as a motion to permit an interlocutory appeal under 28
6
Although the Court assumes that the Statons’ Motion requests permission to
appeal from the written order issued April 10, 2018, ECF No. 330, the
analysis herein applies equally to the minute order entered on April 6, 2018,
which announced the Court’s decision and stated that a written order would
follow, ECF No. 327.
11
U.S.C. § 1292.
ECF No. 329.
The minute order scheduled a
hearing on the motion for Wednesday, April 18, 2018, and
directed the parties to file any memoranda in support or
opposition by Friday, April 13, 2018.
Id.
That same day, on April 10, 2018, the Court issued an
Order Confirming Sale, Approving Commissioner’s Report, and
Determining Order of Priority for Future Disbursements.
10, 2018 Order, ECF No. 330.
April
In the April 10, 2018 Order, the
Court explicitly “reserve[d] jurisdiction to address any
appropriate issues that remain, including [(1) the reasonable
attorneys’ fees and costs to which Lender Defendants’ are
entitled and (2) the accrued interest and any penalties to which
the Government is entitled], as well as the possible entry of a
deficiency judgment in favor of” the Government.
Id. at 28.
The April 10, 2018 Order also stated, among other things, that
it was “not a final judgment pursuant to Rule 54 of the Federal
Rules of Civil Procedure.”
Id.
Special Considerations for Pro Se Litigants
The Court reiterates that, notwithstanding that it
appears the Statons have received advice from an undisclosed
attorney during the course of this proceeding, the Court has
nevertheless treated the Statons as pro se parties and analyzed
their position as being pro se.
The Ninth Circuit has explained
that pro se pleadings and briefs are to be construed liberally.
12
Balisteri v. Pacifica Police Dep’t., 901 F.2d 696 (9th Cir.
1990).
When pro se litigants technically violate a rule, the
court should act with leniency toward them.
Motoyama v. Haw.
Dep’t of Transp., 864 F. Supp. 2d 965, 975 (D. Haw. 2012);
Draper v. Coombs, 792 F.2d 915, 924 (9th Cir. 1986).
Pro se
litigants, however, must follow the same rules of procedure that
govern other litigants.
Motoyama, 864 F. Supp. 2d at 975.
DISCUSSION
The Statons submitted a memorandum in support of their
motion on April 13, 2018.
ECF No. 339 (“Staton Mem.”).
They
first argue that their appeal, though interlocutory in nature,
should be certified “because it falls under the small group of
orders permissible under the collateral order doctrine . . . .”
Staton Mem. at 1-2.
Second, they contend that the April 10,
2018 Order is an appealable interlocutory order pursuant to 28
U.S.C. § 1292(a)(1).
Id. at 3.
Third, they request that the
Court grant leave to file an interlocutory appeal pursuant to 28
U.S.C. § 1292(b).
Id. at 2-3.7
The Government and Lender
Defendants filed memoranda in opposition to the Statons’ motion,
7
The Statons also contend that the decision to confirm the sale should be
certified to the Ninth Circuit as an appealable order under Federal Rule of
Civil Procedure 54(b). Staton Mem. at 3. The April 10, 2018 Order stated
that it was “not a final judgment pursuant to Rule 54 of the Federal Rules of
Civil Procedure” and did not enter judgment as to any party. April 10, 2018
Order at 28 ¶ 17. Accordingly, the Court will not “direct entry of a final
judgment as to one or more, but fewer than all, claims or parties” and has
not has not “expressly determine[d] that there is no just reason for delay.”
Fed. R. Civ. P. 54(b).
13
and Defendant State of Hawaii filed a joinder to the
Government’s opposition. See ECF Nos. 335 (“Pl.’s Mem.”), 336
(“Lender Def.’s Mem.”), 337 (“Haw. Joinder”).
The Court has
reviewed the parties’ arguments and addresses them in turn.
I.
Collateral Order Doctrine
The Statons first contend that their appeal is
“permissible under the collateral order doctrine . . . .”
Staton Mem. 1-2. Pursuant to 28 U.S.C. § 1291, courts of appeals
“have jurisdiction of appeals from all final decisions of the
district courts of the United States . . . .”
A final decision
is generally one “by which a district court disassociates itself
from a case.”
(1995).
Swint v. Chambers Cty. Comm’n, 514 U.S. 35, 42
Courts give § 1291 a “practical rather than a technical
construction,” however, under which the statute encompasses not
only judgments that “terminate an action,” but also a “small
class” of collateral orders that, although they do not terminate
the litigation, are appropriately deemed “final.”
Cohen v.
Beneficial Loan Group, 337 U.S. 541, 545-46 (1949); Mohawk
Indus., Inc. v. Carpenter, 558 U.S. 100, 106 (2009).
“That
small category includes only decisions that are conclusive, that
resolve important questions separate from the merits, and that
are effectively unreviewable on appeal from the final judgment
in the underlying action.”
Swint, 514 U.S., at 42; see also
United States v. Hitchcock, 992 F.2d 236, 238 (9th Cir. 1993)
14
(“The collateral-order doctrine . . . permits immediate appeal
of decisions which (1) conclusively determine the disputed
question, (2) resolve an important issue completely separate
from the merits of the action, and (3) are effectively
unreviewable on appeal from a final judgment.”).
The Supreme Court has cautioned that the collateral
order doctrine must “never be allowed to swallow the general
rule that a party is entitled to a single appeal, to be deferred
until final judgment has been entered.”
Digital Equipment Corp.
v. Desktop Direct, Inc., 511 U.S. 863, 868 (1994) (citation
omitted).
This approach is merited because “permitting
piecemeal, prejudgment appeals, . . . undermines efficient
judicial administration and encroaches upon the prerogatives of
district court judges, who play a special role in managing
ongoing litigation.”
Mohawk Indus., Inc., 558 U.S. at 106
(citations and internal quotation marks omitted).
Accordingly,
the justification for immediate appeal must be strong to
overcome the usual benefits of deferring appeal until litigation
concludes.8
8
This requirement is embedded in two of the three traditional collateral
order doctrine requirements. Mohawk Indus., Inc., 558 U.S. at 107. The
second requirement, for example, insists upon “important questions separate
from the merits.” Swint, 514 U.S. at 42. In addition, “the third Cohen
[requirement], whether a right is ‘adequately vindicable’ or ‘effectively
reviewable,’ simply cannot be answered without a judgment about the value of
the interests that would be lost through rigorous application of a final
judgment requirement.” Digital Equipment Corp. v. Desktop Direct, Inc., 511
U.S. 863, 878-79 (1994). The Supreme Court has thus explained that the
(continued . . . .)
15
In light of these considerations, the Court finds that
the April 10, 2018 Order is not appealable under the collateral
order doctrine.
determination.
Several factors guide the Court’s
The Statons contend that the April 10, 2018 is
conclusive because it establishes Mr. Staton’s tax liabilities
“for the years in question.”
Staton Mem. at 2.
2018 Order, however, did no such thing.
The April 10,
Rather, Mr. Staton’s
outstanding tax liabilities reduced to judgment were the subject
of two stipulations between Mr. Staton and the Government in
2014.
See ECF No. 157 at 7-8.
As the August 31, 2015 Order
explained:
On September 30, 2014, pursuant to a
stipulation filed by Plaintiff and Ronald
Staton, the Court entered judgment against
Mr. Staton with respect to his 2001, 2002,
2003, and 2005 income tax liabilities. ECF
No. 104. . . . On November 25, 2014,
pursuant to another stipulation filed by
Plaintiff and Ronald Staton, the Court
entered judgment against Mr. Staton with
respect to his remaining 2004, 2006, and
2007 income tax liabilities at issue in the
Complaint. ECF No. 108. . . . Mr. Staton’s
total outstanding liability reduced to
judgment is therefore $355,526.74 . . . .
ECF No. 157 at 7.
(continued . . . .)
assertion that waiting until final judgment “may burden litigants in ways
that are only imperfectly reparable by appellate reversal . . . has never
sufficed.” Id. at 872. “Instead, the decisive consideration is whether
delaying review until the entry of final judgment would imperil a substantial
public interest or some particular value of a high order.” Mohawk Indus.,
Inc., 558 U.S. at 107.
16
It is perhaps no coincidence that the Statons’ own
memorandum relies upon the August 31, 2015 Order to argue that
the April 10, 2018 Order is conclusive on this topic.
Their
memorandum states:
[T]he Order confirming the sale (and the
Order granting summary judgment with the
right to foreclosure on the property[)] . .
. is an appealable Order although it may be
considered interlocutory in nature. The
confirmation of the sale by the U.S.
District Court (and the Order granting
summary judgment) has conclusively
established Defendant Ronald Staton’s tax
liability to United States Internal revenue
[sic] Service . . . for the years in
question.
Id. (emphasis added).
The Statons’ argument thus implicitly
acknowledges that the April 10, 2018 Order did not establish Mr.
Staton’s tax liabilities and “may be considered” interlocutory
in nature.
In addition, to the extent the Statons rely upon
Citicorp Real Estate, Inc. v. Smith, 155 F.3d 1097 (9th Cir.
1998)(“Citicorp”) to argue that the April 10, 2018 Order is
“conclusive” under the collateral order doctrine (or a final
order), the Court finds that case distinguishable.
In Citicorp,
the Ninth Circuit held that certain foreclosure judgments, “as
written, [we]re final decisions appealable within the meaning of
28 U.S.C. § 1291.”
Id. at 1101.
In determining that the
foreclosure judgments were final, however, the court emphasized
17
that they “conclusively establish [the Defendant]’s liability
for the defaulted loans (including a quantified amount of
principal, interest, and reasonable attorney’s fees).”
Id.
The
court also reasoned that the foreclosure judgements were final
because the “district court retained jurisdiction for the sole
purpose of holding the Defendants personally liable for any
deficiency judgment remaining after the judicial foreclosure
sales.”
Id.
Here, the April 10, 2018 Order does not resemble the
foreclosure orders in Citicorp.
First, as explained above, the
April 10, 2018 Order did not “conclusively establish” Mr.
Staton’s tax liabilities.
Mr. Staton’s 2014 stipulations with
the Government established these liabilities, as explained in
the August 31, 2015 Order.
Even if the April 10, 2018 Order had
established Mr. Staton’s liability, moreover, it explicitly
reserved judgment on the amount of accrued interest and any
penalties to which the Government is entitled.
April 10, 2018
Order at 26 ¶ 13 (“The Court will schedule a hearing on the
amount of accrued interest and any penalties to which Plaintiff
United States is entitled in conjunction with said judgments.
Plaintiff United States is directed to file a clarification of
the penalties and interest it is seeking to recover from Mr.
Staton at least fourteen (14) days before the hearing.”).
Second, neither the August 31, 2015 Order, nor the
18
April 10, 2018 Order from which the Statons attempt to appeal,
conclusively established the amounts due for any parties’
reasonable attorneys’ fees and costs.
In contrast, the April
10, 2018 Order explained that “[t]he Court has referred to
Magistrate Judge Kevin Chang the determination of the attorneys’
fees and costs to which the Lender Defendants are entitled, . .
. and the Court reserves consideration on that issue until after
the issuance of Magistrate Judge Chang’s Findings and
Recommendation.”
Id. at 26 ¶ 12. The “quantified amount of . .
. reasonable attorney’s fees” in the foreclosure orders that
contributed to the Citicorp court’s analysis, 155 F.3d at 1101,
is therefore lacking in the April 10, 2018 Order.
Third, the April 10, 2018 Order did not retain
“jurisdiction for the sole purpose of holding the Defendants
personally liable for any deficiency judgment remaining after
the judicial foreclosure sales.”
Id. (emphasis added).
In
contrast, the April 10, 2018 Order retained jurisdiction “to
address any appropriate issues that remain, including [(1) the
reasonable attorneys’ fees and costs to which Lender Defendants’
are entitled and (2) the accrued interest and any penalties to
which the Government is entitled], as well as the possible entry
of a deficiency judgment in favor of” the Government.
April 10,
2018 Order at 28 ¶ 16.
Finally, the April 10, 2018 Order did not conclusively
19
establish a quantified amount due to any party except the
Commissioner.
E.g., Liberty Mut. Ins. Co. v. Wetzel, 424 U.S.
737, 744 (1976) (“[W]here assessment of damages or awarding of
other relief remains to be resolved [courts] have never . . .
considered [an order] to be ‘final’ within the meaning of 28
U.S.C. § 1291.”); HSBC Bank USA, N.A. v. Townsend, 793 F.3d 771,
776 (7th Cir. 2015) (“Damages are part of the judgment and
essential to finality; lack of quantified damages prevents an
appeal.”). Even as to Mrs. Staton, the Court found only that
Mrs. Staton is entitled to fifty percent of the remaining
proceeds of the sale following distributions to the Commissioner
and Defendant Capstead (in an amount not yet determined).
Id.
at 27 ¶ 14C.
Significantly, Mrs. Staton’s share will be affected by
the future determinations set forth above—namely, determinations
of the reasonable attorneys’ fees and costs to which Lender
Defendants’ are entitled, and the accrued interest and any
penalties to which the Government is entitled.
These future
determinations will also affect whether a deficiency judgment in
the Government’s favor is even necessary, and if so, in what
amount.
In sum, and unlike in Citicorp, there are several
undecided matters that weigh against finding the April 10, 2018
Order final or conclusive.
The April 10, 2018 Order was not one
by which this Court “disassociate[ed] itself from [this] case.”
20
Swint, 514 U.S. at 42.
Even if the April 10, 2018 Order were conclusive,
however, the Court finds that it did not “resolve an important
issue completely separate from the merits of the action.”
Hitchcock, 992 F.2d at 238 (emphasis added).
Rather, the April
10, 2018 Order involved “considerations that are enmeshed in the
merits of the dispute, that affect the decision on the merits,
or that are affected by that decision.”
878 F.2d 272, 274 (9th Cir. 1989).
United States v. Shah,
It confirmed the sale
ordered in the Court’s 2015 Foreclosure Order, ECF No. 158,
which was entered after the August 31, 2015 Order granted the
Government’s motion for summary judgment, ECF No. 157.
Put
simply, there is nothing “collateral” about the Court’s April
10, 2018 Order confirming a sale that is at the center of this
dispute.
The Court thus finds that the Statons are not entitled
to an immediate appeal under the collateral order doctrine.
II.
Interlocutory Review Under 28 U.S.C. § 1292(a)(1)
The Statons also contend that the April 10, 2018 Order
is appealable under 28 U.S.C. § 1292(a).9
Staton Mem. at 3.
9
The Statons do not specify which provision of 28 U.S.C. § 1292(a) permits
their interlocutory appeal. The Court addresses § 1292(a)(1), however,
because Mrs. Staton asserted that it applied in her memorandum supporting her
last motion for leave to file an interlocutory appeal, see ECF No. 312 at 12, and no other provision seems to provide a plausible basis for the Statons’
current motion.
21
Under 28 U.S.C. § 1292(a)(1), the courts of appeals have
jurisdiction over “[i]nterlocutory orders of the district courts
of the United States . . . granting, continuing, modifying,
refusing or dissolving injunctions.”
The Supreme Court has
stated that an order may be appealable under section 1292(a)(1)
if it has the “practical effect” of denying an injunction.
Carson v. American Brands, 450 U.S. 79, 83-84 (1981).
The Court finds that § 1292(a)(1) does not apply to
the Statons’ latest attempt to appeal.
The Government’s Motion
for an Order Confirming Sale, Approving Commissioner’s Report
and Distributing Proceeds did not request injunctive relief.
The Court’s April 10, 2018 Order neither granted (continued,
modified, refused or dissolved) an injunction, nor had the
practical effect of doing so.
ECF No. 330.
In contrast, the
April 10, 2018 Order confirmed the sale, approved the
Commissioner’s Report, and ruled on the order of priority for
future disbursements.
Id.
None of these issues implicate
relief in the nature of an injunction.
See Pl.’s Mem. at 4.
The Statons also argue that the April 10, 2018 Order
is appealable under § 1292(a)(1) “because it involves a change
in possession or ownership” of the Residence.
Staton Mem. at 3.
As support, the Statons cite Forgay v. Conrad, 47 U.S. 201
(1848), in which the Supreme Court treated as final an appeal
from an order that directed immediate transfer of land, slaves
22
and money and ordered an accounting, despite the absence of the
accounting and judgment.
The Supreme Court held the decree was
final because “[i]t decide[d] the title of all the property in
dispute, decrees that it be delivered up to the complainant, and
that execution issue.”
Id. at 202.
The Forgay-Conrad rule
subsequently has been articulated as follows: “an order is final
if it requires the immediate turnover of property and subjects
the party to irreparable harm if the party is forced to wait
until the final outcome of the litigation.”
Cannon v. Hawaii
Corp. (In re Hawaii Corp.), 796 F.2d 1139, 1143 (9th Cir. 1986).
While the Forgray-Conrad rule is not connected to §
1292(a)(1)—rather, it is an exception to the finality
requirement under § 1291—it creates a close question in this
matter as to whether the April 10, 2018 Order is appealable.
The Court finds that it is not appealable because Forgay is
distinguishable.
As an initial matter, several courts of appeals have
questioned the continuing vitality of Forgay in light of the
development of the collateral order doctrine.
Pigford v.
Veneman, 369 F.3d 545, 547 (D.C. Cir. 2004) (“We have
questioned, however, whether Forgay has continuing vitality
apart from the collateral order doctrine.” (citation and
internal quotation omitted)); Petties v. District of Columbia,
227 F.3d 469, 472 (D.C. Cir. 2000) (“The Supreme Court has
23
recognized but a single variation on the theme of finality,
namely the collateral order doctrine.”); HBE Leasing Corp. v.
Frank, 48 F.3d 623, 632 (2d Cir. 1995) (“Our cases cast
considerable doubt on whether Forgay is still applicable . . .
.”); Cf. HSBC Bank USA, N.A., 793 F.3d at 780 (“While there is
some tension between the Forgay doctrine and Mohawk Industries,
see 558 U.S. at 106, 130 S. Ct. 599, and that tension has been
reinforced by Bullard, the Court has not told us that Forgay has
been overruled . . . .”).
The Ninth Circuit has largely confined application of
the Forgay-Conrad rule to orders that were otherwise collateral
orders under Cohen.
E.g., Cannon, 796 F.2d at 1142 (“Because
the liberalized rules of finality for bankruptcy appeals do not
apply to 28 U.S.C. § 1291 appeals, this court has jurisdiction
over this case only if the order of the district judge is an
appealable collateral order.”); see also In re Vylene
Enterprises, Inc., 968 F.2d 887, 893 (9th Cir. 1992) (discussing
Cannon and explaining: “We decided that the district court’s
order to turn property over to the estate was final because it
was a collateral order under Cohen and it met the Forgay v.
Conrad rule.”); Weingartner v. Union Oil Co. of Cal., 431 F.2d
26, 29 (9th Cir. 1970) (“The Cohen approach rests upon either of
two underpinnings: the ‘collateral order’ rule . . . . or the
likelihood of ‘irreparable harm’ to a party if immediate review
24
is not allowed . . . . Forgay v. Conrad, 47 U.S. 201, 6 How.
201, 12 L.Ed. 404 (1848).
Under neither premise does Cohen
render the order before us appealable.”).
Even if Forgay has not been displaced by the
collateral order doctrine, however, the Court finds that the
April 10, 2018 Order did not finally adjudicate the rights of
the parties in this matter for the reasons stated in Section I,
supra.
Mrs. Staton’s share of the sale proceeds has not yet
been determined, meaning that “[t]he whole law of the case, so
far as the [Statons] are concerned, is [not] settled by the
decree.”
Forgay, 47 U.S. at 202.
And the Statons’ appeal is
not “easily separable from the other claims involved in the
proceeding.”
Cannon, 796 F.2d at 1143.
In contrast, the
Statons filed only a hand-written notice of appeal, which
appealed from the entire April 10, 2018 Order.
See ECF No. 328.
The entire April 10, 2018 Order is not separable from any other
claims in this proceeding.
Additionally, the April 10, 2018 Order retained
jurisdiction “to address any appropriate issues that remain,
including [(1) the reasonable attorneys’ fees and costs to which
Lender Defendants’ are entitled and (2) the accrued interest and
any penalties to which the Government is entitled], as well as
the possible entry of a deficiency judgment in favor of” the
Government.
April 10, 2018 Order at 28 ¶ 16.
25
Unlike in Forgay,
more remains to be done than “the ministerial duty of stating an
account.” 47 U.S. at 202; see also In re Four Seas Ctr., Ltd.,
754 F.2d 1416, 1419 (9th Cir. 1985) (“The order from which
Davre's appeals therefore does not fall within the Cohen
exception. Nor is it sufficiently conclusive to fall within the
rule of Forgay v. Conrad, 47 U.S. (6 How.) 201, 204, 12 L.Ed.
404 (1848), where appeal was allowed of an order that awarded
property and left nothing more to be done than an accounting.”).
Further, as stated above, the Forgay-Conrad rule
permits immediate appeal if an order “requires the immediate
turnover of property and subjects the party to irreparable harm
if the party is forced to wait until the final outcome of the
litigation.” Cannon, 796 F.2d at 1143.
The Statons have not
shown that the April 10, 2018 Order confirming the sale will
irreparably harm them here.
Title to the Residence has not yet
passed to the purchaser, and, as discussed in Section IV, supra,
they may obtain a stay as of right by posting an adequate
supersedeas bond.
E.g., HSBC Bank USA, N.A., 793 F.3d at 780
(reasoning that order confirming a judicial sale would not
threaten irreparable harm because“[a] mortgagor can delay the
permanent transfer of title to the purchaser by obtaining a stay
pending appeal of the order confirming sale”).
An appeal of the
April 10, 2018 Order under § 1292(a)(1), or the Forgay-Conrad
rule, is thus inappropriate.
26
III.
Interlocutory Review Under 28 U.S.C. § 1292(b)
The Statons again contend that the Court should permit
them to file an interlocutory appeal under 28 U.S.C. § 1292(b).
Staton Mem. at 2-3.
Courts have explained that a “movant
seeking an interlocutory appeal [under 28 U.S.C. § 1292(b)] has
a heavy burden to show that exceptional circumstances justify a
departure from the basic policy of postponing appellate review
until after the entry of a final judgment.”
Coopers & Lybrand
v. Livesay, 437 U.S. 463, 475 (1978) (internal quotation marks
omitted); see also James v. Price Stern Sloan, Inc., 283 F.3d
1064, 1067 n.6 (9th Cir. 2002) (“Section 1292(b) is a departure
from the normal rule that only final judgments are appealable,
and therefore must be construed narrowly.”); Du Preez v. Banis,
No. CIV. 14-00171 LEK-RL, 2015 WL 857324, at *1 (D. Haw. Feb.
27, 2015) (collecting cases).
Certification for interlocutory
appeal under § 1292(b) is only appropriate where: (1) the order
involves a controlling question of law; (2) a substantial ground
for difference of opinion exists; and (3) an immediate appeal
from the order may materially advance the ultimate termination
of the litigation.
A. Whether the April 10, 2018 Order Involves a Controlling
Question of Law
A question of law is controlling if the resolution of
the issue on appeal could “materially affect the outcome of
27
litigation in the district court.”
In re Cement Antitrust
Litig., 673 F.2d 1020, 1026 (9th Cir. 1981).
A “question of
law” under § 1292(b) means a “pure question of law” rather than
a mixed question of law and fact or the application of law to a
particular set of facts.10
Chehalem Physical Therapy, Inc. v.
Coventry Health Care, Inc., No. 09-CV-320-HU, 2010 WL 952273, at
*3 (D. Or. Mar. 10, 2010) (collecting cases); see also McFarlin
v. Conseco Servs., LLC, 381 F.3d 1251, 1259 (11th Cir. 2004)
(Section “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”); Oliner
v. Kontrabecki, 305 B.R. 510, 529 (N.D. Cal. 2004) (“Because the
alleged ‘controlling questions of law’ raised by Kontrabecki are
inextricably intertwined with the bankruptcy court’s factual
findings, an interlocutory appeal is not appropriate.”); In re
Bridgestone/Firestone, Inc., Tires Prods. Liab. Litig., 212 F.
Supp. 2d 903, 907 (S.D. Ind. 2002) (stating that a question of
law is one that presents an abstract legal issue that can be
decided quickly and cleanly without having to study the record).
10
As the Court explained in its April 3, 2018 Order Denying Defendant Brenda
L. Staton’s Motion for Leave to File an Interlocutory Appeal, ECF No. 321,
questions of law appropriate for interlocutory appeal include “‘the
determination of who are necessary and proper parties, whether a court to
which a cause has been transferred has jurisdiction, or whether state or
federal law should be applied.’” In re Cement Antitrust Litig., 673 F.2d at
1026 (quoting United States v. Woodbury, 263 F.2d 784, 787 (9th Cir. 1959)).
28
The Court finds that the questions of law the April
10, 2018 Order poses11 are not pure questions of law appropriate
for interlocutory review.
First, the Court had broad discretion
in deciding whether to confirm the judicial sale.
See April 10,
2018 Order at 14; see also Lender Def.’s Mem. at 3-4.
The
Court’s decision to confirm the sale in the April 10, 2018 Order
was grounded in the particular facts of this case.
The Court
found confirmation appropriate after consideration of, among
other things, whether: (1) the sale complied with this Court’s
2015 Foreclosure Order, ECF No. 158; (2) the $1,135,000.00 sale
price for the Residence was adequate when compared to the 2018
real property tax appraisal value of $1,366,900.00; (3) the
Statons’ extensive challenges in this Court and the Bankruptcy
Court, as well as their failure to cooperate with the
Commissioner, negatively affected the sale price; and (4) the
Commissioner conducted a sufficiently aggressive auction.
Accordingly, the propriety of the sale confirmation in this
matter is not a pure question of law determinable without
analyzing the factual record of this case.
Second, whether the Court’s approval of the
Commissioner’s Report was proper is not a pure question of law.
11
The Statons’ notice of appeal, which this Court has construed as a motion
for leave to file an interlocutory appeal under 28 U.S.C. § 1292, does not
propose a controlling question of law justifying interlocutory review at this
juncture. ECF No. 328.
29
The April 10, 2018 Order approved the Commissioner’s Report
after explaining that the Commissioner served since 2015, had to
interact with uncooperative property owners, oversaw three
attempted auctions, and held a final successful auction during
which some fifty bids were submitted.
20.
April 10, 2018 Order at
It also noted that the Commissioner continued to field
inquiries from prospective bidders leading up to the
confirmation hearing.
For these reasons, the Court exercised
its discretion to approve the Commissioner’s Report.
Finally, the Court has thoroughly addressed the fact
that the Statons own the Residence as tenants by the entirety—
including its effect on the order of priority—on several
occasions.
In the Court’s August 31, 2015 Order Granting
Plaintiff’s Motion for Summary Judgment on the Third Claim in
the Complaint, ECF No. 157, the Court stated that “[s]pouses
that own property as tenants by the entirety under Hawaii law
hold ‘property’ or ‘rights to property’ subject to liens under
26 U.S.C. § 6321,” id. at 16-17 (citing U.S. v. Lindsey, Civ.
No. 11-00664 JMS-KSC, 2013 WL 3947757, at *5 (D. Haw. July 30,
2013)).
The Court further explained:
In order to enforce its tax liens, the
Government is empowered, under 26 U.S.C. §
7403, to join all parties with an interest
in the subject property and request a
judicial sale of the property. United
States v. Rodgers, 461, 677, 691-92 (1983)
(citing 26 U.S.C. § 7403). The Government
30
may seek the sale not only of the debtor’s
interest in the property, but the entire
property held by the debtor and his spouse
in a tenancy by the entirety. Id. at 69394; see also In re Pletz, 221 F.3d 1114,
1118 (9th Cir. 2000). In such instances,
the Court may order the sale of the entire
property and compensate the nondebtor spouse
for her ownership interest. Pletz, 221 F.3d
at 1117 (citations omitted). Each spouse
owns a fifty percent interest in property
held as tenants by the entirety under Hawaii
law. Lindsey, 2013 WL 3947757 at *6 n.3
(citations omitted); United States v. Webb,
Civ. No. 07-00564 JMS-KSC, 2008 WL 4761745 *
6 n.12 (D. Haw. Oct. 23, 2008) (citations
omitted) . . . The evidence shows that
Ronald Staton and Brenda Staton purchased
and own the Residence as tenants by the
entirety, as reflected in the Agreement of
Sale and Deed. Duffy Decl. ¶¶ 8-9, Exs. G,
H, ECF Nos. 109-2, 109-4, 109-5.
. . .
Brenda Staton has an interest in the
Residence that must be taken into account.
According to the Title Report for the
Residence, she and Ronald Staton own the
Residence as tenants by the entirety. Title
Report at 1, ECF No. 138-2. In this
jurisdiction, a court may order the sale of
the entire property under 26 U.S.C. § 7403
and compensate a nondebtor spouse for her
fifty percent interest from the sale
proceeds. See Pletz, 221 F.3d at 1117;
Lindsey, 2013 WL 3947757 at * 6 n.3
(citations omitted); Webb, 2008 WL 4761745 *
6 n.12 (citations omitted).
However, the Title Report also shows that
Brenda and Ronald Staton are jointly liable
on the Capstead mortgage for the Residence.
See Title Report at 3, ECF No. 138-2. The
uncontested amount owed under the Statons’
mortgage is $294,708.82 as of July 31, 2015.
See Capstead’s Supp. Rpt. at 2, ECF No. 151;
31
Sieber Affd. ¶ 5, ECF No. 156; Tr. 15:11-18.
Accordingly, since the Court has determined
that the Statons’ Residence should be
foreclosed and sold free and clear of all
liens, including Capstead’s senior mortgage,
without objection from any party, the
foreclosure of Capstead’s mortgage
necessarily includes Brenda Staton’s onehalf interest in the Residence.
. . .
As Plaintiff points out, there is “no
language in Section 7403 which suggests that
it does not apply when the United States’
tax liens are junior to other liens.” Id. at
3. Moreover, as a practical matter, the
Government must often seek to foreclose on
property where there is a first priority
mortgage holder. In such cases, this Court
has allowed the sale of the real property to
satisfy federal tax liabilities and has
ordered that the mortgage interest be
satisfied before the liens are paid from
sale proceeds. Id. at 3-4 (citing Webb,
2008 WL 4761745; Lindsey, 2013 WL 3947757). .
. . The Court is therefore satisfied that it
is appropriate to order foreclosure of
Plaintiff’s tax liens and a judicial sale of
the Residence in this case, with the
understanding that Capstead’s senior
mortgage will be satisfied from the sale
proceeds before Plaintiff’s liens.
ECF No. 157 at 17-22; see also ECF No. 276 at 9-10.
In addition, the Court’s April 3, 2018 Order quoted
the above reasoning in denying Mrs. Staton’s motion for leave to
file an interlocutory appeal.
ECF No. 321 at 17-19.
It further
noted that: (1) the Supreme Court had previously held that one
spouse’s federal tax liens may attach to property a married
32
couple owns as tenants by the entirety, id. at 19 (citing United
States v. Craft, 535 U.S. 274, 284 (2002)); and (2) Hawaii law
required that the Lender Defendants, as senior lienholders, be
made parties to this action, id. at 19-20 (citing Hawaii Revised
Statutes § 667-2).
Evaluating the same circumstances on which
the Statons rely here, the April 3, 2018 Order found that “the
Statons[’] own[ership] [of] the Residence as tenants by the
entirety does not give rise to a pure question of law . . . .”
Id. at 20.
The Statons’ latest motion for leave to file an
interlocutory appeal is no different.
To the extent the
Statons’ Motion argues that the order of priority approved in
the April 10, 2018 Order is somehow improper because the
Government’s federal tax liens are solely against Mr. Staton,
this Court’s above-quoted reasoning forecloses that argument.
And the order of priority flowing from that reasoning does not
produce a controlling question of law under § 1292(b).12
B. Whether a Substantial Ground for Difference of Opinion
Exists on the Controlling Question of Law
The Statons cannot satisfy § 1292’s second requirement
that a “substantial ground for a difference of opinion [on the
12
Even if the determining the order of priority in light of the Statons’
ownership of the Residence as tenants by the entirety were a pure question of
law, the Statons cannot satisfy the remaining requirements for an
interlocutory appeal under § 1292(b), including that there is substantial
ground for a difference of opinion. See Section III.B, supra.
33
controlling question of law] exists.”
28 U.S.C. § 1292(b).
There is a “substantial ground for difference of opinion” if
“there is a genuine dispute over the question of law that is the
subject of the appeal.”
In re Cement Antitrust Litig., 673 F.2d
at 1026 (emphasis added); see also Couch v. Telescope, Inc., 611
F.3d 629, 633 (9th Cir. 2010) (“To determine if a substantial
ground for difference of opinion exists under § 1292(b), courts
must examine to what extent the controlling law is unclear.”).
Such a dispute exists, for example, if the circuits are in
disagreement and the court of appeals in which the district
court sits has not decided the issue, the issue involves
complicated questions of foreign law, or the issue is a novel
and difficult one of first impression.
Couch, 611 F.3d at 633.
“However, just because a court is the first to rule on a
particular question or just because counsel contends that one
precedent rather than another is controlling does not mean” that
sufficient grounds exist.
Id.
Said differently, “[a] party’s
strong disagreement with the Court’s ruling is not sufficient
for there to be a ‘substantial ground for difference’; the
proponent of an appeal must make some greater showing.”
Kowalski v. Anova Food, LLC, 958 F. Supp. 2d 1147, 1154 (D. Haw.
2013) (citation omitted); see also First Am. Corp. v. Al–Nahyan,
948 F. Supp. 1107, 1116 (D.D.C. 1996) (“Mere disagreement, even
if vehement, with a court’s ruling on a motion . . . does not
34
establish a ‘substantial ground for difference of opinion’
sufficient to satisfy the statutory requirements for an
interlocutory appeal.”).
Here, there is no substantial ground for a difference
of opinion about whether the foreclosure sale should have been
confirmed.
As the Court noted in the April 10, 2018 Order, “the
[sale price] of $1,135,000 is relatively close to the 2018 real
property tax appraisal value of $1,366,900.00.”
ECF No. 330 at
19 (alterations and internal quotation marks omitted) (citing
ECF Nos. 276 at 8 and 326-1 at 1).
The sale price, moreover,
was obtained despite: (1) the Statons’ uncooperative
interactions with the Commissioner and delay tactics; and (2)
the fact that it was accepted as part of a forced sale scenario
that makes reaching fair market value difficult.
The Court
exercises broad discretion when confirming a judicial sale, and
the Statons’ unsupported assertion that the Residence could have
sold for a higher price is insufficient under § 1292(b)’s second
prong.
Similarly, there is not a substantial ground for a
difference of opinion about whether the Commissioner’s Report
should have been approved.
The Commissioner submitted a
thorough report, ECF No. 270, documenting the steps he took to
sell the property in accordance with this Court’s 2015
Foreclosure Order, ECF No. 158.
The Report also detailed the
35
Statons’ failure to cooperate with the Commissioner in
permitting access to the Residence for purposes of inspection
and open houses.
See generally ECF. No. 270 at ¶¶ 7-24.
The
April 10, 2018 Order accordingly noted, among other things, that
the Commissioner “has served as Commissioner since 2015, had to
work with uncooperative property owners, and oversaw three
attempted auctions and the final successful auction during which
some fifty bids were submitted.”
ECF 330 at 22.
After
considering the entirety of the Commissioner’s Report, the Court
exercised its discretion to approve the Commissioner’s request
for fees, expenses, and excise taxes in the total amount of
$39,048.15.
Id. at 26-27.
The Statons do not attempt to
explain why approval of the Commissioner’s Report was improper,
let alone how substantial ground for a difference of opinion
exists regarding approval.
With respect to the effect of the Statons’ ownership
of the Residence as tenants by the entirety (and whether that
fact renders the approved order of priority questionable), there
remains no substantial ground for a difference of opinion.
April 3, 2018 Order, ECF No. 321 at 22-23.
See
As explained in the
April 3, 2018 Order, the Government’s ability to enforce its tax
liens against Mr. Staton, and the Lender Defendants’ ability to
enforce their mortgage made by Mr. and Mrs. Staton, through
foreclosure and sale of the Residence, free and clear of all
36
liens, is clear and well established.
See id. and cases cited
supra at 17-19; see also Pl.’s Mem. at 3-4.
Moreover, the
Statons again fail to cite conflicting authority on the issue or
bring to the Court’s attention a circuit split.
F.3d at 633.
See Couch, 611
The Court has consistently explained that the law
applied in its August 31, 2015 Order forecloses the Statons’
arguments rooted in their ownership of the Residence as tenants
by the entirety.
E.g., February 16, 2018 Order, ECF No. 276 at
9-10; April 3, 2018 Order, ECF No. 321 at 22-23.
And again,
Mrs. Staton is jointly and severally liable under the Lender
Defendants’ senior mortgage, which is necessarily joined to this
action and is being foreclosed.
C. Whether an Interlocutory Appeal of the April 10, 2018
Order Will Materially Advance the Ultimate Termination of
the Litigation
As the Court explained in its April 3, 2018 Order,
permitting the Statons to file an interlocutory appeal would not
materially advance this litigation.
A district court generally
should not permit an interlocutory appeal where doing so would
prolong litigation rather than advance its resolution.
Fenters
v. Yosemite Chevron, 761 F. Supp. 2d 957, 1005 (E.D. Cal. 2011).
Courts within the Ninth Circuit have held that resolution of a
question materially advances the termination of litigation if it
“facilitate[s] disposition of the action by getting a final
decision on a controlling legal issue sooner, rather than later
37
[in order to] save the courts and the litigants unnecessary
trouble and expense.”
See United States v. Adam Bros. Farming,
Inc., 369 F. Supp. 2d 1180, 1182 (C.D. Cal. 2004); see also In
re Cement Antitrust Litig., 673 F.2d at 1026 (stating that §
1292(b) is used “only in exceptional situations in which
allowing an interlocutory appeal would avoid protracted and
expensive litigation”).
The April 10, 2018 Order is but another step toward
final judgment in this nearly six-year litigation.
In the April
10, 2018 Order, the Court “reserve[d] jurisdiction to address
any appropriate issues that remain, including [(1) the
reasonable attorneys’ fees and costs to which Lender Defendants’
are entitled and (2) the accrued interest and any penalties to
which the Government is entitled], as well as the possible entry
of a deficiency judgment in favor of” the Government.
2018 Order at 28.
April 10,
The foregoing determinations would also
determine the share of the sales proceeds to which Mrs. Staton
is entitled, as well as the share to which the Government is
entitled.
An interlocutory appeal at this stage would
unnecessarily delay resolution of these issues and the impending
issuance of a final judgment in this matter.
Pl.’s Mem. at 4;
Lender Def.’s Mem. at 4-5.
The Statons’ continuing challenges of the foreclosure
sale proceedings in this Court and the United States Bankruptcy
38
Court have hindered the timely resolution of this matter,
including the issuance of a final judgment.
The Statons’ motion
for permission to file an interlocutory appeal here was filed
just three days after entry of the April 3, 2018 Order denying
Mrs. Staton’s previous motion for permission to file an
interlocutory appeal.
Such motions—like the Statons’ serial
bankruptcy filings and other challenges—delay this case in a
manner that does not benefit any party.
Because granting the Statons’ latest motion for
permission to file an interlocutory appeal would unnecessarily
delay this litigation, the Court finds that the Statons cannot
satisfy the third prong of § 1292(b).
IV.
Requirements to Stay Proceedings
The Court notes that because the Statons have filed a
notice of appeal, ECF No. 328, Federal Rule of Civil Procedure
62(d) allows them to file a motion to obtain a stay by
supersedeas bond.
Fed. R. Civ. P. 62(d); e.g., United States v.
Mansion House Ctr. Redevelopment Co., 682 F. Supp. 446, 450
(E.D. Mo. 1988) (“The Court concludes that Rule 62(d) applies to
mortgage foreclosure judgments in the same way that it applies
to money judgments: the appellant may obtain a stay of a
mortgage foreclosure judgment as a matter of right by posting an
adequate supersedeas bond . . . .”).
when the Court approves the bond.
39
The stay would take effect
Fed. R. Civ. P. 62(d).
For the Court to approve any supersedeas bond, such
bond would have to adequately provide security for the maximum
amount to which the Commissioner, Lender Defendants, and the
Government are entitled from the proceeds of the sale.13
13
In the April 10, 2018 Order, the Court approved: (1) the Commissioner’s
fees, expenses and excise taxes, in the total amount of $39,048.15; (2)
Lender Defendants’ request for $289,949.89 in principal and $4,357.59 in
interest as of March 1, 2018, ECF No. 282; and (3) the Government’s judgments
against Mr. Staton in the amount of $355,526.74. ECF No. 330 at 22-23, 26.
In addition, Lender Defendants claim entitlement to attorneys’ fees and costs
in the amount of $128,947.19, ECF No. 282, while the Government claims
entitlement to an additional amount of $56,639.57 (representing accrued
interest and penalties on its judgments calculated to March 30, 2018), ECF
No. 271 at 2. The maximum, aggregate amount to which the Commissioner and
Lender Defendants—who have priority over the Government and Mrs. Staton—will
be entitled is $462,302.80 ($39,048.15 to the Commissioner, and $423,254.65
to Lender Defendants). The determination of the reasonable amount of
attorneys’ fees and costs to which Lender Defendants are entitled has been
referred to Magistrate Judge Kevin Chang for a Findings and Recommendation.
The remaining proceeds after these distributions will be divided evenly among
the Government and Mrs. Staton. See ECF No. 330 at 26-27. As stated above,
the Government’s judgments against Mr. Staton are in the amount of
$355,526.74. The Government also claims entitlement to an additional amount
of $56,639.57 (representing accrued interest and penalties on its judgments
calculated to March 30, 2018), and the Court will determine the propriety of
the claimed amounts of accrued interest and any penalties at a future
hearing. See ECF No. 330 at 26. In any event, the distribution to the
Government is projected to be inadequate to satisfy the full amount of its
judgments against Mr. Staton, including accrued interest and penalties.
The Court’s preliminary calculations under this situation project that the
Government will receive around $336,348.59 in proceeds from the sale, a
figure which is calculated by dividing in half the $672,697.18 in sale
proceeds projected to be remaining after the maximum distributions are made
to the Commissioner and Lender Defendants.
With the aforesaid $336,348.59 considered together with the highest amounts
that may be due to the Commissioner and Lender Defendants, the maximum
aggregate amount of the sales proceeds the Commissioner, Lender Defendants,
and the Government might receive in this matter is near $798,651.39
($39,048.15 + $423,254.65 + $336,348.59), rounded to $798,000.00. Any
supersedeas bond the Statons provide will likely need to provide security in
this amount. Of course, this amount is an initial estimate of the
supersedeas bond the Court would be inclined to approve, and the parties in
this matter will have an opportunity to object to the same.
40
CONCLUSION
For the foregoing reasons, the Court DENIES Defendants
Ronald and Brenda Statons’ Motion for Leave to File an
Interlocutory Appeal.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, April 19, 2018
________________________________
Alan C. Kay
Sr. United States District Judge
United States v. Staton, et al., Civ. No. 12-00319 ACK-KSC, Order Denying
Defendants Ronald and Brenda Statons’ Motion for Leave to File an
Interlocutory Appeal.
41
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?