NCMIC Finance Corporation v. Redmond

Filing 4

MEMORANDUM AND ORDER denying 2 Motion for Leave to Appeal. Signed by District Judge Carlos Murguia on 3/12/2013. (kao)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
NCMIC FINANCE CORP.,

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Appellant,
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v.
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CHRISTOPHER J. REDMOND,
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Trustee of Brooke Corp.,
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Appellee.
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_________________________________________ )

Case No. 13-2065-CM

MEMORANDUM AND ORDER
This matter is before the court on NCMIC Finance Corp.’s (“NCMIC”) motion for leave to file
an interlocutory appeal of the bankruptcy court’s January 15, 2013 order dismissing substantially all of
NCMIC’s counterclaims (Doc. 2).1 The Tenth Circuit has established the following standard for
evaluating such motions:
Leave to hear appeals from interlocutory orders should be granted with discrimination
and reserved for cases of exceptional circumstances. Appealable interlocutory orders
must involve a controlling question of law as to which there is substantial ground for
difference of opinion, and the immediate resolution of the order may materially
advance the ultimate termination of the litigation.
In re Larson, 466 B.R. 147, 149–50 (10th Cir. B.A.P. 2012) (internal quotation and citation omitted).
Upon review, the court determines that NCMIC has not established that there is a controlling
question of law as to which there is substantial ground for difference of opinion. In its motion,
NCMIC identifies four issues that it contends are controlling questions of law. NCMIC next argues
that there is substantial ground for difference of opinion on each question of law because each
involves a difficult issue of first impression. But the simple fact that a controlling question of law
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NCMIC’s motion also states that NCMIC “is seeking certification for direct appeal to the Tenth Circuit Court of
Appeals, and shall file a Request for Certification by the Court in which this matter is pending, pursuant to 28 U.S.C.
§ 158(d)(2) and Fed. Bank. R. 8001(f).” (Doc. 2 at 1 (emphasis added).) Because this statement indicates that such a
request is forthcoming and because NCMIC’s motion contains no discussion of the standard for direct appeal to the
Tenth Circuit, the court limits its analysis to NCMIC’s request for an interlocutory appeal to this court. To the extent
NCMIC intended for this motion to constitute such a request, the court determines that NCMIC has not established its
entitlement to a direct appeal.

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raises an issue of first impression does not, by itself, justify an immediate appeal. See In re Brooke
Corp., No. 11-2599-JWL, 2012 U.S. Dist. LEXIS 1765, at *6–7 (D. Kan. Jan. 6, 2012) (“The mere
fact that a question of first impression arises does not automatically justify interlocutory review,
however.”).
The bankruptcy court carefully considered each question identified by NCMIC and provided a
thoughtful and well-reasoned response that applied established law. For example, the first question
identified by NCMIC is whether the bankruptcy court erred in “determining that establishing a benefit
to the bankruptcy estate was required before [NCMIC] could be granted administrative expense status
under [11 U.S.C. § 503(b)(3)(E)], where [NCMIC] claimed to have been damaged by the tortious
conduct of [Albert A. Riederer] during the Special Master period.” (Doc. 2 at 5.) In resolving this
question, the bankruptcy court determined that the legislative history of this statute reflected an intent
to codify a 1903 decision of the United States Supreme Court. The bankruptcy court further explained
that the Tenth Circuit has construed a nearly identical phrase in the same statute to require a benefit to
the estate. Based on this law, the court determined that a benefit was required. The bankruptcy court
provided a similarly thorough analysis for the issues raised in questions two through four.2
Generally this prong of the interlocutory appeal analysis is satisfied when courts disagree on a
controlling issue of law and an immediate appeal will resolve the split. See State Farm Mut. Auto. Ins.
Co. v. Boellstorff, 540 F.3d 1223, 1224 (10th Cir. 2008) (concluding that there is substantial ground
for difference of opinion because “the four circuits that have offered opinions on the issue have split
evenly”). It is not satisfied simply because a party disagrees with the bankruptcy court’s order, which
appears to be the situation in the current case. Indeed, NCMIC does not identify any disagreement
between courts on the four questions identified in its motion. This fact lends support to the Trustee’s
argument that NCMIC’s counterclaims were based on “outlier” theories that have never been adopted

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The court defers a definitive ruling on the four issues pending an eventual appeal.

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by any court. Because NCMIC has not demonstrated a substantial ground for difference of opinion, an
immediate appeal is not warranted.
Although the above is sufficient to deny NCMIC’s motion, the court also determines that
NCMIC has not demonstrated that an interlocutory appeal would materially advance the ultimate
termination of this lawsuit. The facts and issues underlying NCMIC’s counterclaims are separate and
distinct from the facts and issues underlying the Trustee’s claims. The time required to develop these
facts and to evaluate these issues would be the same regardless of whether the questions identified by
NCMIC are addressed now or are addressed after a final judgment. Therefore, an immediate appeal
would not save the parties or the court significant time or resources. This is an additional reason for
denying NCMIC’s motion.
The Tenth Circuit has explained that interlocutory appeals are extraordinary and that courts
should grant them with discrimination. In re Larson, 466 B.R. at 149–50. NCMIC has not
demonstrated that there is anything unique or exceptional about this case. See In re Fox, 241 B.R.
224, 233 (10th Cir. B.A.P. 1999) (“Exceptional circumstances that warrant interlocutory review
include cases where prohibiting review would force an appellant to irrevocably lose an important right,
and cases where an appellant will effectively be denied review if the proceeding progresses to its
natural end.”). Accordingly, the court denies NCMIC’s motion.
IT IS THEREFORE ORDERED that the Defendant’s Motion for Leave to Appeal (Doc. 2)
is denied.
Dated this 12th day of March, 2013, at Kansas City, Kansas.
s/ Carlos Murguia
CARLOS MURGUIA
United States District Judge

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