CG Acquisitions, LLC

Filing 4

OPINION AND ORDER DENYING 1 APPELLANTS MOTION FOR LEAVE TO FILE BANKRUPTCY APPEAL. Signed by District Judge Linda V. Parker. (AFla)

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UNITED STATES DISTRICT COURT 
EASTERN DISTRICT OF MICHIGAN 
SOUTHERN DIVISION 
IN RE: CG ACQUISITIONS, LLC
CARL JENNINGS et al.

Appellants,

Civil Case No. 22-10510 
Honorable Linda V. Parker 

v.

CG ACQUISITIONS, LLC,  
Bankruptcy Case No. 21-31511

Appellee.
_________________________________/ 

OPINION & ORDER DENYING APPELLANTS MOTION FOR LEAVE
TO FILE BANKRUPTCY APPEAL
Debtor CG Acquisitions, LLC (“Debtor CGA”) filed a Chapter 11 petition

for bankruptcy on November 9, 2021. (ECF No. 1 at Pg ID 8.) Appellants in this
case, Carl Jennings, Christopher Lewis, Ron Keil, and Betty Keil (“Appellants”),
moved to dismiss Debtor CGA’s Chapter 11 bankruptcy filing for lack of corporate
authority to file and bad faith. Mot., In re CG Acquisitions, LLC, Case No. 21-bk31511 (Bankr. E.D. Mich. filed Dec. 22, 2021), ECF No. 30 at 1. On January 28,
2022, the bankruptcy court denied Appellants’ motion to dismiss. Order, id. (filed
Jan. 28, 2022), ECF No. 45. On February 23, 2022, the bankruptcy court denied
Appellants’ timely filed motion for reconsideration. Order, id. (filed Feb. 23,
2022), ECF No. 49.

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Presently before the Court is Appellants’ Motion for Leave to File
Bankruptcy Appeal. (ECF No. 1.) Appellants assert that they are entitled to an
appeal as of right pursuant to 28 U.S.C. § 158(a)(1), or in the alternative, should be
granted leave to file an interlocutory appeal pursuant to 28 U.S.C. § 158(a)(3). (Id.
at Pg ID 3.) On March 22, 2022, Debtor CGA filed a response maintaining that the
appeal should be denied for lack of jurisdiction. (ECF No. 3.) For the reasons
stated hereafter, the Court denies Appellants’ Motion for Leave to File Bankruptcy
Appeal, as the appeal should proceed as of right.
BACKGROUND
This case arises from Debtor CGA’s Chapter 11 bankruptcy filing. The case
is a companion matter to the appeal of a separate bankruptcy filing by Debtor
Lapeer Aviation, Inc. (“Debtor LAI”), an affiliate of Debtor CGA. See Jennings et
al., v. Lapeer Aviation, Inc., Case No. 22-10511 (E.D. Mich. filed March 9,
2022). The appellants in Jennings similarly moved to dismiss Debtor LAI’s
bankruptcy filing, and then sought reconsideration of the bankruptcy court’s denial
of their motion. They have similarly moved to appeal the bankruptcy court’s
orders.
The bankruptcy court did not provide its reasoning for denying the motion to
dismiss. Order, In re CG Acquisitions, et al, Case No. 21-bk-31511 (E.D. Mich.

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filed Jan. 28, 2022), ECF No. 45. It did so in its decision denying the motion for
reconsideration, however. Order, id. (filed Feb. 23, 2022), ECF No. 49.
The bankruptcy court ultimately held that, pursuant to a stock purchase
agreement, Debtor LAI was purchased, and therefore is owned by, Debtor
CGA. Id. at 2. Because Debtor CGA is member operated, and it is undisputed that
there is no operating agreement, the bankruptcy court looked to the Michigan
Limited Liability Act to determine who had the authority to file for
bankruptcy. Id. at 4. The bankruptcy court concluded that Gene Kopzcyk
(“Kopzcyk”) was the sole member of Debtor CGA because of Appellant Lewis’
transfer of rights to Appellant Jennings; and therefore, he alone had the corporate
authority to file bankruptcy on behalf of the two entities. Id. In making this
determination, the court relied on Michigan Compiled Laws § 450.4505(4), which
provides that “a member ceases to be a member when the member’s entire
membership interest is assigned.” 1
ANALYSIS

Per Michigan Compiled Laws § 450.4505(2), it was not necessary for Kopczyk to
obtain Jennings’ consent after the transfer because “an assignment of a
membership interest does not of itself entitle the assignee to participate in the
management and affairs of a limited liability company or to become or exercise
any rights of a member. An assignment entitles the assignee to receive, to the
extent assigned, only the distributions to which the assignor would be entitled.”
1

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Appeals from cases originating in the bankruptcy courts are governed by 28
U.S.C. § 158(a). The Court has jurisdiction to hear appeals of bankruptcy cases
and proceedings from “final judgments, orders, and decrees,” “interlocutory orders
and decrees issued under section 1121(d) of title 11,” and “with leave of the court,
from other interlocutory orders and decrees.” 28 U.S.C. § 158(a). The relevant
inquiry before the Court today is whether Appellants are appealing a final or
interlocutory order, and if interlocutory, whether the Court should grant leave to
appeal.
The Sixth Circuit recently provided that a bankruptcy court order is
immediately appealable under 28 U.S.C. § 158(a)(1) “if it is (1) ‘entered in [a] ...
proceeding’ and (2) ‘final’—terminating that proceeding.” In re Jackson Masonry,
LLC, 906 F.3d 494, 499 (6th Cir. 2018), aff’d sub nom. Ritzen Grp., Inc. v. Jackson
Masonry, LLC, 140 S. Ct. 582 (2020). A “proceeding” for purposes of a
bankruptcy appeal “is a discrete dispute within the overall bankruptcy case . . . a
case within a case.” Id. at 500 (internal citations omitted). The “finality” of a
bankruptcy order
. . . is determined first and foremost by whether it alters the
status quo and fixes the rights and obligations of the
parties. Additionally, courts should look to whether the
order completely resolves all substantive litigation within
the proceeding. In a nutshell, a bankruptcy order is final
if it is both procedurally complete and determinative of
substantive rights.

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Id. at 501 (internal citations and quotations omitted).
In their Motion for Leave to File Bankruptcy Appeal, Appellants assert that
“the order [denying their motion to dismiss] dispose[s] of a discrete dispute” and
that “[t]his is a threshold issue, the outcome of which dictates whether the
bankruptcy case itself proceeds.” (ECF No. 1 at Pg ID 11.) In response, Debtor
CGA cites to In re Lane, where the Sixth Circuit Bankruptcy Appellate Panel
concluded that the bankruptcy court’s denial of the motion to dismiss should not be
deemed final for purposes of an appeal as of right. In re Lane, 591 B.R. 298
(B.A.P. 6th Cir. 2018).
In In re Lane, despite the apparent agreement between the parties at the
confirmation hearing, creditors filed a pro se motion to dismiss disputing whether
“. . . the Debtor’s Chapter 13 Plan Proposal was confirmable under The
Bankruptcy Code 11 U.S.C. § 1325.” Id. at 301. In denying the motion to dismiss,
the bankruptcy court noted that the confirmation order had not been appealed and
thus constituted a final order. Id. As such, “[t]he issues raised by the Creditors as
to whether the Plan should have been confirmed [were] waived.” Id. The creditors
filed a notice of appeal. Id.
In making its determination that the motion to dismiss was not final, the
BAP applied the following analogy:
A bankruptcy case is like a jigsaw puzzle, and the claims
against the bankrupt debtor are the pieces. To complete

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the puzzle, one must start by putting some of the pieces
firmly in place.
Id. at 302 (quoting In re Jackson Masonry, LLC, 906 F.3d at 498) (internal
quotations omitted). The BAP recognized that “in general, denying a creditor’s
motion to dismiss hardly leaves nothing to be done--the case remains pending with
many decisions for the court to make during the life of a typical case.” Id. at 303
(internal quotations omitted). However, the court further recognized:
. . . the concept of finality,[] is applied flexibly in
bankruptcy proceedings because the usual model of a twoparty dispute in a civil action does not quite fit: finality
concepts that easily apply to lawsuits typically brought in
the district courts do not readily translate into the more far
reaching proceedings that characterize bankruptcy cases
which more closely resemble sprawling events that are
made up of smaller, discrete proceedings.
Id. The court ultimately reasoned that “. . .  the [creditor’s] motion, which sought
dismissal of the entire case, did not aim to lock-in a mere piece of the puzzle but
instead proposed to sweep the puzzle off the table” entirely. Id. at 302. The
motion to dismiss was “. . .  not itself preclusive on any issues because it simply
enforced the preclusive effect of the confirmation order, which was no longer
appealable given the passage of time.” Id. at 304. As such, it was not a final order
within the meaning of 28 U.S.C. § 158(a)(1). Id. at 305. However, the court did
note that “. . .  it is certainly conceivable that different factual circumstances

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surrounding a motion to dismiss might lead to a different decision about the
finality of an order denying the motion.” Id. at 305.
In In re Dan Mazzola, Inc., the Sixth Circuit BAP was confronted with just
those factual circumstances. In re Dan Mazzola, Inc., No. 19-8007, 2019 Bankr.
LEXIS 1553 (B.A.P. 6th Cir. May 20, 2019). In that case, the court distinguished
the facts before it from those in In re Lane, noting that in In re Dan Mazzola, Inc.,
the dispute centered upon “. . .  an important piece of the puzzle . . . one that sets the
parties substantive rights and will play a crucial role in the remainder of the
bankruptcy case.” Id. at 5.
In In re Dan Mazzola, Inc., the parties disputed the applicability of the
franchise agreement between them as it pertained to the debtor’s Chapter 11
bankruptcy proceedings. Id. The creditor in that case filed a motion to dismiss,
arguing that the franchise agreement between him and the debtor had been
terminated pre-petition and as such, there was no possibility of
reorganization. Rockne’s Inc. v. Dan Mazzola, Inc. (In re Dan Mazzola, Inc.), No.
19-8007, 2020 Bankr. LEXIS 238, at *7 (B.A.P. 6th Cir. Jan. 28, 2020). The
debtor objected to the motion, arguing that the creditor “. . . did not have grounds
to terminate the Franchise Agreement and that reorganization was
possible.” Id. The BAP found that the determination regarding the applicability of
the franchise agreement in dispute was “. . .  not only final, [but] if the case

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proceeds without an appeal, it will be unreviewable until plan confirmation, when
[the creditors] would be required to object to plan confirmation on the same basis
or lose its opportunity to appeal all together. It is exactly the kind of puzzle piece
which should be locked in place.” In re Dan Mazzola, Inc., 2019 LEXIS 1553 at
*5.
The same scenario is found in the case before the Court today. In the
present appeal, the contested matter is whether Kopczyk had the requisite
corporate authority to file bankruptcy on behalf of both Debtor LAI and Debtor
CGA. Similar to In re Dan Mazzola, Inc., the determination regarding Kopczyk’s
corporate authority is procedurally complete and determinative of Appellants’
substantive rights. Plainly, the determination of this issue will dictate whether the
bankruptcy case proceeds. As the panel put it in In re Dan Mazzola, Inc., this “. . . 
is exactly the kind of puzzle piece which should be locked in place.” Id.
CONCLUSION
For the reasons stated, the Court holds that the order on appeal is final for
purposes of 28 U.S.C. § 158(a). Therefore, leave to appeal is not required and an
interlocutory appeal pursuant to 28 U.S.C. § 158(a)(3) is not applicable.
Accordingly,

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IT IS ORDERED that the Appellants Motion for Leave to Appeal
Bankruptcy Court Order (ECF No. 1) is DENIED. The appeal shall proceed as of
right.

Dated: November 21, 2022

s/ Linda V. Parker
LINDA V. PARKER
U.S. DISTRICT JUDGE