Homaidan et al v. Navient Solutions, LLC et al

Filing 9

MEMORANDUM & ORDER: Navient is denied leave to appeal the TRO. This appeal is dismissed. ORDER ATTACHED. Ordered by Judge Eric R. Komitee on 9/6/2022. (Guy, Alicia)

Case 1:22-cv-04398-EK Document 9 Filed 09/06/22 Page 1 of 9 PageID #: 613

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
------------------------------------x
NAVIENT SOLUTIONS, LLC and NAVIENT
CREDIT FINANCE CORPORATION,
Appellants.

MEMORANDUM & ORDER
22-CV-4398(EK)

-againstHILAL K. HOMAIDAN and REEHAM YOUSSEF,
on behalf of themselves and all
others similarly situated,
Appellee.
------------------------------------x
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NEW YORK
------------------------------------x
HILAL K. HOMAIDAN and REEHAM
YOUSSEF, on behalf of themselves and
all others similarly situated,
Plaintiffs,

Adversary Proceeding
No. 17-AP-1085(ESS)

-againstSALLIE MAE, INC., NAVIENT
SOLUTIONS, LLC, and NAVIENT CREDIT
FINANCE CORPORATION,
Defendants.
------------------------------------x
ERIC KOMITEE, United States District Judge:
Navient Solutions, LLC and Navient Credit Finance
Corporation (“Navient”), defendants in an adversary proceeding

Case 1:22-cv-04398-EK Document 9 Filed 09/06/22 Page 2 of 9 PageID #: 614

in the Bankruptcy Court of the Eastern District of New York,
seek leave to appeal Judge Elizabeth Stong’s recent decision
granting a temporary restraining order against them.

For the

reasons set out below, leave to appeal is denied and the appeal
is dismissed. 1
I.
A.

Background

Selected Facts
The detailed facts of this case are set out in the

Bankruptcy Court’s decision granting the temporary restraining
order (“TRO Decision”), ECF No. 1-2, and that court’s order
denying Navient’s motion for a stay pending appeal, ECF No. 8-1;
familiarity with those documents is assumed.

As relevant here:

Appellees Hilal Homaidan and Reeham Youssef filed for Chapter 7
bankruptcy protection in 2008 and 2013, respectively; their
debts were subsequently discharged.

TRO Decision 3-4.

Following that discharge, Homaidan (and later Youssef) moved to
reopen his Chapter 7 bankruptcy proceeding and commenced an
adversary proceeding as a putative class action against Navient
and other defendants.

See Homaidan’s Mot. to Reopen Chapter 7

Proceeding, In re Hilal Homaidan, No. 08-48275, (Bankr. E.D.N.Y.
Apr. 14, 2017), ECF No. 28; Compl. ¶ 1, Homaidan v. Sallie Mae,
Inc., No. 17-AP-1085 (Bankr. E.D.N.Y. June 23, 2017), ECF No. 1.

1 Because this order dismisses the appeal, I do not consider the merits
of Navient’s motion for a stay pending appeal.

2

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In the adversary proceeding — from which this putative appeal
emerges — they seek a declaratory judgment, injunctive relief,
and damages arising from Appellants’ alleged violations of the
discharge injunctions provided by 11 U.S.C. § 524(a)(2).
Generally speaking, Appellees allege that Appellants continue to
seek to collect private student-loan debts that were discharged
in bankruptcy.

Those private loans were properly discharged,

Appellees contend, because they are not nondischargeable
“qualified education loan[s]” as defined in 26 U.S.C.
§ 221(d)(1) and 11 U.S.C. § 523(a)(8)(B).
B.

Procedural Background
Appellees moved for the TRO in April 2022.

After

briefing and argument, the Bankruptcy Court entered a TRO on
July 11, 2022.
1.

Temporary Restraining Order (“TRO”), ECF No. 1-

The TRO, which became effective as of today, restrains

Navient “from taking any acts to collect on Tuition Answer Loans
held by the Plaintiffs and the Putative Class Members, as the
class is described in the Amended Complaint, that exceed the
cost of attendance as defined by Internal Revenue Code § 221(d),
and that have an outstanding balance subject to collection.”
Id. at 4-5.

The TRO will expire on September 20, 2022 unless it

is extended by the Bankruptcy Court for good cause or Navient
consents to an extension, consistent with Federal Rule of Civil
Procedure 65.

Id. at 5.

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Navient timely sought leave for this appeal; Appellees
oppose such leave.

Navient also asked the Bankruptcy Court to

stay the TRO pending appeal; Judge Stong denied that motion on
September 2.
Appellees’ motions for class certification, a
preliminary injunction, and summary judgment remain pending
before the Bankruptcy Court.
II.

Discussion

The parties disagree over whether Navient’s appeal
comes as a matter of right or requires leave of the Court.

I

conclude that leave to appeal is required under 28 U.S.C.
§ 158(a) and for the reasons below, deny such leave.
28 U.S.C. § 158(a) sets out the district court’s
appellate jurisdiction in bankruptcy cases.

Section 158(a)(3)

provides for appeals of interlocutory orders “with leave of the
court.”

See also In re Kassover, 343 F.3d 91, 94 (2d Cir. 2003)

(“Under Section 158(a)(3), a district court has discretionary
appellate jurisdiction over an interlocutory order of a
bankruptcy court.”).
Under Section 158(c)(2), appeals to the district court
from a bankruptcy court, including appeals of interlocutory
orders, “shall be taken in the same manner as appeals in civil
proceedings generally are taken to the courts of appeals from
the district courts.”

See also In re Bimco Industries, Inc.,

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124 B.R. 623, 625 (E.D.N.Y. 1991) (“interlocutory order” is one
that “does not finally determine a cause of action but only
decides some intervening matter pertaining to the cause, and
which requires further steps to be taken in order to enable the
court to adjudicate the cause on the merits”).

Thus, “[w]hile

neither Section 158 nor the Bankruptcy Rules provides guidelines
for determining whether a district court should grant leave to
appeal, . . .

most district courts in the Second Circuit have

applied the analogous standard for certifying an interlocutory
appeal from a district court order, set forth in 28 U.S.C. §
1292(b).”

In re 22 Fiske Place, LLC, No. 21-CV-8087, 2022 WL

2819093, at *6 n.9 (S.D.N.Y. July 18, 2022); see also Osuji v.
U.S. Bank, Nat'l Ass'n, 285 F. Supp. 3d 554, 557 (E.D.N.Y. 2018)
(“It is well settled that the relevant standard set forth in 28
U.S.C. § 1292(b), which governs interlocutory appeals from
United States District Courts to the United States Courts of
Appeals, governs such [bankruptcy] appeals.”). 2
The Court of Appeals has called Section 1292(b) “a
rare exception to the final judgment rule that generally
prohibits piecemeal appeals.”

Koehler v. Bank of Bermuda Ltd.,

101 F.3d 863, 865 (2d Cir. 1996).

The use of that section is

2 Unless otherwise noted, when quoting judicial decisions this order
accepts all alterations and omits all citations, footnotes, and internal
quotation marks.

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therefore “reserved for those cases where an intermediate appeal
may avoid protracted litigation.”

Id. at 865-66.

“[O]nly

exceptional circumstances will justify a departure from the
basic policy of postponing appellate review until after the
entry of a final judgment.”

Klinghoffer v. S.N.C. Achille Lauro

Ed Altri-Gestione Motonave Achille Lauro in Amministrazione
Straordinaria, 921 F.2d 21, 25 (2d Cir. 1990).
Against these broad limitations, an appellant’s motion
for leave to appeal an interlocutory order should be granted
only when (1) “such order involves a controlling question of
law,” (2) “as to which there is substantial ground for
difference of opinion,” and (3) “an immediate appeal from the
order may materially advance the ultimate termination of the
litigation.”

28 U.S.C. § 1292(b).

Importantly, the “moving

party has the burden of establishing all three elements.”
Anderson, 550 B.R. 228, 234 (S.D.N.Y. 2016).

In re

Temporary

restraining orders, which are by definition of limited duration,
are generally not subject to appeal.

“As a TRO is interlocutory

and is not technically an injunction, it is ordinarily not
appealable.”

Romer v. Green Point Sav. Bank, 27 F.3d 12, 15 (2d

Cir. 1994); see also Amelio v. Piazza, No. 19-CV-5944, 2020 WL
5535241, at *4 (S.D.N.Y. Sept. 15, 2020) (denying leave to
appeal a TRO issued by a bankruptcy judge).

The order at issue

here will expire fourteen days from its effective date of

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September 6.

For that reason, the TRO does not present any

special circumstances justifying leave to appeal. 3
Navient argues that the nationwide scope of the TRO
calls its legality into substantial question.

It cites

decisions from other circuits for the proposition that
bankruptcy courts lack authority to address out-of-district
violations of their discharge injunctions.
Stay TRO 6-7, ECF No. 8.

See Defs.’ Mot. to

This argument is responsive, at least,

to the first two requirements of Section 1292(b).

But leave to

appeal is unwarranted here because Navient cannot satisfy the
third requirement: that an immediate decision in Navient’s favor
would “materially advance the ultimate termination of the
litigation.”

28 U.S.C. § 1292(b).

Navient has not demonstrated

(or even attempted to demonstrate, really) how my review would
promote a speedy resolution of the case.

See In re First

Republic Group Realty, LLC, No. M47, 2010 WL 882986, at *2
(S.D.N.Y. Mar. 2, 2010) (denying leave to appeal bankruptcy
court’s denial of preliminary injunction where appellate review

A TRO may be appealable in limited circumstances, such as “when a
grant or denial of a TRO might have a serious, perhaps irreparable,
consequence, and can be effectually challenged only by immediate appeal.”
Romer, 27 F.3d at 15. Navient has not shown that the TRO will cause it to
suffer a serious or irreparable consequence that can only be challenged by
immediate appeal. On the contrary, Navient admitted in briefing before the
Bankruptcy Court that the TRO “is in reality nothing more than an improper
injunction to obey the law.” Navient’s Obj. to Proposed Order 4, Homaidan v.
Sallie Mae, Inc., No. 17-AP-1085 (Bankr. E.D.N.Y. June 14, 2022), ECF No.
333. And the limited duration of the TRO means that any harm will be subject
to commensurate limitation.
3

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“would not bring the bankruptcy court any closer to concluding
the litigation”).
Navient argues, without citing authority, that this
third prong of Section 1292(b) — the “materially advance”
requirement — is not mandatory.

Appellees’ Reply in Supp. of

Mot. for Leave to Appeal 10, ECF No. 5.
explained above, that is incorrect.

For the reasons

See Osuji, 285 F. Supp. 3d

at 558 (interlocutory appeal from bankruptcy decision “can only
be granted” if all three prongs of Section 1292(b) are
satisfied); see also Anderson, 550 B.R. at 234 (party seeking
leave to appeal bears the burden of satisfying “all three
elements” of Section 1292(b)).

Navient has not persuasively

explained how its appeal would satisfy this third prong, and
understandably so: even if I vacated the Bankruptcy Court’s TRO,
the litigation would continue, including determination of
Appellees’ pending motions for class certification and summary
judgment.
Navient acknowledges that there is “an interpretation”
of 28 U.S.C. § 158 that would require it to request leave to
appeal the TRO, but it urges an alternative interpretation that
permits appeal as of right.

Appellees’ Reply in Supp. 6.

Navient cites no binding authority for this interpretation.
Moreover, even on its own terms, Navient’s “alternative
interpretation” would allow “appeals of preliminary injunctions

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as a matter of right,” not TROs.

Id. (emphasis added).

Even

this view, however, is contested: some courts have rejected the
view that preliminary injunctions are appealable as of right in
the bankruptcy context.

See, e.g., In re Quigley Co., 323 B.R.

70, 76-79 (S.D.N.Y. 2005); First Republic Grp. Realty, 2010 WL
882986, at *1-*2.
IV.

Conclusion

For these reasons, Navient is denied leave to appeal
the TRO.

This appeal is dismissed.
SO ORDERED.
/s/ Eric Komitee__________
ERIC KOMITEE
United States District Judge

Dated:

September 06, 2022
Brooklyn, New York

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