CRADDOCK WASHABAUGH v. MILLER
Filing
5
MEMORANDUM OPINION AND ORDER. Signed by CHIEF JUDGE WILLIAM L. OSTEEN, JR. on 9/1/2016, that Debtor's Motion for Leave to Appeal under 28 U.S.C. § 158(a)(3) (Doc. 2 ) is DENIED. (Daniel, J)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
SUSAN RENE CRADDOCK WASHABAUGH, )
)
Debtor/Appellant,
)
)
v.
)
)
WILLIAM P. MILLER,
)
)
Appellee.
)
1:16CV694
MEMORANDUM OPINION AND ORDER
OSTEEN, JR., District Judge
Presently before this court is a Motion for Leave to Appeal
under 28 U.S.C. 158(a)(3) filed by Debtor/Appellant Susan Rene
Craddock Washabaugh (“the Debtor”). (Doc. 2.) William P. Miller,
the United States Bankruptcy Administrator, has responded (Doc.
3), and the Debtor has replied. (Doc. 4.) This issue is now ripe
for resolution, and for the reasons stated herein, the Debtor’s
Motion for Leave to Appeal will be denied.
I.
BACKGROUND
The relevant background in this action is taken from the
Debtor’s motion for judgment on the pleadings, the denial of
which is the cause of this motion. (See Mem. in Supp. of Def.’s
Motion for Judgment on the Pleadings (Doc. 37) (M.D.N.C. Bankr.
Case No. 15-06031). The Debtor filed her Chapter 11 petition on
January 31, 2014, listing her former employer, Wake Forest
Baptist Health/N.C. Baptist Hospital (“the Hospital”), as a
creditor. (Id. at 1.) The Hospital did not file a claim and the
Debtor received her discharge on May 15, 2014. (Id. at 1-2.)
However, on April 23, 2015, National Union Fire Insurance
Company (“National Union”) filed a motion to reopen the Debtor’s
bankruptcy case in order to permit it to file an adversary
proceeding seeking a determination of non-dischargeability. (Id.
at 2.) On May 15, 2015, the Bankruptcy Court entered an order
reopening the case, and the Bankruptcy Administrator filed a
Complaint to revoke the Debtor’s discharge. (Id. at 2.) Debtor
moved for dismissal on the pleadings, alleging that the
Bankruptcy Administrator had no standing to seek a revocation of
discharge, and the Bankruptcy Court denied her motion. (See
1:16CV694, Debtor’s Mot. for Leave to Appeal, Attach. (Doc.
2-1).) The Debtor then filed the instant motion, seeking leave
to appeal the Bankruptcy Court’s ruling.
II.
ANALYSIS
This court’s appellate jurisdiction over bankruptcy
proceedings is established by 28 U.S.C. § 158, which provides in
part that:
“The district courts of the United states shall have
jurisdiction to hear appeals from final judgments, orders, and
decrees . . . and, with leave of the court, from interlocutory
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orders and decrees, of bankruptcy judges . . . .” 28 U.S.C.
§ 158(a)(1). Section 158(c)(2) provides further that bankruptcy
appeals “shall be taken in the same manner as appeals in civil
proceedings generally are taken to the courts of appeals from
the district courts.” Given this language and the lack of direct
guidance concerning a standard for the grant or denial of leave
to appeal interlocutory orders in § 158 itself, courts apply an
analysis similar to that employed when certifying interlocutory
review by the circuit court of appeals under 28 U.S.C.
§ 1292(b). See, e.g., Atl. Textile Grp., Inc. v. Neal, 191 B.R.
652, 653-54 (Bankr. E.D. Va. 1996); In re Swann Ltd. P’ship, 128
B.R. 138, 140 (Bankr. D. Md. 1991).
Under this standard, leave to appeal should be granted only
when: (1) the appeal involves a controlling question of law, (2)
as to which there is a substantial ground for difference of
opinion, and (3) an immediate appeal would materially advance
the termination of the litigation. See In re Biltmore Invs.,
Ltd, 538 B.R. 706 (Bankr. W.D.N.C. 2015), appeal dismissed (4th
Cir. 15-2313) (Feb. 5, 2016).
“The Fourth Circuit has defined a controlling question of
law to be one that presents a ‘narrow question of pure law whose
resolution will be completely dispositive of the litigation,
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either as a legal or practical matter, whichever way it goes.’”
In re Charlotte Commercial Grp., Inc., No. 01-52684C-11W,
01-6044, Civ. 1:02CV00343, 2003 WL 1790882, at *2 (M.D.N.C.
Mar. 13, 2003) (quoting Fannin v. CSX Transp., Inc., No.
88-8120, 1989 WL 42583, at *5 (4th Cir. Apr. 26, 1989)).
As to the required substantial grounds for a difference of
opinion, “[a]n interlocutory appeal will lie only if a
difference of opinion exists between courts on a given
controlling question of law, creating the need for an
interlocutory appeal to resolve the split or clarify the law.”
Charlotte Commercial, 2003 WL 1790882, at *3 (internal citation
omitted).
Finally, on whether resolution of an issue will materially
advance the termination of the litigation, “[i]t is not a
particular result which must materially advance the litigation,
but the resolution of the disputed question as a whole” that
must do so. Atl. Textile Grp., 191 B.R. at 654.
As an initial matter, as the Debtor points out, the
Bankruptcy Administrator does appear not to contest the first
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factor. 1 (See Debtor’s Reply Br. in Supp. of Mot. for Leave to
Appeal (Doc. 4) at 2; see also Resp. of the Bankruptcy
Administrator to the Defendant/Debtor’s Mot. for Leave to Appeal
(Doc. 3) at 3 (noting only that the Bankruptcy Administrator
disputes “factors three and four.”).) As such, for purposes of
the instant motion, this court will find that the first factor
is satisfied.
Turning to the second factor, the Debtor points to no case
law in her favor, and this court can find no case law on this
issue at all. Instead, the Debtor offers a statutory
interpretation argument that, because Bankruptcy Administrators
are not specifically listed as a party that can request the
revocation of a discharge under 11 U.S.C. § 727(d), they do not
have standing to bring such a motion. However, simply because
the Debtor would interpret the applicable law differently than
the Bankruptcy Judge does not establish a “substantial ground
for difference of opinion.”
In Re Auto Dealer Servs., Inc., 81
B.R. 94, 96-97 (Bankr. M.D. Fla. 1987); see also In re Flor, 79
F.3d 281, 284 (2d Cir. 1996)(“[T]he mere presence of a disputed
1
Note: The test for an interlocutory appeal as set out by
this court combines the first two factors of the test as laid
out by the Bankruptcy Administrator, namely, that there is (1) a
question of law and (2) that question is controlling, into a
single factor.
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issue that is a question of first impression, standing alone, is
insufficient to demonstrate a substantial ground for difference
of opinion.”). This court recognizes as true that “when a matter
of first impression also ha[s] other grounds for difference of
opinion . . . district courts in this circuit have certified the
issue for interlocutory appeal.” Lynn v. Monarch Recovery Mgmt.,
Inc., 953 F. Supp. 2d 612, 624 (D. Md. 2013) (internal quotation
marks and citation omitted). However, there are no such grounds
in this case. The Debtor is correct that the statute at issue,
11 U.S.C. § 727(d), states the court shall revoke a discharge
only “[o]n request of the trustee, a creditor, or the United
States trustee,” and does not mention a Bankruptcy
Administrator. However, as the Bankruptcy Administrator notes,
section 317(b) of the Judicial Improvements Act of 1990 states
that “[a] bankruptcy administrator may raise and may appear and
be heard on any issue in any case under title 11, United States
Code . . . .” See Judicial Improvements Act of 1990, Pub. L. No.
101-650, 104 Stat. 5089 (1990). This provision not only mirrors
the language of 11 U.S.C. § 307, which applies to and empowers
United States trustees, but the legislative history of the
Judicial Improvements Act also explains that section 317(b)
“amends the . . . law to give bankruptcy administrators . . .
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standing . . . to appear and be heard in the same manner as U.S.
Trustees.” 136 Cong. Rec. S17570-02 (Oct. 27, 1990) (emphasis
added). Given the clear congressional intent, this court finds
that there is no substantial ground for a difference of opinion
regarding the Bankruptcy Court’s decision.
Finally, resolution of this issue will not materially
advance the litigation. While the Debtor is of course correct
that a ruling in her favor would end the litigation entirely,
that fact alone is unpersuasive. As noted above, it is not a
particular result which must materially advance the litigation,
but the resolution of the disputed question as a whole. Atl.
Textile Grp., 191 B.R. at 654. Resolution of this issue,
concerning a motion for judgment on the pleadings, will not do
so, and the final factor is thus not present in this case.
III. CONCLUSION
For the reasons stated above, this court finds that the
Debtor has failed to show that this court should grant her
motion for leave to file to appeal.
IT IS THEREFORE ORDERED that Debtor’s Motion for Leave to
Appeal under 28 U.S.C. § 158(a)(3) (Doc. 2) is DENIED.
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This the 1st day of September, 2016.
_______________________________________
United States District Judge
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