Grabanski et al v. Raschke et al

Filing 3

ORDER by Chief Judge Ralph R. Erickson denying 2 Motion for Leave to Appeal. (SH)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NORTH DAKOTA
SOUTHEASTERN DIVISION
In re:
Bankruptcy No. 10-30902
Thomas M. Grabanski and Mari K.
Grabanaski

Chapter 11

Debtors.
Thomas M. Grabanski and Mari K.
Grabanski, a/k/a Grabanski Grain, LLC,
a/k/a G & K Farms, a/k/a Tom
Grabanski, a/k/a MTM Farms,

Case No. 3:15-cv-20
Appeal from District of North Dakota
Bankruptcy Court

Appellants,
-vsCrop Production Services, Inc., Creditor
Committee, Daniel McDermott, U.S.
Trustee,
Appellees.
Before the Court is attorney DeWayne Johnston’s Notice of Appeal regarding a
Show Cause Order issued by the Bankruptcy Court for the District of North Dakota.1
The Show Cause Order directed DeWayne Johnston/Johnston Law Firm to appear at an
evidentiary hearing on April 9, 2015, and explain why funds paid to Johnston Law Firm
should not be disgorged and the Johnston Law Firm should not be sanctioned.2
Section 158 of Title 28, United States Code provides, in relevant part:
(a)

The district courts of the United States shall have jurisdiction to
hear appeals

1

Doc. #1

2

Doc. #1-2.

1

(1)

from final judgments, orders, and decrees;

(2)

from interlocutory orders and decrees issued under section
1121(d) of title 11 increasing or reducing the time periods
referred to in section 1121 of such title; and

(3)

with leave of the court, from other interlocutory orders and
decrees;

and, with leave of the court, from interlocutory orders and decrees, of the
bankruptcy judges entered in cases and proceedings referred to the
bankruptcy judges under section 157 of this title. . . .
The only subsection applicable is the third one. As an interlocutory bankruptcy
court order, Johnston must obtain leave of court to appeal.3 “The decision to deny leave
to appeal an interlocutory bankruptcy order is purely discretionary.”4 The court declines
the invitation to interfere with ongoing bankruptcy proceedings.
Judge Collins’ stated purpose for an evidentiary hearing is to develop the record
and allow Johnston an opportunity to explain why there should not be disgorgement
and why there should not be sanctions imposed. Judge Collins specifically informed
Johnston that this is not a “witch hunt” and has made no decision on the merits of the
U.S. Trustees’ or creditors’ claims.5 There are no “controlling questions of law” raised by
Johnston that warrant interference by this court in ongoing bankruptcy proceedings.
The bankruptcy court is fully capable of addressing Johnston’s jurisdictional claims.
Moreover, with regard to Johnston’s claim of lack of advance notice, the bankruptcy

3

In re M & S Grading, Inc., 526 F.3d 363, 369 (8th Cir. 2008) (denial of a motion to show cause is
viewed as an interlocutory decision).
4

Id. at 371.

5

Doc. #1-3, p. 47 of 203, Transcript of February 26, 2015, hearing: “Maybe I disgorge. Maybe I
don’t. Maybe I order sanctions. Maybe I don’t.”; p. 55 “The issues deal with your compensation. It’s not a
witch hunt. It’s an order to show cause. It’s going to be done on facts and law.”

2

court has given Johnston in excess of five weeks to prepare for the hearing. This court is
not in a position to review the claims raised by Johnston in his appeal until the record is
fully developed.
Johnston’s Notice of Appeal involves an interlocutory order. As such, he needs
leave of the court to appeal. The motion for leave6 is DENIED. This case is remanded to
the bankruptcy court for further proceedings.
IT IS SO ORDERED.
Dated this 18th day of March, 2015.

/s/ Ralph R. Erickson
Ralph R. Erickson, Chief Judge
United States District Court

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Doc. #2.

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