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In re Jacobs

United States District Court, D. Arizona

April 18, 2016

IN THE MATTER OF: Albert L. Jacobs, et al., Debtors.
v.
Albert L. Jacobs, et al., Appellees. Diana Parker, Appellant, BK Nos. 2:15-bk-15429-EPB., 2:15-bk-15431-EPB

ORDER

JOHN J. TUCHI, District Judge.

At issue are Appellees Albert Jacobs LLP and Albert Jacobs, Jr.'s (collectively, "Debtors") Motion to Dismiss Appeal (Doc. 19, MTD), to which Appellant Diana Parker as Executor of the Estate of Gertrude F. Rothschild (collectively, "Rothschild Estate") filed a Response (Doc. 23, Resp.) and Debtors filed a Reply (Doc. 24, Reply); and the Rothschild Estate's Emergency Motion to Expedite Briefing Schedule (Doc. 7), to which Debtors filed a Response (Doc. 20) and the Rothschild Estate filed a Reply (Doc. 22). For the reasons that follow, the Court will deny Debtors' Motion to Dismiss Appeal, grant the Rothschild Estate's Motion to Expedite, and enter a Scheduling Order.

I. BACKGROUND

In its appellate capacity, the Court is typically bound to review the evidence on record in the light most favorable to the prevailing party below. In re Jake's Granite Supplies, LLC, 442 B.R. 694, 698-99 (D. Ariz. 2010). However, that rule only applies when the Court decides the substance of the appeal. Where, as here, the Court rules on a motion to dismiss the appeal, the Court must take all reasonable allegations of material fact as true and construe them in favor of the non-moving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (2009).

This case arose because Debtors filed for bankruptcy protection and one of their creditors, the Rothschild Estate, sought relief from the automatic bankruptcy stay to litigate claims against the Debtors. The Debtors filed for Chapter 11 bankruptcy relief in December 2015, two days before they were scheduled to go to trial in New York state court in a case brought by the Rothschild Estate against them, after more than five years of pre-trial litigation. (Doc. 15, Opening Br. at 1, 3.) The Rothschild Estate filed motions for relief from the automatic stay with respect to both Debtors. (Doc. 17-1, App. 1 to Opening Br. at 22-23; Doc. 17-2, App. 2 to Opening Br. at 6-7.) The Rothschild Estate argued that the Debtors' legal fees for the trial would be covered by insurance carriers and it would be prejudiced if Debtors did not appear at the scheduled trial-which is still set to proceed against another defendant, Troutman Sanders LLP-and it would later have to conduct a separate trial against the Debtors. (App. 2 to Opening Br. at 11-14.) The Bankruptcy Court denied the Rothschild Estate's motions. (Opening Br. at 1.)

The Rothschild Estate appeals from the Bankruptcy Court's Minute Entry Order Denying Creditor's Motion for an Order Granting Relief from the Automatic Stay, entered on February 26, 2016 ("Denial Order"). (App. 2 to Opening Br. at 287.) The Rothschild Estate timely filed its Notice of Appeal on March 7, 2016 (Doc. 2, Notice of Appeal), and Debtors now move to dismiss the appeal.

II. LEGAL STANDARD

With regard to Debtors' Motion to Dismiss, the Court will only resolve whether the appeal was procedurally proper and taken from a final, appealable Order of the Bankruptcy Court. To the extent the parties argued the merits of the appeal in their briefs, the Court will not address those here.

A party may appeal a Bankruptcy Court's Order to the District Court if the Order is final and binding. 28 U.S.C. § 158(a). An appellant may choose between a Bankruptcy Appellate Panel, if one exists in the Circuit, and a District Court to hear its appeal. 28 U.S.C. § 158(c). Thus, this Court has appellate jurisdiction to review all final and binding Orders issued by the Bankruptcy Court. In ultimately resolving the substance of the appeal, the Court will review the Bankruptcy Court's conclusions of law de novo and its findings of fact under a clearly erroneous standard. See Fed R. Bankr. P. 8013; Wegner v. Murphy (In re Wegner), 839 F.2d 533, 536 (9th Cir. 1988) (citing Pizza of Hawaii, Inc. v. Shakey's, Inc. ( In re Pizza of Hawaii, Inc. ), 761 F.2d 1374, 1377 (9th Cir. 1985)).

III. MOTION TO DISMISS

Debtors ask the Court to dismiss the Rothschild Estate's appeal on the grounds that (1) a denial of relief from the stay is not appealable, (2) an Order denying a motion without prejudice is generally non-final, and (3) an unsigned Minute Entry is not a final appealable Order. (MTD at 2-8.)

In the bankruptcy context, courts take a more expansive view in determining whether an Order is final and appealable. See Comerica Bank v. Red Mountain Mach. Co. ( In re Red Mountain Mach. Co. ), 471 B.R. 242, 249 (D. Ariz. 2012) (discussing the flexibility of approach to finality in bankruptcy context, emphasizing the need for immediate review); Sumida & Tsuchiyama, LLLP v. Kotoshirodo ( In re Kyung Sook Kim ), 433 B.R. 763, 772 (D. Haw. 2010) (explaining that in the bankruptcy context, the whole outcome of the case need not be decided for the Order to be final). Under this approach, a Bankruptcy Court Order is considered appealable if it (1) resolves and seriously affects substantive rights, and (2) finally determines the discreet issue to which it is addressed. In re Bonham, 229 F.3d 750, 761 (9th Cir. 2000); In re Red Mountain, 471 B.R. at 249.

A. Appealability of Denial of Relief from the Automatic Stay

Orders granting or denying relief from the automatic stay are deemed to be final Orders. City of Riverside v. Nat'l Envtl. Waste Corp. (In re Nat'l Envtl. Waste Corp. ), 129 F.3d 1052, 1054 (9th Cir. 1997). An Order denying and an Order granting relief from a stay are not legally distinct in terms of finality; both are appealable. Nat'l Envtl. Waste, 129 F.3d at 1054; Cimarron Investors v. Wyid Props. ( In re Cimarron Investors ), 848 F.2d 974 (9th Cir. 1988); see also Solidus Networks, Inc. v. Excel ...


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