Bankruptcy Estate of Morgantown Excavators, Inc. v. Huntington National Bank (In re Bankruptcy Estate of Morgantown Excavators, Inc.)

507 B.R. 126
CourtDistrict Court, N.D. West Virginia
DecidedMarch 13, 2014
DocketBankruptcy Nos. 12-570, 12-1473; Civil Action No. 1:13CV235
StatusPublished

This text of 507 B.R. 126 (Bankruptcy Estate of Morgantown Excavators, Inc. v. Huntington National Bank (In re Bankruptcy Estate of Morgantown Excavators, Inc.)) is published on Counsel Stack Legal Research, covering District Court, N.D. West Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bankruptcy Estate of Morgantown Excavators, Inc. v. Huntington National Bank (In re Bankruptcy Estate of Morgantown Excavators, Inc.), 507 B.R. 126 (N.D.W. Va. 2014).

Opinion

MEMORANDUM OPINION AND ORDER DISMISSING APPEAL FOR LACK OF JURISDICTION

FREDERICK P. STAMP, JR., District Judge.

I. Procedural History

The appellants, Shirley E. Godfrey (“Godfrey”) and The Bankruptcy Estate of Morgantown Excavators Inc. (“MEI”) (collectively the “appellants”), filed an appeal in this Court from the United States Bankruptcy Court for the Northern District of West Virginia.

In a separate but related action, the appellants both filed voluntary Chapter 13 bankruptcy petitions in the United States Bankruptcy Court for the Northern District of West Virginia. A trustee was appointed by the bankruptcy court. Thereafter, the appellants filed a complaint in the Court of Common Pleas of Franklin County, Ohio against the appellee, The Huntington National Bank (“Huntington”). Huntington then filed a notice of removal in the United States Bankruptcy Court for the Southern District of Ohio. In its notice of removal to that court, Huntington argued that this action falls under 28 U.S.C. § 1334(b) which allows a federal bankruptcy court to hear all civil proceedings related to a case under the United States Bankruptcy Code. A co-defendant, Myron Bowling Auctioneers, Inc. (“Myron Bowling”), was added to the removed action shortly thereafter.

The appellants then filed a motion to abstain or remand arguing that the claims in the state court action arise solely under state law and that the matter can be timely adjudicated in state court. Accordingly, the appellants argued that the bankruptcy court was required to abstain. The motion to abstain and remand was fully briefed by the parties. The case was then transferred to the United States Bankruptcy Court in the Northern District of West Virginia because the action was potentially adversarial to any action the bankruptcy court might take in the action involving the appellants’ Chapter 13 petitions.

In considering the appellants’ motion, United States Bankruptcy Court Judge Patrick M. Flatley denied the appellants’ motion for remand or abstention finding that the proceedings could not be timely adjudicated in state court. Thus, mandatory abstention was not required. Further, Judge Flatley found that voluntary abstention was not required because a majority of the factors a court must consider in deciding whether or not it should abstain from hearing an action weighed against abstention. The appellants then appealed that decision to this Court.

The appellants argued in their brief in support of their motion to remand or abstain that this Court has jurisdiction to hear this appeal and that Judge Flatley’s decision should be overruled. Huntington filed a response to that brief arguing that this Court does not have jurisdiction to hear this appeal and that even if this Court could hear the appeal, Judge Flatley did not clearly err in denying the appellants’ motion. No reply was filed by the appellants. As such, this action is ripe for decision by this Court.

II. Discussion

The appellants argue in their brief that the bankruptcy court’s denial of their mo[129]*129tion to abstain was a final decision under the collateral order rule. In re Midgard, 204 B.R. 764 (10th Cir. BAP 1997). Further, the appellants contend that the United States Court of Appeals for the Fourth Circuit has held that a motion to deny remand is reviewable on appeal. In re: Celotex Corp., 124 F.3d 619 (4th Cir.1997). Thus, the appellants assert that this Court can review the bankruptcy court’s denial of remand or abstention pursuant to 28 U.S.C. § 158.1

On the other hand, Huntington argues that the bankruptcy court’s denial of the appellants’ motion to remand or abstain was not a final decision, but rather is interlocutory. Thus, Huntington contends, the appellants were required to prove that their appeal fulfills the requirements of the collateral order doctrine. Further, Huntington claims that because the appellants have not made an argument regarding the collateral order doctrine, they have not shown that the bankruptcy court’s order was final and appealable. As such, Huntington asserts that this Court would have to grant leave to appeal and because the appellants have not sought such relief this appeal should be dismissed. Finally, Huntington argues that if this Court were to consider the appellants’ appeal as a motion for leave to appeal, the appellants have failed to show that they meet the three requirements under 28 U.S.C. § 1292 that would require this Court to grant them interlocutory relief.

For the reasons that follow, this Court finds that the appellants have failed to show that this Court has jurisdiction to hear their appeal. As such, this Court will dismiss the appellants’ appeal to reconsider the bankruptcy court’s denial of their motion for remand or abstention.

A. Applicable Law

This Court has jurisdiction to hear appeals “from final judgments, orders, and decrees [of bankruptcy courts],” or may grant leave to appeal through “interlocutory orders and decrees [of bankruptcy courts].” 28 U.S.C. § 158(a)(1), (3). However, a party only has the right to review by this Court when the bankruptcy court’s judgment is final. Id. at § 158(a)(1). A final judgment “generally is one which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 89 L.Ed. 911 (1945) (citation omitted).

In this case, this Court must determine whether it has jurisdiction to hear the bankruptcy court’s denial of the appellants’ motion to remand or abstain. The United States Supreme Court has set forth two types of abstention appeals that are reviewable. First, an abstention or remand order is appealable if it puts the litigants “effectively out of court” and has the effect “precisely to surrender jurisdiction of a federal suit to a state court.” Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 713, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996). Second, an abstention order is reviewable on appeal if it fits within the narrow class of immediately appealable collateral orders. Id. (“Orders that do not meet the definition of finality, but satisfy the collateral order doctrine, are nevertheless appealable under section 1291.”); 1 Collier Bankruptcy Manual ¶ 5.07[3] (3d ed. rev. 1998) (stating that the collateral order doctrine has been adopted and used for the bankruptcy appellate system).

The collateral order doctrine is based on the recognition that there exists [130]

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Bluebook (online)
507 B.R. 126, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bankruptcy-estate-of-morgantown-excavators-inc-v-huntington-national-wvnd-2014.