In re Adkins

517 B.R. 698, 2014 Bankr. LEXIS 3828, 2014 WL 4446271
United States Bankruptcy Court, N.D. Texas·Decided September 8, 2014·No. No. 12-10314-rlj-7·Published·Cited by 1 cases

Opinion

[699]*699 MEMORANDUM OPINION AND CERTIFICATION OF DIRECT APPEAL

ROBERT L. JONES, Bankruptcy Judge.

McLoba Partners, Ltd. d/b/a U.S. Gold Firm (“McLoba”), appellant, filed its request with this Court, the bankruptcy court, to certify a direct appeal to the Fifth Circuit Court of Appeals of this Court’s order and memorandum opinion of July 24, 2014 [Docket Nos. 273 and 272], Robert Lewis Adkins, Sr. (“Adkins”), the debtor, objects to McLoba’s request.

The appropriate court of appeals — here the Fifth Circuit Court of Appeals — may authorize a direct appeal from a final order of the bankruptcy court if the bankruptcy court, prior to docketing of the appeal in the district court, certifies that the order or judgment subject of the appeal involves:

(i) a question of law on which there is no controlling decision by the circuit court or the Supreme Court;
(ii) a matter of public importance;
(iii) an issue where there are conflicting decisions; or
(iv) a circumstance for which an immediate appeal may materially advance the progress of the case or proceeding in which the appeal is taken.

28 U.S.C. § 158(d)(2)(A). If any of the four conditions precedent are met, the bankruptcy court shall make the certification per § 158(d)(2)(B)(ii). Rule 8001(f) of the Federal Rules of Bankruptcy Procedure governs the procedure and directs that the bankruptcy court, as opposed to the district court, makes the certification if the matter is still pending in the bankruptcy court. A matter is pending in the bankruptcy court until the appeal is docketed in accordance with Rule 8007(b). Such rule provides that an appeal is formally docketed with the district court upon the clerk of the district court’s receipt and docketing of the record on appeal. This Court has confirmed that the appeal here has not yet been docketed with the district court.

McLoba submits that the issue presented on its appeal is “whether the Bankruptcy Court erred in holding that the automatic stay applied to a third-party action that McLoba filed against the Chapter 7 Debtor post petition, even though the third-party action was filed in the Debtor’s home bankruptcy court, even though the third-party action was brought purely as a defensive measure and sought no recovery from the Debtor or his bankruptcy estate, and even though the third-party action could not have been commenced before the commencement of the Debtor’s bankruptcy case.” McLoba’s Motion [Docket No. 284] ¶ 5.

As Adkins pointed out in his objection, two of the three “even thoughs” — that the third party action was brought purely as a defensive measure, and that the third party action could not have been commenced before Adkins’s bankruptcy case was filed — are factual matters that were resolved against McLoba and, as such, are not relevant to the question here of whether the Court must certify a direct appeal to the Circuit.

Adkins submits that the issue on appeal is a simple one: “whether McLoba’s filing of a third party complaint against an individual it knew was in a chapter 7 ... was an intentional and willful violation of the automatic stay.” Adkins’s Response [Docket No. 298] ¶ 3. Neither McLoba nor Adkins accurately frames the issue, however. By its order and memorandum opinion, the Court held that McLoba willfully violated the automatic stay and assessed damages against McLoba and in favor of Adkins. The stay violation arose from McLoba’s third party action against Ad[700]*700kins in an adversary proceeding pending before this Court, but in connection with another bankruptcy case. Copies of the Court’s order and memorandum opinion are attached. The issue, therefore, that potentially implicates a direct appeal is whether the automatic stay was violated by McLoba’s third party action against Adkins in an adversary proceeding filed in another bankruptcy case that is also pending before this Court.

This issue potentially raises the broader question of whether any formal action against the debtor in the bankruptcy court implicates the automatic stay. McLoba relied upon the Fifth Circuit’s opinion in Campbell v. Countrywide Home Loans, Inc., 545 F.3d 348 (5th Cir.2008), in arguing that its filing of a third party action against Adkins was not a stay violation. McLoba looked specifically to the quoted language from Campbell — that “the automatic stay serves to protect the bankruptcy estate from actions taken by creditors outside the bankruptcy court forum, not legal actions taken within the bankruptcy court.” Id. at 356 (quoting In re Sammon, 253 B.R. 672, 681 (Bankr.D.S.C.2000)). McLoba makes the same argument on its appeal. As such, at least as couched by McLoba, there is a controlling decision from the Circuit on the issue. The issue on appeal would then go to whether this Court, the bankruptcy court, properly applied controlling circuit authority and would thus not then be properly subject of a direct appeal. 28 U.S.C. § 158(d)(2)(A). The other bases for a direct appeal are not at issue.

But as noted by this Court in its memorandum opinion, it determined that Campbell did not answer the question. Campbell held that the creditor there did not violate the stay by including, in its proof of claim, a statement that it intended to increase the mortgage payments as a way to recover a pre-petition claim. Campbell is thus a different case. The quoted language is dictum that, in the Court’s view, McLoba takes out of context. The issue as properly framed by the Court does, at least technically, make it one that the Fifth Circuit has not addressed. The Court therefore certifies the issue for direct appeal to the Fifth Circuit. In doing so, the Court recognizes that the issue is one that is highly dependent on particular and unusual facts — a third party action filed against a debtor, but in an adversary proceeding that is pending in another bankruptcy case before the Court — and thus arguably not properly subject of a direct appeal. See Weber v. U.S., 484 F.3d 154, 158 (2d Cir.2007). The Court believes that the violation of the automatic stay is clear under the statute. The appeal does, as stated above and as the quote from Campbell might intimate, arguably raise the broader, more important question of whether the automatic stay covers only those formal actions taken outside the bankruptcy court. Given the implications of this broader question, the Court believes it is compelled to certify this matter for direct appeal.

Attachment

[701]*701[[Image here]]

The following constitutes the ruling of the court and has the force and effect therein described.

Signed July 23, 2014

Isl

United States Bankruptcy Judge

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF TEXAS

ABILENE DIVISION

IN RE: ROBERT LEWIS ADKINS, SR. DEBTOR.

CASE NO. 12-10314-rlj-7

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In re Adkins, 517 B.R. 698, 2014 Bankr. LEXIS 3828, 2014 WL 4446271 (Tex. 2014).

517 B.R. 698 (In re Adkins) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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