Thomas v. Grigsby
2016 U.S. Dist. LEXIS 116122
D. Maryland2016Background
- Debtor Valerie LaVerne Thomas filed Chapter 13 bankruptcy on Dec. 31, 2015; Nancy Spencer Grigsby was appointed Chapter 13 Trustee.
- More than three months later, the Debtor and her son Mark Thomas (trustee of a family trust) filed a joint motion seeking (a) leave for Mark Thomas to intervene/represent the estate and (b) removal and replacement of the Chapter 13 Trustee by Mark Thomas.
- Bankruptcy Trustee opposed, arguing intervention/standing were improper and no cause existed to remove the Trustee; the Bankruptcy Court denied the motion for lack of cause and because no misconduct, negligence, or conflict was alleged.
- Debtor and Mark Thomas appealed to the district court, asserting denial occurred without adequate notice or opportunity to be heard and that the Bankruptcy Court misapplied the law on removal.
- Trustee moved to dismiss the appeal for lack of jurisdiction, arguing the denial of removal is interlocutory (nonfinal) and, alternatively, that appellants did not satisfy requirements for interlocutory appellate review.
- The district court granted the Trustee’s motion to dismiss, holding the denial of removal is nonfinal, not subject to the collateral-order doctrine, and not fit for interlocutory review under § 158(a)(3).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an order denying removal of a Chapter 13 trustee is a final, appealable order under 28 U.S.C. § 158(a)(1) | Denial was final as to Mark Thomas’s interests and thus appealable | Denial preserves the status quo and may be revisited; not final | Denial is interlocutory and not final; no appellate jurisdiction under § 158(a)(1) |
| Whether the collateral-order doctrine makes the denial appealable | Lack of notice and hearing (due process) makes the order effectively unreviewable later | Trustee: denial can be reviewed later and trustee’s actions remain subject to review; not a collateral order | Collateral-order doctrine does not apply; order not effectively unreviewable now |
| Whether leave to appeal an interlocutory order should be granted under § 158(a)(3) | Appellants’ timely notice should be treated as leave; exceptional circumstances exist | Even treated as motion for leave, appellants fail the § 1292(b)-style test (controlling question, substantial grounds for difference, advancement) | Leave denied because the central dispute is fact-intensive, discretionary, and not a controlling pure question of law |
| Whether Bankruptcy Court erred by ruling without a hearing (due process) | Appellants claim insufficient notice/opportunity to be heard before denial | Bankruptcy Code § 102 allows courts to act without a hearing when appropriate and no hearing was requested; no substantial dispute | District court finds no substantial ground for disagreement; ruling without hearing was authorized and not an interlocutory basis for appeal |
Key Cases Cited
- Catlin v. United States, 324 U.S. 229 (U.S. 1945) (definition of final order)
- In re SK Foods, L.P., 676 F.3d 798 (9th Cir. 2012) (orders denying removal preserve status quo and are nonfinal)
- In re Urban Broad. Corp., 401 F.3d 236 (4th Cir. 2005) (finality requires conclusively determining a separable dispute)
- Comm. of Dalkon Shield Claimants v. A.H. Robins Co., 828 F.2d 241 (4th Cir. 1987) (practical finality concerns in bankruptcy appeals)
- In re Rood, 426 B.R. 538 (D. Md. 2010) (bankruptcy appellate jurisdiction and interlocutory-review principles)
- Coopers & Lybrand v. Livesay, 437 U.S. 463 (U.S. 1978) (collateral-order doctrine standards)
- In re Computer Learning Ctrs., Inc., 407 F.3d 656 (4th Cir. 2005) (interim orders subject to reevaluation and thus nonfinal)
- KPMG Peat Marwick, LLP v. Estate of Nelco, Ltd., Inc., 250 B.R. 74 (E.D. Va. 2000) (standards for leave to appeal interlocutory bankruptcy orders)