Dan Bryan v. John E. Land ( 1997 )

United States Bankruptcy Appellate Panel
FOR THE EIGHTH CIRCUIT
____________________________
No. 97-6060
____________________________
In re: *
*
John E. Land, Mary Connie Land, *
*
Debtors *
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Dan Bryan; Sharon Bryan; Bryan *
Broadcasting, Inc., *
*
Creditors - Appellants, * Appeal from the United
States
v. * Bankruptcy Court for the
* Northern District of Iowa
John E. Land, Mary Connie Land, *
*
Debtors - Appellees *
____________________________
Submitted: October 22, 1997
Filed: December 19, 1997
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Before KOGER, WILLIAM A. HILL, and SCHERMER, Bankruptcy Judges
KOGER, Chief Bankruptcy Judge
Dan Bryan, Sharon Bryan and Bryan Broadcasting, Inc. appeal
from the bankruptcy court’s order entered on June 24, 1997, in
which the court denied the appellants’ Motion to Dismiss or to
Change Venue and their Motion to Set Aside and to Vacate Judgment
and Order of Confirmation, for Extension of Time to Appeal, and for
Other Relief.
FACTS
On April 7, 1997, John and Mary Land, husband and wife, filed
a voluntary petition for relief under Chapter 13 of the Bankruptcy
Code in the United States Bankruptcy Court for the Northern
District of Iowa. Despite declaring under penalty of perjury that
they had been domiciled or had a residence, principal place of
business, or principal assets in the Northern District of Iowa for
180 days immediately preceding the date of the bankruptcy petition
or for a longer part of such 180 days than in any other district,
counsel for the Lands admitted at a hearing held on June 3, 1997,
that venue was proper only in the Southern District of Iowa and
that the Lands had filed in the Northern District of Iowa for their
convenience. In their bankruptcy schedules, the Lands listed Dan
Bryan as a creditor holding an unsecured nonpriority claim based
upon his role as a co-signor for a loan from State Central Bank.
The amount of the claim was shown as zero, and as contingent,
unliquidated and disputed. In the mailing matrix, the Lands listed
Dan Bryan’s address as Sherwood Oaks, Carthage, Illinois 62321.
Although Dan Bryan’s spouse, Sharon Bryan, was also a creditor of
the Lands as a result of a mortgage executed by the Lands in favor
of Dan Bryan and Sharon Bryan, the Lands did not list Sharon Bryan
as a creditor in their schedules filed on April 7, 1997. In the
mortgage, the address of the Bryans was shown as Sherwood Oaks,
Carthage, Illinois 62321. Bryan Broadcasting, Inc. is the Bryans’
wholly-owned business and is a defendant, along with the Bryans, in
a state court lawsuit filed by the Lands arising out the sale of a
radio station by Bryan Broadcasting, Inc., Dan Bryan and Sharon
Bryan to the Lands’ business, Landmark Broadcasting, Inc. Bryan
Broadcasting, Inc. and the Bryans may be creditors of the Lands
based upon claims or counterclaims they may file in the pending
state court action. On or about May 25, 1997, the Lands did amend
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their bankruptcy schedules to include Bryan Broadcasting, Inc. and
Dan and Sharon Bryan, each with an address of P.O. Box 485,
Carthage, Illinois 62321.
A notice of the Lands’ bankruptcy filing; the date, time and
location of the meeting of creditors; the deadline to file a proof
of claim; the bar date for filing objections to confirmation of the
plan; and the date, time and place of the hearing on confirmation
was mailed to each creditor at the address shown on the mailing
matrix. The section 341 meeting of creditors and the confirmation
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hearing were both held on May 6, 1997, at 12:00 p.m. and 1:30 p.m.,
respectively. The bankruptcy court confirmed the Lands’ Chapter 13
plan, without objection. The order confirming the plan was filed
on May 12, 1997.
On May 6, 1997, after the 1:30 p.m. confirmation hearing, Dan
Bryan, Sharon Bryan and Bryan Broadcasting, Inc. filed a Motion to
Dismiss or to Change Venue. On May 14, 1997, Dan Bryan, Sharon
Bryan and Bryan Broadcasting, Inc. filed a Motion to Set Aside and
to Vacate Judgment and Order of Confirmation, for Extension of Time
to Appeal, and for Other Relief. Subsequently, on May 19, 1997,
the appellants filed an amendment to the May 14 motion in which
they stated that the address for Dan Bryan was incomplete, and
asserted that neither Dan Bryan, Sharon Bryan nor Bryan
Broadcasting, Inc. received notice of the Lands’ bankruptcy filing.
The bankruptcy court held a hearing on the motions on June 3, 1997.
The bankruptcy court denied both motions. In its order the
bankruptcy court found and concluded in relevant part that:
Evidence was presented that the Bryans’ attorney
contacted the Lands’ attorney on April 16, 1997 regarding
the bankruptcy of the Lands. This was six days after the
notices were mailed by the Clerk. Mr. Bryan testified
that upon learning of the bankruptcy he had to “find Mr.
Lam as an attorney”, as he had no bankruptcy attorney.
Mr. Bryan contacted Mr. Lam, who now represents all three
Bryan parties, sometime prior to the April 16, 1997 phone
call by Mr. Lam to the Lands’ attorney. Mr. Bryan also
testified that he is sure he contacted Mr. Lam prior to
that date.
There was testimony that Mr. Bryan may have heard of
the Lands’ bankruptcy through one of his other attorneys
during depositions in a collateral case. Whether
coincidental or not, he became aware of the Lands’
Chapter 13 petition and began to act on that information
at the same time the notices from the court were
delivered.
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. . . .
Mr. Bryan had notice of the bankruptcy proceeding in
question and began to act on that information exactly as
if he had received notice by mail. Mr. Bryan contacted
an attorney to deal with bankruptcy issues at Mr. Bryan’s
request at least 20 days prior to the objection bar and
confirmation hearing date. The Court concludes that Mr.
Bryan had adequate notice of the Lands’ bankruptcy.
5
It is notable that the appellants do not appeal from the
bankruptcy court’s determination that Dan Bryan had actual notice
of the Lands’ bankruptcy filing at least 20 days prior to the date
set for the confirmation hearing, nor do they appeal from the
bankruptcy court’s factual findings supporting its ruling.
Regarding Sharon Bryan’s notice of the Lands’ bankruptcy
filing, the bankruptcy court found and concluded that:
Sharon Bryan and Dan Bryan live together as husband
and wife. Mr. Bryan testified that they see each other
every day and that he would discuss with Mrs. Bryan
matters of an important nature of which he became aware.
The bankruptcy of individuals who presumably owe them a
substantial debt would qualify as a matter of importance.
Mrs. Bryan has retained the same attorney as Mr. Bryan to
represent her in relation to the Lands’ bankruptcy. That
attorney received notice of the Lands’ bankruptcy from
Mr. Bryan at least 20 days prior to the hearing date.
This Court has concluded that Mr. Bryan received
timely notice of the Lands’ bankruptcy proceeding.
“[T]he normal relationship between spouses being close,
Congress could well consider that receipt of the notice
by either spouse would be well calculated to give actual
notice to both, even though one spouse may be temporarily
absent.” Cohen v. United States, 297 F.2d 760, 773 (9th
Cir. 1962). In Cohen, a prosecution for income tax
evasion, Mr. Cohen was temporarily away, in prison. He
nevertheless was deemed to have received notice when his
wife was served at their permanent address. Neither of
the Bryans have claimed absence from the family home.
Mr. Bryan’s testimony, the advisory language of Congress,
and Cohen, when considered together, convince this Court
that notice to Mr. Bryan [sic] was adequate.
In the case of In re Texaco Inc., 182 B.R. 937(Bankr. S.D.N.Y. 1995), a Chapter 11 case, adjacent
landowners were found to have received actual “Notice by
mail of the Bar Date” for the filing of proofs of claim,
by reason of their relationships to five other landowners
to whom notice was actually mailed. The parties in
question in Texaco were related to some lesser degrees
(sister-in-law, e.g.) to parties to whom notice had
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actually been mailed. Id. at 954. This provides further
support that the Lands’ position that Mr. Bryan’s notice
provided either actual or imputed notice to Mrs. Bryan by
virtue of their marital relationship, living arrangement,
and the testimony of Mr. Bryan.
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The bankruptcy court also observed and found that Sharon Bryan
“was a party to the Motion to Dismiss or to Change Venue which was
filed late on the date of the confirmation hearing.” It is
important to note that the appellants do not appeal from the
bankruptcy court’s factual findings supporting its legal conclusion
that Dan Bryan’s actual notice of the Lands’ bankruptcy filing
could be imputed to Sharon Bryan.
The bankruptcy court did not spend much time on the venue
issue. In relevant part, the bankruptcy court stated that no
objections to venue were made prior to the confirmation hearing and
found that the motion filed subsequent to confirmation was not
timely filed.
JURISDICTION
We must address the issue of whether the bankruptcy appellate
panel has jurisdiction to hear the appeal in this case. The
appellants timely filed a notice of appeal on July 1, 1997. See
Fed. R. Bankr. P. 8002(a). The bankruptcy court’s denial of the
appellants’ motion to set aside the order confirming the debtors’
plan is a final order over which the bankruptcy appellate panel
unquestionably has appellate jurisdiction. See KCC-Leawood
Corporate Manor I v. Travelers Ins. Co., 117 B.R. 969, 972 (W.D.
Mo. 1989) (“Confirmation of a plan is a final order for purposes of
an appeal.”).
The inquiry over whether we may exercise jurisdiction in this
case arises in the context of the bankruptcy court’s order denying
the motion to change venue. Although the denial of a motion to
change venue is interlocutory in nature, it has been held to be
appealable under 28 U.S.C. § 158(a). See ICMR, Inc. v. Tri-City
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Foods, Inc., 100 B.R. 51, 53 (D. Kan. 1989). In ICMR, Inc. the
district court, quoting 1 Collier on Bankruptcy ¶ 3.02[4][f] (L.
King 15th ed. 1988), opined:
The discretion of the district court or appellate
panel [to permit interlocutory appeals of orders changing
venue] should be more readily obtained when an order
regarding the venue of the title 11 case is concerned
than in an appeal from a venue order in a civil
proceeding. Unlike a civil proceeding in which the order
regarding
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venue can be appealed at the conclusion of the proceeding, there is
a very small chance of success on an appeal which is taken after
the title 11 case has been administered and closed, which may be
the only time when the order regarding venue becomes a final order.
The appellate panel or district court should recognize this, and be
more inclined to grant the interlocutory appeal when a motion
regarding venue of the case is involved.
ICMR, Inc., 100 B.R. at 53. We choose to follow the guidance
provided by the district court in ICMR, Inc. and determine that we
have jurisdiction to rule on the bankruptcy court’s order denying
the motion to change venue.
For practical reasons it is appropriate for us to exercise
appellate jurisdiction now over the denial of the motion to change
venue. If we fail to do so, the Lands’ Chapter 13 case will run
its course, the bankruptcy court may issue rulings during the
pendency of the case, dividends will be paid to the creditors, and
the Chapter 13 trustee will be paid the percentage fee. After the
case has been administered and closed, the appellants could bring
an appeal from the bankruptcy court’s order denying the motion to
change venue. If they are successful at that time in their
assertion that venue was improper from the inception of the case,
the bankruptcy court will be required to order and oversee the
recovery of the dividends paid to the creditors and the fee paid to
the Chapter 13 trustee, vacate any orders entered in the case, then
transfer the case to the Southern District of Iowa for the entire
process to begin anew. This would certainly defeat the promotion
of the efficient use of judicial resources, and frustrate the
expectations of the debtors, their creditors and the Chapter 13
trustee.
Further, exercising jurisdiction over the denial of the motion
to change venue also comports with the three-part test for
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determining whether a bankruptcy decision is final that is set
forth in Lewis v. U.S., Farmers Home Admin., 992 F.2d 767, 772 (8th
Cir. 1993). Here, the order leaves the bankruptcy court with
nothing to do but to execute the order; delay in obtaining review
would prevent the appellants from obtaining effective relief; and
a later reversal on the issue of venue would possibly require
recommencement of the entire bankruptcy case. See Lewis, 992 F.2d
at 772.
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See also Moix-McNutt v. Coop, 212 B.R. 953, 954 (B.A.P. 8th Cir.
1997). “[T]he test for finality in the bankruptcy area is more
liberal than in nonbankruptcy proceedings.” Lewis, 992 F.2d at
772. “‘[F]inality for bankruptcy purposes is a complex subject .
. . [and courts deciding appealability questions] must take into
account the peculiar needs of the bankruptcy process.’” In re Koch,
109 F.3d 1285, 1287 (8th Cir. 1997) (quoting In re Huebner, 986
F.2d 1222, 1223 (8th Cir. 1993)).
ISSUES RAISED ON APPEAL
The appellants raise two points on appeal. First, whether a
motion to change venue filed within twenty-nine days of the
petition is timely pursuant to 28 U.S.C. § 1408 and Fed. R. Bankr.
P. 1014(a)(2). Second, whether notice of the bankruptcy filing may
be imputed to Sharon Bryan.
STANDARD OF REVIEW ON APPEAL
Whether the appellants’ motion to change venue was timely
filed under Fed. R. Bankr. P. 1014(a)(2) involves a question of
fact and the bankruptcy court’s ruling on this matter shall not be
set aside unless clearly erroneous. See First Nat’l Bank v. Allen,
118 F.3d 1289, 1294 (8th Cir. 1997); Fed. R. Bankr. P. 8013. A
bankruptcy court’s finding of fact is clearly erroneous when the
reviewing court is left with a “‘definite and firm conviction that
a mistake has been committed.’” In re Waugh, 95 F.3d 706, 711 (8th
Cir. 1996) (quoting Anderson v. City of Bessemer City, 470 U.S.
564, 573, 105 S. Ct. 1504, 1511, 84 L. Ed. 2d 518 (1985)). The
appellant bears the burden of proving that the bankruptcy court’s
determination was clearly erroneous. U.S. Machinery Movers v.
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Beller, 280 F.2d 91, 95 (8th Cir.), cert. denied, 364 U.S. 903, 81
S. Ct. 236, 5 L. Ed. 2d 195 (1960).
Whether notice of the Lands’ bankruptcy filing may be imputed
to Sharon Bryan involves a question of law over which the
bankruptcy appellate panel exercises de novo review. See First
Nat’l Bank, 118 F.3d at 1294.
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DISCUSSION
I. Whether the motion to change venue was timely filed.
The proper venue in which to file a bankruptcy case is set out
in section 1408 of the Judicial Code, which states in relevant part
that:
[A] case under title 11 may be commenced in the district
court for the district--
(1) in which the domicile, residence, principal
place of business in the United States, or
principal assets in the United States, of the
person or entity that is the subject of such case
have been located for the one hundred and eighty
days immediately preceding such commencement, or
for a longer portion of such one-hundred-and-
eighty-day period than the domicile, residence, or
principal place of business, in the United States,
or principal assets in the United States, of such
person were located in any other district.
28 U.S.C. § 1408(1).
Federal R. Bankr. P. 1014(a)(2) provides that:
If a petition is filed in an improper district, on
timely motion of a party in interest and after hearing on
notice to the petitioners, the United States trustee, and
other entities as directed by the court, the case may be
dismissed or transferred to any other district if the
court determines that transfer is in the interest of
justice or for the convenience of the parties.
Fed. R. Bankr. P. 1014(a)(2).
If venue is not proper in a district, upon the filing of a
timely motion to change venue a bankruptcy court is without
authority to retain the bankruptcy case. McCall, 194 B.R. at 593.
See also ICMR, Inc., 100 B.R. at 54. However, “[i]f a timely
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motion to dismiss for improper venue is not filed, the right to
object to venue is waived.” Fed. R. Bankr. P. 1014, Advisory
Committee Note (1987), reprinted in Norton Bankruptcy Rules
Pamphlet 1996-1997 Edition, p.50. “What constitutes a timely
filing of such a motion is not governed by a statutory or rule
definition.” McCall, 194 B.R.
15at 592. Whether a motion to change venue has been timely filed
depends on the facts and circumstances presented in the particular
case. See McCall, 194 B.R. at 593.
There is no question that venue is improper in this case.
However, the factual findings of the bankruptcy court support its
conclusion that Dan Bryan did not timely file the motion to change
venue. The findings of fact are not clearly erroneous. The
uncontested evidence shows that Dan Bryan contacted an attorney at
least 20 days prior to the date set for the confirmation hearing
and the date set for filing objections to confirmation. The
attorney contacted the Lands’ attorney on April 16, 1997, regarding
the Lands’ bankruptcy filing. Dan Bryan became aware of the Lands’
bankruptcy about the same time the notice from the clerk’s office
was delivered to creditors. Dan Bryan had actual notice of the
Lands’ bankruptcy filing and began to act on that information by
contacting an attorney who then contacted the Lands’ attorney 21
days before the confirmation hearing. Although he had actual
notice of the Lands’ bankruptcy filing and plenty of time in which
to act, Dan Bryan failed to file the motion to change venue and
failed to file objections to confirmation of the Lands’ Chapter 13
plan prior to the confirmation hearing. After confirmation Dan
Bryan sought to undo all that had been done by filing his tardy
motion to change venue and subsequently filing a motion to vacate
the order of confirmation in which he likewise tardily raised
objections to confirmation of the plan. The evidence shows that
Dan Bryan failed to timely file the motion to change venue, and
that Dan Bryan untimely filed objections to confirmation of the
Lands’ Chapter 13 plan.
Whether Sharon Bryan timely filed the motion to change venue
and timely raised objections to confirmation in the motion to set
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aside the confirmation order depends upon whether notice of the
bankruptcy filing may be imputed to her.
II. Whether notice of the Lands’ bankruptcy filing may be imputed
to Sharon Bryan.
Sharon Bryan did not testify at the hearing on the motion to
change venue and motion to set aside the confirmation order, and
Dan Bryan did not testify that he told his wife about the Lands’
17
bankruptcy filing. Although the bankruptcy court imputed notice of
the Lands’ bankruptcy filing to Sharon Bryan based upon Dan Bryan’s
actual notice, we determine that the bankruptcy court’s ruling must
be affirmed because notice or knowledge of the Lands’ bankruptcy
filing clearly is imputable to Sharon Bryan as a matter of law
based upon the attorney-client/agent-principal relationship with
her attorney, Eric W. Lam.
The bankruptcy court found that the attorney whom Dan Bryan
contacted prior to April 16, 1997, Eric W. Lam, now represents
all three Bryan parties; that Sharon Bryan has retained the same
attorney as Dan Bryan to represent her in relation to the Lands’
bankruptcy; that the attorney received notice of the Lands’
bankruptcy from Dan Bryan at least 20 days prior to the date set
for the hearing on confirmation; and that Sharon Bryan was a party
to the motion to change venue that was filed late on the date of
the confirmation hearing. Although the bankruptcy court did not
impute notice of the Lands’ bankruptcy filing to Sharon Bryan based
upon her attorney-client relationship with Lam, the factual
findings of the bankruptcy court support such a legal conclusion.
Specifically, the bankruptcy court found that Sharon Bryan had
retained Lam to represent her in relation to the Lands’ bankruptcy.
An attorney is considered to be an agent for his or her client.
See Cheriogotis, 188 B.R. at 999; Dillon v. City of Davenport, 366
N.W.2d 918, 923 (Iowa 1985). The attorney-agent’s knowledge is
imputable to the client-principal. See In re Felberman, 196 B.R.
678, 684-85 (Bankr. S.D.N.Y. 1995). Further:
The rule in Iowa is that knowledge acquired by an agent
before the commencement of the relationship of principal
and agent is imputable to the principal if the knowledge
is present in the mind of the agent while acting for the
principal in a transaction to which the information is
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material.
Curran Hydraulic Corp. v. National-Ben Franklin Ins. Co. Of
Illinois, 261 N.W.2d 822, 826 (Iowa 1978). “‘Except for knowledge
acquired confidentially, the time, place, or manner in which
knowledge is acquired by a servant or other agent is immaterial in
determining the liability of his principal because of it.’” Id.(quoting Restatement (Second) of Agency § 276).
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“The relationship of principal and agent is not dependent upon
express agreement between the parties. It may be implied from
either words or conduct of the parties, depending on the
circumstances of the case.” Wyckoff v. A & J Home Benevolent Ass’n
of Creston, Iowa, 119 N.W.2d 126, 128 (Iowa 1962). In Kurtenbach v.
TeKippe, 260 N.W.2d 53, 56 (Iowa 1977), the Supreme Court of Iowa
stated that an attorney-client relationship is created when:
(1) a person seeks advice or assistance from an attorney,
(2) the advice or assistance sought pertains to matters
within the attorney’s professional competence, and (3)
the attorney expressly or impliedly agrees to give or
actually gives the desired advice or assistance.
In this case, an attorney-client/agent-principal relationship
was created between Lam and Sharon Bryan upon which notice of the
Lands’ bankruptcy may be imputed as a matter of law to Sharon
Bryan. Accordingly, Sharon Bryan failed to timely file the motion
to change venue, and failed to timely raise objections to
confirmation of the Lands’ Chapter 13 plan.
CONCLUSION
We determine that it is appropriate to exercise appellate
jurisdiction over both the bankruptcy court’s denial of the motion
to change venue and motion to set aside the confirmation order.
The evidence supports the bankruptcy court’s factual finding that
Dan Bryan failed to timely file the motion to change venue, and
failed to timely file objections to confirmation of the Lands’
Chapter 13 plan. Notice or knowledge of the Lands’ bankruptcy
filing clearly is imputable to Sharon Bryan as a matter of law
based upon the attorney-client/agent-principal relationship with
Lam. As a result, Sharon Bryan likewise failed to timely file the
motion to change venue and failed to timely object to confirmation
20
of the Lands’ Chapter 13 plan. Accordingly, the decision of the
bankruptcy court is affirmed.
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SCHERMER, Bankruptcy Judge, dissenting.
I respectfully dissent. Because there is no final order of
the bankruptcy court, we lack jurisdiction to address the merits of
this appeal.
This court must first decide whether the bankruptcy court’s
order is final for purposes of 28 U.S.C. § 158(a). This circuit
has “traditionally considered three factors in determining when an
order in a bankruptcy case is final: the extent to which (1) the
order leaves the bankruptcy court nothing to do but execute the
order; (2) the extent to which delay in obtaining review would
prevent the aggrieved party from obtaining effective relief: (3)
the extent to which a later reversal on that issue would require
recommencement of the entire proceeding.” In re Koch, 109 F.3d
1285, 1287 (8th Cir. 1997). As the majority noted, the order of
the bankruptcy court denying a change of venue is interlocutory.
Only the third factor weighs in favor of appealability in this
case.
Although our circuit has not yet determined whether an order
denying a change of venue is an appealable order, other circuits
have held it is not. See Blankenship v. Am. Sav. & Loan Assoc.,
871 F.2d 1087, No. 89-5075, 1989 WL 27812 (6th Cir. (Ky.) March 24,
1989) (stating this court has no jurisdiction over an interlocutory
appeal from an order denying leave to appeal or, from orders
transferring venue (citations omitted); Dalton v. United States,
733 F.2d 710, 714 (10th Cir. 1984) (holding it is “[a]lso well-
established . . . that an order transferring venue of an action,
even if the transfer is to a district in another circuit, is an
interlocutory order and unappealable, except by certification under
28 U.S.C. § 1292(b)”). Section 1292(b) allows for immediate appeal
22
when an order of the district court “involves a controlling
question of law as to which there is substantial ground for
difference of opinion and . . . an immediate appeal from the order
may materially advance the ultimate determination of the
litigation.” 28 U.S.C. § 1292(b).
Authority for the majority opinion is based upon Collier on
Bankruptcy ¶ 3.02 [4][f] (L. King 15th ed. 1988). This treatise
suggests that courts should be more lenient granting interlocutory
appeals than the standard followed under § 1292(b) when a request
for change of venue has been
23
made. Venue decisions are usually fact specific to the case at
hand. “Thus they are generally not ‘controlling questions of law’
as that term is used in § 1292(b), but rather are discretionary
determinations. Such discretionary orders are not of the type from
which interlocutory appeals are generally taken.” K-Mart Corp. v.
Swann Ltd. Partnership, 128 B.R. 138, 140 (D. Md. 1991) (citations
omitted).
A true copy.
Attest:
CLERK, U.S. BANKRUPTCY APPELLATE PANEL FOR THE
EIGHTH
CIRCUIT
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