(BK) In Re: Tarajit & Rajpal Chatha ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 In re RAJPAL SINGH CHATHA, and No. 2:19-cv-02341 WBS TARANJIT KAUR CHATHA,, 13 Bankruptcy Case No.: Debtors. 17-25335-B-7 14 15 ORDER RE: MOTION FOR LEAVE TO APPEAL, OR, IN 16 THE ALTERNATIVE, MOTION FOR CERTIFICATION OF THE 17 FINALITY OF THE JUDGMENT 18 19 DOUGLAS WHATLEY, Chapter 7 Trustee, 20 Plaintiff, 21 v. 22 SIMRANJIT CHATHA; THRIVE 23 MANAGEMENT, LCC; SUMMERFEST HOSPITALITY, LLC, 24 Defendants. 25 26 ----oo0oo---- 27 Plaintiff-appellee Douglas Whatley filed this action in 28 bankruptcy court against defendants-appellants Simranjit Chatha 1 and Thrive Management LLC alleging claims related to two 2 properties: a La Quinta Inn & Suites in Mansfield, Texas (the 3 “Hotel”) and a parcel of real property located in Marysville, 4 California (“Marysville Property.”). The bankruptcy court denied 5 summary judgment as to the Hotel-related claims, but granted 6 summary judgment as to most, but not all, claims related to the 7 Marysville Property. (See Bankruptcy Court Order at 3 (Docket 8 No. 8-1).) The judgment effectively ordered the transfer of the 9 Marysville Property to appellee. (Id. at 40.) Before the court 10 is appellants’ motion for leave to appeal the bankruptcy court’s 11 order or, in the alternative, motion for certification of the 12 finality of the judgment. (Docket No. 7.) 13 I. Motion for Certification of the Finality of the Judgment 14 To determine whether a judgment is final, and therefore 15 whether appellate jurisdiction exists, courts in bankruptcy 16 disputes typically apply a “flexible finality” approach which 17 “focuses on whether the order affects substantive rights and 18 finally determines a discrete issue.” In re Belli, 268 B.R. 851, 19 854 (B.A.P. 9th Cir. 2001). Such an approach, however, does not 20 apply in bankruptcy adversary proceedings because adversary 21 proceedings “are merely federal civil actions under another name, 22 and do not ordinarily present the types of uncertainties that 23 necessitate ‘flexible finality’ analysis.” Id. Instead, 24 “finality for purposes of jurisdiction over ‘as of right’ appeals 25 under 28 U.S.C. § 158(a)(1) in adversary proceedings does not 26 differ from finality in ordinary federal civil actions under 28 27 U.S.C. § 1291.” Id. at 855. Accordingly, Federal Rule of Civil 28 Procedure 54(b) controls such actions. Id. 1 The present action is an adversary proceeding. (See 2 Appellants’ Mot. at 2 (Docket No. 7).) “The parties are named in 3 the pleadings; the claims are those presented in the respective 4 counts of the complaint. The litigation is conducted under the 5 Federal Rules of Civil Procedure (as incorporated by Bankruptcy 6 Rules) and follows the ordinary pattern of summons and complaint, 7 answer, discovery, pretrial, trial, and judgment.” See id. at 8 854-55. This court will therefore evaluate the finality of the 9 judgment under Federal Rule of Civil Procedure 54(b) (“Rule 10 54(b)”). 11 Under Rule 54(b), “any order or other decision, however 12 designated, that adjudicates fewer than all the claims or the 13 rights and liabilities of fewer than all the parties does not end 14 the action as to any of the claims or parties” unless the court 15 “direct[s] entry of a final judgment as to one or more, but fewer 16 than all, claims or parties” and “expressly determines that there 17 is no just reason for delay.” Fed. R. Civ. P. 54(b). “Either 18 the so-called ‘Rule 54(b) certification’ or ‘Rule 54(b) order’ 19 appears on the face of the record using mandated express language 20 or it is absent.” In re Belli, 268 B.R. at 855. If the so- 21 called “Rule 54(b) certification” is not present, the “order is 22 interlocutory and not appealable as a final order.” Id. at 855- 23 856. 24 Here, the parties agree that the bankruptcy court did 25 not adjudicate all claims. (Opp’n to Mot. at 3; Def.-Appellants’ 26 Mot. at 3.) The parties also agree that the bankruptcy court did 27 not certify the order under Rule 54(b) or expressly state that 28 there was no just reason for delay. (Opp’n to Mot. at 7-8; Def.- 1 Appellants’ Reply at 3 (Docket No. 14).) Because the “‘Rule 2 54(b) certification’ is not present, . . . [the] order is 3 interlocutory and not appealable as a final order.” In re Belli, 4 268 B.R. at 855-56; see also id. at 856-57 (“It is long-settled 5 that a grant of partial summary judgment without a Rule 54(b) 6 certification is interlocutory and not within an appellate 7 court’s jurisdiction over final orders.”) (citing Chacon v. 8 Babcock, 640 F.2d 221, 222 (9th Cir. 1981).) 1 9 II. Leave to Appeal 10 Because the bankruptcy court’s order is interlocutory, 11 “appellate jurisdiction depends upon whether the appellate court 12 grants leave to appeal under 28 U.S.C. § 158(a)(3).” Id. at 856. 13 “To determine whether to grant leave to file an interlocutory 14 appeal from a bankruptcy court, the Court considers the 15 following: (1) whether the order on appeal involves a 16 ‘controlling question of law as to which there is a substantial 17 ground for difference of opinion’; (2) whether an ‘immediate 18 right to appeal will materially advance the ultimate termination 19 of the litigation’; and (3) whether denying leave to appeal ‘will 20 result in wasted litigation and expense.’” Thissen v. Johnson, 21 1 In their reply, Defendants-appellants argue that the 22 bankruptcy court treated the order as a final judgment because the judgment was placed on a separate document. (Reply at 3-4.) 23 Defendant-Appellants therefore ask this court to vacate the bankruptcy court’s judgment. (Id. at 4.) Appellants cite no 24 authority to suggest that this court can do so. Further, until the bankruptcy court either dismisses or adjudicates the 25 remaining claims in this action, the bankruptcy court “remains free under Rule 54(b) to change its mind about the . . . count as 26 to which it granted partial summary judgment.” In re Belli, 268 27 B.R. at 857. This court declines “to intermeddle with the trial court’s handling of the adversary proceeding until it has 28 completed its task.” Id. at 858. 1 406 B.R. 888, 892 (E.D. Cal. 2009) (quoting In re Roderick Timber 2 Co., 185 B.R. 601, 604 (B.A.P. 9th Cir. 1995)). In its decision 3 denying defendants-appellants’ motion for stay pending appeal, 4 the bankruptcy court considered each of these points and 5 concluded that defendants-appellants did not satisfy any of the 6 factors above. (Opp’n to Mot. Ex. 2 at 6-7 (Order Denying Motion 7 to Stay).) For the following reasons, this court agrees. 8 First, appellants have not identified any controlling 9 question of law as to which there could be substantial ground for 10 difference of opinion. In evaluating this factor, the court 11 looks to whether “there may be some conflict in the case law.” 12 In re Roderick, 185 B.R. at 604. Appellants ask the court to 13 evaluate two questions: first, whether a delay in reporting 14 constitutes “concealment” under California Civil Code § 3439.04, 15 and second, whether there was consideration in the creation of a 16 life estate. 17 For both questions, appellants fail to identify any 18 conflicting authority on either of these issues. Instead, 19 appellants appear to argue that the bankruptcy court’s factual 20 findings may have been incorrect. Appellants’ contentions 21 represent questions of fact, not questions of law, and certainly 22 do not establish “a substantial ground for difference of 23 opinion.” See In re Roderick, 185 B.R. at 604; cf. Thissen, 406 24 B.R. at 892 (finding difference of opinion where two judges at 25 the Eastern District of California, within two days, “reached 26 opposite conclusions . . . under nearly identical facts”). 27 Appellants therefore fail to satisfy the first factor. 28 Second, an immediate right to appeal will not advance 1 the ultimate termination of the litigation. A trial is necessary 2 to adjudicate the claims related to the Hotel. (Appellants’ Mot. 3 at 3; see also Order Denying Motion to Stay at 7.) Further, the 4 bankruptcy court will still have to hear a claim for recovery of 5 | profits as to the Marysville Property. (Appellants’ Mot. at 3.) 6 Granting leave to appeal here would not resolve these issues any 7 earlier. Accordingly, appellants have not satisfied the second 8 factor. 9 Finally, denying leave will not result in wasted litigation 10 and expense. As discussed above, the litigation will continue 11 even if the court grants leave. To the contrary, granting leave 12 would run the greater risk of wasting time and resources through 13 the potential for piecemeal appeals. Accordingly, appellants 14 also fail to satisfy the third factor. 15 IT IS THEREFORE ORDERED that appellants’ motion (Docket 16 No. 7) is, and the same hereby is, DENIED. 17 Dated: March 5, 2020 L - ak. 18 WILLIAMB.SHUBB- 19 UNITED STATES DISTRICT JUDGE 20 21 22 23 24 25 26 27 28 2 Notably, appellants do not address this factor.