Filed: Sep. 01, 2016
Latest Update: Sep. 01, 2016
Summary: OPINION & ORDER MICAELA ALVAREZ , District Judge . Pending before the Court is a motion for leave to appeal a memorandum opinion and order of the Bankruptcy Court of the Southern District of Texas, filed by Defendant Portfolio Recovery Associates, LLC ("PRA"). 1 Marcos Lopez ("Lopez"), a debtor in the underlying Chapter 13 bankruptcy proceeding, filed a timely response, 2 to which PRA replied. 3 For the reasons set forth herein, the motion is DENIED and the case is DISMISSED. I. Pr
Summary: OPINION & ORDER MICAELA ALVAREZ , District Judge . Pending before the Court is a motion for leave to appeal a memorandum opinion and order of the Bankruptcy Court of the Southern District of Texas, filed by Defendant Portfolio Recovery Associates, LLC ("PRA"). 1 Marcos Lopez ("Lopez"), a debtor in the underlying Chapter 13 bankruptcy proceeding, filed a timely response, 2 to which PRA replied. 3 For the reasons set forth herein, the motion is DENIED and the case is DISMISSED. I. Pro..
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OPINION & ORDER
MICAELA ALVAREZ, District Judge.
Pending before the Court is a motion for leave to appeal a memorandum opinion and order of the Bankruptcy Court of the Southern District of Texas, filed by Defendant Portfolio Recovery Associates, LLC ("PRA").1 Marcos Lopez ("Lopez"), a debtor in the underlying Chapter 13 bankruptcy proceeding, filed a timely response,2 to which PRA replied.3 For the reasons set forth herein, the motion is DENIED and the case is DISMISSED.
I. Procedural Background
On September 14, 2009, Lopez filed for Chapter 13 bankruptcy.4 Lopez then initiated an adversary proceeding against PRA on October 2, 2013, claiming PRA made repeated phone calls to his home and workplace in violation of the automatic stay and Chapter 13 bankruptcy plan.5 On September 12, 2014, Lopez filed a motion for sanctions against PRA alleging it failed to comply with discovery obligations and the bankruptcy court's prior orders.6 On November 24, 2015, the bankruptcy court entered the sanctions order that forms the basis of PRA's motion for leave to appeal.7 Specifically, the bankruptcy court entered a memorandum opinion8 and an order9 granting in part and denying in part Lopez's motion for sanctions. PRA then filed its motion for leave to appeal and notice of appeal in the bankruptcy court on December 8, 2015.10 PRA's motion for leave to appeal was transmitted to this Court on February 19, 2016.11
II. Discussion
a. Standard
Title 28 U.S.C. § 158(a)(3) confers district courts with the jurisdiction to hear appeals from interlocutory orders of bankruptcy courts.12 District courts have the discretion to permit interlocutory appeals.13 Interlocutory appeals are disfavored because they "interfere with the overriding goal of the bankruptcy system, expeditious resolution of pressing economic difficulties."14 When determining whether to grant leave to appeal an interlocutory order of a bankruptcy court pursuant to 28 U.S.C. § 158(a)(3), district courts within the United States Court of Appeals for the Fifth Circuit generally use the standard applied under 28 U.S.C. § 1292(b).15 Section 1292(b) governs interlocutory appeals from district court to circuit courts of appeals and permits interlocutory appeals where a district court judge believes there to be "[1] a controlling question of law as to which there is [2] substantial ground for difference of opinion" and believes "[3] an immediate appeal from the order may materially advance the ultimate termination of the litigation."16
Appeals from bankruptcy courts are "taken in the same manner as appeals in civil proceedings generally are taken to the courts of appeals from the district courts."17 Accordingly, district courts use the same standard of review utilized by circuit courts when considering an appeal.18 On review of a bankruptcy decision,19 the Court reviews factual findings for clear error, and reviews legal conclusions and mixed questions of fact and law de novo.20
b. Analysis
PRA challenges the bankruptcy court's sanctions order, arguing that the bankruptcy court "effectively eliminated" its ability to defend itself and that its order amounts to "death penalty" sanctions.21 PRA did not brief the Court on whether it is entitled to an interlocutory appeal pursuant to 28 U.S.C. § 158(a)(3) in its motion for leave to appeal. Nonetheless, it its reply, PRA argues it appeals pursuant to 28 U.S.C. § 158(a)(1) and 28 U.S.C. § 158(a)(3).22
Under 28 U.S.C. § 158(a)(1), a district court has the jurisdiction to hear appeals from final judgments, orders and decrees of a bankruptcy court. PRA characterizes the bankruptcy court's sanctions order (1) as a final determination of its right to assert and present its defense of mistake and (2) as a final disposition of a discrete dispute — the adversary proceeding.23 In the alternative, PRA contends the bankruptcy court's sanctions order meets the requirements of 28 U.S.C. § 158(a)(3) as it (1) involves a controlling question of law ripe for appellate review; (2) presents situation where there is substantial ground for difference of opinion on the correctness of the bankruptcy court's order; and (3) materially advances the ultimate termination of litigation.24
The Court is not persuaded by PRA's arguments.
i. The bankruptcy court's sanctions order is an interlocutory order.
First, as a general rule, "[a] decision is not final unless `it ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.'"25 The Fifth Circuit has specifically held that where a sanctions order did not dismiss an action in its entirety, such a sanctions order could not be considered a final order.26 Furthermore, the Fifth Circuit found that such a sanctions order could not be appealed pursuant to the collateral-order Cohen doctrine, as sanctions orders are typically reviewed when merged in a final judgment.27 In the instant appeal, PRA is challenging the bankruptcy court's resolution of Lopez's discovery-related motions. Lopez twice filed motions to compel,28 and the bankruptcy court twice ordered PRA to comply with Lopez's discovery-related requests.29 Thereafter, Lopez filed a motion for sanctions and the bankruptcy court issued a memorandum opinion30 and order.31 In these, the bankruptcy court (1) deemed certain facts established against PRA; (2) precluded PRA from producing fact witnesses to testify at trial and precluded PRA from offering specific types of testimony and evidence; and (3) ordered PRA to pay reasonable attorneys fees for Lopez's attorneys in connection with the motion for sanctions.32
The Court finds that the bankruptcy court's sanctions order is not a final order, but rather an interlocutory order addressing the issues involved in the discovery process. The bankruptcy court's sanctions order resolves a discovery dispute but does not dispose of the adversary or bankruptcy proceeding, and contrary to PRA's arguments, is not a conclusion of a discrete judicial unit.33 "Any order on a nondispositive motion within an adversary proceeding is, by definition, interlocutory."34 PRA's argument that the bankruptcy court's sanctions order is a final determination of its rights and a final disposition of a discrete dispute is unconvincing. Thus, the bankruptcy court's sanctions order is an interlocutory order and this Court must evaluate PRA's motion for leave to appeal only under the criteria of 28 U.S.C. §158(a)(3).
ii. Evaluation pursuant to 28 U.S.C. § 158(a)(3)
The Court observes that district courts within the Fifth Circuit typically deny motions for leave to appeal interlocutory discovery-related orders.35 In this case, the Court finds that there is no basis to allow an interlocutory appeal from the bankruptcy court's sanctions order. The sanctions order does not involve a controlling issue of law upon which there is substantial ground for difference of opinion, and an immediate appeal of this interlocutory, discoveryrelated order would not materially advance the ultimate termination of the adversary or the bankruptcy proceeding.
III. Holding
For the foregoing reasons, the Court DENIES PRA's motion for leave to appeal and the case is DISMISSED. The Clerk of the Court is instructed to close the case.
IT IS SO ORDERED.