Valley National Bank v. Warren

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

TAMPA DIVISION

CCP SP HOTEL, LLC,

Appellant,

v. Case No: 8:20-cv-2085-KKM

Bankruptcy Case No: 8-19-bk-9946-CED

HERITAGE HOTEL

ASSOCIATES, LLC,

Appellee.

_______________________________

ORDER

Appellant (CCP SP Hotel, LLC) filed a notice of appeal seeking review of a

bankruptcy court order that granted Appellee’s (Heritage Hotel Associates, LLC)

motion for reconsideration of a previous order awarding default interest to Appellant’s

predecessor-in-interest. With the notice, Appellant moved under 28 U.S.C. § 158(a)(3)

for leave to appeal the interlocutory order granting reconsideration of the interest

award. Upon consideration, the Court denies Appellant’s motion for leave to appeal

and dismisses this appeal.

I. Background

Appellant is the successor-in-interest to Valley National Bank (Valley), which had

extended credit to Appellee in June 2008. In October 2019, Appellee sought Chapter

11 protection before the bankruptcy court, and that court confirmed Appellee’s plan in

January 2020. (Doc. 1, Ex. B, p. 1–2). On February 10, 2020, Valley timely submitted

its “Application for Payment of Post-Petition Interest and Attorneys’ Fees and Costs

Pursuant to 11 U.S.C. § 506(b).” (Doc. 1, Ex. B, p. 2).

On May 20, 2020, the bankruptcy court entered an order approving the award

of attorney’s fees and default interest to Valley but reserving the determination of that

amount. (Bankr. Docket, Doc. 171, p. 4). The bankruptcy court later noted that this

order was interlocutory because the exact amount of the accrued default interest and

the allocation of other proceeds from a related sale of property were still outstanding

issues. (Bankr. Docket, Doc. 291, p. 4).

On June 4, 2020, Appellee filed a motion for reconsideration of the order that

awarded Valley default interest, on the grounds that the bankruptcy court had not

considered evidence, had improperly weighed evidence, and that Valley had not

produced all responsive documents. (Doc. 1, Ex. B, p. 5–7).

On June 8, 2020, Appellant acquired the secured bank debt from Valley. (Doc.

1, Ex. B, p. 6–7). The next day, Appellant filed a motion in opposition to Appellee’s

motion for reconsideration, arguing that the extraordinary circumstances required for

reconsideration under Federal Rules of Civil Procedure 59 and 60 were not present and

that the bankruptcy court had already reached a decision consistent with Florida

contract law. (Bankr. Docket, Doc. 196, p. 7–8).

On August 18, 2020, the bankruptcy court granted Appellee’s motion for

reconsideration of the order awarding default interest to Appellant, now the successor-

in-interest to Valley. (Doc. 1, Ex. A). After noting that the Federal Rule of Bankruptcy

Procedure 9023 incorporates Federal Rule of Civil Procedure 59, which allows final

orders to be reconsidered on limited grounds, the bankruptcy court described its

Reconsideration Order as an interlocutory order that it had broad discretion to

reconsider at any time before final judgment. See (Doc. 1, Ex. A, p. 5 (citing Covenant

Christian Ministries, Inc. v. City of Marietta, 654 F.3d 1231, 1242 (11th Cir. 2011))). The

bankruptcy court granted the reconsideration motion, concluding that the equities of

the case made reconsideration appropriate. Id.

III. Analysis

Appellant seeks to overturn the Reconsideration Order and reinstate the initial

order awarding it default interest. (Doc. 1, Ex. B, p. 9). It presents three questions for

review: First, whether the bankruptcy court applied the correct standard in determining

whether to grant the Reconsideration Order. (Doc. 1, Ex. B, p. 8). Second, whether the

bankruptcy court abused its discretion by ordering additional development of the

record given Appellee’s presentation at earlier hearings. And third, whether the

bankruptcy court abused its discretion by ordering additional development of the

record in the light of the bankruptcy court’s legal findings.

Before the Court may address the merits of Appellant’s appeal, it must first

determine it has jurisdiction. But because the Reconsideration Order was not a final

judgment and because Appellant’s motion fails to meet the standard required by this

Court to exercise discretionary jurisdiction over interlocutory orders, the motion for

leave to appeal is denied.

A. The Reconsideration Order Was Interlocutory

Under 28 U.S.C. § 158(a)(1), district courts have appellate jurisdiction over “final

judgments, orders, and decrees” entered by bankruptcy judges. Under § 158(a)(3),

district courts may also exercise appellate jurisdiction, with leave of the district court,

over “interlocutory orders and decrees.” The former is mandatory, the latter is

discretionary. See In re Lykes Bros. S.S. Co., 200 B.R. 933, 938 (M.D. Fla. 1996).

Because “[a] bankruptcy case involves ‘an aggregation of individual

controversies,’ ” Bullard v. Blue Hills Bank, 575 U.S. 496, 501 (2015) (quoting 1 Collier on

Bankruptcy ¶ 5.08[1][b], p. 5–42 (16th ed. 2014)), finality for purposes of appeal in

bankruptcy proceedings is measured by resolution of “discrete disputes within the

larger case,” Howard Delivery Serv., Inc. v. Zurich Am. Ins. Co., 547 U.S. 651, 657 n.3 (2006)

(quoting In re Saco Local Dev. Corp., 711 F.2d 441, 444 (1st Cir. 1983)). “[T]o be final, a

bankruptcy court order must ‘completely resolve all of the issues pertaining to a discrete

claim, including issues as to the proper relief.’ ” In re Donovan, 532 F.3d 1134, 1136–37

(11th Cir. 2008) (quoting In re Atlas, 210 F.3d 1305, 1308 (11th Cir. 2000)). In other

words, “the separate dispute being assessed must have been finally resolved and leave

nothing more for the bankruptcy court to do.” Id. at 1137 (quoting In re Charter Co., 778

F.2d 617, 621 (11th Cir. 1985)).

The Reconsideration Order was an interlocutory order, not a final one. First, by

the plain text of the order awarding attorney’s fees and default interest, the bankruptcy

court did not determine the amount of interest owed, and it reserved ruling on the

allocation of proceeds from the sale of a related property. (Bankr. Docket, Doc. 171, p.

4). Second, even after the bankruptcy court entered the challenged order, an unresolved

issue remained in the case—Appellant’s proof of claim that it filed in September 2020.

(Doc. 4, p. 3); cf. In re PMF Enters., Inc., 653 F. App’x 903, 904 n.1 (11th Cir. 2016) (per

curiam) (holding that an order was final because it resolved the proof of claim and “left

no unresolved dispute”). Moreover, Appellant even acknowledges that the court “may

deem [the Reconsideration Order] interlocutory in nature,” (Doc. 1 Ex. B, p. 1), and

cited the § 158(a)(3) standard in the Motion for Leave to Appeal. See In re Brown, No.

3:17-BK-02262-PMG, 2018 WL 3496790, at *1 (M.D. Fla. July 20, 2018) (noting as

relevant that appellants “label the appeal as interlocutory and filed the Motion, thereby

acknowledging that the Order is not final and cannot be appealed without leave of

Court”).

B. Motion for Leave to Appeal

Under 28 U.S.C. § 158(a)(3), a district court has jurisdiction to hear appeals from

interlocutory orders of a bankruptcy judge if the district court grants leave. Granting

leave is discretionary. In re Demasi, 8:14-cv-2228-T-33, 2015 WL 773393, at *3 (M.D.

Fla. Feb. 24, 2015).

Section 158(a)(3) does not direct district courts how to exercise their

discretionary jurisdiction over interlocutory appeals from bankruptcy courts. See In re

Charter Co., 778 F.2d 617, 620 n.5 (11th Cir. 1985). In the absence of textual guidance,

district courts have uniformly looked to the standards in 28 U.S.C. § 1292(b), which

govern discretionary interlocutory appeals from the district courts to the courts of

appeals. See, e.g., Robinson v. Lofty Asset Mgmt., Inc. (In re Robinson), No. 3:19-cv-1155-J-

32, 2019 WL 5102921, at *1 (M.D. Fla. Oct. 11, 2019); In re Cruz, No. 6:16-bk-7815-

CCJ, 2019 WL 2084525, at *2 (M.D. Fla. May 12, 2019). Under that standard, Appellant

must show “ ‘that (1) the order presents a controlling question of law; (2) over which

there is a substantial ground for difference of opinion among courts; and (3) the

immediate resolution of the issue would materially advance the ultimate determination

of the litigation.’ ” Robinson, 2019 WL 5102921, at *1 (quoting Laurent v. Herkert, 196 F.

App’x 771, 772 (11th Cir. 2006)); see also Bullard, 575 U.S. at 500 (explaining that the

lower bankruptcy appellate panel granted discretionary leave to appeal because it

“involved a controlling question of law as to which there is substantial ground for

difference of opinion and an immediate appeal would materially advance the ultimate

termination of the litigation”).

Because interlocutory appeals are disfavored in the Eleventh Circuit, Appellant

is required to establish that their appeal meets all three elements. See Prado-Steiman ex rel.

Prado v. Bush, 221 F.3d 1266, 1276 (11th Cir. 2000) (“[I]nterlocutory appeals . . . are

generally disfavored.”); Robinson, 2019 WL 5102921, *1. “The Court must deny leave if

the moving party fails to establish any one of the three elements.” Colony Lender, LLC

v. Breakpointe, LLC, No. 8:13-bk-00348-KRM, 2015 WL 3689075, at *2 (M.D. Fla. June

12, 2015) (citing In re Celotex Corp., 187 B.R. 746, 749 (M.D. Fla 1995)).

Appellant cites one recent district court order that suggests that meeting any of

the three elements will suffice. See (Doc. 1, Ex. B, p. 9) (quoting In re Yormak, 2:18-cv-

793-FTM-29, 2019 WL 2515972, at *2 (M.D. Fla. June 18, 2019), appeal dismissed, 2019

WL 5250781 (11th Cir. 2019)). But that court pointed to the wrong statutory

provision—28 U.S.C. § 158(d)(2)—which governs when “the bankruptcy court, the

district court, or the bankruptcy appellate panel” or even “all the appellants and

appellees” should certify appeals to the courts of appeals. See In re Yormak, 2019 WL

2515972, at *2 (quoting In re Yormak, No. 2:18-cv-309-FTM-29, 2018 WL 2763343, at

*2 (M.D. Fla. June 8, 2018)). Appellant does not address this discrepancy or argue that

Yormak introduced a new standard. And the substantial majority of cases, including

those affirmed by the Eleventh Circuit, have required all three prongs to be satisfied.

See, e.g., In re Charter Co., 778 F.2d at 620 & n.5 (affirming a district court order denying

leave because “the case did not involve a controlling question of law as to which there

was substantial ground for difference of opinion and that accepting their appeals would

not ultimately advance the termination of the bankruptcy proceedings” (emphasis

added)); Robinson, 2019 WL 5102921, at *1; Colony Lender, 2015 WL 3689075, at *2; In

re Celotex Corp., 187 B.R. at 749; see also Figueroa v. Wells Fargo Bank N.A., 382 B.R. 814,

824 (S.D. Fla. 2007).

Finally, even if all three elements are established by Appellant, it is still within the

discretion of the Court to deny leave, and “leave should be granted only in exceptional

circumstances.” In re Demasi, 2015 WL 773393, at *3. Appellant’s motion fails to meet

this high burden.

1. Controlling Question of Law

To meet the first prong, Appellant must show it presents a controlling question

of law, which is a question about “the meaning of a statutory or constitutional provision,

regulation, or common law doctrine.” McFarlin v. Conosco Servs., LLC, 381 F.3d 1251,

1258 (11th Cir. 2004). If the issue is a controlling question of law, a court should not

need “to study the record” and will be able to “quickly and cleanly” decide the issue. Id.

(quoting Ahrenholz v. Bd. of Trs. of the Univ. of Ill., 219 F.3d 674, 677 (7th Cir. 2000)); see

also Colony Lender, 2015 WL 3689075, at *2. Further, to satisfy this standard, the issue

“ ‘must be stated at a high enough level of abstraction to lift the question out of the

details of the evidence or facts of a particular case and give it general relevance to other

cases in the same area of law.’ ” Ibrahim v. FINR III, LLC, 8:15-cv-1093-T-17, 2016 WL

409630, at *2 (M.D. Fla. Feb. 3, 2016) (quoting McFarlin, 381 F.3d at 1260).

Two of the issues presented by Appellant ask this Court to review for an abuse

of discretion the bankruptcy court’s determination to further develop the record. (Doc.

1, Ex. B., p. 8–9). Those issues necessarily present mixed questions of law and fact, and

therefore they are not controlling questions of law. Ibrahim, 2016 WL 409630 at *3; In

re Brown, 2018 WL 3496790, at *3; see also Flying Cow Ranch HC, LLC v. McCarthy, No.

19-cv-80230, 2019 WL 1258780, at *3 (S.D. Fla. Mar. 19, 2019) (noting that a court

should not “ ‘second guess the reasonableness of the bankruptcy court’s

judgment’ ”(quoting Shannon v. Morales-Arcadio Creditors, No. 09-61153-LWD, 2010 WL

5288305, at *3 (S.D. Ga. Dec. 17, 2010))). Indeed, Appellant refers to disputed facts in

the record and other bankruptcy court orders, compare (Doc. 1, Ex. B, p. 8–9) (alleging

the Debtor “rest[ed]” and referring to other orders in the record), with (Doc. 4, p. 2)

(disputing the characterization of the record), “thereby implicitly acknowledging that

this Court would have to delve into the record” to review these issues, In re Fundamental

Long Term Care, No. 8:11-bk-22258-MGW, 2019 WL 3429546, at *2 (M.D. Fla. July 30,

2019). Because these questions fail to meet the first element of the standard, “[t]he

Court must deny leave.” Colony Lender, 2015 WL 3689075, at *2 (citing In re Celotex Corp.,

187 B.R. at 749).

But Appellant’s remaining issue is a controlling question of law. (Doc. 1, Ex. B,

p. 8). Put simply, the question is “what is the legal standard for motions to reconsider

interlocutory orders of the bankruptcy court?” This is an “abstract legal issue” that can

be decided “quickly and cleanly,” McFarlin, 381 F.3d at 1258 (quoting Ahrenholz, 219

F.3d at 677), and is “relevan[t] to other cases,” id. at 1260.

2. Substantial Difference of Opinion

Although the proper legal standard for reconsideration of interlocutory orders is

a controlling question of law, there is not a substantial difference of opinion regarding

that particular legal issue. Accordingly, Appellant’s motion fails to satisfy the second

element of the § 158(a)(3) standard to appeal an interlocutory order. “It is simply not

enough for interlocutory review that the order for which appeal is sought presents a

difficult ruling; nor is it sufficient that the movant can demonstrate a lack of authority

on the issue.” In re Brown, 2018 WL 3496790, at *2 (quoting In re Pac. Forest Prods. Corp.,

335 B.R. at 922). “Notably, there cannot be a substantial difference of opinion as to a

legal principle if there is controlling authority in the bankruptcy court’s jurisdiction.” Id.

(citing In re Pac. Forest Prods. Corp., 335 B.R. at 910).

That is the case here. The bankruptcy court below applied binding Eleventh

Circuit precedent, holding that trial courts have “broad discretion to reconsider their

non-final rulings ‘at any time prior to entry of final judgment.’ ” (Doc. 1, Ex. A, p. 5)

(quoting Covenant Christian Ministries, Inc. v. City of Marietta, 654 F.3d 1231, 1242 (11th

Cir. 2011)). Further, “[i]t is well-established that it is within a bankruptcy judge’s

discretion to reconsider any interlocutory order made prior to the entry of final

judgment.” In re Pac. Forest Prods. Corp., 335 B.R. at 916 (citing Piper Aircraft Corp. v.

Calabro, 169 B.R. 766, 771 (Bankr. S.D. Fla. 1994)). Indeed, Federal Rule of Bankruptcy

Procedure 7054(a) states that Federal Rule of Civil Procedure 54(b), which provides

that a non-final order “may be revised at any time before the entry of a judgment

adjudicating all the claims and all the parties’ rights and liabilities,” applies to bankruptcy

proceedings. Cf. Covenant Christian Ministries, 654 F.3d at 1242 (citing Rule 54(b) for the

proposition that “an interlocutory order is subject to reconsideration at any time prior

to entry of final judgment”).

Appellant argues that reconsideration orders can be granted only in extraordinary

circumstances, but that standard applies to the reconsideration of final orders. See, e.g.,

Harper v. Lawrence Cnty., Ala., 592 F.3d 1227, 1231–32 (11th Cir. 2010) (“[A]bsent a

particularly egregious abuse of discretion, district courts are free to reconsider their

interlocutory orders.” (quoting Sanchez v. Triple-S Mgmt. Corp., 492 F.3d 1, 12 n.12 (1st

Cir. 2007)); Covenant Christian Ministries, 654 F.3d at 1242; see also Fed. R. Civ. P. 60(b)

(stating it applies to “a final judgment, order, or proceeding”). Accordingly, this Court

has described as “incorrect” the argument that Rules 59 or 60 “somehow restrained the

bankruptcy court’s authority to vacate the previous order” when the reconsidered order

is “interlocutory in nature.” In re Steffen, No. 8:09-cv-00353-JDW, 2011 WL 13174777, at

*6–7 (M.D. Fla. Oct. 12, 2011), aff’d, 500 F. App’x 877 (11th Cir. 2012) (emphasis

added). Since there is controlling precedent in the jurisdiction on this question, the

second element cannot be met. In re Fundamental Long Term Care, 2019 WL 3429546, at

*2 (quoting In re Pac. Forest Prods. Corp., 335 B.R. at 922).

3. Advance the Termination of the Litigation

Finally, the question of whether the bankruptcy court applied the proper

standard also fails the final element. This inquiry is satisfied if the resolution of the issue

presented will “ ‘advance the ultimate termination of the litigation,’ ” id. at *3 (quoting

In re Pac. Forest Prods. Co., 335 B.R. at 924), and “the most compelling grounds for

granting interlocutory appeals exist when reversal of the issue on appeal would dispose

of the entire bankruptcy case,” Figueroa, 382 B.R. at 825; see Colony Lender, 2015 WL

3689075, at *3. Appellant does not claim that the bankruptcy case will be disposed of

by reversing the Reconsideration Order nor does he explain how resolution of this issue

would substantially reduce the amount of litigation remaining below. Indeed, the proof

of claim is still outstanding. (Doc. 4, p. 3).

Appellant’s argument that this issue may eventually be appealed misunderstands

the third element. (Doc. 1, Ex. B, p. 10). If it could be met by the possibility that the

issue would be appealed after final resolution of the case, then nearly all motions for

interlocutory appeals would qualify. See In Re Fundamental Long Term Care, 2019 WL

3429546, at *3. While it is true that it is relevant to the third element if review will

“clarify” the legal question, “and preclude the need for further appeals of this type

which delay bankruptcy proceedings,” In re Lykes Bros., 200 B.R. at 938, this

consideration does nothing to assist Appellant. As discussed, there is controlling

authority in the bankruptcy court’s jurisdiction on the legal standard for motions to

reconsider interlocutory orders.

At bottom, Appellant’s Motion for Leave to Appeal fails to satisfy this Court’s

standard for exercising discretionary jurisdiction over interlocutory orders under

§ 158(a)(3).

Therefore, it is ORDERED:

1. Appellant’s Motion for Leave to Appeal Reconsideration Order (Doc. 1,

Ex.B) is DENIED.

2. The appeal is DISMISSED.

3. The Clerk shall CLOSE this case and transmit a certified copy of this order

to the Clerk of the United States Bankruptcy Court for the Middle District of

Florida.

ORDERED in Tampa, Florida, on January 22, 2021.

f= tf Mizelle

United States District Judge

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