GMS Mine Repair & Maintenance Inc. v. Drivetrain LLC

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

PLAN ADMINISTRATOR,

Appellant, Case No. 2:22-cv-2032

JUDGE EDMUND A. SARGUS, JR.

v.

ANDERSON EXCAVATING, LLC et al.,

Appellees.

PLAN ADMINISTRATOR,

Appellant, Case No. 2:22-cv-2033

JUDGE EDMUND A. SARGUS, JR.

v.

CONSOLIDATED ELECTRICAL

DISTRIBUTORS, INC. et al.,

Appellees.

GMS MINE REPAIR &

MAINTENANCE INC., et al.,

Appellants, Case No. 2:22-cv-2177

JUDGE EDMUND A. SARGUS, JR.

v.

DRIVETRAIN, LLC et al.,

Appellees.

OPINION AND ORDER

This matter is before the Court on three Motions for Leave to File Interlocutory Appeals

of two non-final decisions of the United States Bankruptcy Court for the Southern District of

Ohio. For the reasons that follow, these requests for permission to file interlocutory appeals are

DENIED.

I.

Prior to October 29, 2019, Appellees Anderson Excavating, LLC, GMS Mine Repair &

Maintenance, Inc. and Pioneer Conveyor, LLC, and Wayne’s Water ‘N’ Wells, Inc.

(“Claimants”), among others, contracted with and supplied services to Murray Energy Holdings

Company and its affiliates. Murray Energy Holdings Company and ninety-eight affiliates

(“Debtors”) each filed a voluntary petition under Chapter 11 of Title 11 of the United States

Code in the Bankruptcy Court, that were consolidated before Chief Judge John E. Hoffman in In

re: Murray Energy Holdings, Co., et al., Chapter 11, Case No. 19-56885 (S.D. Ohio).

Drivetrain, LLC is the trustee and administrator for the Murray Energy Wind-Down Trust

(“Plan Administrator”). The Claimants are manufacturers of components for custom-made

conveyor structures and suppliers of various services including mine maintenance labor, drilling,

pumping, excavation, construction, trucking, soil modification and environmental work. The

Claimants filed notices of liens under West Virginia Code § 38-2-31 (“Section 31 Notices”) that

purport to encumber the property improved and all real estate and personal property owned by

the Debtors with whom the Claimants contracted to perform work or labor. The Claimants also

filed proofs of claims based on those mechanic’s/laborer’s liens (“Section 31 Claims”).

The Plan Administrator has moved to interlocutorily appeal two decisions issued by

Chief Judge Hoffman (Case No. 2:22-cv-2032 and Case No. 2:22-cv-2033), and GMS Mine

Repair & Maintenance, Inc. and Pioneer Conveyor, LLC, has cross appealed (Case No. 2:22-cv-

2177).

II.

This Court has jurisdiction over final orders of the bankruptcy court pursuant to 28

U.S.C. § 158(a)(1). “A final order ‘ends the litigation on the merits and leaves nothing for the

court to do but execute the judgment.’” Belfance v. Bushey, 210 B.R. 95, 98 (6th Cir. BAP

1997) (quoting Midland Asphalt Corp. v. United States, 489 U.S. 794, 798 879 (1989)).

“The Bankruptcy Rules do not provide standards for determining when leave to appeal an

interlocutory order should be granted. In the absence of such guidance within the Bankruptcy

Rules, appellate courts reviewing the decisions of bankruptcy courts have applied the standards

found in 28 U.S.C. § 1292(b), which define the courts of appeals’ jurisdiction to review

interlocutory orders.” In re Wicheff, 215 B.R. 839, 843 (Bankr. App. 6th Cir. 1998) (“Leave to

appeal is uncommon, allowing interlocutory appeals only when the stringent standard for

analogous interlocutory appeals pursuant to 28 U.S.C. § 1292(b) are met.”). Under § 1292(b), an

appellant seeking review of an interlocutory order must show:

(1) the question involved is one of law; (2) the question is controlling; (3) there is

substantial ground for difference of opinion respecting the correctness of the

[bankruptcy] court’s decision; and (4) an immediate appeal would materially

advance the ultimate termination of the litigation.

Review under § 1292(b) should be sparingly granted and then only in exceptional

cases. Vitols v. Citizens Banking Co., 984 F.2d 168, 170 (6th Cir.1993) (internal

citations omitted). See also Abel v. Shugrue (In re Ionosphere Clubs, Inc.), 179 B.R.

24, 28 (S.D.N.Y.1995) (“[L]eave to appeal from interlocutory orders should be

granted only in ‘exceptional circumstances' because to do otherwise would

‘contravene the well-established judicial policy of discouraging interlocutory

appeals and avoiding the delay and disruption which results from such piecemeal

litigation.’”).

Id. at 844.

III.

The Court addresses below (A) the Plan Administrator’s request for leave to

appeal in Case No. 2:22-cv-2032, (B) the Plan Administrator’s motion for leave to appeal

in Case No. 2:22-cv-2033, and (C) the Claimants’ request to cross appeal in Case No.

2:22-cv-2177.

A. Plan Administrator’s Motion for Leave to Appeal, Case No. 2:22-cv-2032

On June 23, 2020, the Debtors filed an objection to certain mechanic’s liens, requesting

that the Bankruptcy Court reclassify the Section 31 Claims as general unsecured claims (ECF

No. 1749 in Bankruptcy Case) and moved for summary judgment. After full briefing and oral

argument, the Bankruptcy Court issued its decision (“Rule 31 Order”) on March 31, 2022. In the

Rule 31 Order, the Bankruptcy Court held:

For the reasons set forth above, the Court hereby ORDERS that:

(1) Partial summary judgment is GRANTED in favor of Claimants as to [the Plan

Administrator] Drivetrain’s request for a ruling invalidating the Claimants’ liens

based on their purported ineligibility to file under W.Va. § 38-2-31. The Claimants

are eligible to file liens under W.Va. Code § 38-2-31.

(2) Partial summary judgment is GRANTED in favor of [the Plan Administrator]

Drivetrain on GMS’s and Pioneer’s request for a ruling that W.Va. Code § 38-2-17

repealed by implication the limitation on priority set forth in W.Va. Code § 38-2-

31. The one-month limitation set forth in Section 31 is valid and enforceable.

(3) Except for the Motion for Summary Judgment relating to Pioneer’s claims, [the

Plan Administrator] Drivetrain’s request to invalidate the Claimants’ liens based on

their purported noncompliance with Section 33 will be HELD IN ABEYANCE

pending the outcome of the parties’ attempt to determine the amounts for which

priority may be claimed. Partial summary judgment is GRANTED in favor of

Pioneer on Drivetrain’s request for a ruling invalidating Pioneer’s claims for

noncompliance with Section 33. The one-month amounts set forth in Pioneer’s

Notices of Lien are ALLOWED as secured claims with priority over later liens.

(Rule 31 Order at 39, Case No. 2:22-cv-2032 at 43.)

The Plan Administrator appeals the portions of the Rule 31 Order that were unfavorable

to it or were held in abeyance. The Plan Administrator argues that this Court should grant its

request for leave to interlocutorily appeal because all of the 28 U.S.C. § 1292(b) factors are met.

The Plan Administrator addresses together the first three § 1292(b) criteria that it

must meet for the Court to grant leave to appeal non-final order of the Bankruptcy Court,

(i.e., the question involved is one of law; the question is controlling; and there is

substantial ground for difference of opinion respecting the correctness of the bankruptcy]

court’s decision). The Plan Administrator posits:

With respect to the first three criteria, the issue of a corporation’s eligibility for a

Laborer’s Lien is a controlling question of law in this case – an issue that affects

both portions of the challenged Section 31 Order – and the Bankruptcy Court’s

ruling differs from other authorities on the subject. West Virginia mechanic’s lien

law governs the disposition of this issue and case law interpreting W.Va. 38-2-31

confirms that corporations can be eligible for a Laborer’s Lien if they perform work

of an “individual character as distinguished from corporate service.” Wetzel & T.R.

Co. v. Tennis Bros. Co., 145 F. 458 (4th Cir. 1906) (interpreting predecessor of

W.Va. 38-2-31) and Kimball v. Sundstrom & Stratton Co., 92 S.E. 737, 740 (1917)

(reaffirming Wetzel under West Virginia law).

The Bankruptcy Court misinterpreted this limiting principle from the Wetzel

holding as dicta because, at least in part, it was unable to find subsequent case law

that contradicted or refuted same while minimizing the West Virginia Supreme

Court decision (Kimball) that reaffirmed the Laborer Lien statute’s “personal

service” requirement. (Section 31 Order, at 12-15 and n.7.) The Bankruptcy Court’s

ruling that the nature of the corporation’s work is immaterial to laborer lien

entitlement also contravenes Michie’s Jurisprudence, a reliable reference in West

Virginia law libraries for decades. See 12A M.J. LIEN § 13 (2020) (“A corporation

. . . has a right to a lien when the character of its services comes within the terms of

the statute.” (Citing Wetzel.)

(Plan Administrator’s Mot. at 5–6, ECF No. 1-1, Case No. 2:22-cv-2032.)

The Claimants disagree. (ECF No. 4, Case No. 2:22-cv-2032.) They first argue that “the

Motion misstates the question involved as one of law, where the Motion clearly acknowledges

that corporations are eligible to file liens under W.Va. Code §38-2-31, but suggests that this is so

only if ‘it performs work of an individual character;’ which plainly is a question of fact.”

(Claimants’ Resp. in Opp. at 2, ECF No. 4, Case No. 2:22-cv-2032.) The Claimants also

contend that there is no substantial ground for difference of opinion respecting the correctness of

the Bankruptcy Court’s decision. The Claimants’ arguments are well taken.

While the issue of whether work is of an individual character certainly appears to be a

question of fact, the Court need not address this argument because even if the issue was one of

law and that law was controlling (meeting the first two criteria), no ground for difference of

opinion respecting the correctness of the Bankruptcy Court’s decision exists, let alone a

substantial one.

A substantial ground for a difference of opinion exists when: “(1) the issue is difficult

and of first impression; (2) a difference of opinion exists within the controlling circuit; or (3) the

circuits are split on the issue.” Ruhl v. Ohio Dep't of Health, No. 16-CV-773, 2016 WL 5869828,

at *4 (N.D. Ohio Oct. 7, 2016) (citations omitted). Even where there is not contradictory

precedent, a novel issue may be certified for interlocutory appeal. In re Trump, 874 F.3d 948,

952 (6th Cir. 2017) (“[W]hen novel legal issues are presented, on which fair-minded jurists

might reach contradictory conclusions, a novel issue may be certified for interlocutory appeal

without first awaiting development of contradictory precedent.”) (quoting Reese v. BP Expl.,

Inc., 643 F.3d 681, 688 (9th Cir. 2011)). However, a circuit split alone may not be enough to

constitute a substantial difference of opinion. See In re Miedzianowski, 735 F.3d 383, 384 (6th

Cir. 2013).

The Bankruptcy Court’s decision comprehensively addresses each of the Plan

Administrator’s arguments, in a well-reasoned and detailed decision that correctly applies the

law to the facts. Chief Judge Hoffman considers the Plan Administrator’s arguments related to

West Virginia mechanic’s lien law, Code § 38-2-31, which governs the disposition of this issue

and the case law interpreting the statute. The Bankruptcy Court’s analysis of this statute and the

case law upon which Plaintiff relies, the 1906 Fourth Circuit case of Wetzel and the 1917 West

Virginia case of Kimball, shows the correctness of the decision:

[The Plan Administrator] Drivetrain’s reliance on Wetzel is misplaced. First,

Drivetrain asserts that Wetzel’s “central holding” is that a corporation is eligible for

a lien under the Laborer’s Lien Statute only if it provided work of an “individual

character as distinguished from corporate service.” See, e.g., Mem. in Resp. to GMS

Mine Repair and Maintenance Inc.’s Cross-Mot. for Partial Summ. J. (Doc. 2466)

at 10 (quoting Wetzel, 145 F. at 461–63). If that were true, this “central holding”

would have presumably played an essential role in other West Virginia disputes

involving corporations that have filed notices of mechanic’s liens.

But a review of the caselaw reflects that Wetzel has been cited in other cases 24

times in the 115 years since it was decided. Of those 24 cases, only seven referred

to Wetzel’s holding on the question of corporate eligibility under lien laws. Six of

those—only one of which was a West Virginia case—cited Wetzel as establishing

that a corporation is a “person” qualified to file a notice of lien,6 and none of those

held that “work of an individual character” was an essential requirement of a valid

laborer’s lien. The seventh declined to extend Wetzel to a corporation employed as

a logging contractor because of specific language in that state’s logger’s lien statute.

Jack Long Logging Co. v. Pyramid Mountain Lumber, Inc., 387 P.2d 712 (Mont.

1963).

While there is nothing in the record addressing the point, it stands to reason that

creditors of West Virginia coal mining companies have filed thousands of liens

against those companies over the past 115 years. And undoubtedly corporate

creditors of those mining companies made no small portion of those filings under

the Laborer’s Lien Statute and its predecessor. If it is in fact clear, as [the Plan

Administrator] Drivetrain says, that these corporate entities could not file under the

Laborer’s Lien Statute unless they provided services of a personal character, it is

reasonable to presume that litigation would have ensued and that there would be a

body of caselaw on point. But the parties have not cited—and the Court’s

independent research has not uncovered—a single West Virginia decision holding

that Wetzel imposed a work-of-an-individual-character requirement on

corporations filing mechanic’s liens under the Laborer’s Lien Statute. This lack of

caselaw support undercuts Drivetrain’s position.

(Rule 31 Order at 12–13, Case No. 2:22-cv-2032) (footnotes removed).

Additionally, there is no ground for difference of opinion respecting the correctness of

the Bankruptcy Court’s decision that the language relied upon by the Plan Administrator is dicta.

The Bankruptcy Court stated:

More important, the purported limitation of the laborer’s lien to those corporate

services that could be considered “of a personal character,” is drawn from dicta in

Wetzel.

Id. at 14.

The Bankruptcy Court then goes on to accurately evaluate the law, appropriately apply

the law to the facts, and clearly explain its reasoning as shown in the following:

The Wetzel court began its discussion by noting that

[t]here is nothing in the context of the act under consideration,

section 7, c. 75, Code, supra, that would either preclude a

corporation from claiming the benefit of the act, or indicate that the

words, “or other person” were used in any narrower or restricted

sense. The word “person” used in the statute has not unfrequently

been under review by the courts; and certainly so far as the states of

Virginia and West Virginia are concerned, the use of such word

“person” includes a corporation.

Wetzel, 145 F. at 462.

These two sentences establish that a corporation is treated as a “person”

under West Virginia ‘s mechanic’s lien laws. But nothing in this language limits a

corporation’s right to assert a West Virginia laborer’s lien to those situations in

which the corporation performs work of a personal character. Nor does the Wetzel

court’s observation that under common law C.C. Tennis also would be entitled to a

laborer’s lien create a “work of a personal character” requirement applicable to

corporations claiming a lien under the Laborer’s Lien Statute. In fact, the Wetzel

court said that

[a]t common law, a corporation is deemed a “person” when the

circumstances in which it is placed, are identical with those of a

natural person, which, irrespective of the statute, and the

construction placed thereon by the court, under the circumstances of

this case, would include such a claim as the one sought to be

enforced here.

Id. at 462.

Wetzel thus makes clear that under either statutory or common law, Tennis

Bros. could file its lien under the laborer’s lien statute. And “the circumstances in

which it is placed” being “identical with those of a natural person” means what is

commonly known—a corporation acts through its employees. Invariably it is the

corporation’s employees who perform services under a contract between it and

another corporation (or its general contractor or a subcontractor). And when that

happens the corporation is working under circumstances identical to those of a

natural person: it is performing services entitling it to a lien if those services go

unpaid. Indeed, Section 31 permits a corporation to file a lien for “any work or

labor.” In the end, the plain language of Section 31 trumps the dicta in Wetzel on

which Drivetrain relies. And it would not be appropriate for the Court—based on

this dicta—to engraft a work-of-an-individual-character limitation onto a statute

containing no such restriction.

(Rule 31 Order at 13–16, Case No. 2:22-cv-2032) (footnotes removed).

As to the remaining element of the test for allowing an interlocutory appeal, the Plan

Administrator contends:

With respect to the fourth criterion, resolution of the laborer lien eligibility issue

would materially advance the resolution of this case. An order invalidating the

Claimants’ Laborer’s Liens would avoid months of further expense and

unnecessary litigation surrounding the Section 31 Claims, whose collective value

constitutes the overwhelming majority of the mechanic’s lien dispute, and

conserve judicial resources.

(Mot. for Leave to Appeal at 6, ECF No. 1-1, Case No. 2:22-cv-2032.)

In response, the Claimants maintain:

Appellant implausibly suggests that an order invalidating the Claimants’ Laborer’s

Liens would avoid months of further expense and unnecessary litigation

surrounding the Section 31 Claims. To the contrary, all that remains is for

Appellees to supplement the record with the amount of the claim for the month for

which priority is claimed. Once this has been done, the Bankruptcy Court will issue

a final order, which will then be subject to immediate appeal by any party.

(Claimants’ Resp. in Opp. at 3, ECF No. 4, Case No. 2:22-cv-2032.) This Court agrees.

Nothing in the record before the Court suggests that the grant of an interlocutory appeal

would materially advance the resolution of this case.

Based on the foregoing, the Court concluded that this case does not present the

exceptional circumstances in which it would be appropriate to hear the appeal of an interlocutory

order. Therefore, the Court DENIES the Plan Administrator’s Motion for Leave to Appeal.

B. Plan Administrator’s Appeal, Case No. 2:22-cv-2033

After full briefing, the Bankruptcy Court denied the Plan Administrator’s request for

summary judgment regarding the date a mechanic’s lien attaches under West Virginia Code §

38-2-17 (“Section 17”). The Bankruptcy Court held:

Here there is a genuine dispute as to a material fact—whether the equipment

Consolidated supplied to the Debtors was continually provided such that the

materials it provided after July 2018 were “directly connected and are all part of

the same project” as materials Consolidated provided before July 2018. Richards,

617 S.E.2d at 561. In this regard, the Court notes that the O’Leary Affidavit attaches

invoices showing the regular shipment of goods by Consolidated to the Debtors

both in the months leading up to and several months after July 2018. O’Leary Aff.

at 109–74. Because there are genuine issues of material fact about when the

electrical equipment Consolidated provided “began to be furnished,” the Motion is

DENIED.

(“Mechanic’s Liens’ Order at 5, Case No. 2:22-cv-2033 at 9.)

The Plan Administrator again addresses together the first three criteria that it must meet

for the Court to grant the review of a non-final order of the Bankruptcy Court, (i.e., the question

involved is one of law; the question is controlling; and there is substantial ground for difference

of opinion respecting the correctness of the [bankruptcy] court’s decision). And as did the Court

in the analysis supra, it will only address whether a ground for a substantial difference of opinion

respecting the correctness of the Bankruptcy Court’s decision exists. To this question, the Court

finds that one does not.

That is, the Plan Administrator contends that “on appeal [it] will assert that the Court

erred in holding that the amendment to Section 17 did not necessitate a different conclusion—

that a materialman’s lien attaches as of the date materials ‘giving rise to such lien’ (i.e., for

which payment is owed) were ‘begun to be furnished.’” (Plan Admin. Mot. for Leave to Appeal

at 7, ECF No. 1-1, Case No. 2:22-cv-2033.) The Plan Administrator asserts that the Bankruptcy

Court “overlook[ed]” certain 1973 amendments to West Virginia Code § 38-2-17, which governs

the priority of mechanic’s liens. Based on these amendments, the Plan Administrator takes issue

with the Bankruptcy Court’s reliance on the decisions of the Supreme Court of Appeals of West

Virginia in Carolina Lumber Company v. Cunningham, 192 S.E.2d 722 (1972) and Richards v

Harman, 617 S.E.2d 556, 561 (2005).

The Court, however, disagrees. The arguments made by the Plan Administrator are the

same ones made before the Bankruptcy Court, which were considered in another well-written

and correct decision. Chief Judge Hoffman analyzed the West Virginia statute, considered its

interpretation by the West Virginia Supreme Court in Carolina Lumber and Richards, and

rendered a decision consistent with those principles. The Plan Administrator’s disagreement

with the decision is not sufficient to show a ground for a difference of opinion respecting the

correctness of the Bankruptcy Court’s opinion. That is, the Plan Administrator has failed to

show that this issue is a difficult one of first impression, that there is a difference of opinion

within the Sixth Circuit, that there is a circuit split, that the issue is novel, and/or that there is any

other sufficient reason showing a ground for a substantial difference of opinion.

As to the fourth element this Court considers in determining whether to grant an

interlocutory appeal, the Plan Administrator contends:

As to the final criterion, resolution of whether CED’s liens were senior or junior

to the Mortgages would materially advance the resolution of this case. As noted

above, deciding this question could determine which liens—either CED’s liens or

those in the Mortgages – are senior. As the priority question is the central thrust of

the First Omnibus Objection, and the issue of fact regarding when CED may have

become “involv[ed] in the project” would be moot in the event the Plan

Administrator prevails on appeal (as it is undisputed that all amounts giving rise to

the CED liens were for materials furnished after the Mortgages were filed), this

issue is dispositive of the dispute. As such, it serves the purposes of efficiency and

judicial economy to hear the appeal now.

(Plan Admin. Mot. for Leave to Appeal at 7, ECF No. 1-1, Case No. 2:22-cv-2033.)

The Claimants disagree, asserting inter alia:

If the Plan Administrator is permitted to drag CED through roundabout and redundant

litigation by way of an interlocutory appeal, the parties run the risk of expending more

in legal fees than Claim 1750 is worth at face value. This expense does not hurt the

Plan Administrator’s bottom line, but it does threaten the return that the Plan

Administrator will pay to holders of allowed claims. Therefore, the Plan Administrator

has not shown that the interlocutory appeal will materially advance the litigation.

(ECF No. 7 at 10, Case No. 2:22-cv-2033.) This Court agrees.

Accordingly, the Court concludes that this case does not present the exceptional

circumstances of which it would be appropriate to hear the appeal of an interlocutory order of the

Bankruptcy Court. Thus, the Court DENIES the Plan Administrator’s Motion for Leave to

Appeal.

C. Cross Appeal, Case No. 2:22-cv-2177

GMS Mine Repair & Maintenance, Inc. and Pioneer Conveyor, LLC, one of the

Claimants, has cross appealed, asking the Court to allow it to appeal if it grants the Plan

Administrator’s requests to appeal. (Case No. 2:22-cv-2177.) The Cross Appeal request is

wholly contingent upon this Court granting the Plan Administrator’s request for interlocutory

appeal. Because the Court denies the Plan Administrator’s request to appeal, the Court

necessarily declines to review Claimants request to cross appeal. Accordingly, the Court

DENIES these Claimants’ Motion to File a Cross Appeal.

IV.

As set forth above, the Court DENIES the Plan Administrator’s Appeal set out in

Case No. 2:22-cv-2032; DENIES the Plan Administrator’s Appeal addressed in Case No.

2:22-cv-2033; and DENIES the Claimant’s Cross Appeal filed as Case No. 2:22-cv-

2177. The Clerk is DIRECTED to ENTER JUDGMENT in accordance with this

Opinion and Order and to CLOSE all three of these cases.

IT IS SO ORDERED.

March 27, 2023 /s/ Edmund A. Sargus, Jr.

DATE EDMUND A. SARGUS, JR.

UNITED STATES DISTRICT JUDGE