Opinion
Bankruptcy No. 01-52684C-11W, Adversary No. 01-6044, Civil No. 1:02CV00343
March 13, 2003
MEMORANDUM OPINION
On March 27, 2002, the Bankruptcy Court entered an order dismissing Plaintiff Charlotte Commercial Group's ("CCG") third cause of action against Defendant Fleet National Bank ("Fleet") for unfair and deceptive trade practices in violation of N.C. Gen. Stat. § 75-1.1. This matter is before the court for resolution of CCG's motion for leave to appeal the Bankruptcy Court's interlocutory order pursuant to 28 U.S.C. § 158 (a) and Bankruptcy Rule 8003(a). For the following reasons, the court will deny CCG's motion for leave to appeal.
FACTS
CCG filed a voluntary petition under Chapter 11 of the Bankruptcy Code on November 13, 2001. On December 17, 2001, CCG filed an adversary proceeding against Fleet alleging (1) breach of contract; (2) breach of the duty of good faith; and (3) violation of the North Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1. The Bankruptcy Court denied Fleet's motion to dismiss CCG's first and second claims, but granted Fleet's motion to dismiss CCG's third claim.
Under North Carolina law, a plaintiff may maintain a breach of contract claim and an unfair and deceptive trade practices claim based on the same conduct. Vazguez v. Allstate Ins. Co., 137 N.C. App. 741, 745, 529 S.E.2d 480, 482 (2000). The plaintiff, however, must allege "`substantial aggravating circumstances attending the breach [of contract]'" to support the claim for unfair and deceptive trade practices. Branch Banking Trust Co. v. Thompson, 107 N.C. App. 53, 62, 418 S.E.2d 694, 700 (1992) (quoting Bartolomeo v. S.B. Thomas, Inc., 889 F.2d 530, 535 (4th Cir. 1989)). The Bankruptcy Court, in dismissing CCG's third claim, concluded that CCG's complaint alleged a breach of contract claim but failed to allege substantial aggravating circumstances that would give rise to a claim for unfair and deceptive trade practices.
DISCUSSION
The district court's appellate jurisdiction over proceedings in bankruptcy court is granted pursuant to 28 U.S.C. § 158 (a). Section 158(a) provides: "The district courts of the United States shall have jurisdiction to hear appeals . . . from final judgments, orders, and decrees; . . . and, with leave of the court, from interlocutory orders and decrees. . . ." 28 U.S.C. § 158 (a) (West Supp. 2002). Because the Bankruptcy Court's order dismissing CCG's third cause of action is not a final judgment, order, or decree in that it disposes of only one of CCG's three claims, "leave of the court" is a jurisdictional prerequisite to a proper appeal.
Section 158 provides no direct guidance concerning when leave to appeal an interlocutory order should be granted. However, Section 158(c) provides that bankruptcy appeals "shall be taken in the same manner as appeals in civil proceedings generally are taken to the courts of appeals from the district courts." Id. § 158(c)(2). Accordingly, courts apply a similar analysis to that employed by district courts in certifying interlocutory review by the circuit court of appeals under 28 U.S.C. § 1292 (b). See KPMG Peat Marwick, L.L.P. v. Estate of Nelco, LTD. Inc., 250 B.R. 74 (E.D. Va. 2000); Atlantic Textile Group. Inc. v. Neal, 191 B.R. 652 (E.D. Va. 1996); In re Swann Ltd. Partnership, 128 B.R. 138 (D. Md. 1991).
Leave to file an interlocutory appeal under Section 1292(b) is not intended to allow for immediate appellate review in ordinary cases. Rather, to show that an interlocutory appeal is warranted, the appellant must demonstrate "`that exceptional circumstances justify a departure from the basic policy of postponing appellate review until after the entry of a final judgment.'" Coopers Lybrand v. Livesay, 437 U.S. 463, 475 (1978) (quoting Fisons. Ltd. v. United States, 458 F.2d 1241, 1248 (7th Cir. 1972)). "[T]he Fourth Circuit has stressed "that piecemeal review of decisions that are but steps toward final judgments on the merits are to be avoided, because they can be effectively and more efficiently reviewed together in one appeal from the final judgment.'" Howes v. W.R. Zeele, Sr. Trust, 889 F. Supp. 849, 853 (E.D.N.C. 1995) (quoting James v. Jacobson, 6 F.3d 233, 237 (4th Cir. 1993)). Therefore, because interlocutory appeals should be granted in only exceptional circumstances, the "procedural requirements for interlocutory appeal . . . are to be strictly construed and applied."Id. at 852 (citing Myles v. Laffitte, 881 F.2d 125, 127 (4th Cir. 1989).
Under Section 1292(b), leave to file an interlocutory appeal should be granted only when (1) the order involves a controlling question of law, (2) as to which there is a substantial ground for a difference of opinion, and (3) immediate appeal would materially advance the termination of the litigation. Atlantic Textile, 191 B.R. at 653. All three requirements must be satisfied in order to grant leave to appeal an interlocutory order. Id. If even one requirement is not satisfied, leave to appeal is inappropriate. Id.
The first requirement for an interlocutory appeal is that the order must involve a "controlling question of law." The Fourth Circuit has defined a controlling question of law to be one that presents a "narrow question of pure law whose resolution will be completely dispositive of the litigation, either as a legal or practical matter, whichever way it goes." Fannin v. CSX Transp. Inc., No. 88-8120, 1989 WL 42583, at *5 (4th Cir. Apr. 26, 1989). The issue presented by CCG's motion for leave to appeal, namely whether the facts as alleged in CCG's complaint state a claim for unfair and deceptive trade practices, does not present a narrow question of pure law. In concluding that CCG's complaint failed to state a claim, the Bankruptcy Court was required to undertake a careful and thorough review of the underlying facts. While the Bankruptcy Court was required to accept the facts as true, its determination was nonetheless predicated on an intensive analysis of the facts in this particular case. Accordingly, because the question of law presented in this appeal is "grounded in the specific facts of the case, and cannot be divorced from [those] facts," it does not present a narrow question of pure law. Brooks v. Farm Fresh, Inc., 759 F. Supp. 1185, 1198 (E.D. Va. 1991).
Furthermore, while the issue presented in CCG's appeal may be dispositive of the unfair and deceptive trade practices claim, it is not completely dispositive of the litigation as a whole. CCG still has two viable causes of action for breach of contract and breach of the duty of good faith. These claims will proceed through the normal pretrial and trial proceedings regardless of the unfair and deceptive trade practices claim. Therefore, because the legal question presented is not a narrow question of pure law and is not completely dispositive of CCG's lawsuit, the court finds that it is not a controlling question of law.
The second requirement under Section 1292(b) is that the Bankruptcy Court's order present an issue over which there is a substantial ground for a difference of opinion. CCG argues that such a ground exists because the Bankruptcy Court found that the allegations in its complaint were insufficient to state a claim for unfair and deceptive trade practices "while a review of the case decisions of the North Carolina Courts point to the contrary." (Pl.'s Mot. Leave to Appeal Order Allowing Def.'s Mot. Dismiss Third Cause Action at 15.) The question, however, is not whether CCG thinks the Bankruptcy Court misapplied the law, but "whether courts themselves disagree as to what the law is." KPMG, 250 B.R. at 83. "[Am interlocutory appeal will lie only if a difference of opinion existsbetween courts on a given controlling question of law, creating the need for an interlocutory appeal to resolve the split or clarify the law."Id. at 82; see also McDaniel v. Mehfoud, 708 F. Supp. 754, 756 (E.D. Va. 1989) (finding no case conflict or circuit conflict, the court stated: "The only apparent difference in opinion defendants demonstrate is between their counsel and the Order of this court. Counsel's disagreement with the Court is simply not reason enough to grant an interlocutory appeal.")
It is clearly established in North Carolina that a plaintiff may maintain both a breach of contract claim and an unfair and deceptive trade practices claim. To maintain both claims, a plaintiff must allege substantial aggravating circumstances. It is equally clear that "a mere breach of contract, even if intentional, is not sufficiently unfair or deceptive to sustain an action [for unfair and deceptive trade practices]." Branch Banking, 107 N.C. App. at 62, 418 S.E.2d at 700. This is the law the Bankruptcy Court applied, and there is no disagreement between courts concerning the law. It is possible the court misapplied the law to the facts of CCG's complaint. If that is the case, CCG may still seek review after the entry of a final judgment.
Finally, the third requirement for an interlocutory appeal is that immediate review must materially advance the termination of the litigation. As previously indicated, CCG has two remaining claims. Whether or not this court grants CCG's request for an immediate appeal, a trial on CCG's breach of contract and breach of the duty of good faith claims will still be necessary. Moreover, a trial on these two claims will involve many of the same issues involved in CCG's unfair and deceptive trade practices claim. Granting CCG immediate review of its dismissed claim will not eliminate the need for discovery, trial preparation, or trial on the remaining claims. To the contrary, "to permit [CCG] to challenge, piecemeal, every adverse determination of the bankruptcy court en route to a final disposition of the matter would unnecessarily prolong the litigation." Atlantic Textiles, 191 B.R. at 654. Thus, an immediate appeal of the Bankruptcy Court's order will not materially advance the termination of this lawsuit.
CONCLUSION
For the reasons set forth herein, the court will deny Plaintiff's motion for leave to appeal the Bankruptcy Court's order of March 27, 2002.
An order in accordance with this memorandum opinion shall be entered contemporaneously herewith.
ORDER
For the reasons set forth in the memorandum opinion filed contemporaneously herewith,
IT IS ORDERED that Plaintiff's motion of April 8, 2002, [Doc. #27 in bankruptcy record] for leave to appeal the Bankruptcy Court's March 27, 2002, order is DENIED.