Opinion
CASE NO. 3:99-35175-HCA-7, CIVIL NO. 3:00-CV-1161-T
November 21, 2000
ORDER GRANTING MOTION FOR LEAVE TO APPEAL INTERLOCUTORY ORDER
Before the Court is the Motion for Leave to Appeal to the United States District Court, filed on June 2, 2000, by Defendant Daniel Otis Tomlin Jr. After consideration, the Court concludes that the motion should be granted.
Defendant Daniel Otis Tomlin Jr., filed the instant motion for leave to appeal an interlocutory order entered by the United States Bankruptcy Court for the Northern District of Texas, pursuant to 28 U.S.C. § 158 (a)(3). Defendant seeks an appeal to this Court of the bankruptcy court's order denying his motion to dismiss the adversary proceeding against him by Plaintiff United States of America (Internal Revenue Service).
Specifically, Defendant contends that Plaintiff does not have standing to bring the adversarial proceeding against him because, as the executor of his father's estate, he does not owe a fiduciary duty to Plaintiff to pay federal estate taxes. Thus, because he does not owe a fiduciary duty for purposes of 11 U.S.C. § 523 (a)(4), Plaintiff does not have standing to bring the adversary proceeding. The bankruptcy court denied Defendant's motion to dismiss, thereby implicitly concluding that Defendant owed a fiduciary duty to Plaintiff.
It is well settled that leave to appeal an interlocutory order of a bankruptcy court should be granted only in unique circumstances, which justify transcending the general rule that such appeals should not be allowed. In re Hunt Int'l Resources Corp., 57 B.R. 371, 372 (N.D.Tex. 1985). While the United States Court of Appeals for the Fifth Circuit has not expressly adopted criteria for determining whether to grant leave to appeal under 28 U.S.C. § 158 (a)(3), it recognizes that many district courts have adopted the standard applied under 28 U.S.C. § 1292 (b) (interlocutory appeals to courts of appeals) for interlocutory appeals from bankruptcy court orders. Ichinose v. Homer Nat'l Bank, 946 F.2d 1169, 1177 (5th Cir. 1991). Thus, to be appealable under § 158(a)(3), an interlocutory order of the bankruptcy court must: (1) involve a controlling issue of law; (2) present a question upon which there is substantial ground for difference of opinion; and (3) an immediate appeal of the order must materially advance the ultimate termination of the litigation. Id.
Plaintiff concedes that the issue of standing is a controlling issue of law, and that an immediate appeal of the bankruptcy court's order will materially advance the ultimate conclusion of the litigation. Thus, there is no dispute that factors one and three are present in this case. Plaintiff argues, however, that the question of whether an executor owes a fiduciary duty to a tax creditor does not present a question upon which there is substantial ground for a difference of opinion.
Plaintiff refers the Court to specific sections of the Texas Probate Code, which state that an executor shall hold the estate of the decedent in trust and shall pay or reject the claims of creditors. See TEX. PROB. CODE ANN. § 37 and § 146. Plaintiff also cites jurisprudence, the great majority of which was decided more than fifty years ago, which also indicates that the executor holds the property of the estate in trust for the benefit of creditors. However, the cited cases obliquely refer to the executor's duty to hold the estate in trust. They do not indicate whether the fiduciary duty to pay tax creditors inures to the benefit of those creditors, or whether that duty only extends to the estate, to which the executor ultimately answers. Therefore, it is not settled that an executor owes fiduciary duties to all "persons interested" in the estate. See TEX. PROB. CODE ANN. § 3(r). There is no current authority that addresses the precise issue. Accordingly, the Court concludes that there is substantial ground for a difference of opinion on the controlling question of Texas law, with respect to the extent of fiduciary duties owed by an executor. Having met the three factors set forth in Ichinose, Defendant's interlocutory appeal should be granted.
It is therefore ORDERED that the Motion for Leave to Appeal to the United States District Court, filed on June 2, 2000, by Defendant Daniel Otis Tomlin Jr., is granted.
It is FURTHER ORDERED that the parties shall submit their briefs in accordance with the Federal Rules of Bankruptcy Procedure and the local rules of this Court.