Opinion
CV-22-00702-PHX-GMS BK 2:18-BK-01594-DPC
10-24-2022
IN THE MATTER OF Star Mountain Resources Incorporated, Debtor. v. Jared Parker, et al., Appellee. Titan Mining (US) Corporation, et al., Appellants, ADV No. 2:19-AP-00412-DPC
G. MURRAY SNOW CHIEF UNITED STATES DISTRICT JUDGE
ORDER
G. MURRAY SNOW CHIEF UNITED STATES DISTRICT JUDGE
Before the Court is a Motion for Leave to Appeal the Bankruptcy Court's Under Advisement Order Regarding Titan Defendants' Damage Capping Motion (Doc. 2) brought by Titan Mining (US) Corp. and Titan Mining Corp. (“Appellants”). For the following reasons, Appellants' motion is denied.
BACKGROUND
In the proceedings below, Appellants sought partial summary judgment on the limited issue of whether, in a liquidation proceeding, Bankruptcy Code § 550(a) limited the amount that Appellee could recover by avoiding a fraudulent transfer to the amount necessary to allow full payment of creditor claims. (Doc. 2 at 8.) The Bankruptcy Court concluded that it was bound by In re Acequia, which found reversible error when a district court limited the debtor's “recovery of the fraudulent transfers to the amount of unsecured claims against the bankruptcy estate.” Acequia, Inc. v. Clinton (In re Acequia, Inc.), 34 F.3d 800, 804, 811-12 (9th Cir. 1994); (Doc. 2 at 40.) Relying on In re Acequia, the Bankruptcy Court concluded it was required to deny the Capping Motion because it lacked the ability to cap recovery under § 550(a). (Doc. 2 at 40.) Appellants now seek leave to appeal the Bankruptcy Court's order.
The Court will refer to Appellants' motion for partial summary judgment as “the Capping Motion.”
The underlying bankruptcy proceeding is ready for trial, and parties have jointly moved to withdraw the reference. See Star Mountain Plan Tr. v. Titan Mining (US) Corp. (In re Star Mountain Resources, Inc.), No. 22-cv-1389-PHX-GMS (D. Ariz. Aug 17, 2022), ECF No. 2.
DISCUSSION
I. Legal Standard
28 U.S.C. § 158(a)(3) allows “parties to appeal bankruptcy judges' ‘interlocutory orders and decrees' but leaves to the Court's discretion whether to grant such appeals.” Bank of Am., N.A. v. Lashinsky (In re Ahl), No. CV-11-2282-PHX-GMS, 2012 WL 1599834, at *2 (D. Ariz. May 7, 2012) (quoting 28 U.S.C. § 158(a)(3)). Courts considering the issue “look for guidance to standards developed under 28 U.S.C. § 1292(b) to determine if leave to appeal should be granted.” Belli v. Temkin (In re Belli), 268 B.R. 851, 858 (B.A.P. 9th Cir. 2001). Leave to appeal should only be granted if the interlocutory order “[1] involves a controlling question of law, [2] as to which there is substantial ground for difference of opinion, and . . . [3] an immediate appeal from the order may materially advance the ultimate termination of the litigation.” 28 U.S.C. § 1292(b).
II. Analysis
Certification is inappropriate because Appellants have not shown that an interlocutory appeal of the Capping Order would materially advance the ultimate termination of the litigation. Appellants contend that an interlocutory appeal is warranted because Appellee “may already be holding sufficient assets . . . to allow full payment of all creditor claims.” (Doc. 2 at 14.) In other words, Appellants contend that if the Court were to limit recovery to the amount necessary to satisfy all creditor claims, Appellee might be precluded from seeking any damages arising out of the fraudulent transfer claim, thus obviating the need for trial. But this argument is too contingent to justify an interlocutory appeal at this juncture. That other claim objections may be resolved in a manner that satisfies all creditor claims does not establish that they will. Moreover, Appellants acknowledged in their initial Capping Motion that Appellee could need to recover as much as $789,429.15 through the fraudulent transfer claim in order to satisfy all creditor claims even if damages were capped. Parker v. Titan Mining (US) Corp. (In re Star Mountain Resources, Inc.), No. 19-ap-412-DPC (Bankr. D. Ariz. Oct 27, 2021), ECF No. 228 at 2.
That Appellee would have a damages case to present at trial regardless of the outcome of the interlocutory appeal distinguishes the present action from the case cited by Plaintiff. See MLC Intell. Prop., LLC v. Micron Tech., Inc., No. 14-cv-3657-SI, 2019 WL 5269014, at *4 (N.D. Cal. Oct. 17, 2019). In MLC, the court certified an interlocutory appeal of orders which had the practical effect of precluding the plaintiff from presenting any damages evidence at trial, an effect that the plaintiff conceded. Id. at *4. In that situation, the court concluded an interlocutory appeal would materially advance the litigation because the appeal would “result in either the ultimate conclusion of this case (if the Federal Circuit affirms) or a single trial on liability and damages (in the event of reversal) ....” Id. Here, by contrast, Appellee does not concede that granting the Capping Motion would preclude it from presenting damages at trial. Unlike in MLC, a trial is required no matter the outcome on appeal.
While it is permissible to consider whether an appeal may facilitate settlement, see Fed. Energy Regul. Comm'n v. Vitol, Inc., No. 20-cv-00040-KJM-AC, 2022 WL 583998, at *4 (E.D. Cal. Feb. 25, 2022), any increased likelihood of settlement does not outweigh the efficiencies inherent in proceeding to trial at this juncture. Given that the parties are otherwise ready for trial, the Court finds that prolonged appellate review would not be an efficient use of resources at this juncture.
CONCLUSION
Because an interlocutory appeal of the Bankruptcy Court's order denying Appellants' Capping Motion would not materially advance the litigation at this stage of proceedings, the Court declines to exercise jurisdiction over an appeal. Appellants' Motion is denied.
IT IS THEREFORE ORDERED that Appellants' Motion for Leave to Appeal the Bankruptcy Court's Under Advisement Order Regarding Titan Defendants' Damage Capping Motion (Doc. 2) is DENIED.
IT IS FURTHER ORDERED directing the Clerk of Court to terminate this civil case.