The U.S. District Court for the Southern District of Illinois has denied the request of a bankruptcy litigant who sought leave to appeal the transfer of her case to the Northern District of Texas.
Chief District Judge Michael J. Reagan denied leave to appeal sought by Mpatanishi S. Tayari.
The bankruptcy was initiated in October 2016. It was dismissed and reinstated in December and was ultimately transferred to the Texas court in April.
In the order, Reagan noted that the court has jurisdiction over interlocutory appeals from bankruptcy court under the Federal Rules of Bankruptcy Procedure, Rule 8004, as well as Section 158, giving it jurisdiction over all final judgments, orders or decrees from bankruptcy court.
An issue arose over jurisdiction, with Simon contending that a motion to transfer venue is an exclusively fact-based decision, so it cannot fall within the scope of appealable orders contemplated by Section 1292.
Under Section 1292, "if a district judge issues an order “not otherwise appealable, but is of the opinion that the order presents a controlling question of law for which there is substantial ground for difference of opinion, that judge shall so identify the issue in writing. The Court of Appeals may then exercise discretion to take the issue up in an interlocutory appeal," the suit states.
“Courts, in non-binding precedent, have accepted interlocutory bankruptcy appeals under more lenient standards,” Reagan wrote in the order. “However, even assuming those standards were applicable here, the trustee argues that public policy weighs against taking the appeal since the case has already been transferred and is proceeding before a Texas court.”
However, Tayari maintained that the standard for accepting jurisdiction over an interlocutory transfer of venue order is “with leave of court.”
Tayari contended that under a leave of court standard, the U.S. District Court for the Southern District of Illinois should grant leave to consider the interlocutory transfer of venue order because the request to transfer involves an important question of law – whether or not the transfer motion was timely.
Moreover, Tayari maintained that the motion was not timely, so the transfer should not have been granted.
In the order, Reagan noted that in In re Jartran Inc., the 7th Circuit acknowledged that leave of court can be granted by district courts to hear interlocutory bankruptcy appeals where the issues involved are sufficiently important to justify review of a matter other than a final judgment.
Reagan also noted that an order that is not appealable may be appealed if the order involves a controlling question of law with a substantial ground for difference of opinion and an immediate appeal from the order may materially advance the ultimate termination of the litigation.
“Here, Appellant (Tayari) is, in essence, asking this court to grant leave to consider the propriety of the bankruptcy court’s order transferring venue in her bankruptcy case from the Southern District of Illinois to the Northern District of Texas,” Reagan wrote. “She argues that the transfer of venue presents a question of law because the transfer was untimely.”
By contrast, trustee Russell Simon argued that the transfer was timely, and that it was a discretionary act, so the U.S. District Court for the Southern District of Illinois lacks jurisdiction to review it.
In the order, Reagan noted that the court agreed with Simon’s position that the decision to transfer the case was a discretionary and fact-based decision.
Moreover, the court agreed it wouldn’t be prudent to exercise jurisdiction over a fact-based and discretionary decision by the Bankruptcy Court to transfer this case because it didn’t present a controlling and dispositive issue of law.
“Additionally, the transfer has already been effectuated and proceedings are continuing in Texas, so it would be unnecessarily disruptive to relocate the case at this late stage in the game,” Reagan wrote.