A creative invocation of Stern v. Marshall, 564 U.S. 462, 474 (2011), failed to persuade a district judge that the defendant has an automatic right to appeal an interlocutory order in a non-core proceeding.
In an adversary proceeding, the bankruptcy court partly granted and denied the defendant’s motion to dismiss. The counts in the complaint that survived dismissal were primarily non-core.
Because the bankruptcy court’s order was interlocutory, the defendant filed a notice of appeal together with a motion for leave to appeal under 28 U.S.C. § 158(a)(3). In the motion for leave to appeal, the defendant also argued that the decision by the bankruptcy judge in reality constituted proposed findings and conclusions of law to which it objected.
On the theory that the bankruptcy court made proposed findings and conclusions, the defendant contended that only the district court had power to enter an order partially denying the motion to dismiss. The defendant therefore argued that it had the right to de novo review under 28 U.S.C. § 157(c)(1) and thus the equivalent of an automatic right of appeal.
District Judge Jon D. Levy of Bangor, Maine, did not buy this idea in his Oct. 26 opinion. He said that the defendant’s motion “does not invoke the related jurisdiction to consider proposed findings of fact and conclusions of law in non-core proceedings.”
He said that the defendant’s argument was “contrary” to the “plain and unambiguous language of Section 158(a)(3), which recognizes that bankruptcy courts may enter ‘interlocutory orders and decrees’ in non-core proceedings.” Such proceedings, Judge Levy said, “are not ‘proposed findings of fact and conclusions of law’ pursuant to Section 157(c)(1) that may result in the entry of a final order or judgment.”
Judge Levy therefore ruled that appeals from interlocutory orders by bankruptcy courts, whether made in core or non-core proceedings, are “only permitted by ‘with leave of the court,’ as stated in Section 158(a)(3).” Finding no justification for an interlocutory appeal on traditional grounds, Judge Levy denied the motion for leave to appeal.