Credit One Fin. v. Anderson (In re Anderson)
| Decision Date | 22 February 2016 |
| Docket Number | No. 15–cv–4227 NSR,15–cv–4227 NSR |
| Citation | 550 B.R. 228 |
| Parties | In re: Orrin S. Anderson, Debtor. Credit One Financial, Appellant, v. Orrin S. Anderson, a/k/a Orinn Anderson, a/k/a Orinn Scott Anderson Appellee, on behalf of himself and all others similarly situated. |
| Court | U.S. District Court — Southern District of New York |
Adam Reese Shaw, Boies, Schiller & Flexner LLP, Albany, NY, George F. Carpinello, Boies, Schiller & Flexner LLP, Fort Lauderdale, FL, for Debtor.
Michael David Slodov, Sessions, Fishman, Nathan & Israel, LLC, Chagrin Falls, OH, for Appellant.
NELSON S. ROMAN
Credit One (“Defendant”) submits the current motion seeking leave to appeal the United States Bankruptcy Court for the Southern District of New York's (the “Bankruptcy Court”) order of May 14, 2015 (the “May Order”) (ECF No. 3, Exhibit A), denying Defendant's motion to strike class allegations and motion to dismiss for lack of subject matter jurisdiction. In the May Order, the Bankruptcy Court additionally denied Credit One's motion to compel arbitration, and Credit One has appealed that decision as of right. For the reasons set forth below, the motion for leave to appeal the additional issues is DENIED.
Plaintiff Orrin Anderson (“Plaintiff”) incurred a debt with Defendant Credit One by opening a credit card account in 2002. In 2011, Plaintiff defaulted on the account, and the account was closed in December 2011. Plaintiff filed a voluntary bankruptcy with the Bankruptcy Court on January 31, 2014. As a result of the bankruptcy proceedings, Mr. Anderson received a discharge of consumer debt, including the Credit One account. Despite the discharge, the debt remained on Mr. Anderson's credit report as “charged off” (i.e., not discharged in bankruptcy). Plaintiff subsequently contacted Defendant to notify it that the debt had been discharged in bankruptcy and to request that Defendant update his credit report. According to Plaintiff, Defendant took no action and Plaintiff's credit report continues to show the debt as charged off rather than discharged in bankruptcy.
On October 17, 2014, Plaintiff moved to reopen the bankruptcy proceeding and after a hearing, the Bankruptcy Court reopened the case to “permit the Debtor to commence and pursue an adversary proceeding ... against Credit One Bank with respect to alleged violations of the Debtor's discharge injunction.” (Bank. Doc. 14–22147–rdd, ECF No. 26.) Thereafter, Plaintiff filed an Amended Class Action Complaint (the “Class Action Complaint”), seeking to represent a class of persons having credit reports with remaining entries for discharged debts. In the Class Action Complaint, Plaintiff asserts a cause of action pursuant to 11 U.S.C. § 524
(“§ 524 ”) and 11 U.S.C. § 105 (“§ 105 ”). Under § 524, a discharge in a bankruptcy action acts as an injunction against all efforts to collect a discharged debt.
11 U.S.C. § 524
. Section 105(a) of the Bankruptcy Code empowers a bankruptcy court with authority to issue “any order, process, or judgment that is necessary or appropriate to carry out the provisions of [the Bankruptcy Code].” 11 U.S.C. § 105(a).
On March 3, 2015, Credit One filed a combined motion to compel arbitration, motion to strike class allegations, and motion to dismiss for lack of subject matter jurisdiction. The Bankruptcy Court held a hearing on May 5, 2015 (the “May Hearing”) and denied Defendant's motions. Credit One appealed, as of right, the denial to compel arbitration. Credit One additionally seeks leave to appeal the denials to strike class allegations and dismiss for lack of subject matter jurisdiction.
Under the doctrine of pendent appellate jurisdiction, a court may, in its discretion, consider nonappealable issues in a case once it has taken jurisdiction over a related issue. See San Filippo v. U.S. Trust Co. of N.Y., 737 F.2d 246, 255 (2d Cir.1984)
(). The Supreme Court has cautioned, however, that “a rule loosely allowing pendent appellate jurisdiction would encourage parties to parlay [appealable] collateral orders into multi-issue interlocutory appeal tickets.” See
Swint v. Chambers County Comm'n, 514 U.S. 35, 49, 115 S.Ct. 1203, 131 L.Ed.2d 60 (1995). Therefore, a careful exercise of discretion is required in granting pendent jurisdiction.
The Second Circuit has held that an exercise of pendent appellate jurisdiction is appropriate only “over an independent but related question that is ‘inextricably intertwined’ with the [appealable issue] or is ‘necessary to ensure meaningful review’ of that issue.” Kaluczky v. City of White Plains, 57 F.3d 202, 207 (2d Cir.1995)
(quoting Swint, 514 U.S. at 51, 115 S.Ct. 1203 ). A question is “inextricably intertwined” where there is “sufficient overlap in the factors relevant to the appealable and nonappealable issues to warrant our exercising plenary authority over the appeal.” Kaluczky, 57 F.3d at 207 (internal citation omitted). In other words, “issues usually will not be considered inextricably intertwined where review of the unappealable issue is ‘not necessary for review of the issue over which we have appellate jurisdiction.’ ” Lamar Advert. of Penn, LLC v. Town of Orchard Park, New York, 356 F.3d 365, 372 (2d Cir.2004) (citing Rein v. Socialist People's Libyan Arab Jamahiriya, 162F.3d 748, 759 (2d Cir.1998) ). See also
Swint, 514 U.S. at 50–51, 115 S.Ct. 1203 (); Davidson v. Chestnut, 193 F.3d 144, 151 (2d Cir.1999) (). Therefore, where a court can consider and decide the appealable issue without addressing or considering the nonappealable issue(s), an exercise of pendent appellate jurisdiction is not warranted. Rein, 162 F.3d at 759 ().
Under 28 U.S.C. § 158(a)(3)
, “with leave of the court,” district courts have jurisdiction to hear appeals from “interlocutory orders and decrees” of the bankruptcy courts. 28 U.S.C. § 158(a)(3). To determine whether leave to appeal should be granted, district courts apply the standards prescribed in 28 U.S.C. § 1292(b). See
In re Kassover, 343 F.3d 91 (2d Cir.2003) ; In re Enron Corp., No. 01–16034, 2006 WL 2548592, at *3 (S.D.N.Y. Sept. 5, 2006). A court may certify for interlocutory appeal an order that involves (1) a controlling question of law (2) as to which there is a substantial ground for difference of opinion and (3) that an immediate appeal from which may materially advance the ultimate termination of the litigation. 28 U.S.C. § 1292(b). The moving party has the burden of establishing all three elements. See
Casey v. Long Island R.R. , 406 F.3d 142, 146 (2d Cir.2005). The conditions create a significant hurdle to § 1292(b) certification, “since ‘the power [to grant an interlocutory appeal] must be strictly limited to the precise conditions stated in the law.’ ” Klinghoffer v. S.N.C. Achille Lauro Ed Altri–Gestione Motonave Achille Lauro in Amministrazione Straordinaria, 921 F.2d 21, 25 (2d Cir.1990) (citing Gottesman v. General Motors Corp., 268 F.2d 194, 196 (2d Cir.1959) ). Even when the statutory criteria are met, “[d]istrict court judges have broad discretion to deny certification.” Century Pac., Inc. v. Hilton Hotels Corp., 574 F.Supp.2d 369, 370–71 (S.D.N.Y.2008) (quoting SPL Shipping Ltd. v. Gujarat Cheminex Ltd., No. 06–CV–15375 (KMK), 2007 WL 1119753, at *1 (S.D.N.Y. Apr. 12, 2007) ().
Moreover, interlocutory appeals are strongly disfavored in federal practice. In re Ambac Fin. Grp., Inc. Sec. Litig., 693 F.Supp.2d 241, 282 (S.D.N.Y.2010)
. Movants cannot invoke the appellate process “as a vehicle to provide early review of difficult rulings in hard cases.” In re Levine, No. 94–44257, 2004 WL 764709, at *2 (S.D.N.Y. Apr. 9, 2004) (internal citations omitted).
For these reasons, and because a basic tenet of federal law is to delay appellate review until a final judgment, § 1292(b)
certification should be “rare.” Koehler v. Bank of Bermuda Ltd., 101 F.3d 863, 865 (2d Cir.1996). Certification should be reserved for “exceptional” cases, for example, where an immediate appeal would avoid protracted litigation. Id. at 865–66. See also
In re Facebook, Inc., IPO Sec. & Derivative Litig., 986 F.Supp.2d 524, 529–30 (S.D.N.Y.2014) (quoting McNeil v. Aguilos, 820 F.Supp. 77, 79 (S.D.N.Y.1993) (Sotomayor, J.) ().
Credit One has appealed as of right the Bankruptcy Court's decision denying Credit One's motion to compel arbitration. In refusing to compel arbitration, the Bankruptcy Court decided that the case necessarily raised core issues under the Bankruptcy Code and forcing those issues to be arbitrated inherently conflicts with the Bankruptcy Code. Those decisions are before this Court as of right on appeal.
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