Grayton v. U.S. Tr. (In re Perez)

• Decision Date: 27 April 2021
• Docket Number: Case No.: 20-CV-1616 JLS (AHG)
• Parties: In re CESAR MONTIEL PEREZ, Debtor. MAURICE GRAYTON, Appellant, v. UNITED STATES TRUSTEE Appellee.
• Court: U.S. District Court — Southern District of California

In re CESAR MONTIEL PEREZ, Debtor.

MAURICE GRAYTON, Appellant, v. UNITED STATES TRUSTEE Appellee.

Case No.: 20-CV-1616 JLS (AHG)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

April 27, 2021

ORDER GRANTING MOTION TO DISMISS APPEAL

(ECF No. 3)

Presently before the Court is Appellee United States Trustee Tiffany Carroll's Motion to Dismiss Appeal ("Mot.," ECF No. 3). Appellant Maurice Grayton ("Appellant" or "Mr. Grayton"), proceeding pro se, filed an Opposition to the Motion ("Opp'n," ECF No. 7), and Appellee filed a Reply in support of the Motion ("Reply," ECF No. 8). The Court decides this matter on the papers submitted and without oral argument pursuant to Civil Local Rule 7.1(d)(1). See generally ECF No. 5. Having carefully reviewed the Parties' arguments and the relevant law, the Court GRANTS Appellee's Motion to Dismiss.

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BACKGROUND

On January 3, 2020, the United States Trustee initiated an adversary proceeding against Mr. Grayton in the United States Bankruptcy Court for the Southern District of California. Mot. at 3; see generally United States Trustee v. Grayton, No. 3:20-ap-90002-MM (Bankr. S.D. Cal.). The complaint alleges that Mr. Grayton "engaged in unfair, deceptive, or fraudulent conduct and has violated each of the sub-sections of 11 U.S.C. § 110[.]" Mot. at 3. "The complaint asserts that Mr. Grayton, who is not an attorney, has acted as a bankruptcy petition preparer in connection with a case filed in the Bankruptcy Court for the Southern District of California." Id. at 4. Mr. Grayton filed an answer alleging that he had acted under duress. Id. Mr. Grayton also invoked his Fifth and Fourteenth Amendment rights and demanded a jury trial. Id. In addition to his answer to the complaint, Mr. Grayton filed (1) a motion for summary judgment, (2) a request for court appointed counsel, and (3) a demand for a jury trial. Id. at 2.¹

On August 11, 2020, the bankruptcy court entered three orders denying Mr. Grayton's motion for summary judgment, his request for court appointed counsel, and his demand for a jury trial. Id. at 5; see United States Trustee v. Grayton, No. 3:20-ap-90002-MM (Bankr. S.D. Cal.), ("Summary Judgment Order," ECF No. 40), ("Right to Counsel Order," ECF 41), ("Jury Trial Order," ECF No. 42).² In denying Mr. Grayton's motion for summary judgment, the court noted that "[Mr.] Grayton's motion curiously admits that many of the material facts alleged in the Complaint are disputed." Summary Judgment Order at 2. The court further noted that "the undisputed facts support the [United States Trustee]'s claims." Id. The court also found that "Bankruptcy Petition Preparers are notentitled to a jury trial," Jury Trial Order at 1 (citing In Gould v. Clippard, 340 B.R. 861, 881-82 (M.D. Tenn. 2006); In re Bascus, 548 B.R. 742 (Bankr. S.D. Tex. 2016)), and "[t]here is no Sixth Amendment right to counsel in civil cases," Right to Counsel Order at 1 (citing Lassiter v. Dep't of Soc. Servs. of Durham Cnty., 452 U.S. 18, 24-28 (1981)).

On August 20, 2020, Mr. Grayton filed a notice of appeal based on the bankruptcy court's denial of these three motions. See generally "Notice of Appeal," ECF No. 1-3 at 1-8. This action is one of four appeals³ filed by Appellant in this District related to the underlying bankruptcy action, which is still pending before the bankruptcy court. See generally Docket of United States Trustee v. Grayton, No. 3:20-ap-90002-MM (Bankr. S.D. Cal.). On October 20, 2020, Appellee filed the present Motion to Dismiss Appeal for lack of jurisdiction. ECF No. 3.

LEGAL STANDARD

Federal district courts have jurisdiction over appeals of "final judgments, orders, and decrees" of bankruptcy courts. See 28 U.S.C. § 158(a)(1). Generally, district courts lack jurisdiction over appeals from interlocutory orders of bankruptcy judges except where the district court grants leave to appeal under 28 U.S.C. § 158(a)(3).

A determination of whether an order is final or interlocutory is jurisdictional and therefore can be raised sua sponte and reviewed de novo by an appellate court. See In re Bonham, 229 F.3d 750, 760-61 (9th Cir. 2000); In re Belli, 268 B.R. 851, 853 (B.A.P. 9th Cir. 2001). Denial of leave to appeal is left to the sound discretion of the court. See In re City of Desert Hot Springs, 339 F.3d 782, 787 (9th Cir. 2003).

ANALYSIS

I. Appeal as of Right

Appellee argues that "[t]he United States Trustee's lawsuit against Mr. Grayton is not yet resolved; it remains open and pending." Mot. at 8. In response, Appellant contends that "[t]he order denying summary judgment is final and the appeal is not interlocutory."Opp'n at 5. Appellant further argues that the bankruptcy court's denial of his request for appointed counsel and denial of his demand for a jury trial are similarly final orders. Id. at 6, 14.

Under section 158(a)(1), parties may appeal to a district court "final" orders in bankruptcy cases and proceedings "as of right." 28 U.S.C. § 158(a)(1); see Ritzen Grp., Inc. v. Jackson Masonry, LLC, 140 S. Ct. 582, 587 (2020); Bullard v. Blue Bills Bank, 575 U.S. 496 (2015). In the context of an adversary proceeding, an order is final if it would be considered an appealable final order in an ordinary federal civil action under 28 U.S.C. § 1291. In re Belli, 268 B.R. at 855 ("Finality for purposes of jurisdiction over 'as of right' appeals under 28 U.S.C. § 158(a)(1) in adversary proceedings does not differ from finality in ordinary federal civil actions under 28 U.S.C. § 1291."). Federal Rule of Civil Procedure 54(b) "controls the analysis of finality of judgments for purposes of appeal in federal civil actions, including bankruptcy adversary proceedings." Id. (citing Fed. R. Civ. P. 54(b), incorporated by Fed. R. Bankr. P. 7054(a)); see Matter of King City Transit Mix, Inc., 738 F.2d 1065, 1066-67 (9th Cir. 1984) (applying Rule 54(b) in bankruptcy adversary proceedings). If there is a Rule 54(b) certification, it is treated as a final order over which appellate jurisdiction exists "as of right" under 28 U.S.C. § 158(a)(1).

However, the Ninth Circuit has held that "the fluid and sometimes chaotic nature of bankruptcy proceedings necessitates a degree of jurisdictional flexibility." In re Landmark Fence Co., Inc., 801 F.3d 1099, 1102 (9th Cir. 2015). "Congress has long provided that orders in bankruptcy cases may be immediately appealed if they finally dispose of discrete disputes within the larger case." Howard Delivery Service, Inc. v. Zurich American Ins. Co., 547 U.S. 651, 657, n.3 (2006) (internal quotation marks and emphasis omitted). Section 158 provides the appellate court with jurisdiction over orders in bankruptcy cases that alter "the legal relationships among the parties." Bullard, 575 U.S. at 506. Therefore, to determine whether a particular order is final, the court examines "whether the bankruptcy court's decision: '1) resolves and seriously affects substantive rights and 2) finally determines the discrete issue to which it is addressed.'" In re Gugliuzza, 852 F.3d884, 894 (9th Cir. 2017) (quoting In re Perl, 811 F.3d 1120, 1126 (9th Cir. 2016)). If "further proceedings in the bankruptcy court will affect the scope of the order, the order is not subject to review." In re Tech. Knockout Graphics, Inc., 833 F.2d 797, 800 (9th Cir. 1987) (quoting In re 405 N. Bedford Dr. Corp., 778 F.2d 1374, 1377 (9th Cir. 1985)).

The bankruptcy court's denial of Mr. Grayton's (1) motion for summary judgment, (2) request for appointed counsel, and (3) request for jury trial are not final orders that Appellant may appeal as of right. See Ortiz v. Jordan, 562 U.S. 180, 188 (2011) ("Ordinarily, orders denying summary judgment do not qualify as 'final decisions' subject to appeal."); Wilborn v. Escalderon, 789 F.2d 1328, 1330 (9th Cir. 1986) (holding order denying appointment of counsel is not immediately appealable); City of Morgantown, W. Va. v. Royal Ins. Co., 337 U.S. 254, 255-59 (1949) (holding an order denying a demand for trial by jury is not a final order and hence is not immediately appealable). A review of the docket of the bankruptcy court proceedings reveals there has been no Rule 54(b) certification in Appellant's case. See generally Docket of United States Trustee v. Grayton, No. 3:20-ap-90002-MM (Bankr. S.D. Cal.). Further, the bankruptcy court's orders did not adjudicate all the parties' respective rights and liabilities. To the contrary, the summary judgment order allowed the complaint to go forward in its entirety. See Tennison v. City & Cnty. of San Francisco, 570 F.3d 1078, 1081 (9th Cir. 2009) (stating the Ninth Circuit "generally do[es] not have jurisdiction over an interlocutory appeal from the denial of a motion for summary judgment"); see also Morgan v. Morgensen, 465 F.3d 1041, 1044 (9th Cir. 2006), opinion amended on reh'g, No. 04-35608, 2006 WL 3437344 (9th Cir. Nov. 30, 2006) ("Ordinarily, a district court's interlocutory order denying a motion for summary judgment is not immediately appealable[.]"). A denial of a motion for summary judgment is appealable as a matter of right in limited circumstances, such as when a defendant's motion for summary judgment is based on qualified immunity, see Morgan, 465 F.3d at 1044; however, these facts are not present here. The bankruptcy court may revise or revisit its findings in these orders as the case progresses.

/// Therefore, the Court finds that the bankruptcy court's orders denying Appellant's motion for summary judgment, request for appointed counsel, and request for jury trial are not appealable as a matter of right. The Court now turns to whether to exercise its discretion and grant interlocutory review.

II. Interlocutory Appeal

Appellant argues that "This Court Must Grant Discretionary Leave for Non Interlocutory Appeal Here." Opp'n at 16. Appellant contends that "[t]he Tentative Rulings are questionable and are drafted in the manner that is not supported by the law." Id. In response, Appellee argues that these "were...