ICMR, INC. v. Tri-City Foods, Inc.
| Decision Date | 18 April 1989 |
| Docket Number | No. 88-1613-K,88-1614-K.,88-1613-K |
| Citation | 100 BR 51 |
| Parties | ICMR, INC., Alleged Debtor/Appellant, v. TRI-CITY FOODS, INC., Petitioning Creditor/Appellee. ICMR OF IOWA, INC., Alleged Debtor/Appellant, v. TRI-CITY FOODS, INC., Petitioning Creditor/Appellee. |
| Court | U.S. District Court — District of Kansas |
James D. Oliver, Foulston, Siefkin, Powers & Eberhardt, Wichita, Kan., for debtor/appellant.
Terry Paup, Don W. Bostwick, Adams, Jones, Robinson & Malone, Wichita, Kan., for creditor/appellee.
The debtors in two consolidated involuntary bankruptcy cases appeal from the bankruptcy court's denial of debtors' motion to dismiss for lack of venue, or in the alternative, to transfer the cases to the District of Iowa.
The court heard oral argument on this appeal on March 17, 1989, and at that time announced its ruling. Consistent with its statements at that time and for the reasons set forth herein, the court reverses the bankruptcy court's decision and further orders the transfer of these cases to the United States Bankruptcy Court for the District of Iowa.
In reviewing the findings of the bankruptcy court, this court may set aside findings of fact only if they are clearly erroneous. Conclusions of law, however, are subject to de novo review. In re Blehm Land & Cattle Co., 859 F.2d 137 (10th Cir.1988); In re Herd, 840 F.2d 757, 759 (10th Cir.1988).
The debtors, ICMR, Inc. ("ICMR") and its wholly-owned subsidiary ICMR of Iowa, Inc. ("ICMR of Iowa"), are both Delaware corporations. Each maintained its principal place of business in Des Moines, Iowa. For several years, and for the greater part of the 180 days preceding the petitions in bankruptcy, ICMR of Iowa owned and operated three restaurants in Iowa and one in Illinois. Overall management of the restaurants was handled from corporate offices in Des Moines. The various officers of the company resided in several states, including Iowa, Pennsylvania and California. The treasurer/assistant secretary, Lawrence Oeding, resided in Wichita, Kansas.
Neither ICMR nor ICMR of Iowa ever conducted any business or held any meetings in Kansas. However, ICMR of Iowa purchased restaurant facilities on contract from the petitioning creditor, Tri-City Foods, Inc. ("Tri-City"), and ICMR guaranteed the purchase agreement.
As of mid-June, 1987, the debtors were current on all purchase payments to Tri-City but had ceased operation of the restaurant and made numerous transfers of corporate assets. Deeming itself unsecure, Tri-City accelerated the unpaid obligation under the purchase agreement and demanded payment. On June 18, 1987, Tri-City filed involuntary petitions in bankruptcy against ICMR and ICMR of Iowa seeking an involuntary adjudication of these companies under Chapter 7 of the Bankruptcy Code. After the petitions were filed, the records of the debtors were moved to Wichita, Kansas.
The debtors subsequently filed a motion to dismiss, arguing venue was improper in this district. In a memorandum of decision dated September 28, 1988, Judge Pearson found that while the venue of the cases properly belonged in Iowa in 1987, "the remedy for improper filing in this district is unclear." (Memorandum of Decision, p. 5.) Judge Pearson concluded that "the convenience of the parties justifies retention of the cases here for trial on the merits of the involuntary petitions." (Memorandum of Decision, p. 7.)
The debtors have appealed from this ruling.
Before considering the merits of the debtors' appeal, the court must first address Tri-City's contention that this court should not exercise its discretion to grant debtors leave to appeal the bankruptcy court's interlocutory order.
Pursuant to 28 U.S.C. § 158(a), an interlocutory order from the bankruptcy court is appealable "with leave of the court." Tri-City urges the court to deny the debtors leave to appeal on the ground the debtors have failed to meet the conditions necessary to appeal an interlocutory order. Tri-City contends that in determining whether to permit an appeal from an interlocutory bankruptcy order, the district court must "apply the body of decisional law under 28 U.S.C. § 1292(b)." That statute provides that an interlocutory order of the district court which is not otherwise appealable may be appealed if (1) the district court certifies in writing that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation; and (2) if the Court of Appeals, in its discretion, permits an appeal to be taken from such order.
The debtors, however, maintain that interlocutory appeals from venue orders in bankruptcy cases may be taken without consideration of the factors generally considered under 28 U.S.C. § 1292(b). They contend that § 1292 applies only to interlocutory decisions made by the district court in the first instance.
This court recently ruled on a similar issue in In re Steele, No. 88-1288, ___ B.R. ___, (D.Kan. Oct. 21, 1988). In Steele, the debtors appealed from Judge Pusateri's order transferring venue of the case from Topeka to Wichita. In upholding the order of intradistrict transfer, this court initially determined that while venue orders generally are interlocutory in nature, they are appealable under 28 U.S.C. § 158(a). In so holding, the court relied on the reasoning of a leading bankruptcy treatise:
The discretion of the district court or appellate panel to permit interlocutory appeals of orders changing venue should be more readily obtained when an order regarding the venue of the title 11 case is concerned than in an appeal from a venue order in a civil proceeding. Unlike a civil proceeding in which the order regarding venue can be appealed at the conclusion of the proceeding, there is a very small chance of success on an appeal which is taken after the title 11 case has been administered and closed, which may be the only time when the order regarding venue becomes a final order. The appellate panel or district court should...
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