In re Pacific Forest Products Corp.

• Decision Date: 17 October 2005
• Docket Number: No. 05-22061-CIV.,05-22061-CIV.
• Citation: 335 B.R. 910
• Parties: In re PACIFIC FOREST PRODUCTS CORP., Debtor, Colonial Bank, Appellant, v. Lewis B. Freeman, etc., Appellee. Suntrust Bank, Appellant, v. Lewis B. Freeman, etc. Appellee.
• Court: U.S. District Court — Southern District of Florida

335 B.R. 910

In re PACIFIC FOREST PRODUCTS CORP., Debtor,

Colonial Bank, Appellant, v. Lewis B. Freeman, etc., Appellee.

Suntrust Bank, Appellant, v. Lewis B. Freeman, etc. Appellee.

No. 05-22061-CIV.

United States District Court, S.D. Florida.

October 17, 2005.

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COPYRIGHT MATERIAL OMITTED

Ben H. Harris, III, Mobile, AL, Mark R. Kings, Miami, FL, for Colonial Bank, N.A.

Elliott Scherker, Miami, FL, Richard Bergman, Ft. Lauderdale, FL, Steven Mishan, Miami, FL, for Suntrust Bank.

David C. Cimo, Miami, FL, for Lewis B. Freeman.

ORDER GRANTING APPELLANTS' MOTIONS FOR LEAVE TO APPEAL

GOLD, District Judge.

THIS CAUSE is before the Court upon Appellants' Motions for Leave to Appeal [DE 1 and 4] the Bankruptcy Court's May 3, 2005 interlocutory order granting Trustee's motion for partial summary judgment. In granting partial summary judgment, Bankruptcy Judge Barry S. Schermer ruled that the Debtor acted with "actual intent to hinder, delay or defraud its creditors."¹ Appellants seek interlocutory review of this ruling.

I held oral argument on the Motions for Leave to Appeal on September 30, 2005. Upon review of the parties' arguments, the record, relevant statutes, and case law, I grant Appellants' Motions for Leave to Appeal.

I. Background Pacts

On February 14, 2001, three creditors of Pacific Forest Products Corp. (the "Debtor") filed an involuntary petition for bankruptcy relief under Chapter 7 of the Bankruptcy Code. On April 5, 2001, the Bankruptcy Court converted the case to a Chapter 11 Reorganization.

On July 10, 2002, the Bankruptcy Court entered an Order confirming the Debtor's Amended Liquidating Plan, and appointing Lewis B. Freeman ("Trustee") as the Liquidating Trustee. The Plan transferred to the Trustee the right to bring avoidance actions under the Bankruptcy Code.

On February 11, 2003, the Trustee commenced an adversary proceeding against, among others, Appellants Colonial Bank ("Colonial") and SunTrust Bank ("SunTrust") (Colonial and SunTrust shall be referred to collectively as "Appellants"). The Complaint, as amended (the "Complaint"), alleges, inter alia, claims against Appellants for the avoidance and recovery of fraudulent transfers under sections 544 and 548 of the Bankruptcy Code, as well as under applicable Florida statutes. The Trustee's theory of recovery includes, inter alia, that the Debtor had engaged in a massive check-kiting scheme, and that any transfers made to Appellants pursuant to that scheme were with an actual intent to defraud the Debtor's creditors, and therefore subject to avoidance by the Trustee.

On June 23, 2004, the Trustee filed a Motion for Partial Summary Judgment Regarding Debtor's Actual Intent to Hinder, Delay, or Defraud Creditors (the "Motion for Summary Judgment"). Through the Motion for Summary Judgment, the Debtor sought a declaration that no material facts remained as to the issue of the Debtor's actual intent to hinder, delay or defraud creditors through operating the extensive check-kiting scheme. In support of its Motion for Summary Judgment, and in response to the Bankruptcy Court's request for clarification, the Debtor submitted proposed findings of fact and conclusions of law.

On April 13, 2005, the Bankruptcy Court held a hearing on the Motion for Summary Judgment, and on May 3, 2005, entered findings of fact and conclusions of law that established that the Debtor acted with "actual intent to hinder, delay or defraud creditors" by engaging in an extensive check-kiting scheme (the "Bankruptcy Court Order"). The Bankruptcy Court Order was entered on the docket on May 6, 2005.

On May 16, 2005, Appellants each filed a motion for rehearing and reconsideration (the "Motions for Rehearing") of the Bankruptcy Court's Order, contesting a number of the Bankruptcy Court's findings of fact and conclusions of law, including the Bankruptcy Court's finding that the check kiting scheme at issue in this case was, per se, fraudulent. On May 25, 2005, the Bankruptcy Court denied Appellants' Motions for Rehearing.

On June 3, 2005 and June 6, 2005, Appellants SunTrust and Colonial, respectively, filed motions for leave to appeal the Bankruptcy Court's Order (collectively, the "Motions for Leave to Appeal"). On August 2, 2005, this Court consolidated both actions under Case Number 05-22061-CIV-GOLD/TURNOFF because they raise the same issues. [DE 4].

The Trustee filed responses to Appellants' Motions for Leave to Appeal on August 30, 2005. [DE 6].² In the Opposition, the Trustee argues that the Motions for Leave to Appeal were untimely, and that the Appellants have not satisfied the standard for interlocutory review. On September 1, 2005, SunTrust filed a reply in support of its Motion for Leave to Appeal. [DE 9].

II. Jurisdiction

Before I address Appellants' dual grounds for appeal, I must first consider whether this Court has subject matter jurisdiction over the instant appeal.

28 U.S.C. § 158(a) imparts upon the district courts jurisdiction to hear appeals from:

(1) final judgments, orders, and decrees:

(2) interlocutory orders and decrees issued under section 1121(d) of title 11 increasing or reducing the time periods referred to in section 1121 of such title; and

(3) with leave of the court, from other interlocutory orders and decrees; and, with leave of the court, from interlocutory orders and decrees, of bankruptcy judges entered in cases and proceedings referred to the bankruptcy judges under section 157 of this title. An appeal under this subsection shall be taken only to the district court for the judicial district in which the bankruptcy judge is serving.

Appellants recognize that the Bankruptcy Court Order is interlocutory and request the Court to assert jurisdiction under 28 U.S.C. § 158(a)(3). For the reasons set forth below, I conclude that this Court has jurisdiction to consider an immediate appeal of the Bankruptcy Court Order, and I grant Appellants' Motions for Leave to Appeal. Valley Drug Co. v. Geneva Pharms., Inc., 344 F.3d 1294, 1295 (11th Cir. 2003) (partial summary judgment on interlocutory appeal), reh'g and reh'g en banc denied 88 Fed. Appx. 388 (11th Cir. 2003), cert. denied 543 U.S. 939, 125 S.Ct. 308, 160 L. Ed. 2d 248 (2004); Foothill Capital Corp. v. Official Unsecured Creditors' Cmty. of Midcom Commc'ns Inc., 246 B.R. 296, 299 (E.D. Mich. 2000) (exercising discretion to allow interlocutory appeal of bankruptcy court order granting partial summary judgment pursuant to 28 U.S.C. § 158(a)(3)).

III. Appellants' Motions for Leave to Appeal Were Timely

In reviewing the timeliness of Appellants' motions for leave to appeal, I must consider Federal Rule of Bankruptcy Procedure ("FRBP") 8002.³ Rule 8002(a) requires a party to file a notice of appeal with the clerk of the bankruptcy court "within 10 days of the date of the entry of the judgment, order, or decree appealed from." But if the party moving for appeal files one of a number of enumerated motions, the time for appeal "runs from the entry of the order disposing of the last such motion outstanding." Fed. R. Bankr. P. 8002(b).

The list of motions that toll the time to appeal include motions:

(1) to amend or make additional findings of fact under Rule 7052, whether or not granting the motion would alter the judgment;

(2) to alter or amend the judgment under Rule 9023;

(3) for a new trial under Rule 9023; or

(4) for relief under Rule 9024 if the motion is filed no later than 10 days after the entry of judgment.

Fed. R. Bankr. P. 8002(b). If an appeal is not timely filed, the district court has no jurisdiction over it. In re Davis, 237 B.R. 177, 180 (Bankr. M.D. Ala. 1999) (citing In re Morrow, 564 F.2d 189, 190 (5th Cir. 1977)), remanded to 243 B.R. 127 (Bankr. M.D.Ala. 1999).

Appellants assert that their Motions for Rehearing were motions under Rule 59(e) of the FRCP, as incorporated into Rule 9023 of the FRBP, and therefore tolled the appellate clock from ticking until disposition of the Motions for Rehearing under FRBP 8002(b)(2).⁴ Accordingly, Appellants contend that their Motions for Leave to Appeal, filed within ten days of the Bankruptcy Court's order denying their Motions for Rehearing, are timely.

The Bankruptcy Court Order was signed on May 3, 2005, and entered on the Bankruptcy Court docket on May 6, 2005. Appellants filed their Motions for Rehearing on May 16, 2005. The Trustee initially contends that the Motions for Rehearing were untimely because they were filed more than ten days after the Bankruptcy Court ruled, which was on May 3, 2005. This Court finds, however, that an order is entered when it appears on the clerk's docket, and thus Appellants' Motions for Rehearing were timely because they were filed within ten days of the Bankruptcy Court Order's appearance on the docket. United States v. Henry Bros. P'ship (In re Henry Bros. P'ship), 214 B.R. 192, 195 (B.A.P. 8th Cir. 1997); Williams v. EMC Mortgage Corp. (In re Williams), 216 F.3d 1295, 1296 (11th Cir. 2000) (signifying entry of the bankruptcy court's order on the docket as the starting point for the ten-day period for appeal); Balcor Pension Invs. v. Wiston XXIV, Ltd. P'ship (In re Wiston XXIV, Ltd. P'ship), 172 B.R. 647, 652 (D. Kan. 1994) (ten-day period for appeal runs from time clerk enters bankruptcy order).⁵

In any event, it does not appear that Appellants' Motions for Rehearing would be untimely under any circumstances. It is well-established that it is within a bankruptcy judge's discretion to reconsider any interlocutory order made prior to the entry of final judgment. Piper Aircraft Corp. v. Calabro (In re Piper Aircraft Corp.), 169 B.R. 766, 771 (Bankr. S.D. Fla. 1994), aff'd 168 B.R. 434 (S.D. Fla. 1994), aff'd as modified sub nom. Epstein v. Official Comm. of Unsecured Creditors of Estate of Piper Aircraft Corp., 58 F.3d 1573 (11th Cir. 1995). Accordingly, a party who seeks reconsideration of an interlocutory bankruptcy order need not move for...