Wells Fargo Bank, N.A. v. Brannan (In re Brannan), MISC. ACTION 13-0001-WS

• Decision Date: 05 March 2013
• Docket Number: MISC. ACTION 13-0001-WS
• Parties: In the Matter of: MARK BRANNAN and KELLY BRANNAN, Debtors. WELLS FARGO BANK, N.A., Appellant/Defendant, v. MARK BRANNAN and KELLY BRANNAN, Appellees/Plaintiffs.
• Court: U.S. District Court — Southern District of Alabama

In the Matter of: MARK BRANNAN and KELLY BRANNAN, Debtors.WELLS FARGO BANK, N.A., Appellant/Defendant,

v.MARK BRANNAN and KELLY BRANNAN, Appellees/Plaintiffs.

MISC. ACTION 13-0001-WS

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

DONE and ORDERED: March 5, 2013

ORDER

This miscellaneous action comes before the Court on appellant/defendant Wells Fargo Bank, N.A.'s Motion to the District Court for Leave to Appeal (doc. 1) and Motion to Expedite Ruling on Defendant's Motion for Leave to Appeal (doc. 3). The Court also has the benefit of appellees/plaintiffs' Response (doc. 4) filed on March 1, 2013.

I. Relevant Background.

Plaintiffs, Mark and Kelly Brannan, are Chapter 13 debtors who brought a bankruptcy adversary proceeding against Wells Fargo Bank, N.A., back in 2004. This adversary proceeding concerns plaintiffs' allegations that Wells Fargo engaged in fraudulent and improper practices attendant to the preparation, signing and filing of affidavits in bankruptcy actions in the U.S. Bankruptcy Court for the Southern District of Alabama for the period of 1996 through 2008. Plaintiffs sought class certification.

After extensive discovery, multiple class certification hearings, and a November 2011 order denying without prejudice plaintiffs' first attempt to obtain class certification, Bankruptcy Judge Mahoney entered a 22-page Order (doc. 1, Exh. B) on January 8, 2013 granting plaintiffs'motion for class certification, and certifying two classes under Rule 7023, Fed.R.Bankr.P. The first class consisted of all individuals who had filed a Chapter 13 or Chapter 7 bankruptcy case in this district in which Wells Fargo filed an affidavit in support of a motion for relief from stay, motion for adequate protection, or similar motion filed from January 1, 1996 through December 31, 2008, where such individuals also made payment to Wells Fargo for attorney's fees or filing fees associated with such a motion. The second class was much like the first, except that in lieu of actually paying Wells Fargo for attorney's fees or filing fees associated with such a motion, these individuals simply had charges posted to their mortgage account for attorney's fees or filing fees associated with Wells Fargo's motion to stay, motion for adequate protection or similar motion.¹ The January 8 Order concluded that "[t]he plaintiffs have met the necessary burden for class certification in this case. Their allegations, if proven, state a claim against Wells Fargo that is actionable." (Id. at 22.)

Wells Fargo filed a Motion to the District Court for Leave to Appeal on January 29, 2013. The Bankruptcy Court Clerk forwarded that Motion to the District Court Clerk on February 14, 2013. On the face of the Motion, the legal authority on which Wells Fargo predicates its request for interlocutory appeal consists of 28 U.S.C. § 158(a) and Rules 8001(b) and 8003 of the Federal Rules of Bankruptcy Procedure. Pursuant to § 158(a)(3), "[t]he district courts of the United States shall have jurisdiction to hear appeals ...with leave of the court, from other interlocutory orders and decrees" of bankruptcy courts. Id.

On February 25, 2013, some 11 days after the Motion for Leave to Appeal was transmitted to the District Court Clerk, while the undersigned was awaiting the conclusion of court-ordered briefing, Wells Fargo filed a Motion to Expedite Ruling, in which it elaborated on its intentions and introduced a heretofore-unspoken element of temporal urgency to the equation. At that time, Wells Fargo explained that, if its Motion for Leave to Appeal were granted, it would file in this District Court a request for certification of the January 8 Order for direct appeal to the Eleventh Circuit Court of Appeals pursuant to 28 U.S.C. § 158(d)(2). However, § 158requires that any such request for certification "shall be made not later than 60 days after the entry of the judgment, order, or decree." 28 U.S.C. § 158(d)(2)(E). Because the Bankruptcy Court's Order was entered on January 8, 2013, the 60-day period for requesting certification expires on March 9, 2013. While it would have been extraordinarily helpful for Wells Fargo to reveal its plans, and particularly those triggering the 60-day constraint, contemporaneously with its Motion for Leave to Appeal, the Court agrees that expedited consideration is warranted under the circumstances. On that basis, the Motion to Expedite Ruling (doc. 3) is granted.

II. Analysis.

As noted, Wells Fargo's Motion for Leave to Appeal is predicated on 28 U.S.C. § 158(a)(3), which authorizes district courts to hear appeals from interlocutory orders of bankruptcy courts.² Myriad authorities support the notion that a district court's jurisdiction to hear such an appeal is purely discretionary. See, e.g., In re Celotex Corp., 700 F.3d 1262, 1265 n.3 (11th Cir. 2012) ("District courts have discretionary jurisdiction to hear appeals from interlocutory orders and decrees of bankruptcy judges.").³

The text of § 158(a)(3) does not furnish district courts with any discernable criteria, guideposts or standards to govern or even guide the exercise of this statutory discretion. Nonetheless, extensive case law from this and other circuits dictates that a district court's determination of whether to allow discretionary appeal of an interlocutory bankruptcy ruling should be made by reference to the standards articulated in 28 U.S.C. § 1292(b). See, e.g., Laurent v. Herkert, 2006 WL 2429960, *1 (11th Cir. Aug. 22, 2006) ("Because 28 U.S.C. § 158(a) does not provide the district court any criteria for determining whether to exercise their discretionary authority to grant leave to appeal, the courts look to 28 U.S.C. § 1292(b) which governs discretionary interlocutory appeals from district courts to the court of appeals.") (citation and internal marks omitted).⁴ This Court will proceed in like manner; therefore, examination of the § 1292(b) test is appropriate.

The Eleventh Circuit has opined that "§ 1292(b) sets a high threshold for certification to prevent piecemeal appeals." OFS Fitel, LLC v. Epstein, Becker and Green, P.C., 549 F.3d 1344, 1359 (11th Cir. 2008). In that regard, "to obtain § 1292(b) certification, the litigant must show not only that an immediate appeal will advance the termination of the litigation but also that the appeal involves a controlling question of law as to which there is substantial ground for difference of opinion." Id. (citation and internal quotation marks omitted). "Most interlocutory orders do not meet this test." Id.; see also McFarlin v. Conseco Services, LLC, 381 F.3d 1251, 1264 (11th Cir. 2004) (in exercising § 1292(b) discretion, appellate court "should keep in mind that the great bulk of its review must be conducted after final judgment, with § 1292(b) interlocutory review being a rare exception"); Camacho v. Puerto Rico Ports Authority, 369 F.3d 570, 573 (1st Cir. 2004) ("Section 1292(b) is meant to be used sparingly, and appeals under it are, accordingly, hen's-teeth rare."). "Because permitting piecemeal appeals is bad policy, permitting liberal use of § 1292(b) interlocutory appeals is bad policy." McFarlin, 381 F.3d at 1259. Wells Fargo's request for review of an interlocutory bankruptcy order under § 158(a) is cloaked with the same disfavored status that characterizes § 1292(b) motions.⁵

By its terms, § 1292(b) authorizes appeal of an interlocutory order only where the following criteria are satisfied: (1) "such order involves a controlling question of law"; (2) "as to which there is substantial ground for difference of opinion"; and (3) "an immediate appeal from the order may materially advance the ultimate termination of the litigation." 28 U.S.C. § 1292(b). As the movant seeking interlocutory appeal, Wells Fargo bears the burden of satisfying all of these elements. See OFS Fitel, 549 F.3d at 1359; McFarlin, 381 F.3d at 1264 ("The burden of persuading us that a question of law meeting the requirements of § 1292(b) clearly is presented is on the petitioning party").

Defendant has not met this burden. Indeed, notwithstanding the foregoing authorities, Wells Fargo has not attempted to show that the requirements prescribed by § 1292(b) weigh in favor of allowing an appeal of the Bankruptcy Court's January 8 Order pursuant to 28 U.S.C. § 158(a).⁶ It has not advanced any § 1292(b) argument, leaving the undersigned guessing as to what (if any) facts, circumstances and issues Wells Fargo might contend are sufficient to justify interlocutory appeal under that standard.⁷ Instead, Wells Fargo posits that this Court's discretion in whether to allow the instant interlocutory appeal is guided by the somewhat less stringent showing required under Rule 23(f), Fed.R.Civ.P., for discretionary review by a court of appeals of a district court's class certification ruling. Now, the Eleventh Circuit has held that Rule 23(f) was not incorporated into the Federal Rules of Bankruptcy Procedure. See Chrysler Financial Corp. v. Powe, 312 F.3d 1241, 1246-47 (11th Cir. 2002).⁸ As such, Rule 23(f) would appear to have no direct application where, as here, the interlocutory appeal sought is from a bankruptcy court's class certification order. In the same case, however, the panel opined in dicta (without supporting authorities or reasoning) that "the § 1292(b) requirements need not be satisfied whenan interlocutory appeal is taken from the bankruptcy court to the district court," and that "the district court's discretion to entertain an interlocutory appeal from the bankruptcy court is analogous to the court of appeals' discretion to entertain a Rule 23(f) appeal from the district court." Powe, 312 F.3d at 1245-46. In reliance on this language, Wells Fargo's position is that Powe allows it to pursue interlocutory appeal from the Bankruptcy Court's class certification ruling by reference to the lesser Rule 23(f) standard, rather than the greater § 1292(b) standard.

The Court declines to...