Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-02181/USCOURTS-cand-3_15-cv-02181-1/pdf.json

Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 28:0158 Notice of Appeal re Bankruptcy Matter (BAP)

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United States District Court

For the Northern District of California

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 There are several other defendants who have been named in Plaintiffs’ lawsuit. Although

these defendants have not formally joined the motion to dismiss, the analysis in this order would

appear to be equally applicable to them.

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

YOUSIF H. HALLOUM, et al.,

Appellants,

v.

McCORMICK BARSTOW LLP, et al.,

Appellees.

___________________________________/

YOUSIF H. HALLOUM, et al.,

Appellants,

v.

DAVID KATZEN, et al.,

Appellees.

___________________________________/

No. C-15-2181 EMC

No. C-15-2183 EMC

ORDER GRANTING APPELLEESDEFENDANTS’ MOTIONS TO

DISMISS; AND DENYING

APPELLANTS-PLAINTIFFS’ MOTIONS

FOR LEAVE TO FILE

INTERLOCUTORY APPEAL

(Docket Nos. 5, 10, 12)

Currently pending before the Court are motions to dismiss filed by Appellees-Defendants

Hilton A. Ryder and McCormick, Barsow, Wayte & Carruth LLP (“Defendants”).1

 Defendants have

moved to dismiss the appeals of Appellants-Plaintiffs Yousif H. Halloum and Iman Y. Halloum

(“Plaintiffs”) on the ground that the bankruptcy orders appealed by Plaintiffs are not final appealable

orders and Plaintiffs failed to seek leave from the Court to file any interlocutory appeal. In response,

Case 3:15-cv-02181-EMC Document 13 Filed 07/24/15 Page 1 of 6
United States District Court

For the Northern District of California

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Plaintiffs have filed oppositions to the motions to dismiss and, in the same briefs, moved for leave to

file an interlocutory appeal.

Having considered the parties’ briefs and accompanying submissions, as well as all other

evidence of record, the Court hereby GRANTS the motions to dismiss and DENIES the motions for

leave to file an interlocutory appeal.

I. DISCUSSION

As this Court has previously noted, an interlocutory order may be appealed only with leave

of the Court. See 28 U.S.C. § 158(a)(3) (providing that a district court shall have jurisdiction to hear

appeals from interlocutory orders but only “with leave of the court”).

In considering whether to grant leave to appeal, courts

generally “loo[k] to the standards set forth in 28 U.S.C. § 1292(b),

which concerns the taking of interlocutory appeals from the district

court to the court of appeals.” In re Roderick Timber Co., 185 B.R.

601, 604 (B.A.P. 9th Cir. 1995); see also In re Belli, 268 B.R. 851,

858 (B.A.P. 9th Cir. 2001) (“We look for guidance to the standards

developed under 28 U.S.C. § 1292(b) to determine if leave to appeal

should be granted [under section 158(a)(3)].”). The relevant question

under 28 U.S.C § 1292(b) is “whether the order on appeal involves a

controlling question of law as to which there is a substantial ground

for difference of opinion and whether an immediate appeal may

materially advance the ultimate termination of the litigation.” 

Roderick, 185 B.R. at 604. Courts also consider whether denying

leave to appeal from the interlocutory order would result in “wasted

litigation and expense.” In re NSB Film Corp., 167 B.R. 176, 180

(B.A.P. 9th Cir. 1994); see also Belli, 268 B.R. at 858; Roderick, 185

B.R. at 604. “Interlocutory appeals are generally disfavored and

should only be granted where extraordinary circumstances exist.” 

Cameron, 2014 U.S. Dist. LEXIS 35454, 2014 WL 1028436, at *4.

Brady v. Otton, No. 15-cv-00757-WHO, 2015 U.S. Dist. LEXIS 55598, at *5-6 (N.D. Cal. Apr. 27,

2015).

As a formal matter, Plaintiffs seek leave to file an interlocutory appeal with respect to two

different orders of the bankruptcy court – the first denying their motion for remand or abstention and

the second granting the defendants’ motion to transfer. Because Plaintiffs have not made any real

attempt to show that the above standard has been met with respect to the transfer order, their motion

for leave to file an appeal with respect to that order is hereby denied.

Case 3:15-cv-02181-EMC Document 13 Filed 07/24/15 Page 2 of 6
United States District Court

For the Northern District of California

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The Court now turns to whether Plaintiffs should be given leave to appeal the order denying

the motion to remand or abstain. On the remand portion of that order, the Court finds that Plaintiffs

have failed to show that the order involved a controlling question of law. In fact, Plaintiffs have

failed to show that the order involved a question of law at all. Cf. McFarlin v. Conseco Servs., LLC,

381 F.3d 1251, 1259 (11th Cir. 2004) (stating that “§ 1292(b) appeals were intended, and should be

reserved, for situations in which the court appeals can rule on pure, controlling questions of law

without having to delve beyond the surface of the record in order to determine the facts”) (emphasis

added); see also United States v. Soong, No. C-13-4088 EMC, 2014 U.S. Dist. LEXIS 30874, at *3-

4 (N.D. Cal. Mar. 10, 2014) (stating that “the Soongs have failed to establish that they are seeking to

appeal an order involving a question of law”; adding that, “[w]here a party simply asserts that there

has been a misapplication of law to the facts, § 1292(b) does not provide for relief”); In re Novatel

Wireless Secs. Litig., No. 08cv1689 AJB (RBB), 2013 U.S. Dist. LEXIS 164725, at *5 (S.D. Cal.

Nov. 19, 2013) (noting that “a number of other courts have stated the term [question of law] means a

‘pure question of law’ rather than a mixed question of law and fact or the application of law to a

particular set of facts”).

For example, Plaintiffs assert that the bankruptcy court should have remanded the case back

to state court pursuant to 28 U.S.C. § 1452(b). That statute provides as follows: “The court to which

such claim or cause of action is removed may remand such claim or cause of action on any equitable

ground.” 28 U.S.C. § 1452(b). But Plaintiffs fail to point to any statement by the bankruptcy court

suggesting that, e.g., it was not aware of the statute or that it was choosing to ignore the statute. 

They fail to point to any error of law committed by the bankruptcy court. Instead, Plaintiffs are

challenging the bankruptcy court’s application of that statute. See Tr. at 6 (bankruptcy court stating

that “jurisdiction is almost exclusive in the Bankruptcy Court if there are challenges to what

happened in the bankruptcy case”); Tr. at 13-14 (bankruptcy court stating that, “if you can persuade

the Bankruptcy Court or the United States Trustee that the current trustee needs to be investigated,

then you’re entitled to ask that that happen” but the bankruptcy court “is the forum to determine

Case 3:15-cv-02181-EMC Document 13 Filed 07/24/15 Page 3 of 6
United States District Court

For the Northern District of California

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 Although the Court is not at this point adjudicating the merits of the bankruptcy court’s

statements, it advises Plaintiffs to consider, e.g., In re Harris Pine Mills, 44 F.3d 1431, 1437 (9th

Cir. 1995) (indicating that “postpetition state law claims asserted by or against a trustee in

bankruptcy or the trustee’s agents for conduct arising out of the sale of property belonging to the

bankruptcy estate qualify as core proceedings”), and In re Ferrante, 51 F.3d 1473, 1476 (9th

Cir.1995) (stating that, “[b]ecause this case evokes the Bankruptcy Act’s imposition of duties on

trustees to administer estate property and a surety’s liability on its bond for the benefit of the estate,

it cannot be gainsaid that it involves a core issue”).

3

 Abstention is governed by 28 U.S.C. § 1334. Section 1334(c)(1) provides: “[N]othing in

this section prevents a district court in the interest of justice, or in the interest of comity with State

courts or respect for State law, from abstaining from hearing a particular proceeding arising under

title 11 or arising in or related to a case under title 11.” 28 U.S.C. § 1334(c)(1). Section 1334(c)(2)

provides:

Upon timely motion of a party in a proceeding based upon a State law

claim or State law cause of action, related to a case under title 11 but

not arising under title 11 or arising in a case under title 11, with

respect to which an action could not have been commenced in a court

of the United States absent jurisdiction under this section, the district

court shall abstain from hearing such proceeding if an action is

commenced, and can be timely adjudicated, in a State forum of

appropriate jurisdiction.

Id. § 1334(c)(2).

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whether there has been some abuse of the bankruptcy process”).2

 In its moving papers, Plaintiffs

argue the application of seven factors in determining whether there are equitable grounds for

remand. But application of the law to the facts is not, as indicated above, a question of law. 

While Plaintiffs do suggest that the bankruptcy court committed a pure legal error because it

failed to make any “findings of fact” to support its order denying remand, the Court does not agree

with Plaintiffs’ characterization and/or interpretation of the bankruptcy court’s statement that “I’m

not making any findings.” Tr. at 25. When that statement is taken in context, it is clear that the

bankruptcy court was simply instructing defendants to prepare an order stating that the motion to

remand was being denied for the reasons stated on the record. See also Tr. at 25 (bankruptcy court

stating that, “[i]f Judge Klein or an appellate court wants to know what my reasoning was, the record

is the record”). 

This leaves only the order denying Plaintiffs’ motion to abstain.3

 Here, the Court is not

without some sympathy for Plaintiffs because it is not entirely clear from the record what rationale

supported the bankruptcy court’s order denying abstention. But that does not thereby make the

Case 3:15-cv-02181-EMC Document 13 Filed 07/24/15 Page 4 of 6
United States District Court

For the Northern District of California

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 The Court notes that there is also a pending motion, filed by Plaintiffs, titled “motion for

time extension pending leave to appeal ruling.” See Docket No. 12 (motion). It is not clear from the

brief what exact relief Plaintiffs are seeking. In any event, that request for relief appears moot in

light of the Court’s ruling above.

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bankruptcy court’s order erroneous; or even if so, that does not mean that the bankruptcy court

thereby committed a pure legal error justifying an interlocutory appeal (i.e., a controlling issue of

law). Instead of seeking relief by means of an interlocutory appeal, Plaintiffs could have sought

clarification from the bankruptcy court on its order denying the motion to abstain. Or, potentially,

Plaintiffs could even have taken up the abstention issue with the bankruptcy court in the Eastern

District of California. Either way, Plaintiffs have not demonstrated that there is enough to warrant

an interlocutory appeal. There are no “extraordinary circumstances” (Cameron, 2014 WL 1028436

at *4) justifying an interlocutory appeal given these remedies available to Plaintiffs. Although the

Court emphasizes that it is not making any ruling here as to whether or not there should have been

abstention, the Court notes that, “[a]bstention can exist only where there is a parallel proceeding in

state court.” Security Farms v. Int’l Bhd. of Teamsters, 124 F.3d 999, 1010 (9th Cir. 1997); see also

In re Cedar Funding, Inc., 419 B.R. 807, 820 (B.A.P. 9th Cir. 2009) (stating that “the abstention

requirements under 28 U.S.C. § 1334(c)(1) or (2) are inapplicable to removed proceedings, since a

successful removal effectively extinguishes the parallel proceeding in state court”). The Court also

notes that, “[w]here a post-petition claim [is] brought against a court-appointed professional, . . . the

suit [is] a core proceeding.” Schultze v. Chandler, No. 12-15186, 2014 U.S. App. LEXIS 15067, at

*7 (9th Cir. Aug. 1, 2014).

Accordingly, the Court grants the motions to dismiss the appeals and denies the motions for

leave to file an interlocutory appeal. Because Plaintiffs’ motions sought leave to appeal with respect

to all of the defendants in this case (even though not all defendants moved to dismiss), the Court

deems it proper to close the file in this case in its entirety.4

 

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Case 3:15-cv-02181-EMC Document 13 Filed 07/24/15 Page 5 of 6
United States District Court

For the Northern District of California

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The Clerk of the Court is instructed to enter judgment in accordance with the above and

close the file in this case. 

This order disposes of Docket Nos. 5, 10, and 12.

IT IS SO ORDERED.

Dated: July 24, 2015

_________________________

EDWARD M. CHEN

United States District Judge

Case 3:15-cv-02181-EMC Document 13 Filed 07/24/15 Page 6 of 6