United States District Court, N.D. West Virginia
MEMORANDUM OPINION AND ORDER GRANTING MOTION TO
DISMISS FOR LACK OF JURISDICTION [DKT. NO. 3] AND DISMISSING
M. KEELEY, UNITED STATES DISTRICT JUDGE
2013 CCRE12 Crossings Mall Road, LLC (“COMM
2013"), appeals an order entered by the Honorable
Patrick M. Flatley, United States Bankruptcy Judge
(“Bankruptcy Court”), denying its motion to
dismiss the voluntary petition for bankruptcy pursuant to
Chapter 11 of the Bankruptcy Code filed by debtor Tara Retail
Group, LLC (“Tara”). Prior to the Court's
receipt of the designated record, Tara moved to dismiss the
appeal for lack of jurisdiction (Dkt. No. 3). The question
presented is whether the Bankruptcy Court's denial of a
motion to dismiss pursuant to 11 U.S.C. § 1112(b) is a
final and appealable order under 11 U.S.C. § 158(a)(1).
For the reasons that follow, the Court concludes that such an
order is interlocutory, and denies leave for COMM 2013 to
bring the appeal. It thus GRANTS Tara's motion to dismiss
(Dkt. No. 3) and DISMISSES this bankruptcy appeal.
manages and operates Elkview Crossing Mall (“Elkview
Crossing”), a shopping center in Elkview, West
Virginia. COMM 2013 is Tara's principal creditor and is
secured by a lien on Elkview Crossing, as well as an
assignment of its rents. In June 2016, flooding destroyed the
bridge and culvert that provided the only public access to
Elkview Crossing, which has remained inaccessible and
inoperable since that time. Although Tara had remained in
compliance with its monetary obligations to COMM 2013 prior
to the flood, it has been unable to generate rents and make
payments since Elkview Crossing became inaccessible.
January 24, 2017, Tara filed a voluntary petition for
bankruptcy pursuant to Chapter 11 of the Bankruptcy Code
(“Petition”). COMM 2013 moved to dismiss the case
pursuant to 11 U.S.C. § 1112(b), arguing that Tara had
failed to secure the appropriate corporate authority as
required by its governing documents. The Bankruptcy Court
denied COMM 2013's motion on April 13, 2017, finding
instead that Tara's independent director had ratified the
Petition by silence. COMM 2013 noticed its appeal from the
Bankruptcy Court's order based on this question of law.
Tara seeks dismissal of the appeal for lack of jurisdiction,
arguing that the Bankruptcy Court's order denying COMM
2013's motion to dismiss pursuant to § 1112(b) is
not a final and appealable order.
Motions to Dismiss Bankruptcy Cases
outset, it is important to distinguish two types of motions
to dismiss bankruptcy cases. Under 11 U.S.C. § 1112(b),
which COMM 2013 utilized in this case, interested parties may
request dismissal of a Chapter 11 case “for
cause.” “[P]arties may bring an action to dismiss
for ‘cause' under § 1112(b) throughout the
bankruptcy proceedings, and the circumstances that constitute
‘cause' may arise at anytime.” McDow v.
Dudley, 662 F.3d 284, 289 (4th Cir. 2011). The statute
provides an exemplary list of circumstances constituting
“cause, ” including gross mismanagement of the
estate, failure to maintain appropriate insurance, failure to
comply with a court order, failure to attend the meeting of
creditors without good cause, and material default with
respect to a confirmed plan of reorganization. 11 U.S.C.
§ 1112(b)(4). Moreover, precedent establishes that, if a
corporate entity files for bankruptcy without the proper
authority under local law, the bankruptcy court lacks
jurisdiction and must dismiss the petition. Hager v.
Gibson, 108 F.3d 35, 39 (4th Cir. 1997).
other hand, under 11 U.S.C. § 707(b)(1), a party may
move for dismissal of a Chapter 7 case if “the granting
of relief would be an abuse of the provisions” of
Chapter 7. A case is considered presumptively abusive if the
debtor's disposable income rises above a statutory
threshold. McDow, 662 F.3d at 288 (citing 11 U.S.C.
§ 707(b)(2)(A)-(B)). After the Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005
(“BAPCPA”), the United States Trustee is directed
to determine whether each case is presumptively unreasonable,
notify the bankruptcy court of his determination, and move
for dismissal or explain why dismissal is inappropriate - all
within a brief period of time after the initial meeting of
creditors. Id. (citing 11 U.S.C. §§ 704,
Final and Interlocutory Orders
courts have jurisdiction to hear appeals “from final
judgments, orders, and decrees . . . of bankruptcy judges
entered in cases and proceedings” under the Bankruptcy
Code. 28 U.S.C. § 158(a). By contrast, district courts
have jurisdiction over appeals from interlocutory orders only
if the appellant seeks leave of the court. Id.
is commonly acknowledged that ‘finality' under
§ 158 or its predecessors must be interpreted in light
of the special circumstances of bankruptcy cases.”
Sumy v. Schlossberg, 777 F.2d 921, 923 (4th Cir.
1985). Although “[a] ‘final decision'
generally is one which ends the litigation on the merits and
leaves nothing for the court to do but execute the judgment,
” Catlin v. United States, 324 U.S. 229, 233
(1945), “[t]he concept of finality in bankruptcy cases
has been traditionally applied in a more pragmatic and less
technical way . . . than in other situations.” In
re Computer Learning Ctrs., Inc., 407 F.3d 656, 660 (4th
an order need not dispose of an entire bankruptcy case in
order to be appealable. As the Fourth Circuit recently
[t]he special or unique reason for this relaxed rule of
appealability in bankruptcy is that “[b]ankruptcy cases
frequently involve protracted proceedings with many parties
participating. To avoid the waste of time and resources that
might result from reviewing discrete portions of the action
only after a plan of reorganization is approved, courts have