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Canadian Pacific Railway Co. v. Keach

United States District Court, D. Maine

October 26, 2017

CANADIAN PACIFIC RAILWAY COMPANY, et al., Appellants,
v.
ROBERT J. KEACH, in his capacity as estate representative of the post-effective date estate of Montreal, Maine & Atlantic Railway, Ltd., Appellee.

          ORDER DENYING APPELLANT'S MOTION SEEKING INTERLOCUTORY APPEAL

          JON D. LEVY U.S. DISTRICT JUDGE.

         In July of 2013, a freight train operated by the Montreal Maine & Atlantic Railway, Ltd. (“MMA”), including its 72 carloads of crude oil, derailed in the town of Lac-Megántic, Quebec, leading to a series of explosions that destroyed part of the downtown area and killed 47 people. The next month, MMA filed a chapter 11 Bankruptcy proceeding in this District and simultaneously sought similar protection in Canada. In January 2014, Robert Keach, then acting as the chapter 11 trustee of the MMA estate, commenced an adversary proceeding against multiple defendants who are no longer parties to the action. In January 2015, Keach filed an Amended Complaint which added Appellant Canadian Pacific Railway Company as a defendant.

         In September 2016, Keach, now in his capacity as the estate representative of the estate of MMA (the “Estate Representative”), filed a Third Amended Complaint in the U.S. Bankruptcy Court against Canadian Pacific Railway Company and Soo Line Railroad Company (collectively, “CP”). Keach alleged claims for negligence (Count One); breach of contract/warranty (Count Two); negligent misrepresentation (Count Three); and disallowance of CP's proof of claim in the underlying bankruptcy involving MMA (Count Four). CP subsequently moved to dismiss the Third Amended Complaint on grounds of forum non conveniens and for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). In July 2017, the Bankruptcy Court issued an interlocutory order granting CP's motion in part as to the Breach of Contract/Warranty Claims, but denied it as to the remaining counts.

         This matter is before me on CP's motion (ECF No. 7) seeking leave to appeal from the Bankruptcy Court's interlocutory order. CP's motion invokes the District Court's jurisdiction “to hear appeals . . . with leave of the court, from interlocutory orders and decrees” of bankruptcy judges established in 28 U.S.C.A. § 158(a)(3) (2017). In the alternative, CP's motion urges me to exercise the District Court's jurisdiction to review, “with leave of the court, [the] interlocutory orders and decrees, of bankruptcy judges entered in cases and proceedings referred . . . under section 157 of this title.” Id. Section 157 refers to 28 U.S.C.A. § 157(c)(1) (2017), which authorizes bankruptcy judges to submit proposed findings of fact and conclusions of law to the District Court in “a proceeding that is not a core proceeding but that is otherwise related to a case under title 11” of the United States Code (“Title 11” or the “Bankruptcy Code”). Id.

         For the reasons explained below, I reach two conclusions: First, CP's motion invokes the District Court's appellate jurisdiction established in § 158(a)(3), and does not invoke the related jurisdiction to consider proposed findings of fact and conclusions of law in non-core proceedings. Second, CP has not demonstrated that leave to appeal from the Bankruptcy Court's interlocutory order is warranted. Thus, I deny the motion.

         I. LEGAL ANALYSIS

         A. Jurisdiction

         U.S. District Courts have jurisdiction over appeals from final judgments, orders, and decrees of the Bankruptcy Courts, 28 U.S.C.A. § 158(a)(1) (2017), including the discretion to hear appeals taken from the interlocutory orders and decrees, id. at § 158(a)(3). See also In re Jackson Brook Inst., Inc., 280 B.R. 1, 4 (D. Me. 2002). Section 158(a)(3) provides:

The district courts of the United States shall have jurisdiction to hear appeals with leave of the court, from . . . 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.

28 U.S.C.A. § 158(a)(3).

         In a “core proceeding” before a Bankruptcy Court-one arising under the Bankruptcy Code, Title 11-appellate review of an interlocutory order or decree is, as provided in § 158(a)(3), “with leave of court.” 28 U.S.C.A. §§ 157(b)(1), § 158(a)(3). See also Stern v. Marshall, 564 U.S. 462, 474 (2011). The same standard applies in a non-core proceeding-one that does not “arise under” Title 11 but is merely “related to” a case under Title 11. §§ 157(b)(1), 157(c)(1); Stern, 564 U.S. at 474. In non-core proceedings, the Bankruptcy Court submits proposed findings of fact and conclusions of law to the District Court, which then enters a final judgment after reviewing de novo any matter to which a party objects. § 157(c)(1).

         Where, as here, the Bankruptcy Court issues an order or decree in a non-core proceeding that dismisses some, but not all of the claims, the order is interlocutory. Fleet Data Processing Corp. v. Branch (In re Bank of New England Corp.), 218 B.R. 643, 647 (B.A.P. 1st Cir. 1998). Section 158(a)(3) provides that appeals from interlocutory orders and decrees in “cases and proceedings referred to the bankruptcy judges under section 157 of this title, ” such as non-core proceedings referred to the bankruptcy judge, are also subject to “leave of court.” In short, appellate review of an interlocutory order of the Bankruptcy Court, whether it is an interlocutory order entered in a core proceeding or in a non-core proceeding, is only permitted “with leave of court, ” as stated in § 158(a)(3).

         CP contends that the Bankruptcy Court's order granting in part and otherwise denying its motion to dismiss is not an “order” of the Bankruptcy Court for purposes of § 158(a)(3), but is instead “proposed findings of fact and conclusions of law” under section 157(c)(1). Therefore, CP argues, it is subject to de novo review in the District Court without leave of court. This argument is contrary, however, to the plain and unambiguous language of § 158(a)(3), which recognizes that Bankruptcy Courts may enter “interlocutory orders and decrees” in non-core proceedings, i.e., “cases and proceedings referred to bankruptcy judges under section 157.” § 158(a)(3). Such “interlocutory orders and decrees” are not “proposed findings of fact and conclusions of law” pursuant to § 157(c)(1) that may result in the entry of a final order or judgment.[1]

         Thus, because the Bankruptcy Court issued an interlocutory order not a proposed finding of fact and conclusions of law, the District Court's jurisdiction arises “with leave of court, ” ...


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