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In re Coleman

July 12, 2006

IN RE: CHESTER COLEMAN, JR. AND JESSIE COLEMAN, DEBTORS.


The opinion of the court was delivered by: Spatt, District J.

MEMORANDUM OF DECISION AND ORDER

Bankruptcy Case No. 805-81533-288

Presently before the Court is an unopposed motion by the debtors Chester Coleman, Jr. and Jessie Coleman (the "debtors") for leave to appeal the decision of United States Bankruptcy Judge Stan Bernstein in the above captioned matter dated August 15, 2005. Judge Bernstein granted the motion of the United States Trustee (the "U.S. Trustee") for an extension of time to file a motion to dismiss the case for substantial abuse under 11 U.S.C. § 707(b) and to file a complaint seeking to deny the debtors' discharge under 11 U.S.C. § 727.

I. BACKGROUND

On March 15, 2005, the debtors filed a voluntary Chapter 7 petition in the United States Bankruptcy Court for the Eastern District of New York. On March 25, 2005, the U.S. Trustee requested information and documents from the debtors. On April 19, 2005, the Court held the initial Section 341 meeting of creditors. The debtors state that they produced the documents that the U.S. Trustee requested prior to or on the date of the initial Section 341 meeting.

On June 20, 2005, the U.S. Trustee made a motion for an extension of time within which to file a motion to dismiss the petition or to file a complaint to object to the debtors' discharge. Under the Bankruptcy Rules, the Court may grant such an extension only if the request is made within sixty days after the date of the initial Section 341 meeting of creditors and only "for cause." See Bank. R. 1017(e)(1), 4004(a), 4004(b). In this case the U.S. Trustee's only stated reason for asking for the extension was that it was investigating the matter to determine if grounds exist for filing a motion to dismiss or to object the debtors' discharge, and that it "require[d] additional time in order to determine what is the appropriate direction." The debtors opposed the motion on the grounds that it was not timely made and that the U.S. Trustee failed to establish "cause" warranting the extension.

On August 2, 2005, the parties argued the motion before Judge Bernstein. The U.S. Trustee argued that the extension was warranted because the debtors did not fully comply with its document request. The debtors argued that whatever the cause for the motion of the U.S. Trustee, that cause had to exist and be stated at the time the motion was made and, in this case, no such reason was stated in the U.S. Trustee's motion papers.

Judge Bernstein granted the U.S. Trustee's motion stating the following: I know, it has to be for cause, and that's a discretionary matter. . . .

I'm going to grant his motion for an extension, and if he doesn't have a meritorious 707(b) motion, I'll deal with what might be appropriate sanctions after the fact, but I'm not going to cut off the trustee. I think that U.S. Trustee has made a sufficient showing that he acted within a reasonable time period, that he performed his duty of due diligence.

On September 12, 2005, the debtors filed a motion for leave to file an interlocutory appeal from Judge Bernstein's decision.

II. DISCUSSION

Appeals from cases originating in the bankruptcy courts are governed by 28 U.S.C.§ 158. See 28 U.S.C. § 158; see also In re Arochem Corp., 176 F.3d 610, 618 (2d Cir. 1999) ("[Section 158] vests the district courts with appellate jurisdiction over bankruptcy court rulings."). "Appeals from non-final bankruptcy orders may be taken only with leave of the district court." In re Adorn Glass and Venetian Blind Corp., No. 05 Civ. 1890(RJH), 2005 WL 3481325, at *2 (S.D.N.Y. Dec. 16, 2005).

Neither the Bankruptcy Code nor the Federal Rules of Bankruptcy Procedure provide standards for district courts to follow in determining whether to grant leave to appeal an interlocutory order. Thus, the Courts look to the standard 28 U.S.C. § 1292(b), which provides the general standard for granting leave to appeal an interlocutory order. See In re Pappas, 207 B.R. 379, 381 (B.A.P. 2d Cir. 1997) ("Leave to appeal an interlocutory order of a bankruptcy court will be granted only where the standards prescribed in 28 U.S.C. § 1292(b) are satisfied.") (citations omitted); see also In re Kliegl Bros. Univ. Elec. Stage Lighting Co., 1999 WL 1487599, at *1 (E.D.N.Y. Dec. 15, 1999); In re Bimco Indus., 124 B.R. 623, 625-26 (E.D.N.Y 1991).

Under 28 U.S.C. 1292(b), leave to appeal will be granted (1) if the decision involves a controlling question of law; (2) as to which there is substantial ground for difference of opinion; and (3) where an immediate appeal may materially advance the litigation. 28 U.S.C. ยง 1292(b); In re Kliegl Bros., 1999 WL 1487599, at *1. "[T]he determination of whether [an interlocutory appeal] is appropriate under these standards lies with the discretion of the district court." Certain Underwriters at Lloyd's, London v. ABB Lummus Global, Inc., No. 03 Civ. 7248 (JGK), 2004 WL 1286806, at *6 (S.D.N.Y. June 10, 2004). However, the Second Circuit has stated that "only 'exceptional circumstances will justify a departure from the basic policy of postponing appellate review until after the entry of a final judgment.' " ...


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