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Adelphia Recovery Trust v. Bank of America

September 5, 2007


The opinion of the court was delivered by: McKENNA, D.J.

(Related to 03 MDL 1529)



In a decision dated June 11, 2007 ("Decision"), the United States Bankruptcy Court, Southern District of New York (Gerber, B.J.), decided motions for dismissal pursuant to Fed. R. Civ. P. 12(b)(6) addressed to the adversary proceeding complaint ("Complaint") of the Creditors Committee in the Chapter 11 proceedings relating to Adelphia Communications Corporation and affiliated companies ("Adelphia"). Familiarity with the Decision is assumed. This Court had previously, on February 9, 2006, withdrawn the reference of the adversary proceeding to the Bankruptcy Court, with the understanding that Judge Gerber would decide the pending, and already briefed and argued, Rule 12(b)(6) motions.

Pursuant to the confirmed First Modified Fifth Amended Joint Chapter 11 Plan for Adelphia Communications Corporation and Certain of its Affiliated Debtors, title to the causes of action asserted in the Complaint have been transferred to the Adelphia Recovery Trust.*fn1

In the Decision, Judge Gerber dismissed a number of claims in whole or in part and left a number of other claims standing. The plaintiff does not seek leave to appeal while a number of defendants do.*fn2 Plaintiff opposes the grant of leave to appeal to any defendant on any issue.


Judge Gerber's Decision is an interlocutory order, an appeal from which may be taken only with leave of court. 28 U.S.C. § 158(a)(3). Section 158 itself gives no guidance as to the criteria by which a court is to decide whether or not leave to appeal an interlocutory order should be given, but, in the Second Circuit at any rate, district courts have usually applied the criteria that apply to certifications of interlocutory appeals to the courts of appeal under 28 U.S.C. § 1292(b). See, e.g., Americare Health Group, Inc. v. Melillo, 223 B.R. 70, 73-74 (E.D.N.Y. 1998). Under Section 1292(b) a district court may, in its discretion, allow an appeal if it is "of the opinion that [the] order [from which appeal is sought] involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation." 28 U.S.C. § 1292(b). "By its plain terms, Section 1292(b) may only be used to challenge legal determinations." California Public Employees' Retirement System v. Worldcom, Inc., 368 F.3d 86, 96 (2d Cir. 2004) (citation omitted). Generally, Section 1292(b) has been regard as "a rare exception to the final judgment rule that generally prohibits piecemeal appeals." Koehler v. Bank of Bermuda Ltd., 101 F.3d 863, 865 (2d Cir. 1996). Judge Preska has pointed out, however, that there are reasons not to apply as strict a standard to motions for leave to appeal an interlocutory bankruptcy court decision to a district court as applies to attempts to appeal an interlocutory district court decision to a court of appeals. Mishkin v. Ageloff, 220 B.R. 784, 790-92 (S.D.N.Y. 1998).

However strictly or not Section 1292(b) is followed, "'[t]he critical requirement is that it [an interlocutory appeal] have the potential for substantially accelerating the disposition of the litigation.'" In re Duplan Corp., 591 F.2d 139, 148 n.11 (2d Cir. 1978) (Friendly, J.) (quoting 9 Moore, Federal Practice, ¶ 110.22[2] at 260 (1975)). See also Primavera Familienstifung v. Askin, 139 F.Supp.2d 567, 570 (S.D.N.Y. 2001).

The Court, here, follows Section 1292(b), attempting to apply its criteria in a practical manner to a massive litigation, based on a complaint almost 250 pages long, asserting, after the dismissals without leave to replead embodied in the Decision and not counting Claims 17 through 24, over 30 claims surviving in whole or in part. A very lengthy jury trial is to be expected. If, on appeal, any claims now standing will be dismissed, that will assist in accelerating disposition of the case. If not, the appeal will still assist in accelerating disposition because the issues of law involved in the claims as to which leave to appeal is granted will in any event need to be considered in some detail at trial at the end of plaintiff's case or at a charge conference. The Court does not consider it an appropriate approach to the present motions to attempt now to determine preliminarily whether, on any issue, Judge Gerber was correct or not, and nothing herein should be so read.

The Court has attempted to distinguish between issues of law fitted for consideration on the face of the complaint and issues which have a factual component better suited for treatment at trial or on a motion for summary judgment after completion of discovery.

Since the decision whether or not to grant leave to appeal is largely discretionary, see In re Orange Boat Sales, 239 B.R. 471, 473-74 (S.D.N.Y. 1999) (B.D. Parker, Jr., J.) (citations omitted), the Court, in the interests of avoiding unnecessary delay, has not discussed here every specific argument advanced in the briefs in support of or opposition to the seven motions (see n.2, supra) for leave to appeal.


The Decision denied the motions for dismissal of Claims 1 through 16 and 25 through 31 of the Complaint, alleging intentional and constructive fraudulent conveyances, under ...

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