United States District Court, S.D. New York
MF GLOBAL HOLDINGS LTD., as Plan Administrator, and MF GLOBAL ASSIGNED ASSETS LLC, Plaintiffs,
ALLIED WORLD ASSURANCE CO. LTD., IRON-STARR EXCESS AGENCY LTD., IRONSHORE INS. LTD., STARR INS. & REINSURANCE LTD., and FEDERAL INS. CO., Defendants.
DAY, Bruce Bennett, Esq., Edward M. Joyce, Esq., Jane Rue
Wittstein, Esq. Attorneys for Plaintiffs
CRAVATH, SWAINE & MOORE LLP, Daniel Slifkin, Esq., Omid
H. Nasab, Esq., WHITE AND WILLIAMS LLP, Erica Kerstein, Esq.
Attorneys for Allied World Defendants
D'AMATO & LYNCH, Mary Jo Barry, Esq., Maryann Taylor,
Esq. Attorneys for Iron-Starr Defendants
W. SWEET, U.S.D.J.
Allied World Assurance Co. Ltd. ("Allied
World"), Iron-Starr Excess Agency Ltd., Ironshore
Insurance Ltd., Starr Insurance & Reinsurance Ltd.
(collectively, the "Iron-Starr Defendants" and,
collectively with Allied World, the "Bermuda
Insurers") have several motions presently before the
Court. The Bermuda Insurers seek leave to appeal the United
States Bankruptcy Court for the Southern District of New
York's (the "Bankruptcy Court") January 12,
2017, order granting a preliminary injunction for Plaintiffs
MF Global Holdings, Ltd. ("MFGH"), MF Global
Assigned Assets LLC ("MFGAA, " collectively with
MFGH, "Plaintiffs") and finding the Bermuda
Insurers in contempt for violating the Bankruptcy Court's
December 21, 2016, temporary restraining order. The Bermuda
Insurers have also moved, either as of right or with leave of
the Court, to appeal the Bankruptcy Court's January 23,
2017, order finding that the Bermuda Insurers violated the
Barton doctrine and requiring that their Bermuda
proceeding be terminated.
the findings and conclusions set forth below, each motion is
as to MFGH's chapter 11 bankruptcy and the parties'
prior dealings before the Bankruptcy Court, the Supreme Court
of Bermuda, Civil Jurisdiction (Commercial Court), and this
Court, have been described in previous opinions. See MF
Glob. Holdings Ltd. v. Allied World Assurance Co., No.
17 Civ. 106 (RWS), 2017 WL 548219, at *l-2 (S.D.N.Y. Feb. 10,
2017); In re MF Glob. Holdings Ltd., 561 B.R. 608,
612 (Bankr. S.D.N.Y. 2016). Familiarity is assumed.
January 12, 2017, the Bankruptcy Court converted its
previously-issued temporary restraining order
("TRO") prohibiting the Bermuda Insurers from
continuing to enforce an Anti-Suit Injunction issued by the
Bermuda Court into a preliminary injunction. On the same day,
the Bankruptcy Court also found the Bermuda Insurers in
contempt for violating the TRO.
January 23, 2017, the Bankruptcy Court issued an oral ruling
that found the Bermuda Insurers had violated the
Barton doctrine due to their instigation of
proceedings in the Bermuda Court without the Bankruptcy
Court's approval and issued a written order directing the
Bermuda Insurers to dismiss the Bermuda
proceedings. On January 24, 2017, the Bankruptcy Court
entered an order clarifying that the Bermuda proceedings were
to be dismissed without prejudice. On January 31, 2017, the
Bankruptcy Court issued a written opinion as to its
Barton doctrine decision (together with the January
23 rulings and January 24 order, the "Barton
January 31, 2017, the Bermuda Insurers sought leave to appeal
the preliminary injunction and contempt orders. (17 Civ. 742,
Dkt. 4; 17 Civ. 780, Dkt. 3.) On February 6, 2017, the
Bermuda Insurers appealed the Barton Order. (17 Civ.
953, Dkt. 1; 17 Civ. 993, Dkt. 1.)
motion as to the preliminary injunction and contempt order
was heard and marked fully submitted on March 2, 2017. The
motion as to the Barton order was heard and marked
fully submitted on April 19, 2017.
24, 2017, the Iron-Starr Defendants wrote the Court to
request that their involvement as to these proceedings be
stayed in light of those parties having reached a settlement
in principal with Plaintiffs, which the Court
granted. (17 Civ. 933, Dkt. 15.)
courts are vested with appellate jurisdiction over bankruptcy
courts if the bankruptcy court ruling is "final"
under 28 U.S.C. § 158(1)(a) or "of the nature that
renders it appropriate for interlocutory review"
pursuant to 28 U.S.C. § 158(a)(3). In re AMR
Corp., 490 B.R. 470, 475 (S.D.N.Y. 2013); see also
In re Residential Capital, LLC, No. 14 Civ. 9711 (RJS),
2015 WL 5729702, at *2 (S.D.N.Y. Sept. 30, 2015) .
the context of bankruptcy proceedings, whether an order is
"final" for purposes of appealing is
"different" and "more flexible than in
ordinary civil litigation." In re Fugazy Exp.,
Inc., 982 F.2d 769, 775 (2d Cir. 1992) (quoting In
re Hooker Investments, Inc., 937 F.2d 833, 836 (2d Cir.
1991)). Bankruptcy proceedings "often continue for long
periods of time, and discrete claims are often resolved at
various times over the course of the proceedings"; thus,
a final order "need not resolve all of the issues raised
by the bankruptcy; but it must completely resolve all of the
issues pertaining to a discrete claim, including issues as to
the proper relief." Id. at 775-76 (collecting
cases). "In all other respects, district courts apply
the same standards of finality [in a bankruptcy case] that .
. . apply to an appeal under 28 U.S.C. § 1291."
In re Residential Capital, 2015 WL 5729702, at *3
(quoting In re Fugazy Exp., 937 F.2d at 775)
(internal quotation marks omitted).
bankruptcy court's order or decree is not final, a
district court may still grant leave to hear the appeal
pursuant to 28 U.S.C. § 158(a)(3). For such
interlocutory orders, "[t]o determine whether leave to
appeal should be granted, district courts apply the standards
prescribed in 28 U.S.C. § 1292(b)." In re
Anderson, 550 B.R. 228, 234 (S.D.N.Y. 2016) (citing
In re Kassover, 343 F.3d 91 (2d Cir. 2003)). A
district court may exercise its discretion to grant leave to
appeal when the order at issue involves: "(1) a
controlling question of law (2) as to which there is a
substantial ground for difference of opinion and (3) that an
immediate appeal from which may materially advance the
ultimate termination of the litigation." Id.
(citing 28 U.S.C. § 1292(b)). Granting a permissive
interlocutory appeal is appropriate "where appellate
review might avoid protracted and expensive litigation."
German v. Fed. Home Loan Mortg. Corp., 896 F.Supp.
1385, 1398 (S.D.N.Y. 1995). However, "the party seeking
an interlocutory appeal has the burden of showing
'exceptional circumstances' to 'overcome the
general aversion to piecemeal litigation' and
'justify a departure from the basic policy of postponing
appellate review until after the entry of a final
judgment.'" In re Perry H. Koplik & Sons,
Inc., 377 B.R. 69, 73-74 (S.D.N.Y. 2007) (quoting
Klinghoffer v. S. N.C. Achille Lauro Ed Altri-Gestione
Motonave, 921 F.2d 21, 24 (2d Cir. 1990)). ...