United States District Court, E.D. California
ORDER
Troy
L. Nundey United States District Judge
This
matter is before the Court pursuant to Appellee S&J
Advertising’s (hereinafter referred to as
“Appellee” or “Corporation”) Motion
to Dismiss Appellants Patrick and Suzanne Clark’s
(“Appellants” or “Debtors”) Notice of
Bankruptcy Appeal.[1] (Appellee’s Mot. to Diss., ECF No.
6.) Appellants oppose the motion. (Appellant’s
Opp’n. to Mot. to Diss., ECF No. 7.) For the reasons
set forth below, Appellee’s Motion to Dismiss is
GRANTED IN PART and DENIED IN PART.
Appellee
also submits a Motion for Reconsideration moving the Court to
reconsider its previous Order granting the consolidation of
three appeals by the Appellant. (Appellee’s Mot. to
Recon., ECF No. 14.) Appellants oppose the motion.
(Appellant’s Opp’n. to Mot. to Recon., ECF No.
17.) For the reasons set forth below, Appellee’s Motion
to Reconsider is DENIED.
I.
FACTUAL BACKGROUND
As the
Court understands, Appellant Debtors and Appellee Corporation
have been involved in bankruptcy proceedings regarding
Appellants’ 50% interest in the Appellee Corporation.
Appellants filed their Chapter 13 bankruptcy case in February
of 2014 and subsequently filed a Certificate of
“Election to Wind Up and Dissolve” the
Corporation with the California Secretary of State in June of
2014. (ECF No. 6 at 2.) In response to this bankruptcy
filing, Appellee Corporation filed a “Petition to Stay
the Dissolution and Ascertain the Value of the Dissolving
Shareholder’s Shares” as provided under
California Corporate Code Section 2000 (hereafter
“§2000”) which was granted by the Solano
Superior Court. (ECF No. 6 at 2.) The bankruptcy court then
issued an Order allowing the parties to continue within its
jurisdiction and under §2000 guidelines as ordered by
the state court. (ECF No. 6 at 2.) The bankruptcy court
approved the Chapter 13 plan to provide for the sale of the
Appellants’ 50% interest to Appellee under §2000,
with the sale proceeds to fund the plan. (ECF No. 6 at 2.)
Appellee
and Appellants chose their respective appraisers. Together,
the two appraisers spent several months investigating and
reviewing the case, eventually issuing a detailed 27-page
report of the valuation of the Appellants’ shares. (ECF
No. 6 at 3.) Appellants presented a sworn valuation of their
shares at $42, 250. (Appellee’s Reply, ECF No. 8 at 2.)
In contrast, the joint appraisers valued Appellants’
shares at $247, 000. (ECF No. 6 at 3.) Appellee filed a
“Motion to Approve Valuations and Transfer” to
request that the bankruptcy court approve the joint
appraisers’ valuation. In response, Appellants filed
273 pages of opposition. (ECF No. 6 at 3.)
The
bankruptcy court held a hearing on September 9, 2015 at which
it stated oral findings regarding Appellee’s
“Motion to Approve Valuations and Transfer” as
well as the extensive objections made by Appellants. (ECF No.
6 at 3.) Continuing on the same matter on September 11, 2015,
the court issued an order sustaining certain objections of
Appellants and overruling others. (ECF No. 6 at 3.) The court
also set a date for an evidentiary hearing to further address
the merits of the Appellants’ objections to the
appraisal. (ECF No. 6 at 3.)
In
response to a “Motion to Clarify” filed by
Appellee, the bankruptcy court held another hearing on
October 20, 2015 to clarify the previous September hearings.
At this hearing, the court issued a detailed
“Memorandum Decision” determining that the
valuation of the Appellants’ shares would be governed
by California state law and §2000 guidelines. (ECF No.
14 at 2-3.) Here again, the court set a date for an
evidentiary hearing to further address the merits of
Appellants’ lengthy objections. (ECF No. 14 at 2-3.)
In a
separate proceeding on February 3, 2016, the bankruptcy court
granted Appellee’s “Motion to Convert
Debtor’s Chapter 13 Case to Chapter 7.” (ECF No.
14 at 3.) In this order, the bankruptcy court explained that
the case was converted, among other reasons, for
Appellants’ “intentional disobedience of the
court’s orders and deceitful conduct toward the court
and creditors for misrepresenting the value of [their]
shares.” (ECF No. 14 at 3.)
II.
PROCEDURAL BACKGROUND
Appellants
have moved this Court to appeal three orders issued by the
bankruptcy court. Appellants’ First Notice of Appeal,
Case No. 2:15-CV-02021 TLN, to this Court was made on
September 23, 2015, appealing the bankruptcy court’s
September 9th and 11th, 2015 orders. These hearings regarded
the court’s findings on Appellee’s “Motion
to Approve Valuations and Transfer.” (Appellant’s
First Not. of Appeal, ECF No. 1.)
Appellants
then filed their Second Notice of Appeal on October 22, 2015,
Case No. 2:15- CV-02228 TLN, again appealing the bankruptcy
court’s September hearings in addition to the October
2015 “Memorandum Decision.” (Appellant’s
Sec. Not. of Appeal, ECF No. 12.)
Consequently,
Appellee filed a Notice of Related Cases for the two
aforementioned appeals on January 7, 2016, stating that
“the two cases are related because they are both an
appeal of the same bankruptcy court minute order dated
September 11, 2015.” (Appellee’s Not. of
Rel.’d Cases, ECF No. 5 at 1.) (The First and Second
Appeals will hereafter be referred to as the
“valuation-related” appeals.)
In
response to these two valuation-related appeals, Appellee
filed a Motion to Dismiss on January 8, 2016. (ECF No. 6.)
Appellee asserts, and the bankruptcy court agrees, that these
first two valuation appeals are interlocutory and therefore
not appealable to the District Court.[2] (ECF No. 6 at 5.) Appellants
opposed the motion on January 29, 2016, arguing that the
appeals were in fact final judgements and thus appealable.
(ECF No. 7.) Appellee filed a Reply to the Opposition on
February 1, 2016. (ECF No. 8.)
Subsequently,
on February 9, 2016, Appellants filed yet another Notice of
Related Cases for a third appeal. The Third Appeal moves this
Court to appeal the February 2016 “Conversion
Order” issued by the bankruptcy court which converted
Appellants’ case from a Chapter 13 to a Chapter 7
plan.[3] (See generally Appellant’s
Not. of Rel.’d Cases, ECF No. 10.) This Third Appeal
was filed with this Court as case number 2:15-CV-00250. Upon
receipt of the second Notice of Related Cases, this Court
...