United States District Court, E.D. Michigan, Southern Division
In re GREEKTOWN HOLDINGS, LLC, et al., Debtors.
OPINION AND ORDER (1) DENYING THE PAPAS AND GATZAROS DEFENDANTS' APPEAL AS OF RIGHT FROM BANKRUPTCY JUDGE WALTER SHAPERO'S AUGUST 13, 2014 ORDER DENYING THEIR MOTION FOR SUMMARY JUDGMENT AND (2) DENYING THEIR MOTION FOR LEAVE TO APPEAL (ECF NO. 1)
PAUL D. BORMAN, District Judge.
Before the Court is Defendants Dimitrios and Viola Papas (the "Papas" Defendants) and Ted and Maria Gatzaros's (the "Gatzaros" Defendants) Motion for Leave to Appeal Bankruptcy Judge Walter Shapero's August 13, 2014 Order Denying their Motion for Summary Judgment in Adversary Proceeding No. 10-05712 (ECF No. 473, Bankr. Adv. Pro. 10-05712) (hereinafter "the Summary Judgment Order"). (ECF No. 1, Motion for Leave to Appeal.) Also before the Court is the related issue of whether the Papas and Gatzaros Defendants may appeal the Summary Judgment Order as of right. Plaintiff has filed a response to the Motion for Leave to Appeal and a Supplemental Brief on the issue of an appeal as of right. (ECF Nos. 3, 9.) The Papas and Gatzaros Defendants have filed a reply brief in support of their Motion for Leave to Appeal and a Supplemental Brief on the issue of an appeal as of right. (ECF Nos. 5, 8.) The Court has determined that oral argument will not assist the Court in determining the merits of the issues presented and therefore will decide the matter on the briefs submitted and without hearing. See E.D. Mich. L.R. 7.1(f)(2). For the reasons that follow, the Court determines that Judge Shapero's Summary Judgment Order is not appealable as of right and DENIES the Papas and Gatzaros Defendants' Motion for Leave to Appeal the Summary Judgment Order.
This action is one of several that have come before this Court in connection with the Greektown Bankruptcy (Bankr. Case No. 08-53104) Adversary Proceeding No. 10-05712, in which the Litigation Trustee seeks to recover, under 11 U.S.C. §§ 544 and 550 and the Michigan Uniform Fraudulent Transfer Act, Mich. Comp. Laws § 566.31 et seq. ("MUFTA"), $155 million in transfers made to the Papas and Gatzaros Defendants in 2005 by the insolvent debtor Greektown Holdings, LLC. In the MUFTA proceeding, the Litigation Trustee asserts that in 2005, Greektown Holdings, LLC sold notes and raised $185 million in cash and then transferred $177 million of that cash to various third-parties, including the Papas and Gatzaros Defendants, for no consideration in order to satisfy pre-existing debts of the owners of Greektown Holdings, LLC.
In this action, the Papas and Gatzaros Defendants seek to appeal Judge Shapero's denial of one of three motions for summary judgment they have filed in the Bankruptcy Court; the other two motions remain pending but unresolved in the Bankruptcy Court. In the underlying summary judgment motion that is the subject of this appeal, the Papas and Gatzaros Defendants argued that the Litigation Trustee's action against them under MUFTA must be dismissed because the underlying debt transaction challenged in the MUFTA proceeding was approved by the Michigan Gaming Control Board ("MGCB") in 2005:
Put simply, Plaintiff cannot use MUFTA to avoid and undo the very transaction that the MGCB approved in 2005 under the [Michigan] Gaming [Control] Act [Mich. Comp. Laws § 432.201, et seq. ]. The Gaming Act preempts the use of MUFTA to second guess and undermine the MGCB's approval of the 2005 Debt Transaction, an approval that was expressly and exclusively entrusted to the MGCB by the Gaming Act.
ECF No. 1, Motion for Leave to Appeal 2, PgID 15 (alterations added).
Judge Shapero rejected the Papas and Gatzaros Defendants' argument and concluded that the MGCB's approval of the 2005 debt transaction under the Gaming Act does not preempt the Litigation Trustee's MUFTA claims and does not preclude the MUFTA action. Judge Shapero denied the motion for summary judgment. The Papas and Gatzaros Defendants now seek to appeal that ruling either as final order appealable as of right or alternatively seek leave to appeal from an interlocutory order. For the reasons that follow, the Court concludes that the Order denying the Motion for Summary Judgment is not a final Order appealable as of right and DENIES the Motion for Leave to Appeal.
A. Judge Shapero's Order Denying Summary Judgment is Not A Final Order and Not Apppealable as of Right
This Court has jurisdiction to hear an appeal from a final order of the bankruptcy court under 28 U.S.C. § 158(1), which provides that district courts "shall have jurisdiction to hear appeals (1) from final judgments, orders, and decrees" of the bankruptcy courts. "A final order ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.'" In re Wicheff, 215 B.R. 839, 840 (6th Cir. BAP 1998) (citing Belfance v. Bushey (In re Bushey), 210 B.R. 95, 98 (6th Cir. BAP 1997)). While the Sixth Circuit has recognized that the concept of finality is to be applied more pragmatically in the context of an overall bankruptcy proceeding, allowing for orders that dispose of "discrete issues" to be appealed immediately, see In re Dow Corning, 86 F.3d 482, 488 (6th Cir. 1996), the Papas and Gatzaros Defendants fail to demonstrate why this relaxed approach should apply in the context of an order denying summary judgment within an adversary proceeding which does not resolve any discrete issue and does not end the litigation on the merits:
The test for finality in the bankruptcy context has often been stated as requiring a showing that the challenged order finally dispose[s] of discrete disputes within the larger case.... [The] test has also been said to require a showing that the order ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.
In re Gray,
447 B.R. 524, 528 (E.D. Mich. 2011) (internal quotation marks and citations omitted) (first alteration in original); In re Campbell, No. 10-12630, 2011 WL 768644, at *1 (E.D. Mich. Feb. 28, 2011) (noting that "interlocutory bankruptcy appeals should be the exception, rather than the rule, " and holding that bankruptcy court's order denying summary judgment was not a final order and could only be appealed with leave of court) (alteration omitted). See also In re Saber, 264 F.3d 1317, 1324 (11th Cir. 2001) ("A final ...