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Southstar Capital Group, I, LLC v. 1662 Multifamily LLC

United States District Court, M.D. Florida, Orlando Division

August 8, 2019

SOUTHSTAR CAPITAL GROUP, I, LLC, COTTINGTON ROAD TIC, LLC and DURBAN ROAD TIC, LLC, Plaintiffs,
v.
1662 MULTIFAMILY LLC, HINES 1662 MULITFAMILY, LLC, HINES INVESTMENT MANAGE ME NT HOLDINGS LIMITED PARTNERSHIP, HIMH GP, LLC, HINES REAL ESTATE HOLDINGS LIMITED PARTNERSHIP, HINES INTEREST LIMITED PARTNERSHIP, JCH INVESTMENTS, INC. and URBAN OAKS BUILDERS, LLC, Defendants.

          ORDER

          PAUL G. BYRON, UNITED STATES DISTRICT JUDGE

         This cause comes before the Court without oral argument on the following:

         1. Plaintiffs' Motion for Leave to Appeal (Doc. 59);

         2. Urban Oaks Builders LLC's Response (Doc. 60);

         3. Plaintiffs' Reply (Doc. 63);

         4. Plaintiffs' Amended Motion for Stay Pending Appeal (Doc. 64);

         5. Urban Oaks Builders LLC's Response (Doc. 65); and

         6. Plaintiffs' Reply (Doc. 66).

         With briefing complete, the matter is ripe. Upon consideration, the Motions for Leave to Appeal and to Stay will be granted.

         II. BACKGROUND

         This hot potato of a case is before the Court for consideration of Plaintiffs' Motion for Leave to Appeal a May 7, 2019, order from the U.S. Bankruptcy Court for the Middle District of Florida. The Court begins with a brief overview of the winding trail trod by this action through three courts and six judges and counting.

         Plaintiffs, a trio of limited liability companies, initiated this suit in state court against Defendants, an octet of affiliated entities, asserting five Counts stemming from Defendants' sale of an allegedly defective apartment property for $67, 000, 000.00 (the “Defect Lawsuit”). (Doc. 2). After Defendant Urban Oaks Builders LLC (“UOB”) filed for Chapter 11 bankruptcy relief in the Bankruptcy Court for the Southern District of Texas, the Defect Lawsuit was removed to this Court pursuant to 28 U.S.C. §§ 1334 and 1452, which vest district courts with subject matter jurisdiction over cases “related to” pending bankruptcy actions. (Doc. 1). Once here, the action spent time on three judges' dockets before the Honorable Judge Anne C. Conway transferred the suit to the Bankruptcy Court for the Middle District of Florida (“First Transfer Order”) based on 28 U.S.C. § 157(a). (Docs. 16, 27, 55).

         From there, the Defect Lawsuit was again transferred, this time to the Bankruptc y Court for the Southern District of Texas on UOB's motion. (Doc. 57-1, pp. 16-22 (“Second Transfer Order”)). The Second Transfer Order denied Plaintiffs' request to abstain and transfer the action back to state court, opting instead to transfer the suit pursuant to 28 U.S.C. § 1412 to the Texas Bankruptcy Court principally because that court “can resolve all issues between the parties.” (Id. at p. 21). Now, Plaintiffs move for leave to appeal the Second Transfer Order, contending the Bankruptcy Court exceeded its authority in transferring the Defect Lawsuit and violated both the mandatory and permissive abstention statutes. (Doc. 59). Plaintiffs seek leave under the collateral order doctrine or, alternatively, 28 U.S.C. § 158(a)(3), the interlocutory appeal statute. (Id.).

         III. DISCUSSION

         1. Collateral Order Doctrine

         First, Appellants argue that leave to appeal should be granted under the collateral order doctrine. (Doc. 59, p. 7). The collateral order doctrine-a narrow exception to the rule that appeals may only be taken of final judgments-enables litigants to appeal prejudgment orders under prescribed circumstances. To be appealable, “an order must (1) conclusively determine the disputed question, (2) resolve an important issue completely separate from the merits of the action, and (3) be effectively unreviewable on appeal from a final judgment.” In re Celotex Corp., 187 B.R. 746, 749 (M.D. Fla. 1995). “The collateral order doctrine is a ‘narrow exception,' whose reach is limited to trial court orders affecting rights that will be ...


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