The opinion of the court was delivered by: Michael P. McCUSKEY Chief U.S. District Judge
This case is before this court for ruling on the Motion for Leave to Appeal filed by Defendants, First Mid-Illinois Bank & Trust, N.A., Mark Bluhm and Charles Miller. Following this court's careful review of Defendants' Motion and the Objection filed by Plaintiff, Norma Faye Kelly, this court concludes that Defendants have failed to establish that an interlocutory appeal should be allowed in this case. Accordingly, Defendants' Motion for Leave to Appeal is DENIED and this case is terminated.
On April 24, 2006, Defendant First Mid-Illinois Bank & Trust, N.A. (Bank), filed a Complaint against Plaintiff in the circuit court of Coles County. The Bank sought judgment against Plaintiff for an amount in excess of $71,000.00 as a result of Plaintiff's default and continued failure to pay on notes with the Bank. Plaintiff failed to respond, and a default judgment was entered against Plaintiff on July 24, 2006. Plaintiff was subsequently served with a citation to discover assets, and a hearing was scheduled on February 23, 2007. Plaintiff appeared at the hearing and asked for a continuance because the new attorney she retained to represent her was unavailable to appear at that time. The circuit court granted the request for a continuance and the matter was continued to April 9, 2007. On that date, a suggestion of bankruptcy was filed in the circuit court. Plaintiff's bankruptcy case is assigned Case No. 07-90482 in the bankruptcy court.
On March 17, 2008, Plaintiff filed an adversary case in the bankruptcy court against the Bank, Bluhm and Miller. Bluhm is a former vice president of the Bank and Miller is a current vice president of the Bank. The case was assigned Case No. 08-09012 in the bankruptcy court. In her adversary complaint, Plaintiff claimed that Defendants committed conversion and breach of fiduciary duty in 2005 by transferring funds placed in Plaintiff's accounts held with the Bank and applying those funds to notes between Plaintiff and the Bank.
On April 18, 2008, Plaintiff filed a Motion to Vacate Default Judgment in the circuit court of Coles County. On May 14, 2008, the Bank filed a Response to Plaintiff's Motion. The next day, Plaintiff filed a Notice of Removal and the case was removed to the bankruptcy court. It was assigned Case No. 08-09020 in the bankruptcy court. No hearing has been held in the bankruptcy court on the pending Motion to Vacate Default Judgment.
On July 14, 2008, Defendants filed a Motion to Consolidate adversary cases No. 08-09012 and 08-09020. On July 30, 2008, the bankruptcy court entered an order granting the Motion to Consolidate. Defendants filed a Motion to Dismiss Plaintiff's adversary case No. 08-09012 and sought judgment on the pleadings. Defendants argued that, because Plaintiff failed to pay on some or all of the notes Plaintiff entered into with the Bank, they had the right to engage in set-offs under Illinois common law, the signature card on the deposit account, and the terms of the notes. Defendants also argued that Plaintiff failed to give timely notice of any discrepancies with Plaintiff's accounts as required by the Uniform Commercial Code and the agreements between the parties. In addition, Defendants argued that the doctrine of res judicata barred Plaintiff from proceeding with her adversary complaint against Defendants.
On September 16, 2008, a hearing was held regarding Defendants' Motion to Dismiss and for Judgment on the Pleadings. On October 2, 2008, Defendant submitted a brief in support of the application of res judicata. On November 6, 2008, United States Bankruptcy Judge Gerald A. Fines entered an Order denying the Motion to Dismiss and for Judgment on the Pleadings. Judge Fines also entered an Opinion the same day setting out the reasons for his ruling. In the Opinion, Judge Fines stated:
In reviewing all of the motions before it, the affidavits in support of those motions, and the legal arguments submitted by the parties, the Court finds that there are genuine issues of material fact to be resolved. As a result, these matters are not ripe for either a dismissal or a judgment on the pleadings. The testimony submitted by the Debtors in their affidavits raises a significantly probative fact as to whether they were in default at the time the Defendant Bank made withdrawals from their accounts, together with other contested facts, requires this Court to deny the Motions to Dismiss and for Judgment on the Pleadings in both of the above-captioned adversary proceedings.*fn1
In addition to finding that the Motions to Dismiss and for Judgment on the Pleadings must be denied as a result of [there] being genuine issues of material fact, this Court also finds that the Defendants' arguments as to the res judicata effect of the State Court litigation in Coles County, Illinois, is incorrect. The State Court litigation was not a final judgment on the merits and is, in fact, subject to a motion to vacate said default judgment filed by the Plaintiffs/Debtors pursuant to Illinois Code of Civil Procedure 735 ILCS 5/12-1401, which remained pending at the time that said case was removed to this Court on motion by the Plaintiffs/Debtors.
On November 13, 2008, Defendants filed a Notice of Appeal to the District Court and a Motion for Leave to Appeal. On November 20, 2008, Plaintiff filed an Objection to Defendants' Motion for Leave to Appeal. On November 20, 2008, the clerk of the Bankruptcy Court forwarded the Motion for Leave to Appeal and Objection to the Motion to this court for decision.
A bankruptcy court's denial of a motion to dismiss is an interlocutory order. See In re Beale, 2008 WL 538913, at *2 (N.D. Ill. 2008). Accordingly, in this case, the parties agree that Judge Fines' ruling denying Defendants' Motion to Dismiss and for Judgment on the Pleadings is an interlocutory order and Defendants may appeal this order only if they obtain leave from the district court. See Gierum v. Kontrick, 2002 WL 226857, at *2 (N.D. Ill. 2002), citing 28 U.S.C. § 158(a). Under 28 U.S.C. § 158(a)(3), it is within the district court's discretion whether to allow leave to appeal from an interlocutory order. See In re Jartran, Inc., 886 F.2d 859, 866 (7th Cir. 1989); In re Auto. Prof'ls, Inc., 379 B.R. 746, 751 (N.D. Ill. 2007); In re Woltman, 2006 WL 2052078, at *1 (C.D. Ill. 2006); Gierum, 2002 WL 226857, at *2.
In their Motion for Leave to Appeal, Defendants argued that they should be allowed to appeal to this court from Judge Fines' ruling because Judge Fines erred in finding that the default judgment entered by the circuit court of Coles County was not a final judgment on the merits. Defendants further argued that, if this court would address this issue, Plaintiff's adversary complaint would be dismissed which would allow Defendants to avoid the time and expense involved in the pre-trial and trial process otherwise necessary to resolve the case. Defendants contended that no judicial resources would be wasted in resolving this legal issue at this time and ...