Memorandum Opinion on Motion to Certify — Virginia ex rel. Integra REC v. Countrywide Securities (E.D. Va.)

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A Memorandum Opinion filed 06/03/15 as Document 120 in Commonwealth of Virginia ex rel. Integra REC LLC v. Countrywide Securities Corporation, et al., Case 3:14-cv-00706-MHL, U.S. District Court for the Eastern District of Virginia, Richmond Division. The opinion addresses the Commonwealth of Virginia's Motion to Amend and Certify Order for Interlocutory Review Pursuant to 28 U.S.C. § 1292(b) and Motion to Stay (ECF No. 99), and states that the Court will deny both motions. It recounts that the Commonwealth, on behalf of the Virginia Retirement System, alleges that defendants made fraudulent misrepresentations in offerings of mortgage-backed securities. It states that the motion seeks interlocutory appeal only of the denial of mandatory abstention under 28 U.S.C. § 1334(c)(2).

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Case 3:14-cv-00706-MHL Document120- Filed 06/03/15 Page 1 of 19 PagelD# 4323

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Richmond Division

COMMONWEALTH OF VIRGINIA ex rel.
INTEGRA REC LLC,

Plaintiff,
v. Civil Action No. 3:14cev706

COUNTRYWIDE SECURITIES
CORPORATION, et al.,

Defendants.

MEMORANDUM OPINION

This matter comes before the Court on the Commonwealth of Virginia’s Motion to
Amend and Certify Order for Interlocutory Review Pursuant to 28 U.S.C. § 1292(b)! (the
“Motion to Amend and Certify”) and Motion to Stay. (ECF No. 99.) Countrywide Securities
Corporation (“CSC”) filed a response to the Motion, and the remaining four defendants in this
removed action joined CSC’s opposition. (ECF Nos. 101, 103-06.) The Commonwealth filed
its reply. (ECF No. 107.) The matter is ripe for disposition. The Court dispenses with oral
argument because the materials before the Court adequately present the facts and legal

contentions, and argument would not aid the decisional process.

' Section [292(b) describes a process under which a district court and the court of
appeals may permit an interim appeal from a “not otherwise appealable” order. 28 U.S.C.

§ 1292(b). The Court evaluates the application of this statute in detail in Sections II and III,
infra.
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The Court exercises jurisdiction pursuant to 28 U.S.C. § 1334(b)” and 1367.> For the
reasons that follow, the Court will deny the Commonwealth’s Motion to Amend and Certify and
the Commonwealti’s Motion to Stay. (ECF No. 99.)

I. Procedural and Factual Background*

In its Complaint originally filed in the Richmond Circuit Court, the Commonwealth of
Virginia, on behaly of the Virginia Retirement System (“VRS”), alleges that defendants made
fraudulent misrepresentations in offerings of mortgage-backed securities (“MBS”), also called
certificates, or residential mortgage-backed securities (“RMBS”), also called certificates
(collectively, “certificates”). CSC and four of its affiliates (“the Removing Defendants”)
removed the portion of the Richmond Circuit Court action they say involves every MBS
certificate issued ty Countrywide Financial Corporation (“CFC”) and its affiliates. On

October 24, 2014, CSC filed a Motion to Transfer this action to the United States District Court

? That statute states, in pertinent part: “[T]he district courts shall have original but not
exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to
cases under title 11.” 28 U.S.C. § 1334(b). A court has “related to” jurisdiction over all claims
giving rise to contractual claims against entities in pending bankruptcy proceedings. See In re
Celotex, 124 F.3d 619, 625 (4th Cir. 1997). In the Court’s March 17, 2015 Memorandum
Opinion and Order (the “March Opinion” or collectively, the “March Opinion and Order”), the
Court concluded that it has such “related to” jurisdiction in this action. (See March 17, 2015
Memorandum Opinion (“March Mem. Op.”) 4-5, ECF No. 85.)

> The Court exercises supplemental jurisdiction over any claims that do not give rise to
contractual obligations upon entities in bankruptcy, pursuant to 28 U.S.C. § 1367(a) (*[I]n any
civil action of which the district courts have original jurisdiction, the district courts shall have
supplemental jurisdiction over all other claims that are so related to claims in the action within
such original jurisdiction that they form part of the same case or controversy ....”).

* The Court assumes familiarity with the procedural and factual background of this case
as summarized in its January 14, 2015 Memorandum Opinion and Order and its March Opinion
and Order. (ECF Nos. 75-76, 85-86.) Those opinions and orders more fully describe the
procedural and factual background of this case, and the Court repeats the background only to the

extent necessary to inform for the present motion. All terms defined in those opinions and orders
will continue unless otherwise noted.
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for the Central District of California. (ECF No. 15.) On October 31, 2014, the Commonwealth
moved this Court to remand the action to the Richmond Circuit Court. (ECF No. 42.)

On March 17, 2015, following a stay ordered by the Court (ECF Nos. 75-76), the Court
entered the March Opinion and Order. (ECF Nos. 85-86.) The Court denied CSC’s Motion to
Transfer this action to the Central District of California and the Commonwealth’s Motion to
Remand as to mandatory abstention, permissive abstention, and equitable remand. (March Mem.
Op. 7-12.) The Court also referred the parties to settlement proceedings with the Honorable
David J. Novak, United States Magistrate Judge. (March Mem. Op. 12-13.) The parties
scheduled a settlement conference to take place on June 9 and 10, 2015. (See Am. O. Regarding
Proced. Settlement Conf. (Am. Settlement Conf. O.”) 1, ECF No. 118.)

The Commonwealth’s present motion seeks interlocutory appeal only of the Court’s
denial of mandatory abstention pursuant to 28 U.S.C § 1334(c)(2).> (Commw. Mot. Amend 1,
ECF No. 99.) In its March Opinion, the Court noted that of the five factors required for
mandatory absten‘ion, the parties contested only the final factor: whether “an action is
commenced and can be timely adjudicated in state court.” (March Mem. Op. 10.) The language

of the fifth factor involves two considerations, meaning the failure to meet either the

* That statute states, in pertinent part:

(2) Upon timely motion of a party in a proceeding based upon a State law claim
or State law cause of action, related to a case under title 11 but not arising under
title 11 or arising in a case under title 11, with respect to which an action could
not have been commenced in a court of the United States absent jurisdiction under
this section, the district court shall abstain from hearing such proceeding if an
action is commenced, and can be timely adjudicated, in a State forum of
appropriate jurisdiction.

28 U.S.C. § 1334(c)(2).
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“commencement” or “timely adjudication” prong blocks a party’s ability to satisfy the
mandatory abstention test.

While in the March Opinion this Court noted discussion among several courts regarding
the application of both the “commencement” and the “timely adjudication” requirements, this
Court ultimately found that the Commonwealth failed to meet any test articulated as to timely
adjudication, and denied the motion for mandatory abstention without making what would have
been an advisory analysis of the commencement prong of the mandatory abstention test. For
instance, in its discussion of the judicial development of this factor’s analysis, the Court simply
noted that the United States Court of Appeals for the Fourth Circuit “has not spoken to the split
of lower court authority as to when an action must have been ‘commenced’ under this test.”
(March Mem. Op. 10 (citing cases).) Because the Court made a finding as to timely
adjudication, it did not further address the commencement prong of the test.

Instead, the Court observed that while the Fourth Circuit “has not resolved a split of
lower court authority as to which party bears the burden of demonstrating whether a case can be
timely adjudicated in state court, and what evidence is needed to meet the burden[,]” (id. (citing
cases)), the Court had a record before it in which none of the evidence produced by either side
“sufficiently educate[d]” the Court regarding the timely adjudication issue. (/d. at 11.) This
finding necessarily placed the burden on the Commonwealth as the party moving for mandatory
abstention, and found the evidence wanting. Because the Court could not make a finding that the
evidence supported a timely adjudication in the Richmond Circuit Court based on the general

caseload and judic‘al statistics before it, the Court could not find that the evidence supported

mandatory abstention.
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The finding as to timely adjudication rested primarily on the factual record before the
Court notwithstanding the legal issue the Court had to address. In short, as to timely
adjudication, the Court discussed the various evidentiary exhibits placed before it by both the
Commonwealth and CSC that purportedly addressed the Richmond Circuit Court’s ability to
timely adjudicate the action. (/d. at 11-12). Largely because neither party addressed the
progress of any proceeding in the Richmond Circuit Court,° the Court found the record “bereft”
of adequate helpful evidence to allow it to make a finding that the Richmond Circuit Court could
timely adjudicate this matter. (/d. at 12; see also id. at 9 (“The record before the Court does not
present a solid basis for mandatory abstention.”).)

The Commonwealth seeks certification of two questions for interlocutory review related
to 28 U.S.C. § 1334(c)(2) (the “First Question” and the “Second Question”):

I. “(Whether the provision stating ‘if an action is commenced . . . in a State forum
of appropriate jurisdiction’ imposes an additional requirement that the state court action must

have been filed prior to the related-to bankruptcy case.” (Commw. Mot. Amend | (alteration in

original).)

6 Oddly enough, the Court now has some evidence that the Richmond Circuit Court may
be entertaining a dispositive motion regarding the preclusive effect of a federal class action
settlement on the unremoved portion of the Commonwealth’s original action. (See CSC Mem.
Opp’n Mot. Amend 15 n.9, ECF No. 101; see generally Decl. Brian E. Pumphrey, ECF No. 102
(including an excezpt from a memorandum in support of such a motion).) The Court finds this
peculiar for three reasons. First, such motion appears to have been filed on January 20, 2015, the
same date the parties filed supplemental briefs in this Court on the motions to transfer, remand,
and stay, yet no party presented this information to the Court at that time. Second, while CSC
has now presented a portion of that motion to the Court, it provided the Court with no
information regarding its present status in the Richmond Circuit Court. Finally, and perhaps
most curious, the Commonwealth has never addressed the existence of the motion and failed to
discuss its presence even in its reply to CSC’s response in opposition to the Motion to Amend
and Certify. Although the parties were not required to provide this Court with evidence on the
Motion to Amend and Certify, the parties have yet again provided the Court with just a trace of

useful evidence regarding the ability of the Richmond Circuit Court to timely adjudicate this
action.
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2. ‘“[W hich party bears the burden of demonstrating whether the ‘action . . . can be
timely adjudicated in a State forum of appropriate jurisdiction,’ and what evidence is sufficient

to satisfy the burden.” (Commw. Mot. Amend | (alteration in original).)

Il. Applicable Law: Interlocutory Review Pursuant to 28 U.S.C. § 1292(b)

The Commonwealth seeks an immediate appeal from the March Order. At the same
time, the Commonwealth seeks a stay in this action — to commence after the “already referred...
settlement conference” in the district court.’ (Mot. Amend at 1-2.)

A. General Standards Underlying Interlocutory Appeal

As to the requirements for an appeal, “[f]ederal appellate jurisdiction generally depends
on the existence of a decision by the [d]istrict [c]ourt that ‘ends the litigation on the merits and

leaves nothing for the court to do but execute the judgment.’” Coopers & Lybrand v. Livesay,

” The Commonwealth continues to insist that remand to the Richmond Circuit Court,
after appeal, is necessary to effectuate judicial economy. Yet many of the Commonwealth’s
actions belie their arguments for efficiency. During briefing on the previously ruled upon
motions to remand, stay, and transfer, the parties filed two joint motions to extend the time
allotted to file responses and replies to the pending substantive motions. (ECF Nos. 7, 53.) In
the interest of judicial economy and recognizing the complexity of the case, the Court granted
such extensions, allowing the parties substantially more time than the Federal Rules of Civil
Procedure would normally allow. (ECF Nos. 27, 54.)

During a telephone conference on April 28, 2015, again through the agreement of the
parties, the Court functionally halted the normal briefing process to allow the parties to focus on
settlement. The Court allowed briefing on the preclusive effect of a federal class action to
commence only if settlement did not succeed. A briefing schedule would be set during a
conference call on June 15, 2015 should settlement fail. Now, in its Motion to Amend, the
Commonwealth seeks a stay of the proceedings following the settlement conference on June 9
and 10 and before briefing would begin. (See Mot. Amend 1-2.)

The Court expresses dismay at the Commonwealth’s procedural wrangling when the
March Opinion plainly cites a federal class action settlement — identified by CSC at the onset of
litigation — that may govern the case and could require dismissal. If the Court’s observations are
incorrect, the best use of litigative resources would be to address the issue posed by the Court
directly, rather than to seek a procedural workaround so that a different court rules on the issue.
The Court has ordered multiple delays with the Commonwealth’s consent, and the
Commonwealth now seeks an additional indeterminate stay while claiming, in essence, that it
does so to save resources. This inconsistent position strains logic.

6
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437 U.S. 463, 467 (1978) (citing Catlin v. United States, 324 U.S. 229, 233 (1945)). However,
Congress has established narrow avenues by which litigants may pursue appeals of non-final
orders. See Katz v. Carte Blanche Corp., 496 F.2d 747, 753-54 (3d Cir. 1974) (discussing the
legislative history of interlocutory appeals). Section 1292(b) provides litigants one such path to
an interlocutory appeal “upon the consent of both the district court and the court of appeals.” Jn
re Cement Antitrust Litig., 673 F.2d 1020, 1025-26 (9th Cir. 1982). Pursuant to Section 1292(b),
a district court mav certify a non-final order for interlocutory appeal when the court finds that the
order sought for appeal involves (1) a controlling question of law (2) about which there is
substantial ground for difference of opinion and (3) an immediate appeal therefrom may
materially advance the termination of the litigation.® 28 U.S.C. § 1292(b).

The Court must begin a Section 1292(b) analysis “by emphasizing the gravity of the
relief” sought in such a request. Cooke-Bates v. Bayer Corp., No. 3:10cv261-JRS, 2010 WL
4789838, at *2 (E.D. Va. Nov. 16, 2010). Interlocutory appeals are an “extraordinary remedy,”
Fannin v. CSX Transp., Inc., No. 88-8120, 1989 WL 42583, at *2 (4th Cir. Apr. 26, 1989)
(unpublished) (per curiam), that sit contrary to “the well-established policy limiting appeals to
final judgments.” Long v. CPI Sec. Sys., Inc., No. 3:12¢cv396-RJC-DSC, 2013 WL 3761078,
at *1 (W.D.N.C. July 16, 2013) (citation omitted) (internal quotation marks omitted); see
Difelice v. U.S. Airways, Inc., 404 F. Supp. 2d 907, 908 (E.D. Va. 2005). Further, courts are
“bound ‘to protect the integrity of the congressional policy against piecemeal appeals.’” Fannin,
1989 WL 42583, at *2 (quoting Switz. Cheese Ass'n v. Horne’s Mkt., Inc., 385 U.S. 23, 25
(1966)); see Xoom, Inc. v. Imageline, Inc., No. 3:98cv00542-JRS, 1999 WL 1611444, at *1 (E.D.

Va. Sept. 3, 1999) (citing James v. Jacobson, 6 F.3d 233, 237 (4th Cir. 1993)); Riley v. Dow

8 If the district court does not certify its order contemporaneously, the court may amend
the order later to include the certification. Fed. R. App. P. 5(a)(3).

7
Case 3:14-cv-00706-MHL Document120 _ Filed 06/03/15 Page 8 of 19 PagelD# 4330

Corning Corp., 876 F. Supp. 728, 731 (M.D.N.C. 1992). Section 1292(b) is not intended to
allow interlocutory appeals in ordinary suits, Xoom, 1999 WL 1611444, at *1, but instead should
be utilized for “‘orders deemed pivotal and debatable.’” Difelice, 404 F. Supp. 2d at 908
(quoting Swint v. Chambers Cnty. Comm'n, 514 U.S. 35, 46 (1995)). Thus, certification is “not
to be granted lightly.” Fannin, 1989 WL 42583, at *2.

Section 1292(b) ensures such an extraordinary remedy will not be granted lightly by
requiring “dual judicial discretion” in the certification and acceptance of the appeal. Cross v.
Suffolk City Sch. Bd., No. 2:11cv88-RBS, 2011 WL 2838180, at *2 (E.D. Va. July 14, 2011)
(citing Myles v. Laffitte, 881 F.2d 125, 126 n.2 (4th Cir. 1989)). First, the movant must
demonstrate to the district court that he or she meets all three Section 1292(b) factors. See
Cooke-Bates, 2010 WL 4789838, at *2. “Even if the requirements of [S]ection 1292(b) are
satisfied, the district court has ‘unfettered discretion’ to decline to certify an interlocutory appeal
if exceptional circumstances are absent.” Manion v. Spectrum Healthcare Res., 966 F. Supp.
2d 561, 567 (E.D.N.C. 2013) (citation omitted); see Coopers & Lybrand, 437 U.S. at 474 (“A
party seeking review of a nonfinal order must first obtain the consent of the trial judge.”); State
of N.C. ex rel. Howes v. W.R. Peele, Sr. Trust, 889 F. Supp. 849, 852 (E.D.N.C. 1995) (noting
that Section 1292(d) provides “great flexibility” to the district court). After certification in the

district court, the court of appeals makes a separate determination as to the appropriateness of an

interlocutory appeal.”

” The Fourth Circuit has stated that courts should use Section 1292(b) “sparingly,” Myles,
881 F.2d at 127, and only “‘in exceptional situations in which [doing so] would avoid protracted
and expensive litigation.’” Fannin, 1989 WL 42583, at *2 (alteration in original) (quoting /n re
Cement Antitrust Litig., 673 F.2d at 1026). Accordingly, “given the basic policy of postponing
appellate review until after the court has entered final judgment in the case, [Section] 1292(b)
clearly places on the movant the burden of persuading the court that ‘exceptional circumstances’
justify a departure from that policy.” LeFleur v. Dollar Tree Stores, Inc., No. 2-12cv00363,

8
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B. The Three Elements of Section 1292(b)

1. A District Court Must Find It Ruled on a Controlling Question of
Law

The standards by which a district court must evaluate the three parts of Section 1292(b)
are clear. The party seeking an interlocutory appeal must first demonstrate that the question
sought for certification is a “controlling question of law.” 28 U.S.C. § 1292(b). This element
may be divided into two requirements: the question must be “controlling” and it must be one “of
law.” In order for a question to be “controlling,” the district court must actually have decided
such question. Paschall v. Kansas City Star Co., 605 F.2d 403, 409 (8th Cir. 1979); see
Schwartz v. Rent a Wreck of Am., Inc.,__ F. App’x __, No. 13-2189, 2015 WL 1020647, at *3
n.2 (4th Cir. Mar. 10, 2015) (unpublished). Controlling questions include those “whose
resolution will be completely dispositive of the litigation, either as a legal or practical matter,
whichever way it goes.” Fannin, 1989 WL 42583, at *5. “Conversely, a question of law would
not be controlling ‘if the litigation would necessarily continue regardless of how that question
were decided.” Wyeth v. Sandoz, Inc., 703 F. Supp. 2d 508, 525 (E.D.N.C. 2010) (quoting
Howes, 889 F. Supp. at 852-53). When the resolution of a question would not completely end
the litigation altogether, district courts look to whether the immediate appeal would be “serious
to the conduct of the litigation, either practically or legally.” Katz, 496 F.2d at 755-56.

Questions sought to be certified should be “narrow question[s] of pure law.” Fannin,
1989 WL 42583, at *5. Even if a question “is technically one of law,” if the issue is “heavily

freighted with the necessity for factual assessment,” the question is likely not proper for

2014 WL 2121721, at *1 (E.D. Va. May 20, 2014) (quoting Howes, 889 F. Supp. at 853). Thus,
even if the district court certifies an order for interlocutory appeal, the movant must still

demonstrate the existence of “exceptional circumstances” to the court of appeals. Fannin, 1989
WL 42583, at *2.
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Section 1292(b) interlocutory review. [d.; see Xoom, 1999 WL 1611444, at *2 (finding an issue
not a “controlling question of law” because “it was in part based on facts” placed into evidence
by the parties); /n re Jemsek Clinic, P.A., Nos. 06-31766, 06-3 19866, 07-03006, 07-03008, 2011
WL 3841608, at *3 (W.D.N.C. Aug. 30, 2011) (denying certification of a question that was
“grounded in the specific facts of the case, and cannot be divorced from [those] facts’”
(alteration in original) (citation omitted)) (applying Section 1292(b) analysis to an interlocutory
bankruptcy appeal). Pure questions of law include “matters the court of appeals can decide
quickly and cleanly without having to study the record.” Long, 2013 WL 3761078, at *2
(citation omitted) (internal quotation marks omitted).

2. A District Court Must Find A Substantial Ground for Difference of
Opinion

Next, the party pursuing a Section 1292(b) interlocutory appeal must show that a
“substantial ground for difference of opinion” exists as to the controlling questions of law. 28
U.S.C. § 1292(b). Such ground “must arise ‘out of a genuine doubt as to whether the district
court applied the correct legal standard in its order.” Wyeth, 703 F. Supp. 2d at 527 (citation
omitted). “[J]ust any simple disagreement between courts will not merit certification.” Cooke-
Bates, 2010 WL 4789838, at *2. A mere lack of unanimity, Wyeth, 703 F. Supp.2d at 527, or
opposing decisions outside of the governing circuit, need not persuade a court that a substantial
ground for disagreement exists. Cross, 2011 WL 2838180, at *3 n.1. “An issue presents a
substantial ground for difference of opinion if courts, as opposed to parties, disagree on a

controlling question of law.” Cooke-Bates, 2010 WL 4789838, at *2 (citation omitted).

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3. A District Court Must Find an Interim Appeal Would Materially
Advance the Ultimate Termination of the Litigation

Finally, the party seeking interlocutory appeal must establish that certification would
“materially advance the ultimate termination of the litigation.” 28 U.S.C. § 1292(b). “The mere
fact that [the resolution of the question sought to be certified] at this time may save pre-trial and
trial effort and expense is not determinative ....” Fannin, 1989 WL 42583, at *5 (citation
omitted). Such speculation “of course can be said of any interlocutory appeal.” /d. Instead,
courts look to whether *‘early appellate review might avoid protracted and expensive
litigation.”” Xoom, 1999 WL 1611444, at *1 (quoting Howes, 889 F. Supp. at 852); see In re Va.
Elec. & Power Co., 539 F.2d 357, 364 (4th Cir. 1976) (finding interlocutory appeal would
advance the ultimate termination of the litigation because the decision would prevent needless
waste of “much time, expense and effort”). Accordingly, courts use a case-specific analysis to
determine whether the time and expense saved on interlocutory appeal would “materially
advance the ultimate termination of the litigation” as required by Section 1292(b).

Il. Analysis

For the following reasons, the March Opinion and Order do not involve “a controlling
question of law,” nor would an immediate appeal from that decision “materially advance the
ultimate termination of the litigation.” '!° 28 U.S.C. § 1292(b). The First Question does not
involve a controlling question of law, and any appeal could seek only an advisory opinion. The

Second Question does not involve a controlling question of law because it turns upon an

'° CSC also argues that no “substantial ground for difference of opinion” exists as to the
questions sought for certification. The Court finds that neither of the questions involves
“controlling questions of law” and that immediate appeal would not “materially advance the
ultimate termination of the litigation.” While the Court finds persuasive CSC’s arguments as to a
“substantial ground for difference of opinion,” it need not address whether such difference of
opinion exists. See Cooke-Bates, 2010 WL 4789838, at *2 n.4 (declining to address two of
Section 1292(b)’s requirements after finding one element unsatisfied).

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examination of the factual record in this case. Further, immediate appeal of the questions would
not materially advance the termination of the litigation, and therefore certification would not be
proper. Accordingly, the Court will deny the Commonwealth’s Motion to Amend and Certify.

A. The First Question Is Not a Controlling Issue of Law and an Immediate
Appeal Could Seek Only an Advisory Opinion

Because the Court denied mandatory abstention based on “timely adjudication” and not
“commencement,” the First Question does not constitute a controlling question of law. The
Court did not make a ruling as to when an action need be commenced in a State forum, meaning
an immediate appeal to the Fourth Circuit could seek only an advisory opinion. The First
Question “necessarily misstates the Court’s ruling in this case.” Yoom, 1999 WL 1611444,
at *1. While the Court discussed courts’ differing approaches regarding the “commencement” of
an action in a state forum, the March Opinion and Order clearly made no ruling on the
interpretation of this phrase. (See March Mem. Op. 10.) A plain reading of the March Opinion
shows that the Court based its ruling on the lack of useful evidence presented to it by the parties
with respect to the timely adjudication prong only. (See March Mem. Op. 9, 11-12.) The Court
cannot certify for interlocutory appeal a question not ruled upon. See Paschall, 605 F.2d at 409.
Any Fourth Circuit ruling on an issue not addressed by this trial court would be advisory. See
Schwartz, 2015 WL 1020647, at *3 n.2. Accordingly, the First Question does not involve a
controlling question of law required by Section !1292(b). Thus, the Commonwealth fails to
satisfy the first element required for an interlocutory appeal, and the Court will deny the

Commonwealth’s Motion to Amend as to the First Question.

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B. The Second Question Is Inappropriate for Interlocutory Appeal

1. The March Opinion Placed the Burden of Proof on the
Commonwealth

The Commonwealth’s briefing suggests that the March Opinion did not sufficiently
articulate the Court’s intent to hold the Commonwealth, as the moving party, to a burden of
proof regarding timely adjudication of this matter in state court. CSC correctly identifies that the
Court implicitly placed the burden of proof as to timely adjudication on the Commonwealth.
(CSC Mem. Opp’n Mot. Amend 9 n.2.) However, to the extent a lack of clarity exists, it requires
no different outcome.

First, as CSC identifies, the March Opinion impliedly ruled that the Commonwealth, as

the party moving for abstention, held the burden of proof. Indeed, as noted by the court in
Power Plant Entm't Casino Resort Ind., LLC y. Mangano, 484 B.R. 290, 297-99 (Bankr. D.
Md. 2012), when the parties present no evidence—or, as in this instance, no helpful evidence—
regarding timely adjudication in state court, the resolution of this element “hinges on which party
has the burden to show that a matter can be timely adjudicated in state court.”!! Jd. at 297.

Second, to the extent the March Opinion would need the clarification only one party

seeks here, the Court may, “on its own, with or without notice[,]” correct what could be

'! The Power Plant court highlighted the importance of the burden when no evidence
existed regarding the state court’s ability to timely adjudicate the case. 484 B.R. at 297-99. If
the party seeking abstention—here the Commonwealth—holds the burden but presents no
helpful evidence, the court would necessarily deny the motion and retain the action in federal
court. See id. Conversely, if CSC, when opposing abstention, held the burden but provided no
helpful evidence, the Court would have abstained from the case. See id. The first example
proved true in this Court. In the March Opinion, the Court found that a lack of helpful evidence
existed on the record and denied the motion to abstain. Thus, the Court impliedly held that the
Commonwealth bore the burden of proof.

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characterized as “a mistake arising from oversight or omission.” Fed. R. Civ. P. 60(a).'? See
Sartin v. McNair Law Firm PA, 756 F.3d 259, 265-66 (4th Cir. 2014). As noted above, the
Court implicitly placed, and still intends to place, the burden of proof on the Commonwealth, the
moving party, regarding timely adjudication. To the extent the March Opinion might “include[ ]
an unintended ambiguity that obfuscates the court’s original intent,” Sartin, 756 F.3d at 266, and
“consistent with the intent of the original [opinion],” id., the Court now clarifies that the March
Opinion placed the burden of proof regarding timely adjudication on the Commonwealth."
Third, the “correct inquiry [as to timely adjudication] is whether the claim will be timely
adjudicated in state court.” Massey Energy Co. v. W. Va. Consumers for Justice, 351 B.R. 348,
352 (E.D. Va. 2006). Thus, the Court’s ultimate conclusion, that it had conflicting general
information and no specific evidence as to this issue, is consistent with case law. At least two
other courts have addressed timely adjudication without an analysis of the burden and decided to
remand based on the very evidence the Court found lacking in this case. See, e.g., Bender v.

Insight Health Corp., Nos. 7:13cv00157, -158, -159, 2013 WL 1952150, at *1 n.1 (W.D. Va.

'? That rule states, in pertinent part:

(a) Corrections Based on Clerical Mistakes; Oversights and Omissions. The
court may correct a clerical mistake or a mistake arising from oversight or
omission whenever one is found in a judgment, order, or other part of the record.
The court may do so on motion or on its own, with or without notice ....

Fed. R. Civ. P. 60(a).

'3 The Court notes that it was most persuaded by the traditional notion that the moving
party carries the burden of proof. See /n re Freeway Foods of Greensboro, Inc., 449 B.R. 860,
878 (Bankr. M.D.N.C. 2011). (See March Mem. Op. 10.) The Court has established jurisdiction
over this case (see March Mem. Op. 4-5), and the Court holds a responsibility to exercise its
jurisdiction unless some rule demands otherwise. In light of the Commonwealth’s failure to
satisfy its burden of proof, no rule demands that the Court decline to exercise jurisdiction in this
matter.

Should the parties desire a separate order clarifying the March Opinion, they may petition
the Court with such a request.

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Case 3:14-cv-00706-MHL Document120 _ Filed 06/03/15 Page 15 of 19 PagelD# 4337

May 10, 2013) (finding the timely adjudication element met when the parties had submitted
affidavits and other filings to show that the state case was moving swiftly, with partial summary
judgment already issued and a plan to address factual and legal issues moving forward); Massey
Energy Co., 351 B.R. at 352 (finding the timely adjudication element met when the parties
showed that discovery had commenced, motions had been heard, a final trial date had been set,
and further continuances would be denied by the state court).

Finally, as the Court discusses in Section III.B.2, infra, independent of the implicit
finding as to burden made by this Court, the Second Question is too heavily freighted with
factual assessment to be appropriate for interlocutory appeal.

2. The Second Question Is Not a Controlling Question of Law Because It
is Too Heavily Freighted with Factual Assessment

Regardless of any ambiguity regarding the party that carries the burden, the Second
Question as to which party bore the burden of demonstrating timely adjudication is not a
controlling question of law because its analysis would necessarily require a factual assessment
beyond that which is appropriate on an interlocutory appeal under Section 1292(b). The Court
ruled that no party presented sufficiently helpful evidence to allow this Court to find that the
Richmond Circuit Court could timely adjudicate this action. (See March Mem. Op. 11-12.)
When it ruled, the Court had conflicting general evidence, but no specific insight, as to how
efficiently the state court action could proceed, or was proceeding. The Court considered various
exhibits submitted by both the Commonwealth and CSC. (/d.) As such, the Court’s ruling
necessarily took into account questions of fact not appropriate on an interlocutory appeal. See
Fannin, 1989 WL 42583, at *5.

The Court éeels it necessary to point out a distinction in its ruling. The Court did not hold

that the parties presented no evidence at all on the issue of timely adjudication. Rather, the

15
Case 3:14-cv-00706-MHL Document120 - Filed 06/03/15 Page 16 of 19 PagelD# 4338

Court held that the evidence presented by both parties was unhelpful in its analysis. The Court
found that, while it would not undergo an analysis of the relative state and federal court dockets,
the fact that the parties omitted any mention of the specific status of the related litigation at the
state court level prevented the Court from evaluating an important aspect of the timely
adjudication analysis. (March Mem. Op. 12.) The Court ruled that the only evidence before it
was contradictory: it could not make a timely adjudication finding based on a court being
“generally busy,” based on dated articles about judicial vacancies, or based on statistics that
showed both swift decisions and cases that languished for years. (March Mem. Op. 11-12).

That said, any determination by another court on appeal would necessarily involve
reviewing the law and weighing the facts. Thus, unlike questions of pure law, these factual
questions cannot be “decide{d] quickly and cleanly without having to study the record.” Long,
2013 WL 3761078, at *2 (citation omitted). Because the Second Question grounds itself in the
“specific facts” presented by the parties, its resolution proves inappropriate for interlocutory
appeal. In re Jemsek Clinic, 2011 WL 3841608, at*3. Accordingly, the Second Question does
not pose a controlling question of law as required by Section 1292(b). Thus, the Commonwealth
fails to satisfy the first element required for an interlocutory appeal, and the Court will deny the
Commonwealth’s Motion to Amend as to the Second Question.

Cc. An Immediate Appeal from the Opinion and Order Would Not Materially
Advance the Ultimate Termination of this Litigation

The Court also finds that an immediate appeal from the March Opinion would not
materially advance the ultimate termination of the litigation in this case. An immediate appeal,
even were it to be granted, would only delay the trial process further, especially in light of the
stay requested by the Commonwealth. Even were an immediate appeal certified by this Court,

heard by the Fourth Circuit, and ruled upon in the Commonwealth’s favor, such ruling would not

16
Case 3:14-cv-00706-MHL Document120 _ Filed 06/03/15 Page 17 of 19 PagelD# 4339

advance an ultimate termination of the litigation. Presumably, the case would first return to this
Court under remand to implement a finding as to timely adjudication. Next, this Court likely
would have to make a finding on the First Question regarding “commencement” as it applied to
the record in this case. Only then could the case advance. And that progress would amount to
continued litigation in this federal court, or in state court upon remand from this Court. The case
would not terminate.

This action has been pending in this Court for over six months, and its progression has
been characterized by multiple procedural motions. The Court has yet to see a motion or
pleading, with the exception of the Complaint, regarding the merits of the Commonwealth’s
claims. In the event that the scheduled settlement proceedings do not prove successful, the Court
has ordered a status conference to order expeditious briefing on a potentially dispositive
summary judgment motion: the preclusive effect of the Luther federal class action,'* which

presents “an important question of federal law.”"°

(March Mem. Op. 7-8 (noting that a review
of the Luther documents suggests “that 17 of the 22 certificates in this action are included in the
settlement.”).) (Sez March Mem. Op. 12-13; April 28, 2015 docket entry (setting June 15, 2015

conference call to establish briefing on the Luther class issue).)

'" Luther v. Countrywide Fin. Corp., No. 2:12-cv-05125-MRP (MANx) 1, ECF No. 320
(C.D. Cal. Dec. 5, 2013) (final order approving class settlement).

'S The Supreme Court of the United States directs that “(t]he preclusive effect ofa
federal-court judgment is determined by federal common law.” Taylor v. Sturgell, 553 U.S. 880,
890 (2008). (See March Mem Op. 7.)

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Case 3:14-cv-00706-MHL Document120 - Filed 06/03/15 Page 18 of 19 PagelD# 4340

Certification of the March Opinion and Order for interlocutory appeal would only further
delay such briefing.'® See Difelice, 404 F. Supp. 2d at 910. In addition, the stay sought by the
Commonwealth “while it pursues appeal [would] only exacerbate[ ] the delay inherent in
interlocutory appeal on these facts.” Long, 2013 WL 3761078, at *4. Finally, even if all went in
the Commonwealth’s favor—that is, this Court certified the March Opinion and Order; the
Fourth Circuit accepted the interlocutory appeal; and, the Fourth Circuit reversed this Court as to
its finding on timely adjudication—the appeal would, likely, at best result in a remand of this
action to this Court to implement a timely adjudication finding and then determine
“commencement” on the facts of this case. If the Commonwealth again prevailed, a remand to
the Richmond Circuit Court would take place, where the action will be no more advanced on the
merits than it now stands.

Here, certification cannot “materially advance the ultimate termination of the litigation,”
28 U.S.C. § 1292(b), because it “would only serve to further delay the trial process.” Riley, 876
F. Supp. at 731. Thus, the Commonwealth also fails to meet the third prong required to establish
a basis for interlocutory appeal, and the Court will deny the Commonwealth’s Motion to Amend

as to both the First and Second Questions.

'6 Indeed, it seems that the arguments made by the Commonwealth regarding the judicial
economy of an immediate appeal—the efficiency of consolidating the removed action with the
original action—onlv reiterate its position taken on permissive abstention and equitable remand.
(Compare Commw. Mem. Supp. Mot. Amend 7, ECF No. 100, with Commw. Supp’! Br. Supp.
Mot. Remand 2-3, ECF No. 83.) The Court has already rejected these arguments and found
judicial economy best served by retaining the action in this Court to determine the preclusive
effect of a potentially related class action settlement. (March Mem. Op. 9.)

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Case 3:14-cv-00706-MHL Document120_ Filed 06/03/15 Page 19 of 19 PagelD# 4341

IV. The Motion to Stay Is Moot

Because the Court denies this motion, the proceedings will continue as presently
scheduled, and the Commonwealth’s Motion to Stay is rendered moot. The Court will deny the

Motion to Stay as moot.

V. Conclusion

For the reasons stated above, the Court denies the Commonwealth’s Motion to Amend
and Certify Order ‘or Interlocutory Review and the Commonwealth’s Motion to Stay. (ECF
No. 99.)

An appropriate Order shall issue.

/s/ | | Vall 2.

United States District Judge

Richmond, Virginia_
Date: G [2] ld

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