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In re Kelly

filed: May 31, 1989.

IN RE MICHAEL P. KELLY; MICHAEL P. KELLY, INDIVIDUALLY AND DERIVATIVELY ON BEHALF OF ENERGY CONVERSION CORPORATION
v.
MELLON BANK (EAST) NATIONAL ASSOCIATION; MICHAEL P. KELLY, INDIVIDUALLY AND AS AN AUTHORIZED CORPORATE OFFICER ON BEHALF OF ENERGY CONVERSION CORPORATION, APPELLANT



On Appeal from the United States District Court for the Eastern District of Pennsylvania, D.C. No. 88-4734.

Sloviter, Cowen and Weis, Circuit Judges.

Author: Sloviter

Opinion OF THE COURT

SLOVITER, Circuit Judge

Plaintiff Michael Kelly appeals from the district court's order denying his motion for leave to amend his complaint to add Energy Conversion Corp. (ECC) as a party plaintiff in his adversary proceeding against Mellon Bank (East) National Association (Mellon) Because this appeal was not taken from an appealable order, we do not have jurisdiction and we will dismiss the appeal.

I.

Kelly, a debtor under Chapter 13 of the Bankruptcy Code, filed an adversary proceeding against Mellon, alleging personal claims and derivative claims on behalf of ECC, a company of which Kelly was a director, officer, and majority shareholder. The adversary proceeding was automatically referred to the bankruptcy court but the parties consented to a withdrawal of the automatic referral and the adversary proceeding was transferred to the district court.

Kelly's personal claims were based on allegations that Mellon fraudulently induced Kelly and his wife to personally guarantee repayment of money owed by ECC to Mellon. The derivative claims were based on allegations that Mellon breached an agreement to provide financing for ECC and effectively prevented ECC from securing financing from alternate sources, thus forcing ECC into bankruptcy.

The district court dismissed Kelly's derivative claims on the ground that he lacked standing to assert those claims but refused to dismiss his personal claims. The court also denied Kelly's cross-motion to join ECC as a plaintiff, stating without further elucidation that the court lacked subject matter jurisdiction. After the district court denied Kelly's motion to reconsider, Kelly appealed. Kelly argues that the district court erred in determining that there was no subject matter jurisdiction over the claim to be asserted by ECC against Mellon. We cannot reach the merits of Kelly's argument at this time unless the matter is presently appealable.

II.

Patently the litigation in the district court on the merits is not over. Kelly's personal claims against Mellon have not been adjudicated. The district court did not certify this issue for immediate appeal under 28 U.S.C. 1292(b).

Orders permitting the addition of plaintiffs are clearly interlocutory, see Deckert v. Independence Shares Corp., 311 U.S. 282, 290-91 & n.4, 85 L. Ed. 189, 61 S. Ct. 229 (1940); Pennsylvania Co. for Insurances on Lives and Granting Annuities v. Deckert, 123 F.2d 979, 984 (3d Cir. 1941), reviewable on appeal from a final judgment. Deckert, 311 U.S. at 291. Similarly, denial of leave to amend pleadings is ordinarily not final. See Wells v. South Main Bank, 532 F.2d 1005 (5th Cir. 1976).

Kelly contends, however, that this case falls within a "death knell" exception to the final order rule whereby orders which have the practical effect of terminating the litigation are treated as final orders. Kelly claims support for the applicability of the death knell rule from Gillespie v. United States Steel Corp., 379 U.S. 148, 13 L. Ed. 2d 199, 85 S. Ct. 308 (1964), and United States v. Berkowitz, 328 F.2d 358 (3d Cir.), cert. denied, 379 U.S. 821, 13 L. Ed. 2d 32, 85 S. Ct. 42 (1964)

In Gillespie, the Supreme Court held that an order dismissing plaintiffs' state law and common law claims on the ground that the Jones Act provided the only remedy was appealable, despite the fact that the Jones Act claims remained pending after the dismissal. Gillespie, 379 U.S. at 152-54. The Court decided that an immediate appeal was justified because plaintiffs' interest in prompt resolution of the continuing validity of the dismissed claims outweighed the interest in preventing piecemeal litigation and because the case involved ...


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