General Electric Credit Corp. v. Montgomery Mall Ltd. Partnership

704 F.2d 1173
CourtCourt of Appeals for the Tenth Circuit
DecidedApril 7, 1983
DocketNo. 81-1525
StatusPublished
Cited by1 cases

This text of 704 F.2d 1173 (General Electric Credit Corp. v. Montgomery Mall Ltd. Partnership) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
General Electric Credit Corp. v. Montgomery Mall Ltd. Partnership, 704 F.2d 1173 (10th Cir. 1983).

Opinion

WILLIAM E. DOYLE, Circuit Judge.

The appellant, the Montgomery Mall Limited Partnership, appeals from a federal bankruptcy court order which granted foreclosure by way of summary judgment, in favor of appellee, General Electric Credit Corporation. That order was .affirmed by the federal district court.

Montgomery Mall is a limited partnership and is the owner of the Montgomery Plaza Shopping Center located in Bernalillo County, New Mexico. The debt by Montgomery Mall to General Electric’s predecessor in interest, General Electric Credit Corpora[1174]*1174tion of Colorado, is secured by mortgages on the Center and by an assignment of leases and rents from the Center’s operations.

Montgomery Mall (MMLP) failed to make payments due under its obligations. General Electric Credit Corporation (GECC) instituted a foreclosure action in the state court. That action was commenced on June 16, 1980 and sought (1) foreclosure of the mortgage on Montgomery Center; and (2) foreclosure of GECC’s security agreement with MMLP covering rents and profits. The third element of relief which was prayed for was the appointment of a receiver for Montgomery Center.

MMLP filed an answer to the action on July 15, 1980. In it, MMLP admitted its liability to GECC in excess of $8,000,000, and admitted that it had failed to make a payment when due and after notice by GECC. It denied, however, that it was in default.

GECC moved for summary judgment pursuant to Rule 56 of the New Mexico Rules of Civil Procedure. This motion was set to be heard on September 8, 1980. On September 4, 1980, MMLP filed a Chapter 11 bankruptcy petition, which had the effect of staying the action, including the pending summary judgment hearing.

GECC proceeded to file, on September 24, 1980, several documents, including (1) a motion to dismiss MMLP’s Chapter 11 proceeding; (2) an application for removal of GECC’s pending state action; and (3) a complaint to modify the automatic stay of the state foreclosure proceedings pursuant to 11 U.S.C. § 362(d). A copy of this complaint was mailed to MMLP on September 24, 1980.

On October 1, 1980, GECC informed Bankruptcy Court Judge Johnson that it wished to move for emergency relief from the stay of foreclosure proceedings pursuant to § 362(f) of the Bankruptcy Code. The Judge indicated that he informed MMLP’s counsel of this motion on October 1.

On October 2, 1980, GECC’s motion for emergency relief and summary judgment was filed. The grounds for emergency relief were two-fold. First, the claim of GECC that MMLP had failed to provide funds for the payment of operating expenses, and for the salaries of maintenance, security, and management personnel. Second, GECC claimed that MMLP had failed to make funds available for structural repairs which, if not undertaken, would warrant shut-down of the Center.

The hearing on the motion was heard on the same day it was filed, October 2, and Judge Johnson found that MMLP did not intend to meet payroll and operating expenses which were then due, that immediate structural repairs were required to preserve the safety of the tenants and customers of the Center, and that irreparable harm to GECC would thereby ensue. Judge Johnson also terminated the stay to the extent necessary for GECC to foreclose its mortgages and security interests. Also, judgment against MMLP, in the sum of $8,054,165.33 plus accrued interest, was entered.

Judge Johnson’s judgment, however, was without prejudice to the rights of the debt- or within ten days from the date thereof to move to vacate the judgment upon an adequate hearing.

On October 14, 1980, MMLP filed a motion to vacate the order and judgment. That motion was heard on October 30. On that occasion, MMLP presented little evidence as to why the earlier grant of summary judgment should not be vacated. Instead, counsel for MMLP argued that the grant of summary judgment was procedurally defective. GECC opposed MMLP’s approach at the October 30 hearing by presenting evidence in support of its motion for summary judgment.

On November 3, 1980, Judge Johnson reaffirmed his decision to grant summary judgment to GECC and against MMLP.

The propriety of these proceedings is what is being challenged here now.

[1175]*1175The assertion of MMLP is that the bankruptcy court lacked jurisdiction under § 326(f) to grant summary relief in favor of GECC.

This is a position that might have had some validity prior to the Bankruptcy Reform Act of 1978, Pub.L. No. 95-598. See In re Roloff, 598 F.2d 783, 785 (3d Cir.1979). Also, considering the Supreme Court’s recent decision in Northern Pipeline Const. Co. v. Marathon Pipe Line Co., -U.S. -, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982), MMLP’s assertion might have some merit. Northern Pipeline held unconstitutional the assignment of broad jurisdiction to bankruptcy judges. 102 S.Ct. at 2874. See 28 U.S.C. § 1471 (Supp. IV 1980). However, the Supreme Court, in Northern Pipeline, was careful to say that the decision was not to be applied retroactively. See Northern Pipeline, supra, 102 S.Ct. at 2880. The interpretation has been that the Northern Pipeline decision does not have effect on bankruptcy court decisions pending on appeal before June 28, 1982, the date of the Supreme Court opinion. Barnes v. Wheland, 689 F.2d 193, 196 n. 1 (D.C.Cir.1982).

In examining the authority or jurisdiction of the Judge to grant summary relief in favor of GECC prior to the Northern Pipeline decision, it would appear that such authority did exist. See 124 Cong.Rec. 534,-010 (Oct. 5, 1978) (remarks of Senator De-Concini). The Bankruptcy Reform Act “grants the courts of appeals original and exclusive jurisdiction of all cases under Title 11. That jurisdiction in turn is completely delegated to the bankruptcy court with the sole exception of punishing for contempts by imprisonment and enjoining other courts. The bankruptcy court is thus given pervasive jurisdiction over all proceedings arising in or related to bankruptcy cases. In addition, the bankruptcy court is given exclusive jurisdiction of the property of the estate in a case under Title 11. This represents a major improvement over present law where the distinction between summary and plenary jurisdiction often results in wasteful litigation.”

The Rule 56 Problem

Rule 56 of the Federal Rules of Civil Procedure states that a motion for summary judgment “shall be served at least 10 days before the time fixed for the hearing.” Fed.R.Civ.P. 56(c). MMLP asserts that, since it received no more than a one day notice of the October 2 hearing conducted by Judge Johnson, the requirements of Rule 56 were not met.

Apparently a hearing conducted without proper notice will be set aside. See Swallow v. United States,

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Related

In Re Montgomery Mall Limited Partnership
704 F.2d 1173 (Tenth Circuit, 1983)

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