In Re Edward S. PRUITT and Ida B. Pruitt. Appeal of LANDMARK SAVINGS ASSOCIATION

910 F.2d 1160
CourtCourt of Appeals for the Third Circuit
DecidedSeptember 21, 1990
Docket89-3688
StatusPublished
Cited by106 cases

This text of 910 F.2d 1160 (In Re Edward S. PRUITT and Ida B. Pruitt. Appeal of LANDMARK SAVINGS ASSOCIATION) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Edward S. PRUITT and Ida B. Pruitt. Appeal of LANDMARK SAVINGS ASSOCIATION, 910 F.2d 1160 (3d Cir. 1990).

Opinions

OPINION OF THE COURT

SCIRICA, Circuit Judge.

In this complicated matter, the bankruptcy judge dismissed this case and the debtors appealed to the district court. The district court appeared to withdraw the reference of the case to the bankruptcy court and stayed state foreclosure proceedings on the debtors’ home. This appeal concerns the propriety of the district court’s withdrawal of reference order. Having concluded that we have jurisdiction, we will vacate and remand with instructions that the district court consider the appeal from the bankruptcy court and the debtors’ motion for a stay of the state foreclosure proceedings during its pendency.

I.

Landmark Savings Association is the mortgagee of real property owned by Edward and Ida Pruitt. In 1988, Landmark commenced mortgage foreclosure proceedings against them in the Court of Common Pleas of Allegheny County, Pennsylvania. Summary judgment was subsequently granted in favor of Landmark, which then proceeded to execute on the judgment.

On March 22, 1989, proceeding without counsel, the Pruitts filed a joint petition under Chapter 13 of the Bankruptcy Code with the United States Bankruptcy Court for the Western District of Pennsylvania. As a result, a sheriff’s sale of their home, scheduled in the state foreclosure proceedings, was stayed. 11 U.S.C. § 362(a) (1988). The Pruitts contended that a previous discharge under Chapter 7 eradicated their mortgage indebtedness, and therefore made no provision for payments to Landmark in their proposed plan of adjustment. For this reason, the bankruptcy judge rejected the proposed plan at a May 17 confirmation hearing but gave them an opportunity to amend the plan. On June 21, 1989, [1163]*1163the bankruptcy judge dismissed the case with prejudice for failure to file an amended plan that would cure Landmark’s mortgage arrearage. With the stay provision now lifted, 11 U.S.C. § 362(c)(2)(B) (1988), Landmark scheduled a sheriffs sale of the Pruitt home for October 4.

On July 5, 1989, the Pruitts filed a notice of appeal in the Western District of Pennsylvania. While the appeal was pending, the Pruitts moved to enjoin Landmark’s foreclosure proceedings on their home.1

On September 20,1989, the district judge conducted a hearing in this matter. At the conclusion of the hearing, he stayed Landmark’s foreclosure proceedings against the Pruitts.2 The order did not articulate reasons for granting the stay; nor did it require security from the Pruitts.

On review, it is unclear whether the district judge acted in his appellate capacity or under his original jurisdiction, having first implicitly withdrawn the reference of the case to the bankruptcy court. Under the Bankruptcy Code, the district court may withdraw the reference of a bankruptcy case on its own motion for cause shown. 28 U.S.C. § 157(d) (Supp. V 1987). The order signed by the district judge does not specify under which authority he was acting. Therefore, we look to the court’s statements at the hearing:

THE COURT: Is there an appeal pending from what happened in Bankruptcy Court over in this Court?
MR. PRUITT: Yes, sir, I filed an appeal. THE COURT: How can you people go ahead with this foreclosure in light of the fact that — isn’t the stay still in place?
MR. HARVEY: The automatic stay? No.
THE COURT: Who lifted that?
MR. HARVEY: Judge Cosetti.
* * * * * *
THE COURT: ....
I’ll tell you what we’re going to do. We’re going to stay all proceedings, including the mortgage foreclosure, until we get an accounting. We’re operating not on a permanent injunction request but operating as bankruptcy. We have the right to supervise what goes on over there in bankruptcy in this Court and we’re going to exercise our power, and we’re going to stay this, and we’re going to put it in writing....
MR. PRUITT: Yes, sir.
THE COURT: And we’ll set this up for a hearing down the line.
MR. HARVEY: Your Honor, would the Court want — this mortgage began in 1974.
THE COURT: I want an accounting from day one. From the time they took it out up to the time I’ll set a hearing date. And we’re exercising our bankruptcy jurisdiction at this point. And that’s what we’re going to do, stay this proceeding until we get into the root of what’s going on here. I don’t know what’s going on here.
* * * * * *
MS. CHROMULAK: The brief, with respect to the appeal, would be due Monday.
THE COURT: Well, there’s — we’re not— I’m accepting the appeal — I mean, I haven’t concluded anything in regard to it. I’m just getting the groundwork here.
MS. CHROMULAK: So, you’ll give us time later then to complete the brief?
THE COURT: Yes. If necessary, yes. In other words, I’m staying all proceedings, which we’re including this mortgage foreclosure, because this gentleman appealed the Bankruptcy Judge’s decision, as I understand it, to lift the stay.

Although we cannot be certain, it appears that the district court believed that he had taken control of this case (“I want an ac[1164]*1164counting from day one_ And we’re exercising our bankruptcy jurisdiction at this point.”) Based on our review of the court’s statements, we conclude the district judge withdrew the reference and acted through his original jurisdiction.

Although Landmark’s notice of appeal to this court fails to question specifically the oral order withdrawing the reference or the written order granting the stay, its brief addresses both orders. Landmark challenges the first order because it was granted without a showing of cause, and the second order, which it classifies as an injunction, because it was granted without assessing security or articulating reasons. See Fed.R.Civ.P. 65(c), (d). Because we conclude the withdrawal — on whose authority this stay was premised — was inappropriate, we need not consider the stay; we will treat this appeal as one from the withdrawal of reference order only.3

II.

Because of the unusual procedural posture of this case, a brief review of the jurisdictional framework in bankruptcy is appropriate. The district courts have “original and exclusive jurisdiction of all cases under title 11” as well as “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(a) & (b) (Supp. V 1987). “The filing of a petition for relief constitutes commencement of the title 11 case.” 1 Collier on Bankruptcy

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910 F.2d 1160, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-edward-s-pruitt-and-ida-b-pruitt-appeal-of-landmark-savings-ca3-1990.