In re Stone Resources, Inc.

Citation:
In re Stone Resources, Inc., No. 11-2888 (3d Cir. May 29, 2012) (not precedential)
Tag(s):
Ruling:
A District Court must review a Bankruptcy Court decision denying relief from the automatic stay under an abuse of discretion standard and cannot engage in its own fact finding when engaging in such review. Also, a District Court exercising its appellate jurisdiction under 28 U.S.C. § 158(a) lacks jurisdiction to modify an injunction entered in another action where the District Court is exercising its original jurisdiction.
Procedural context:
Appeal from order of the United States District Court for the Eastern District of Pennsylvania reversing Bankruptcy Court order denying motion for relief from automatic stay.
Facts:
Before the filing of the debtor's case, the District Court entered a preliminary injunction against the debtor and in favor of MarbleLife, Inc. The debtor filed its petition shortly thereafter, invoking the automatic stay of 11 U.S.C. § 362. MarbleLife moved to dismiss the case or, in the alternative, for relief from the automatic stay. The Bankruptcy Court denied both requests for relief. The District Court affirmed the denial of the motion to dismiss, but reversed the denial of the motion for relief from the automatic stay, reinstating and modifying the preliminary injunction entered in the non-bankruptcy litigation. The Third Circuit held that the District Court erred by failing to review the denial of relief from the automatic stay under the correct standard by reviewing facts outside the bankruptcy record, and remanded for a determination solely on the record before the Bankruptcy Court. The Third Circuit also held that the District Court erred by modifying the injunction it entered in the non-bankruptcy litigation because a District Court sitting in appellate review lacks jurisdiction to take such action, and therefore vacated the District Court order modifying the injunction.
Judge(s):
Greenway, Jr.; Roth; and Tashima, Circuit Judges

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