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Haberern v. Lehigh and New England Railway Co.

argued: February 17, 1977.

BELA M. HABERERN, APPELLANT
v.
THE LEHIGH AND NEW ENGLAND RAILWAY COMPANY AND R. D. TIMPANY, SOLELY AS TRUSTEE OF THE PROPERTY OF THE CENTRAL RAILROAD COMPANY OF NEW JERSEY, AND THE CENTRAL RAILROAD COMPANY OF NEW JERSEY, APPELLEES



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Civil No. 75-2388).

Seitz, Chief Judge, Van Dusen and Weis, Circuit Judges.

Author: Weis

Opinion OF THE COURT

WEIS, Circuit Judge.

An employee's suit against a bankrupt railroad and its receiver to recover a pension and compensation was sidetracked by a stay ordered by the district court because of the reorganization court's broad ban on litigation. We conclude that, in the unique situation presented, the stay is appealable and 28 U.S.C. § 959(a) clears the tracks for the suit to proceed.

Plaintiff filed suit in the United States District Court for the Eastern District of Pennsylvania claiming benefits under the Federal Employers' Liability Act, 45 U.S.C. §§ 51, et seq., for injuries resulting from overwork while employed by the defendants. A second count alleged an entitlement to a pension of $307.57 per month as a result of his medical retirement in 1972. In their answer, the railroads and the trustee admitted owing a pension of $158.00, but they moved for a stay of the proceedings because the railroad was in reorganization in the United States District Court for the District of New Jersey. Defendants asserted that the suit contravened the reorganization court's Order No. 1 prohibiting litigation against the debtor since permission to institute the suit had not been obtained. The district judge decided that the case did not come within the exception to the blanket prohibition contained in Order No. 1 which allowed suits "for damages caused by the operation of trains . . . ." Accordingly, he granted the motion and "stayed and enjoined" the proceedings until further order of court. 412 F. Supp. 285 (E.D. Pa. 1976).

This is the second case filed by the plaintiff on the identical cause of action. The first was brought in the Court of Common Pleas of Lehigh County, Pennsylvania. There, as here, Mr. Haberern asserted that he had worked loyally for many years as the defendants' divisional sales manager for a large area in northeastern Pennsylvania. He contended that at the request of the defendants and contrary to medical advice, he continued to work long hours with inadequate assistance and, as a result, became totally disabled on September 19, 1972. According to the plaintiff, officers of the defendants promised him a pension in the amount of $307.57 per month, but no amount whatsoever had been paid since his retirement, nor had he received the sick pay due him. His cause of action under the FELA was based on the defendants' insistence that he work when he was physically unfit.

The Common Pleas Court stayed the action because of the pending reorganization proceedings for the Central Railroad Company of New Jersey under § 77 of the Bankruptcy Act, 11 U.S.C. § 205. The reorganization litigation commenced on March 22, 1967 in the United States District Court for the District of New Jersey and was (and still is) pending. The Superior Court of Pennsylvania affirmed the stay order on October 28, 1976, 243 Pa. Super. 1, 364 A.2d 420 (1976). A petition for allocatur to the Supreme Court of Pennsylvania is pending.*fn1

In granting the stay, the United States District Court for the Eastern District of Pennsylvania relied upon Order No. 1 issued by the United States District Court for the District of New Jersey which provides in part:

"All persons and all firms and corporations whatsoever and wheresoever situated . . . hereby are restrained . . . from commencing or continuing any proceeding against the Debtor, whether for obtaining or for the enforcement of any judgment or decree or for any other purpose, provided that suits or claims for damages caused by the operation of trains, buses, or other means of transportation may be filed and prosecuted to judgment in any Court of competent jurisdiction. . . ."

The exemption for damage suits tracks the language in § 77 (j) of the Bankruptcy Act, 11 U.S.C. § 205(j).

In the district court's view, a claim for pension rights did not come within the category of "damages caused by the operation of trains." With respect to the FELA count, the court held that the exemption referred to the cause of injury, not the activity of the plaintiff. Since the plaintiff's injury was not caused by operation of trains, therefore, the stay was granted.

We first consider the appealability of the stay order. The defendants moved to quash this appeal, but at oral argument expressly abandoned that position. However, since the matter is jurisdictional, we may not rely upon consent of the parties.

As a general rule, a stay order is not appealable. In Cotler v. Inter-County Orthopaedic Ass'n, P.A., 526 F.2d 537, 541 (3d Cir. 1975), we concluded that a district court order staying its proceedings until resolution of a state court suit with an overlapping factual background was not appealable. Admitting that our treatment of the finality of stay orders has "not been unwavering," Judge Gibbons concluded that we were bound by Arny v. Philadelphia Transportation Co., 266 F.2d 869 (3d Cir. 1959), absent special circumstances such as those which appear in In re Grand Jury Proceedings, 525 F.2d 151 (3d Cir. 1975). The case at bar, however, is rife with ...


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