On Appeal from the United States District Court for the Eastern District of Pennsylvania; D.C. Civil Action No. 87-0774.
Sloviter, Chief Judge, Scirica and Alito, Circuit Judges
Opinion SUR DENIAL OF MOTION
Appellant in this case is the Celotex Corporation, which is currently undergoing voluntary reorganization under Chapter 11 of the Bankruptcy Code. We stayed this appeal because the Code's automatic stay provisions ordinarily apply to appeals in actions originally brought against Chapter 11 debtors. See Association of St. Croix Condominium Owners v. St. Croix Hotel Corp., 682 F.2d 446 (3d Cir. 1982). Appellee Joanne Borman now seeks reconsideration, contending that our decision in Mid-Jersey National Bank v. Fidelity-Mortgage Investors, 518 F.2d 640 (3d Cir. 1975), decided under the Bankruptcy Act of 1898 (as amended), requires that we decide the merits of this appeal because Celotex posted a supersedeas bond prior to its bankruptcy filing. We will deny the motion for reconsideration because we believe Mid-Jersey is no longer an accurate statement of the law under the expanded jurisdiction of the current Bankruptcy Code, adopted in 1978.
In February, 1987, Richard Borman and his wife Joanne filed a product liability suit in district court against several manufacturers of asbestos products, including Celotex. The suit sought damages for personal injuries allegedly suffered by Mr. Borman as a result of exposure to asbestos. Mr. Borman died in 1988. The trial was bifurcated, with the issue of damages tried first. Only Celotex and one other defendant remained in the suit by the end of the damages trial. On August 24, 1989, a jury assessed damages of $532,719. Celotex then agreed to pay a proportionate amount of the damage award, although it reserved its right to appeal from the damages trial. The jury found the remaining defendant not liable. On December 26, Celotex filed its notice of appeal. On January 31, 1990, Celotex stayed execution of judgment against it by posting a supersedeas bond. See Fed. R. Civ. P. 62(d). The Allstate Insurance Company served as surety for the bond, which was in the amount of $88,708.
The gravamen of Celotex's appeal is that the district court should have charged the jury on the apportionment of damages between cigarette smoking and asbestos exposure. On August 2, 1990, this court heard argument on the appeal. On October 12, before any disposition, Celotex filed a voluntary petition for bankruptcy under Chapter 11 of the Bankruptcy Code. On October 29, we notified the parties that the appeal would be stayed until either the bankruptcy proceeding was dismissed or the bankruptcy court granted leave to proceed. On March 28, 1991, Mrs. Borman filed a motion asking that we decide the merits of the appeal. She contends that the automatic stay does not apply to this appeal because Celotex posted a supersedeas bond before filing for bankruptcy.
The automatic stay is a central concept in bankruptcy law. Section 362(a) provides in part that:
Except as provided in subsection (b) of this section, a petition filed under section 301, 302 or 303 of this title . . . operates as a stay, applicable to all entities, of --
(1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title; . . .
(3) any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate; . . . .
11 U.S.C. § 362 (1988 & Supp. 1991). The automatic stay was intended to give the debtor "a breathing spell from his creditors. It stops all collection efforts, all harassment, and all foreclosure actions. It permits the debtor to attempt a repayment or reorganization plan, or simply to be relieved of the financial pressures that drove him into bankruptcy." H.R. Rep. No. 95-595, 95th Cong., 1st Sess. ...