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IN RE GEMINI EQUIPMENT BUSINESS TRUST

November 14, 2005.

IN RE: GEMINI EQUIPMENT BUSINESS TRUST. GEMINI EQUIPMENT BUSINESS TRUST, Appellant,
v.
FIRST UNION NATIONAL BANK f/k/a CORESTATES BANK, N.A., Appellee.



The opinion of the court was delivered by: SYLVIA RAMBO, Senior District Judge

MEMORANDUM

Before the court is an appeal from an order of the Bankruptcy Court for the Middle District of Pennsylvania. The parties have briefed the issue and the matter is ripe for disposition. For the reasons that follow, the court will affirm the order of the bankruptcy court.

I. Background

  The facts are well known to the parties, thus the court will dispense with their recitation in brief. In or about June 1993, First Union Bank, formerly CoreStates, N.A. (hereinafter "First Union") loaned the sum of $100,000.00 to Adams County Asphalt Company (hereinafter "ACA"). ACA is a wholly owned subsidiary of Appellant, Gemini Equipment Business Trust (hereinafter "Gemini"). Also in June 1993, First Union increased ACA's existing line of credit to $3,000,000.00. Both Gemini and Robert Mumma, the principal of Gemini and ACA, guaranteed the loans for ACA. First Union contends that ACA defaulted on the terms of the loans, and on June 8, 1998, First Union initiated proceedings against the guarantors of ACA's loans, Gemini and Robert Mumma, in the Court of Common Pleas for Dauphin County, Pennsylvania (hereinafter "the June 8, 1998 State Court Proceeding.")

  In February 2003, ACA filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code. The case is pending under bankruptcy case number 03-00722 in front of Chief Judge Thomas.*fn1 To date, ACA has not filed a plan of reorganization. Gemini asserts that ACA has "essentially been a dormant entity since filing of its Chapter 11 petition." (Appellant's Principal Brief at 7.) According to Gemini, "the dormant nature of ACA has been a planned event designed to minimize expenses until ACA could exercise its rights to operate a quarry," which Gemini contends contains valuable assets. (Id.)

  On May 25, 2005, Gemini filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code. On or about June 10, 2005, First Union Bank filed its motion for relief from the automatic stay pursuant to 11 U.S.C. § 362(d) (hereinafter the "Lift Stay Motion"). Specifically, First Union sought an allowance to continue litigation in the June 8, 1998 State Court Proceeding.

  On July 5, 2005, one day prior to the scheduled hearing on the Lift Stay Motion, Gemini filed a motion for a change of venue ("hereinafter "the Change Venue Motion"). No hearing has been set or held, and no response date has been set by the bankruptcy court with respect to the Change Venue Motion. On July 6, 2005, the bankruptcy court held a hearing on the Lift Stay Motion and, on July 7, 2005, entered an order granting the Lift Stay Motion. Specifically, the bankruptcy court provided that First Union could go forward with the June 8, 1998 State Court Proceeding so that the claims of First Union could be liquidated; however, the bankruptcy court provided that First Union could only execute judgment against non-debtor third parties, specifically, Mr. Mumma. The bankruptcy court provided that First Union could not execute any judgment against Gemini. The court notes the ACA is not a party to the June 8, 1998 State Court Proceeding. According to First Union, once its claims have been liquidated, the claims against Gemini "will be dealt with in a plan or otherwise as will all other liquidated claims of the estate." (Appellee's Brief at 2.) Gemini timely filed this appeal on August 16, 2005.

  II. Legal Standard

  District courts have appellate jurisdiction over final judgments, orders, and decrees of the bankruptcy court. 28 U.S.C. § 158(a)(1). When reviewing the bankruptcy court's factual determinations, the district court will not disturb such findings unless it finds that the bankruptcy court committed clear error. In re Fegley, 118 F.3d 979, 982 (3d Cir. 1997); Universal Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 102 (3d Cir. 1981). The district court, however, reviews legal decisions de novo. Id.; In re Siciliano, 13 F.3d 748, 750 (3d Cir. 1994).

  III. Discussion

  Gemini asserts three arguments in support of its appeal from the order of the bankruptcy court. First, Gemini alleges that the presiding bankruptcy judge's failure to recuse herself constituted an error of law and/or was in violation of judicial rules concerning recusal. Second, Gemini asserts that the bankruptcy court should have enjoined proceedings against third-party, non-defendants. Finally, Gemini argues that the bankruptcy court's granting of the Lift Stay Motion constituted an error of law and/or and abuse of discretion. The court will examine each of Gemini's arguments and First Union's corresponding arguments below.

  A. Recusal

  Gemini argues that presiding Bankruptcy Judge France should have recused herself from the instant case, and that her failure to do so constitutes an error of law and is in violation of the judicial rules concerning recusal. In response, First Union asserts that there has been no motion for recusal; thus, according to First Union, there has been no appealable decision. First Union also purports that there are not sufficient facts in the record to support the recusal of Judge France.

  With respect to First Union's argument that there is no appealable decision from the bankruptcy court, the court notes that there has been no motion for recusal at any point during the proceedings before Judge France. Gemini does not dispute this; rather, Gemini alleges that Judge France should have recused herself sua sponte. According to Gemini, the issue of recusal was raised by counsel during the July 5, 2005 Lift Stay Hearing. Gemini also contends that it filed the July 4, 2005 Change Venue Motion because of the perceived impartiality of Judge France. The court notes that the Change Venue Motion was filed one day before the hearing on the Lift Stay Motion; the bankruptcy court has not ruled on the Change Venue Motion, and there is no pending motion for recusal before the bankruptcy court. Thus, there has been no final order and the district court cannot hear the ...


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