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In re Weisel

February 1, 2010

IN RE: MICHAEL WEISEL AND LORI SUE WEISEL, DEBTORS
MICHAEL WEISEL AND LORI SUE WEISEL, MOVANTS/APPELLANTS
v.
DOMINION PEOPLES GAS COMPANY RESPONDENT/APPELLEE



The opinion of the court was delivered by: David Stewart Cercone United States District Judge

MEMORANDUM OPINION

I. INTRODUCTION

Before the Court is an appeal by Michael Weisel and Lori Sue Weisel (the "Weisels" or "Debtors"), from an order of the United States Bankruptcy for the Western District of Pennsylvania entering summary judgment in favor of Dominion Peoples Gas Company ("Dominion"), finding that Dominion did not violate the automatic stay provisions of 11 U.S.C. § 362 when it terminated gas service to the Weisels for failure to pay post-petition utility bills, and dismissing the Weisels' complaint against Dominion for violation of the automatic stay. This Court has jurisdiction of the appeal from the final order of the Bankruptcy Court pursuant to 28 U.S.C. § 158(a).

II. STATEMENT OF THE CASE

On October 26, 2006, the Weisels filed a petition for relief under Chapter 13 of the Bankruptcy Code in the United States Bankruptcy Court for the Western District of Pennsylvania (the "Bankruptcy Court"). Prior to that date, the Weisels had an account with Dominion, Account No. 7460601283662 (the "pre-petition account"), whereby Dominion agreed to provide gas utility to the Weisels' residence at 308 Lloyd Avenue, Latrobe, Pennsylvania. In their Chapter 13 petition, the Debtors listed an unsecured, non-priority debt owed to Dominion in the amount of $1,203.40 for pre-petition utility service. As a result of the bankruptcy petition, Dominion closed the Weisels' pre-petition account so that all utility charges prior to October 26, 2006, were included in the pre-petition account.

Dominion opened a post-petition account for the Weisels with an account balance of $0 as of the date of the bankruptcy petition. In conjunction with opening the new account, Dominion requested a post-petition deposit of $217.00 from the Weisels to be paid on or before December 22, 2006. On or about December 18, 2006, the Weisels paid $215.00 of the requested deposit. Dominion accepted the deposit and continued the gas utility service to the Debtors. The Debtors admit that they made sporadic payments to Dominion and accumulated a post-petition delinquency of $1,157.09. After providing Debtors proper notice pursuant to state law, Dominion terminated gas utility service to the Debtors' residence on April 9, 2008.

On April 30, 2008, the Wesel's filed a Complaint against Dominion alleging that Dominion violated Title 11, United States Code, Section 362 of the Bankruptcy Code by terminating Debtors' post-petition gas service for failure to pay the post-petition utility bills without obtaining relief from the automatic stay, 11 U.S.C. § 362(d). Dominion filed a motion for summary judgment on June 23, 2008, seeking dismissal of the complaint with prejudice. The Bankruptcy granted summary judgment in favor of Dominion finding that Dominion was permitted to unilaterally terminate gas service to the Debtors based on post-petition unpaid bills without requirement of seeking either leave of the Court or relief from the automatic stay pursuant to 11 U.S.C. §362(d). Debtors then appealed to this Court.

III. STANDARD OF REVIEW

This Court has jurisdiction to hear an appeal from the Bankruptcy Court pursuant to 28 U.S.C. § 158(a). In undertaking a review of the issues on appeal, a district court applies a clearly erroneous standard to a bankruptcy court's findings of fact -- "[f]indings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous.." See Federal Rule of Bankruptcy Procedure 8013. In this instance, the parties agreed to submit the case upon a stipulation of facts*fn1. Therefore, the only issues presented in this appeal are questions of law. The legal conclusions of a bankruptcy court are subject to plenary review. In re Continental Airlines, 125 F.3d 120, 128 (3d Cir. 1997); see also In re Hechinger, 298 F.3d 219, 224 (3d Cir. 2002); In re Telegroup, 281 F.3d 133, 136 (3d Cir. 2002).

IV. DISCUSSION

Upon the filing of a bankruptcy case, a creditor like Dominion is subject to the automatic stay provisions of the Bankruptcy Code. Pursuant to the stay, a creditor is prohibited from:

(6) any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title . . .

11 U.S.C. § 362(a)(6). The Bankruptcy Code specifically addresses utilities at 11 U.S.C. § 366, which provides specific protections for both the debtor and the utility. The Third Circuit noted that "the purpose and policy" of § 366 is "to prevent the threat of termination from being used to collect prepetition debts while not forcing the utility to provide services for which it may never be paid." See In re Hanratty, 907 F.2d 1418, 1424 (3d Cir. 1990)(quoting Begley v. Philadelphia Elec. Co., 760 F.2d 46, 49 (3d Cir. 1985)). In passing § 366, "Congress struck a balance between the general right of a creditor to refuse to do business with a debtor and the debtor's need for utility services." In re Hanratty, 907 F.2d at 1424.

Section 366(a) provides the general rule that a utility may not alter, refuse, or discontinue service to a debtor "solely on the basis of the commencement of a case under this title or that a debt owed by the debtor to such utility for service rendered before the order for relief was not paid when due." This general rule, ...


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