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Utica Leaseco, LLC v. Gmi Land Company

June 16, 2011

UTICA LEASECO, LLC, PLAINTIFF,
v.
GMI LAND COMPANY, LLC, DEFENDANT.



The opinion of the court was delivered by: Arthur J. Schwab United States District Judge

ELECTRONICALLY FILED

MEMORANDUM AND OPINION

Appellant, Utica Leaseco, LLC ("Utica"), one of Appellee‟s, GMI Land Company, LLC‟s ("GMI") creditors, filed this appeal claiming the Bankruptcy Court abused its discretion when it granted GMI‟s Motion for Reconsideration.*fn1 Utica argues that the Bankruptcy Court granted this Motion outside the time period allowed by the Bankruptcy Code ("Code") and further contends that the Bankruptcy Court granted the Motion for Reconsideration on grounds not raised by GMI in its Motion. See doc nos. 8 and 10-1.

In its response, GMI fails to address Utica‟s "time bar argument," and instead of squarely addressing Utica‟s "sua sponte argument," GMI responds in what this Court considers to be a tangential fashion. See doc. no. 11. Utica did not file a Reply Brief.

The Court has reviewed Utica‟s arguments and GMI‟s response to them, and the matter is now ripe for adjudication.

I. Jurisdiction and Standard of Review

This court has jurisdiction over this appeal pursuant to 28 U.S.C. ' 158(a). A district court sits as an appellate court in bankruptcy proceedings. Donald v. Bernstein, 104 F.3d 547, 551 (3d Cir. 1997).

The standards of review which apply to this case are as follows: First, this Court cannot disturb the factual findings of a bankruptcy court unless they are clearly erroneous. Accardi v. IT Litig. Trust (In re IT Group, Inc.), 448 F.3d 661, 667 (3d Cir. 2006). A factual finding is clearly erroneous if the reviewing court is "left with a definite and firm conviction that a mistake has been committed." Gordon v. Lewistown Hosp., 423 F.3d 184, 201 (3d Cir. 2005); see also, Anderson v. Bessemer City, 470 U.S. 564, 573 (1985). Second, this Court exercises plenary, or de novo, review over any legal conclusions. Am. Flint Glass Workers Union v. Anchor Resolution Corp., 197 F.3d 76, 80 (3d Cir. 1999). Third, if the Bankruptcy Court‟s decision is a mixed question of law and fact, this Court must break down the determination and apply the appropriate standard of review to each. In re Montgomery Ward Holding Corp., 326 F.3d 383, 387 (3d Cir. 2003). Finally, this Court reviews a bankruptcy court‟s exercise of discretion for abuse. In re O'Brien Environmental Energy, Inc., 188 F.3d 116, 122 (3d Cir. 1999). A bankruptcy court abuses its discretion when its ruling rests upon an error of law or a misapplication of law to the facts. Id.

II. Factual and Procedural History*fn2

The underlying Chapter 11 Bankruptcy case was filed on December 3, 2010, at docket number 10-28613 and was assigned to Bankruptcy Judge Jeffrey A. Deller. See generally, docket in case no. 10-28613-JAD filed in the United States Bankruptcy Court for the Western District of Pennsylvania.

By way of background, GMI is the owner of a former cement plant and related buildings and equipment located on Neville Island. GMI‟s brief, doc. no. 11, p. 4. GMI claims that after extensive state court litigation, it has been permitted to produce a product (ground granulated blast furnace slag) on the property, for which there is demand and which will be profitable once GMI locates all necessary investors, suppliers, and customers. Id. GMI claims that it filed for Chapter 11 relief in order to propose a plan that will enable it to pay all of its creditors, including Utica, in full. Id.

The parties concur that after filing for relief under Chapter 11 on December 3, 2010, GMI invoked the automatic stay and avoided a sheriff sale (scheduled for December 6, 2010) of GMI‟s real property. GMI‟s brief, doc. no. 11, p. 2; Utica‟s brief, doc. no. 8, p. 2. On December 13, 2010, Utica filed a Motion for Relief from Stay seeking relief under 11 U.S.C. § 362(d)(1) and (2), claiming GMI lacked equity in the real property at issue. Id. GMI‟s response to the Motion indicated that it did have equity in the property. GMI‟s brief, doc. no. 11, p. 2.

On January 11, 2011, Judge Deller held a hearing on Utica‟s Motion for Relief (as well as other motions not relevant here), and held an evidentiary hearing February 9, 2011. GMI‟s brief, doc. no. 11, p. 2; Utica‟s brief, doc. no. 8, p. 2; see also BR docket entry nos. 40 and 70. At the conclusion of the February 9, 2011 hearing, Judge Deller issued an Order granting Utica‟s Motion for Relief from Stay, concluding that GMI had no equity in the assets; but, he also concluded that the property was necessary for an effective reorganization under 11 U.S.C. § 362 (d)(2). GMI‟s brief, doc. no. 11, p. 2; Utica‟s brief, doc. no. 8, p. 2; see also BR docket entry no. 71.

Specifically, the pertinent section of Judge Deller‟s Order reads as follows:

On February 9, 2011, the Court conducted an evidentiary hearing on the Motion for Relief From Automatic Stay . . . . For the reasons stated on the record at such hearing, the Court finds that while [GMI] has no equity in the subject property, the property is necessary for an effective reorganization of [GMI]. Consequently, Utica‟s Motion for Relief from stay pursuant to 11 U.S.C. Section 362(d)(2) is DENIED, in part.

However, as there is no equity in the subject property, and because [GMI] has not afforded Utica with any adequate protection, "cause" exists to grant the Motion for Relief From ...


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