IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
LEON R. DONGELEWICZ, et al., : No. 3:CV-95-0457
Plaintiffs : (Judge McClure)
vs. :
FIRST EASTERN BANK, et al., :
Defendants :
O R D E R
July 7, 1999
BACKGROUND
On June 17, 1994, plaintiffs, lot owners in a recreational
housing development called the Valley of Lakes, commenced this
action with the filing of a complaint pursuant to: the Racketeer
Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§
1961-1968 (Count I); the Interstate Lands Sales Full Disclosure
Act, 15 U.S.C. § 1701 (Count II); 42 U.S.C. § 1983 (Count III);
the New Jersey Real Estate Full Disclosure Act, N.J.S.A. § 45:15-
16.47 (Count IV); and the common law of New Jersey for fraud and
deceit (Count V). The complaint was filed in the United States
District Court for the District of New Jersey and was transferred
to this court by Order of Court dated March 15, 1995.
Succinctly stated, plaintiffs allege a long history of
mismanagement, broken promises, and fraud on the part of persons
in ownership and management positions at Valley of Lakes over the
years. Plaintiffs have been certified to proceed as a class
pursuant to Fed. R. Civ. P. 23.
On September 23, 1997, the court issued a memorandum and
order relating to plaintiffs' motion for entry of default,
granting the motion as it related to defendant Frank M. Cedrone
and denying the motion as it related to defendants C.B.G., Ltd.,
Oneida Water Co., and Valley Utilities Co., Inc. (respectively,
CBG, Oneida, and Valley Utilities), based on pending bankruptcy
proceedings. In denying the motion, we noted that we would
reconsider the entry of default for those claims which arose
after CBG, Oneida, and Valley Utilities filed their petitions in
bankruptcy, since the automatic stay would not apply to post-
petition claims.
Before the court is plaintiffs' motion for reconsideration.
DISCUSSION:
I. STANDARD
Generally, a motion for reconsideration may be granted based
on (1) an intervening change in controlling law, (2) the
availability of new evidence not previously available, or (3) the
need to correct a clear error of law or to prevent manifest
injustice. North River Insurance Co. v. Cigna Reinsurance Co.,
52 F.3d 1194, 1218 (3d Cir. 1995); Jubilee v. Horn, 959 F. Supp.
276, 278 (E.D. Pa. 1997); Cohen v. Austin, 869 F. Supp. 320, 321
(E.D. Pa. 1994). In this instance, we left open the possibility
of reconsideration so that plaintiffs could distinguish between
pre-bankruptcy petition claims and post-bankruptcy petition
claims. Plaintiffs further contend that the court erred in its
holding that the automatic stay barred the entry of default from
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proceeding against CBG, Oneida, and Valley Utilities. The motion
for reconsideration in this case therefore may be viewed as
attempting to prevent a clear error of law.
II. ERROR OF LAW
The error to which plaintiffs point is the court's
determination that the automatic stay provision of the Bankruptcy
Code, 11 U.S.C. § 362(a), prevents consideration of the claims
against CBG, Oneida, and Valley Utilities until the bankruptcy
court lifts the stay. Plaintiffs note that the stay as to the
adversary proceeding was lifted, in effect, when the bankruptcy
case was consolidated with the civil action in the District of
New Jersey. Since the district court properly had the authority
to assume jurisdiction over the matter, see 28 U.S.C. § 157(d),
which means that the adversary proceeding actually became part of
the matter transferred to this court, the automatic stay
provision is inapplicable.
We agree with plaintiffs that the automatic stay does not
prevent them from proceeding against CBG, Oneida, and Valley
Utilities. Since these defendants have not responded to the
complaint, or to the motion for entry of default and for
reconsideration, entry of default is appropriate as to all of
these defendants on all claims, whenever accruing.
NOW, THEREFORE, IT IS ORDERED THAT:
1. Plaintiffs' motion (record document no. 110 ) for
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reconsideration of our Memorandum and Order of Court dated
September 23, 1997, is granted.
2. The memorandum and Order of September 23, 1997, is
vacated to the extent it is inconsistent herewith.
3. The clerk is directed to enter default against
defendants C.B.G., Ltd., Oneida Water Co., and Valley Utilities
Co., Inc.
/s/
James F. McClure, Jr.
United States District Judge
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