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Valley of Lakes RICO Class Action against PNCBANK, et al.
ripped edge: exhibits


			BEFORE THE
	  PENNSYLVANIA PUBLIC UTILITY COMMISSION



GEORGE MORRIS, et al.	:
			:
	V.             	:	Docket No. C-00923820
			:
ONEIDA WATER COMPANY	:

	    __________________________________

	    THE OFFICE OF CONSUMER ADVOCATE'S
            SUPPLEMENTARY MEMORAINDUM OF LAW
            __________________________________


	The Office of Consumer Advocate ("OCA") hereby submits 

this Supplementary Memorandum of Law in response to the Interim 

Order of Administrative Law Judge Richard M. Lovenwirth ("ALJ")
 
dated September 10, 1992.

I.  INTRODUCTION

	This proceeding involves a consolidation of various 

complaints filed against Oneida Water Company ("Oneida" or 

"Company"). The Company filed for bankruptcy on April 7, 1992.  On 

January 27, 1992, prior to the filing of the bankruptcy petition, 

George Morris filed a complaint against Oneida on behalf of himself 

and other customers of the Company.  Subsequent to the filing of 

the bankruptcy petition, other customers of Oneida also filed

complaints.  On June 26, 1992, Oneida Water Company ("Oneida" or

"Company") filed a preliminary motion and a memorandum of law in

support of its position that the Company's filing of a bankruptcy

petition operates to stay proceedings before the PubLic Utility 

Commission.  On July 15, 1992, the OCA filed a memorandum of law 

asserting, inter alia, that the PUC proceeding is an exception to

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asserting, Lnter alia, that the PUC proceeding is an exception to 

the automatic stay provision of the Bankruptcy Code because it 

involves the public's health and safety and not the debtor's 

pecuniary interest.  OCA Memorandum at 3-7.  The OCA argued, 

further, that actions which do not fall under the automatic stay 

provision of the Bankruptcy Code may be brought by other than the 

regulatory power.  OCA Memorandum at 8-12.  Finally, the OCA 

asserted that the Public Utility Commission is empowered under the 

Bankruptcy Code to provide certain types of relief even if the 

relief involves an exchange of money.  OCA Memorandum at 12-15.


	On September 9, 1992 at the third preheating conference 

in the instant proceeding, ALJ Lovenwirth requested that the 

parties submit a further memorandum of law addressing the 

jurisdiction of the Commission over administrative actions against 

the debtor that were commenced after the filing of a Petition of 

Bankruptcy.  As set forth in its initial memorandum of law, the OCA 

noted that Section 362(a)(1) of the Bankruptcy Code stays 

proceedings against the debtor that were or could have been 

commenced before the bankruptcy filing.  The OCA submits this 

supplementary memorandum of law to further clarify this issue.

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II.  THE PUC PROCEEDING INVOLVING ONEIDA WATER COMPANY DOES NOT 
     FALL UNDER THE AUTCMATIC STAY PROVISION OF THE BANKRUPTCY 
     CODE.

	As set forth in detail in the OCA's initial Memorandum of 

Law, the PUC proceeding is an exception to automatic stay provision 

found in Section 362 of the Bankruptcy Code.  OCA Memorandum at 3.

	Section 362 (a) (1) of the Bankruptcy Code states in 

relevant part:

	(a)  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... 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.

11 U.S.C.  362(a)(1).

	Clearly, proceedings which were or could have been 

commenced before the bankruptcy filing fall under the purview of 

Section 362(a)(1) of the Bankruptcy Code.  However, actions which 

were or could have been commenced before the bankruptcy filing may 

not be stayed by Section 362.  As discussed at length in the OCA's 

initial Memorandum of Law, Section 362 does not operate as a stay 

with regard to an action or proceeding by a governmental unit to 

enforce such governmental unit's police or regulatory power.  11 

U.S. Code  362(b)(4), OCA Memorandum at 4.


	In its Initial Memorandum, the OCA has demonstrated that 

subsection 362(b) (4) is applicable to the case at hand.  In 

particular, the OCA submits that the PUC action involving Oneida

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falls within this exception because it was commenced in the 

interest of public health, safety or welfare.  The case before the 

Commission involves an alleged violation of the Public Utility Code 

which requires the utility company to provide safe and adequate

service.  66 Pa.  C.S.A.  1501.  Specifically, the customer

complainants of Oneida allege frequent water outages and low water

pressure.  It follows, therefore that the remedy sought entails the

Commission's police and regulatory power in order to rectify an

alleged inadequate and unsafe condition.  OCA Memorandum at 7. 

	Furthermore, the OCA addressed the fact that the 

exception prevails even though a customer of Oneida, and not the 

regulatory power itself, initiated the action against the Company.  

OCA Memorandum at 8-12.  Finally, the OCA submitted that the 

exception remains applicable to this case even though the remedy 

may involve the exchange of money.  OCA Memorandum at 12-15.

	To shed light on the scope of the automatic stay, the OCA 

cited the case In re Grynberg, 113 Bankr. 709, 711-712 (Bankr.  

D.Colo. 1990) in its initial Memorandum of Law.  In re Grynberg 

involved a pre-petition judgment entered against the debtors which 

the debtors subsequently appealed after filing a petition in 

bankruptcy.  The parties to whom the debtors were indebted, 

hereinafter "applicants," by motion requested both pre-petition and 

post-petition costs related to the judgment.

	Of key importance in Grynberg was the fact that the 

bankruptcy court began its analysis by defining pre-petition claims 

which would fall under Section 362(b) (4) of the Bankruptcy Code.

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The court in Grynberg determined that the automatic stay 

encompassed pre-petition claims given the broadest possible 

definition.  Id. at 711.  The court determined, however, that there

was at least one restriction upon this expansive definition.  In 

order for a claim to be discharged under the automatic stay 

provision of the Bankruptcy Code, "[the] triggering act which 

constitutes the basis for the cause of action must have occurred 

prior to filing the petition in bankruptcy." Id. at 713.  For 

example, citing Accord In re Pettibone Corp., 90 Bankr. 918 (Bankr. 

N.D. Ill. 1988), the Grynberg court noted that in cases of pre-

petition exoosure to harmful chemicals, there is a presumption that 

a bodily injury was sustained at the time of exposure and the 

result which is manifested post-petition in no way depended upon 

further acts of the debtor.

	Thus, Grynberg sheds light on which actions constitute 

pre-petition proceedings that are discharged by the automatic stay 

provision of the Bankruptcy Code.  As the OCA has argued in its 

initial Memorandum of Law, this case falls within the exception 

provided in Section 362 (b) (4) of the Bankruptcy Code and therefore, 

the PUC should proceed with the complaint.








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II.  THE AUTOMATIC STAY PROVISION OF THE BANKRUPTCY CODE IS NOT 
     APPLICABLE TO POST-PETITION PROCEEDINGS AGAINST THE DEBTOR.

	As discussed above, it is the OCA's position as reflected 

in its initial Memorandum of Law, that the automatic stay provision 

of the Bankruptcy Code is inapplicable to the PUC proceeding 

because it involves the enforcement of a governmental unit's police 

or regulatory power.  In particular, this matter before the Public 

Utility Commission involves an alleged deficiency in quality of 

service provided by the debtor, Oneida Water Company and not a 

matter of the debtor's pecuniary or financial interest.  It is the 

OCA's position, therefore, that the PUC does have jurisdiction over 

this proceeding and that this case should continue on its merits.  

The threshold issue presented here in the OCA's Supplementary 

Memorandum, however, involves whether the complaints filed after 

the bankruptcy petition was filed should proceed before the Public 

Utility Commission.  In this case, the ALJ has consolidated the 

various complaint cases initiated both prior to and subsequent to 

Oneida's bankruptcy filing.

	The OCA submits that while Section 362 discharges pre-

petition obligations and claims of the debtor except as discussed, 

supra: "The automatic stay has no effect whatsoever upon claim 

which arose after the petition was filed." OCA Memorandum at 3, 

citing Grynberg at 712.

	The court in Grynberg addressed the legislative 

justification for providing a debtor relief from pre-petition 

actions against it and, hence, also addressed the issue of 

excluding post-petition actions from the automatic stay.  The goal 

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of bankruptcy is to provide the debtor with reasonable exemptions 

to enable it to begin anew.  The court citing Matter of Hadden, 57 

B.R. 187 (Bankr. W.D. Wis. 1986) noted, however, that

dischargeability depends upon the particular facts which give rise 

to the obligation.  The Hadden court held that the debtor is 

afforded a fresh start through the bankruptcy filing but remains 

responsible for the post-petition costs it incurs.  Of key 

importance is preventing the debtor from taking post-petition 

actions with "impunity." Id. Therefore, the automatic stay does 

not afford protection from post-petition actions or proceedings 

which are commenced against the debtor.  An exception to this rule 

is a claim that could have been brought prior to the bankruptcy 

petition.

	The proceeding involving Oneida Water Company differs in 

nature from claims arising out of judgments against the debtor.  As 

discussed in detail in its initial memorandum of law, it is the 

OCA's position that the PUC proceeding is not stayed by the filing 

of the petition for bankruptcy because it involves a govermental 

unit's enforcement of its police or regulatory power.  Here, the 

PUC proceeding involves health and safety considerations and not a 

financial or pecuniary claim against the debtor.  As such, the PUC 

does, therefore, have jurisdiction over this matter involving 

Oneida Water Company.

	Secondly, the OCA submits that the harm or liability that 

is alleged in the PUC proceeding does not involve a triggering act 

per se since the quality of service provided by Oneida is

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continuing in nature.  The CCA would note that the Grynberg court 

did not specifically address the type of claim involved in the 

instant case, wherein there is an alleged continuing harm to health 

and safety of the Company's customers which encapsulates both pre-

petition and post-petition causes of action.  One event, pre-

petition or post-petition, did not serve to cause the injury or 

incur the liability alleged.  Rather, the OCA submits, a matter of 

a utility's quality of service involves ongoing health and safety 

considerations.  Whether a complainant could have initiated the PUC 

proceeding against Oneida pre-petition or post-petition is not 

relevant since the harm alleged is continuing in nature.  Applying 

the standard set forth in the Grynberg case, the OCA submits that 

the basis of the action before the PUC is not an incident that 

occurred prior to the bankruptcy filing but, rather, a recurring

condition of inadequate water pressure on Oneida's system.

Therefore, the PUC properly has jurisdiction over this matter.

Together, the OCA submits, these factors bring the instant PUC 

proceeding outside the automatic stay provision of Section 

362(a)(1) of the Bankruptcy Code.

	Moreover, the post-petition complaints are properly 

before the PUC since the nature of the service being provided by 

the Company is continuing in nature.  In addition, although the 

same quality problem may have been present before the bankruptcy 

petition was filed, it also may have occurred after the bankruutcy 

was filed.  For these reasons, the OCA submits that the PUC 

proceeding is not stayed and should be considered on its merits.

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III.  CONCLUSION

	For the foregoing reasons, the Office of Consumer 

Advocate respectfully submits this supplementary brief in support 

of its request that Oneida Water Company's Preliminary Motion be 

denied and that the instant proceeding go forward on its merits.



				Respectfully submitted,

				/s/
				____________________________
				Susan Jin Davis
				Christine Maloni Hoover
				Assistant Consumer Advocate

			   FOR: Irwin A. Popowsky 
				Consumer Advocate


Office of Consumer Advocate
1425 Strawberry Square
Harrisburg, PA 17120
(717) 783-5048

DATEID:	September 30, 1992








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Valley of Lakes RICO Class Action against PNCBANK, et al.

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