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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 		:	C-923820 
			:
	V.		:
			:
Oneida Water Company	:


		   INTERIM ORDER

	On or about January 27, 1992, George Morris 

(hereinafter "Complainant") filed a formal complaint with the 

Pennsylvania Public Utility Commission alleging that inadequate 

service is being provided by Oneida Water Company (hereinafter 

"Respondent") in that the water pressure to his residence at Lot 

C-26 in the Valley of Lakes/Eagle Rock Resort is low, and that 

ofttimes there have been interruptions of service.

	Thereafter, on April 7, 1992, Respondent filed a 

Chapter 11 Petition in Bankruptcy in the United States District 

Court for the Middle District of Pennsylvania.

	On or about June 25, 1992 Respondent filed a 

"preliminary motion" asking that this Commission refrain from 

taking any further action upon this proceeding (hereinafter 

"preliminary motion") on the grounds that the Commission lacks 

jurisdiction during the pendency of the Bankruptcy proceeding.  

It also filed a "Memorandum of Law" in support of its said 

preliminary motion.  The Office of the Consumer Advocate filed

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its notice of intervention in this matter, and has filed its own 

memorandum of law and supplemental memorandum of law, urging 

denial of the preliminary motion.

	Various pre-hearing conferences were held, and various 

delays in disposing of the preliminary motion were agreed upon 

and ordered by the undersigned due to Respondent's continuing 

efforts to secure financing which would, with the Bankruptcy's 

Court's approval, enable it to remediate problems with its water

facilities. 	Respondeht's efforts in that regard have not been

availing, however.

	This Order will dispose of the preliminary motion.  

Respondent's position is that under Section 362(a)(1) and (3) of 

the Bankruptcy Code (11 U.S.C. 362(a)(1) and (3)), automatic stay 

of all judicial proceedings against the bankruptcy petitioner is 

mandated.  Those sections state:

	"Except as provided in subsection (b) of this 
	section, a petition filed under section 301 
	[voluntary petition] ... of this title ... 
	operates as a stay, applicable to all 
	entities, of -

	"(1) the commencement or continuation ... of a 
	judicial, administrative... proceeding 
	against the debtor that was or could have 
	been commenced before the commencement of the 
	case under this title, or to recover a claim 
	against the debtor that arose before the 
	commencement of the case under this title;

	"...

	"(3) any act to obtain possession of property 
	of the estate or of property from the estate

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	or to exercise control over property of the 
	estate."

	Respondent acknowledges existence of an exception to 

the automatic stay of proceedings set forth in 11 U. S. C.  

362(b)(4).  That section provides that the:

	"...filing of a petition under Section 
	301... does not operate as a stay... under 
	Section (a)(1) of this section, of the 
	commencement or continuance of an action or 
	proceeding by a governmental unit to enforce 
	such governmental unit's police or regulatory
	power...."                 (emphasis added)

OCA urges that this exception should apply in this case, even 

though the Public Utility Commission did not initiate this 

complaint proceeding, and even though the Commission's 

prosecutorial powers under the Public Utility Code are not being 

employed.

	OCA quotes from Penn Terra Ltd. v. Department of

Environmental Resources, 733 F.2d 267 (Third Circuit, 1984), at 

page 272 thusly:

	"Paragraph (4) excepts commencement or 
	continuation of actions and proceedings by 
	governmental units to enforce police or 
	regulatory powers.  Thus, where a 
	governmental unit is suing a debtor to 
	prevent or stop violation of fraud, 
	environmental protection, consumer 
	protection, safety, or similar police or 
	regulatory laws, or attempting to fix damages 
	for violation of such a law, the action or 
	proceeding is not stayed under the automatic 
	stay."


				3



OCA urges that this Commission is a "governmental unit" pursuant 

to the definition of the bankruptcy code, and cites for that 

proposition in re Begley v. Philadelphia Electric Co., 46 Bankr. 

707 (E.D. Pa. 1984).  OCA argues that this case involves 

enforcement of the Commission's police or regulatory power in 

that the private complainant seeks a Commission order finding 

that respondent has failed to fulfill its duties under the 

Pennsylvania Public Utility Code and under the Commission's

regulations, and that, therefore, the case comes within the

purview of the exception to the automatic stay above quoted.

OCA, in its excellent memorandum of law, cites to our attention a

split of authority concerning the question of whether or not the 

governmental unit itself must bring the action (in order for it 

to be exempt from the automatic stay of proceedings), or whether 

exemption arises when a private citizen, and not a governmental 

regulatory body, institutes such action.  OCA candidly cites to 

our attention the cases of In Re Revere Copper and Brass, Inc.,

29 Bankr. 584 (1983); In Re Chateaugay Corp., 118 Bankr. 19

(1990); and in Re 1736 18th St., Ltd. Partnership, 97 Bankr. 121

(1989).  Those cases held that there is no exemption unless the

governmental unit has initiated the enforcement proceeding.

	OCA urges, however, that there is another line of cases 

whose holdings would support "automatic stay of proceeding" 

exemption even when a private citizen initiates the action.  It

				4



cites, inter alia, for that proposition In Re Dervos, 37 Bankr. 

731 (1984); and In Re The Briarcliff, 16 Bankr. 544 (1981).  In 

summarizing the rationale of this line of cases, OCA states (page 

10, original memorandum of law):

	"In other words, the courts have interpreted 
	this exemption to facilitate the interest of
	Congress to leave the police powers with the
	States. Where the state customarily
	exercises that power through actions
	initiated by individuals, the State may 
	continue to do so while a bankruptcy 
	proceeding is pending."

	Our deliberation upon this issue has led us to conclude 

that the line of cases cited by OCA standing for the proposition 

that the governmental unit must be the complainant in order for 

the exemption from the "automatic stay of proceedings" to be in 

effect is the correct one.  The only connection which this 

Commission now has with the instant complaint is that of the 

impartial tribunal adjudicating the rights of the Complainant, 

Respondent and Intervenor (OCA).  Its Law Bureau has refrained 

from recommending to this Commission that a complaint proceeding 

be instituted against Oneida and/or the Commission has decided 

that such action on its part would be inappropriate.

	The Public Utility Commission is a multi-faceted 

organization with both an adjudicatory function and a prosecutory 

function (as well as a legislative function and an executive 

function).  In the instant case its adjudicatory function, only, 

has been augmented.  Its prosecutorial function, delegated to the 

				5



Law Bureau pursuant to Section 308 of the Public Utility Code, 

and as authorized by Section 1505 of the Public Utility Code, has 

not been employed.  Pursuant to those sections of the Public 

Utility Code, this Commission frequently enforces utilities' 

obligations to provide safe and reliable service by utilization 

of its prosecutorial function.  Thus, even under that line of 

cases cited by OCA for the proposition that the exemption from 

"automatic stay of proceedings" is in place when a private 

citizen is the complainant under circumstances where the 

customary method of regulation is by private citizen complaint, 

this Commission would be divested of adjudicatory jurisdiction 

since its prosecutorial arm has not been employed pursuant to 

legal authority and oft-utilized procedure.  This case is 

distinguishable from those cited by OCA thusly: in Briarcliff, 

supra, the Rent Control Board depended upon the private 

complaints of tenants for enforcement of the rent control 

provisions of the law; and in Dervos, supra, typically a private 

complaint was brought by an employee charging a violation of the 

State's Wage Payment and Collection Act.  In the instant case, on 

the other hand, the regulatory body is a commission which, as a 

matter of practice, does not merely rely upon third party 

complaints for exercise of its enforcement powers.

	Moreover, OCA's participation does not confer any 

jurisdiction upon this Commission, either.  Nor, we hastily add,

				6



has OCA suggested otherwise.  We have examined OCA's Enabling Act 

(at 71 P.S. Section 309, et seq.), and we find that it fails to 

create any regulatory or police power exercisable by OCA.  Its 

sole authority is to regulate "the interest of consumers as a 

party, or otherwise participate for the purpose of representing 

the interest of consumers" before other regulatory agencies and 

before the courts.

	Accordingly, we now enter the following ORDER:

	1.  That the complaint proceeding of George Morris

against Oneida	Water Coiipany at C-923820 shall be stayed until

such time as the United States Bankruptcy Court proceeding

involving Oneida Water Company has terminated, or until such time 

as the said Bankruptcy Court has terminated its automatic stay of 

proceedings concerning this complaint proceeding.  The attorney-

of-record for Oneida Water Company shall forthwith notify this 

Commission when either of the events mentioned in this ordering 

paragraph has occurred.

	2.  That this complaint proceeding of George Morris v.

Oneida Water Company is severed from those cases with which it 

was previously consolidated, to wit, Leon Dongelewicz (C-924012) 

and Samuel Rizzo (C-924186) v. Oneida Water Company.


Date May 21, 1993			/s/
					RICHARD M. LOVENWIRTH
					Administrative Law Judge


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George Morris
V.
Oneida water Company
C-00923820



	Service of the foregoing document was made 

on May 21, 1993 via first-class mail upon the 

following parties:

	John J. Sellinger, Esq.
	Mattioni, Mattioni & Mattioni
	399 Market Street, 2nd Floor
	Philadelphia, Pennsylvania 19106

	Susan Jin  Davis, Esq.
	Christine Maloni Hoover, Esq.
	Office of Consumer Advocate
	1425 Strawberry Square
	Harrisburg, Pennsylvania I"/120

	George Morris
	626 Lake Valley Drive
	Valley of Lakes
	P. O. Box 242
	Nuremberg, PA 18241

	Leon R. Dongelewicz
	Cheyney Drive, Lot D70
	P. O. Box 204
	Nuremberg, PA 18241

	Samuel Rizzo
	C-28 Lake View Drive
	Valley of Lakes
	Nuremberg, Pennsylvania 18241


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

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