Use this button to switch between dark and light mode.

Experience a New Era in Legal Research with Free Access to Lexis+

In re Brown

In re Brown

United States Court of Appeals for the Third Circuit

October 15, 1991, Argued ; December 16, 1991, Filed

No. 91-5292

Opinion

 [*565]  OPINION OF THE COURT

WEIS, Circuit Judge.

In this appeal we decide that a bankruptcy judge was required to give preclusive effect to a state court summary judgment  [*566]  on liability in a mortgage foreclosure proceeding. Furthermore, because the amount due is yet to be determined, the bankruptcy judge should permit the state court proceedings to continue. Because it appears that the bankruptcy judge's denial of the mortgagor's motion to dismiss the Chapter 11 petition here was influenced by a misunderstanding of issue preclusion, we believe that the case should be remanded for further [**2]  consideration. Accordingly, we will reverse the district court order dismissing the petition.

This opinion discusses two interrelated bankruptcy cases, the first by a corporation, the second by an individual who had owned an interest in that company. The debtor here, Rosemary Brown, filed a petition for reorganization under Chapter 11 as the result of earlier financial difficulties, and subsequent bankruptcy proceedings, encountered by Repro Supply Corporation. Rosemary Brown and her husband, Gary, each owned fifty percent of the stock of that company.

Although successful for a time, Repro became unable to pay loans it had received from First Jersey National Bank and, filed for Chapter 11 protection in 1986. The bankruptcy court entered a cash collateral order in which Gary Brown waived any claims he might have against the bank and agreed that he and his wife Rosemary would give the bank mortgages on three properties that they jointly owned. This arrangement was negotiated so that the bank would continue financing Repro during the reorganization process.

On June 8, 1987, the Browns executed three mortgages that stated that they were given pursuant to the bankruptcy court's cash collateral [**3]  order. Soon thereafter, the bank stopped advancing funds to Repro and the corporation was unable to reorganize.

Read The Full CaseNot a Lexis Advance subscriber? Try it out for free.

Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.

951 F.2d 564 *; 1991 U.S. App. LEXIS 29218 **; 26 Collier Bankr. Cas. 2d (MB) 202; Bankr. L. Rep. (CCH) P74,370

IN RE: ROSEMARY BROWN, Debtor; FIRST JERSEY NATIONAL BANK v. ROSEMARY BROWN, Appellant

Prior History:  [**1]  APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY. (D.C. No. 90-00371)

Disposition: Reversed and Remanded

CORE TERMS

state court, district court, bankruptcy court, bankruptcy judge, issue preclusion, summary judgment, reorganization, mortgages, collateral, bad faith, liquidation, proceedings, amount due, rehabilitation, bank's motion, cases, collateral estoppel, preclusive effect, interlocutory, foreclosure, questioned, matters, parties

Bankruptcy Law, Judicial Review, Standards of Review, Clear Error Review, Civil Procedure, Appeals, De Novo Review, Procedural Matters, General Overview, De Novo Standard of Review, Clearly Erroneous Review, Bankruptcy, Reorganizations, Eligibility, Discharge & Dischargeability, Preclusion of Judgments, Estoppel, Collateral Estoppel, Judgments, Full Faith & Credit, Summary Judgment, Summary Judgment Review, Judicial Estoppel, Res Judicata, Appellate Jurisdiction, Collateral Order Doctrine, Conversion & Dismissal, Reorganizations