     12-3342
     In re: Residential Capital, LLC

                          UNITED STATES COURT OF APPEALS
                              FOR THE SECOND CIRCUIT

                                     SUMMARY ORDER
     RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
     ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
     PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
     DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
     ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
     SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1            At a stated term of the United States Court of Appeals
 2       for the Second Circuit, held at the Thurgood Marshall United
 3       States Courthouse, 40 Foley Square, in the City of New York,
 4       on the 15th day of July, two thousand thirteen.
 5
 6       PRESENT: DENNIS JACOBS,
 7                              Chief Judge,
 8                ROSEMARY S. POOLER,
 9                DEBRA ANN LIVINGSTON,
10                              Circuit Judges.
11
12       - - - - - - - - - - - - - - - - - - - -X                          12-3342
13       In Re: Residential Capital, LLC,
14
15                    Debtor.
16
17       - - - - - - - - - - - - -
18
19       Residential Capital, LLC, Ditech, LLC, DOA
20       Holding Properties, LLC, DOA Properties IX
21       (Lots-Other), LLC, EPRE LLC, Equity Investment
22       I, LLC, ETS of Virginia, Inc., ETS of
23       Washington, Inc., Executive Trustee Services,
24       LLC, GMAC-RFC Holding Company, LLC, GMAC Model
25       Home Finance I, LLC, GMAC Mortgage USA
26       Corporation, GMAC Mortgage, LLC, GMAC
27       Residential Holding Company, LLC, GMAC RH
28       Settlement Services, LLC, GMACM Borrower LLC,

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 1   GMACM REO LLC, GMACR Mortgage Products, LLC,
 2   HFN REO Sub II, LLC, Home Connects Lending
 3   Services, LLC, Homecomings Financial Real
 4   Estate Holdings, LLC, Homecomings Financial,
 5   LLC, Ladue Associates, Inc., Passive Asset
 6   Transactions, LLC, PATI A, LLC, PATI B, LLC,
 7   PATI Real Estate Holdings, LLC, RAHI A, LLC,
 8   RAHI B, LLC, RAHI Real Estate Holdings, LLC,
 9   RCSFJV2004, LLC, Residential Accredit Loans,
10   Inc., Residential Asset Mortgage Products,
11   Inc., Residential Asset Securities
12   Corporation, Residential Consumer Services of
13   Alabama, LLC, Residential Consumer Services of
14   Ohio, LLC, Residential Consumer Services of
15   Texas, LLC, Residential Consumer Services,
16   LLC, Residential Funding Company, LLC,
17   Residential Funding Mortgage Exchange, LLC,
18   Residential Funding Mortgage Securities I,
19   Inc., Residential Funding Mortgage Securities
20   II, Inc., Residential Funding Real Estate
21   Holdings, LLC, Residential Mortgage Real
22   Estate Holdings, LLC, RFC-GSAP Servicer
23   Advance, LLC, RFC Asset Holdings II, LLC, RFC
24   Asset Management, LLC, RFC Borrower LLC, RFC
25   Construction Funding, LLC, RFC REO LLC, RFC
26   SFJV-2002, LLC,
27
28            Plaintiffs-Appellants,
29
30            -v.-
31
32   Federal Housing Finance Agency, as
33   conservator for the Federal Home Loan
34   Mortgage Corporation,
35
36            Defendant-Appellee.
37   - - - - - - - - - - - - - - - - - - - -X
38
39   FOR APPELLANTS:            DEANNE E. MAYNARD (Joel
40                              C. Haims, Kayvan B.
41                              Sadeghi, and Marc A.
42                              Hearron, on the brief),
43                              Morrison & Foerster LLP,
44                              Washington, D.C.

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 1   FOR APPELLEE:              MARC E. KASOWITZ (Andrew
 2                              K. Glenn, Kanchana
 3                              Wangkeo Leung, and Daniel
 4                              A. Fliman, on the brief),
 5                              Kasowitz Benson Torres &
 6                              Friedman LLP, New York,
 7                              New York.
 8
 9        Appeal from an order of the United States District
10   Court for the Southern District of New York (Cote, J.).
11
12        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
13   AND DECREED that the case is REMANDED to the district court.
14
15        Appellant Residential Capital, LLC, and various related
16   entities (collectively, “ResCap”), appeal from the July 17,
17   2012, order of the United States District Court for the
18   Southern District of New York (Cote, J.), denying ResCap’s
19   motion to stay a lawsuit brought by the Federal Housing
20   Finance Agency (“FHFA”), as conservator for the Federal Home
21   Loan Mortgage Corporation (“Freddie Mac”), against ResCap’s
22   corporate parents and affiliate. We assume the parties’
23   familiarity with the underlying facts, the procedural
24   history, and the issues presented for review.
25
26        In denying ResCap’s motion to stay the lawsuit that has
27   been brought by the FHFA against ResCap’s corporate parents
28   and affiliate, the district court concluded that the
29   Bankruptcy Code’s automatic stay provision, 11 U.S.C.
30   § 362(a), could not extend to ResCap’s corporate parents and
31   affiliate because they were not debtors in bankruptcy. The
32   district court also denied ResCap’s request for a
33   discretionary stay of the lawsuit under Section 105(a) of
34   the Bankruptcy Code.
35
36        Section 362(a)(1) provides that a bankruptcy petition
37   “operates as a stay” of “the commencement or
38   continuation . . . of a judicial, administrative, or other
39   action or proceeding against the debtor.” 11 U.S.C.
40   § 362(a)(1). Additionally, Section 362(a)(3) will stay “any
41   act to obtain possession of property of the estate or of
42   property from the estate or to exercise control over
43   property of the estate.” Id. § 362(a)(3). ResCap relies on
44   both of these provisions to support application of the

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 1   automatic stay to the non-debtor entities. “The automatic
 2   stay can apply to non-debtors, but normally does so only
 3   when a claim against the non-debtor will have an immediate
 4   adverse economic consequence for the debtor’s estate.”
 5   Queenie, Ltd. v. Nygard Int’l, 321 F.3d 282, 287 (2d Cir.
 6   2003). In Queenie, for example, this Court held that the
 7   automatic stay applied to proceedings against a debtor’s
 8   wholly owned corporation. Id. at 287.
 9
10        Here, the district court denied application of Section
11   362(a)’s automatic stay to the non-debtor entities as a
12   categorical matter, without factual findings as to whether
13   the lawsuit against those entities would have had “immediate
14   adverse economic consequence[s]” on ResCap’s estate. The
15   district court did examine some of ResCap’s arguments
16   regarding the adverse consequences of the lawsuit in the
17   context of ResCap’s request for a stay under Section 105(a),
18   but there are no explicit findings with regard to ResCap’s
19   request under Section 362(a).
20
21        Because Section 362(a)’s automatic stay may apply to
22   non-debtors in some limited circumstances, we remand the
23   case pursuant to the procedure outlined in United States v.
24   Jacobson, 15 F.3d 19, 22 (2d Cir. 1994), for the district
25   court to supplement the record and determine whether Section
26   362(a)’s automatic stay applies to the non-debtor entities.
27   It may be that the anti-injunction provision in the Housing
28   and Economic Recovery Act of 2008, 12 U.S.C. § 4617(f), bars
29   application of Section 362(a)’s automatic stay, but we do
30   not have to reach that question until the district court has
31   determined whether the automatic stay applies in the first
32   instance.
33
34        The panel retains jurisdiction to hear ResCap’s appeal
35   once the district court has made its determination. Given
36   ResCap’s ongoing bankruptcy proceedings, we invite the
37   district court to act with celerity, at the latest within
38   sixty calendar days of the date of this decision.
39
40        For the foregoing reasons, we hereby REMAND the case to
41   the district court. After the district court has made its
42   determination, either party may restore jurisdiction to this
43   Court by filing with the Clerk a letter (along with a copy
44   of the relevant order or transcript) advising the Clerk that

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1   jurisdiction should be restored. The returned appeal will
2   be assigned to this panel and an additional notice of appeal
3   will not be needed.
4
5                              FOR THE COURT:
6                              CATHERINE O’HAGAN WOLFE, CLERK
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