                                                                                                                           Opinions of the United
2002 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


11-19-2002

Estate Michael v. Vega
Precedential or Non-Precedential: Non-Precedential

Docket No. 01-4024




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Recommended Citation
"Estate Michael v. Vega" (2002). 2002 Decisions. Paper 758.
http://digitalcommons.law.villanova.edu/thirdcircuit_2002/758


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                                                                               NOT PRECEDENTIAL

                             UNITED STATES COURT OF APPEALS
                                  FOR THE THIRD CIRCUIT


                                    Nos. 01-4024/4209/02-1756


                ESTATE OF MICHAEL ANGELO CORRY INN, INC.

                                                   v.

                MICHAEL A. VEGA; STEPHEN H. HUTZELMAN; ROBERT N. MICHAEL;
                JOHN DOE

                GARY V. SKIBA, Trustee for the Estate of Michael Angelo Corry Inn, Inc.,
                Trustee

                                               Stephen H. Hutzelman, Appellant in Nos. 01-4024/4209

                IN RE: GARY V. SKIBA, Trustee of the Bankruptcy
                Case of Michael Angelo Corry Inn., Inc.,
                              Petitioner in No. 02-1756
                                           ____________

                   APPEAL FROM THE UNITED STATES DISTRICT COURT
                    FOR THE WESTERN DISTRICT OF PENNSYLVANIA
                                    (D.C. Civ. Nos. 96-225 )
                         District Judge: Honorable Sean J. McLaughlin
                                         ____________

                                Argued November 1, 2002
                   Before: NYGAARD and WEIS, Circuit Judges, and IRENAS,*
                                                                                         District Judge.
                        Filed             November 19, 2002
___________________________

                  * The Honorable Joseph E. Irenas, United States District Judge for the District of New
Jersey, sitting by designation.



                                                   1
David L. Haber, Esquire (ARGUED)
Weinheimer, Schadel & Haber, P.C.
602 Law and Finance Building
429 Fourth Avenue
Pittsburgh, PA 15219

Counsel for Appellant Stephen Hutzelman

Gary V. Skiba, Esquire (ARGUED)
Wayne G. Johnson, Esquire
Yochim, Skiba, Johnson, Cauley & Nash
345 West Sixth Street
Erie, PA 16507

Counsel for Appellee Gary V. Skiba

                                            ____________

                                     OPINION OF THE COURT


WEIS, Circuit Judge.

                Only the facts relevant to the narrow issue presented here will be set forth

because this opinion is not precedential and the parties are well aware of the somewhat

complicated background.

                After a jury trial, on September 17, 1999 the District Court entered judgment

in the amount of $425,000 in favor of plaintiff Michael Angelo Corry Inn, Inc. and against

defendant Hutzelman. Plaintiff timely filed motions for a new trial and JMOL.

                In March 2000, Westport Insurance Company, the liability insurer of

defendant Hutzelman, acquired all of the stock of plaintiff Michael Angelo Corry Inn, Inc.

In June 2001, an involuntary petition for relief under Chapter 7 of the Bankruptcy Code was



                                                    2
filed against Michael Angelo Corry Inn, Inc. on behalf of creditors, including John Tobias,

whose earlier efforts to intervene in the malpractice litigation had been denied. After

receiving an answer from Westport Insurance Company, the Bankruptcy Court vacated its

order for relief on July 24, 2001 and scheduled a hearing for August 23, 2001.

                During a chambers conference with the district judge in September 2000, the

parties discussed the proposition that from a pragmatic standpoint it was unlikely that

Westport, as the sole shareholder of Michael Angelo Corry Inn, Inc., would seek payment

of the judgment of $425,000 against Hutzelman. That was so, even though Westport had

the duty to defend and indemnify Hutzelman. Concluding that the case had become moot,

the Court docketed its denial of Hutzelman’s post-trial motion on October 25, 2001.

                On January 8, 2002, the Bankruptcy Court ruled that Westport, as a

stockholder, lacked standing to oppose the petition under Chapter 7. Thereafter, the

bankruptcy proceeding was reinstated and Gary Skiba was appointed Trustee.

                After Hutzelman timely appealed to this Court, Gary Skiba as Trustee for the

bankrupt Angelo Corry Inn, Inc., was substituted as appellee.1




                In International Brotherhood of Boilermakers v. Kelly, 815 F.2d 912, 915

(3d Cir. 1987), we explained that to establish the existence of a live, as distinguished from

a moot case, there must be a real and substantial controversy for which specific relief is


                1
                    Skiba also filed a petition for mandamus. In view of the disposition of the
principal case, the petition for mandamus will be denied.

                                                     3
available. A case is moot when the issues are no longer disputed or the parties lack a

legally cognizable interest in the outcome. Id.

                Here it appears that the parties have confused the status of Westport as the

sole stockholder of Michael Angelo Corry Inn, Inc. with its obligation to defend and

indemnify Hutzelman. The argument that Westport as stockholder could properly prevent

Michael Angelo Corry Inn, Inc. from enforcing the judgment overlooks the rights of

creditors of the corporation who could possibly receive payment on their claims if the

$425,000 were paid. That the parties were aware that Michael Angelo Corry Inn, Inc. had at

least one creditor was evidenced by the efforts of John Tobias to intervene before the jury

trial had taken place. Moreover, whatever doubt there may have been as to the existence of

creditors was removed by the institution of the bankruptcy proceeding on behalf of Michael

Angelo Corry Inn, Inc.

                In short, Westport, as sole shareholder, cannot prejudice creditors by

refusing to collect the judgment if it survives post-trial motions and possible appeal. A live

controversy exists between Hutzelman who contests his liability to Michael Angelo Corry

Inn, Inc. Consequently, the dispute between the parties is not moot and it is necessary that

the District Court decide the post-trial motions filed by Hutzelman.2




                2
                   The automatic stay provisions of the Bankruptcy Code, 11 U.S.C. § 362, are
not applicable here because the litigation was commenced by Michael Angelo Corry Inn,
Inc., the debtor, before the Chapter 7 petition was filed. See Martin-Trigona v. Champion
Fed. Sav. & Loan Ass’n, 892 F.2d 575 (7th Cir. 1989); Ass’n of St. Croix Condo. Owners v.
St. Croix Hotel Corp., 682 F.2d 446 (3d Cir. 1982).

                                                     4
               Accordingly, the order of the District Court will be reversed and the case

remanded for adjudication of the Hutzelman post-trial motions.




                                                  5
________________________

TO THE CLERK:


            Please file the foregoing Opinion.


                                             /s/Joseph F. Weis
                                             _________________________________
                                             United States Circuit Judge




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