Appeal from the United States District Court for the Middle District of Pennsylvania, D.C. Civil No. 89-0109.
Gibbons, Chief Judge, Mansmann, Circuit Judge and Gerry, District Judge*fn* .
We are faced here with a question of whether a corporation which buys property initially zoned for use as a motor freight terminal but which use is upgraded to commercial zoning during the completion of the contract of sale can bring suit in bankruptcy court as a related proceeding to the debtor's petition in order to obtain a temporary restraining order from the bankruptcy court to halt the ticketing of the freight drivers entering the property for terminal usage. We conclude that both the bankruptcy court and the district court properly determined that the bankruptcy court did not have subject matter jurisdiction over the suit since it was a noncore, nonrelated proceeding. Consequently, we will affirm the district court's order dismissing the case and vacating the temporary restraining order.
For a number of years, Hall's Motor Transit Company (Hall's), a Pennsylvania Corporation, owned property in the Village of Hodgkins (Village), Illinois, which was zoned for use as a motor freight terminal. On March 10, 1986, Hall's filed a voluntary chapter 11 petition in bankruptcy. The petition automatically stayed the commencement of any action against Hall's estate. Several months later, on June 24, 1986, GLS LeasCo, Inc. (GLS) successfully bid in the bankruptcy court to buy Hall's terminal. On November 12, the sale was closed, and title to the terminal was transferred to GLS which contemporaneously transferred the property to Central Transit. More than a year afterward, Central Transit proceeded to use the property as a motor freight terminal in the same manner as Hall's.
Between the time GLS bid on the terminal in June and the completion of the sale in November, the Village rezoned the property from a motor freight terminal zone to a "Commercial C" zone. Although GLS was aware of the proposed rezoning, GLS did not challenge the change and did not request Hall's to challenge the proceedings nor did GLS renegotiate the price of the sale. In May, 1988, the Village initiated a condemnation action against the property.*fn1 In July, 1988, the Village began ticketing the Central Transit drivers for violation of the zoning ordinance and for operating a business without a license.*fn2
Central Transit filed a complaint in the United States District Court for the Northern District of Illinois seeking declaratory, injunctive and monetary relief from the Village's ticketing of Central Transit's drivers pending the outcome of the condemnation action. The district court in Illinois determined that the issue of whether the rezoning action by the Village was void ab initio because it was in violation of the automatic stay was an issue best left to the bankruptcy court to resolve.
Accordingly, Central Transit filed a complaint in the Bankruptcy Court for the Middle District of Pennsylvania requesting declaratory and injunctive relief prohibiting the Village from interfering with Central Transit's use of the terminal and from taking further action based on the rezoning ordinance. The bankruptcy court issued a temporary restraining order, which it subsequently dismissed sua sponte upon determination that the court lacked subject matter jurisdiction over the proceeding. The bankruptcy court reissued the TRO pending appeal to the district court because of the nature of the harm Central Transit would suffer if the Village's actions were not enjoined. The district court affirmed the bankruptcy court's order dismissing the action for lack of subject matter jurisdiction and vacated the TRO. Central Transit appeals.
Central Transit's pivotal argument is that the right to use the property as a motor freight terminal is a right belonging to Hall's estate which came within the jurisdiction of the bankruptcy court as part of the estate and, therefore, was subject to the automatic stay provisions of the Bankruptcy Code found at 11 U.S.C.A. § 362. Consequently, Central Transit argues, any action taken to change the zoning ordinance affected the right to use the property as a motor freight terminal and such action could not be taken without the permission of the bankruptcy court. The Village contends that the automatic stay is not applicable to a zoning ordinance.
Both the bankruptcy court and the district court found that it lacked subject matter jurisdiction of the proceedings because the dispute no longer involved Hall's estate. Our first concern with this appeal is to make a determination of whether the bankruptcy and district courts were correct in their conclusion that they lacked subject matter jurisdiction of the suit.
The jurisdiction of a federal court to hear a case cannot be assumed; it must be conferred upon the court by statute. See Matter of Chicago, Rock Is. & Pac. R. Co., 794 F.2d 1182 (7th Cir. 1986). Central Transit contends that the district court had jurisdiction pursuant to 28 U.S.C.A. § 157*fn3 and § 1334(b). Section 1334(b) provides that "the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to a case under title 11." Central Transit contends that the relief it sought was directly related to the automatic stay provisions ...