Justia U.S. 3rd Circuit Court of Appeals Opinion Summaries

A nonprofit organization that assists individuals recovering from alcoholism and substance abuse sought to establish a group home in a New Jersey township by leasing a two-family dwelling. Before residents could move in, the township required a Certificate of Continuing Occupancy (CCO). The organization’s application for the CCO was denied by the township’s zoning officer, who stated that the intended use violated local zoning ordinances. The township’s attorney later explained that the group home was considered a “Community Residence” under state law and thus could not operate in a two-family dwelling. The organization disputed this classification but received no further response from the township.After the denial, the organization filed suit in the United States District Court for the District of New Jersey, alleging discrimination under the Americans with Disabilities Act (ADA) and the Fair Housing Act (FHA), and sought a preliminary injunction. The District Court denied the preliminary injunction, finding the organization had not shown a likelihood of success on the merits, and the United States Court of Appeals for the Third Circuit affirmed that denial. The organization then filed a First Amended Complaint, which the township moved to dismiss. The District Court granted the motion, holding that the amended complaint failed to state a claim and denied leave to amend further, reasoning that prior rulings had already provided notice of deficiencies and that amendment would be futile.On appeal, the United States Court of Appeals for the Third Circuit affirmed the dismissal of the First Amended Complaint for failure to state a claim, finding insufficient factual allegations to support a plausible inference of discriminatory intent or disparate impact. However, the court vacated the denial of leave to amend, holding that the District Court erred in concluding amendment would be futile, and remanded for further proceedings. View "Oxford House Inc v. Township of North Bergen" on Justia Law

Eileen Adams and her husband lost their New Jersey home to foreclosure after a series of events involving the transfer and assignment of their mortgage. The mortgage, originally held by AmTrust Bank, was assigned to EverBank after AmTrust’s failure, and then to Nationstar Mortgage. Adams defaulted on the mortgage, leading EverBank to initiate foreclosure proceedings. Although Adams answered the foreclosure complaint, she did not oppose summary judgment, which was granted in favor of EverBank. Subsequent assignments and litigation ensued, but Adams and her husband ultimately lost their appeals in the New Jersey courts, including a denial of review by the Supreme Court of New Jersey.After exhausting state-court remedies, Adams and her husband filed multiple bankruptcy petitions in an effort to prevent the foreclosure sale. In the most recent Chapter 13 case, Nationstar moved for relief from the automatic stay to proceed with the sale. The United States Bankruptcy Court for the District of New Jersey granted Nationstar’s motion. Adams appealed to the United States District Court for the District of New Jersey, which affirmed the Bankruptcy Court’s order and dismissed the appeal for lack of jurisdiction under the Rooker-Feldman doctrine, reasoning that Adams was seeking to overturn a state-court judgment.The United States Court of Appeals for the Third Circuit reviewed the case and held that, while the District Court erred in applying the Rooker-Feldman doctrine to dismiss for lack of jurisdiction, Adams’s claims were nonetheless precluded under New Jersey law. The Third Circuit clarified that Rooker-Feldman is a narrow doctrine and does not bar jurisdiction in this context; instead, principles of claim preclusion apply because Adams’s arguments had already been litigated and decided in state court. The Third Circuit affirmed the District Court’s order insofar as it upheld the Bankruptcy Court’s decision to lift the automatic stay. View "In re: Adams" on Justia Law

B-R Penn Realty defaulted on a $46 million loan backed by a mortgage on its Philadelphia apartment building. U.S. Bank, the lender, sued to foreclose in federal court, invoking diversity jurisdiction. After a bench trial, the District Court ruled that Penn Realty had breached the loan agreement and entered a money judgment in U.S. Bank’s favor for $51,392,086.96. U.S. Bank then sought a foreclosure sale of the building to recover the judgment amount. Penn Realty moved twice to halt the sale, but the District Court denied both motions, and the building was sold.The United States District Court for the Eastern District of Pennsylvania initially ruled in favor of U.S. Bank, issuing a money judgment for the amount owed by Penn Realty. Penn Realty appealed the judgment but did not obtain a stay. Subsequently, U.S. Bank renewed its foreclosure efforts, and the District Court denied Penn Realty’s emergency motion to quash the writ of execution and cancel the sale. The sale was rescheduled, and Penn Realty filed a second motion to quash, which was also denied by the District Court.The United States Court of Appeals for the Third Circuit reviewed the case. The court held that the sale of the building was an execution sale governed by Federal Rule of Civil Procedure 69(a), not a judicial sale under 28 U.S.C. § 2001. The court determined that U.S. Bank complied with the requirements of Rule 69(a), which imports Pennsylvania law for execution sales. The court also found that service of the writ was proper under Pennsylvania law. Consequently, the Third Circuit upheld the sale and affirmed the District Court’s denial of Penn Realty’s motion to quash. View "US Bank NA v. B R Penn Realty Owner LP" on Justia Law

The case revolves around Tiffany Smith, who filed a voluntary petition for a Chapter 13 bankruptcy proceeding in May 2019. Smith owned a two-unit rental property in Newark, New Jersey, secured by a mortgage held by Freedom Mortgage Corporation. Smith filed a Chapter 13 payment plan in the Bankruptcy Court, which included a motion to partially void Freedom’s mortgage lien on the property and to reclassify Freedom’s underlying claim as partially secured and partially unsecured. Freedom objected to the plan, particularly the cramdown of its secured claim, the property's listed valuation, the property's rents being applied to reduce its secured claim, and the feasibility of the overall plan.The Bankruptcy Court held a hearing to address Freedom’s objections. During the hearing, Freedom clarified that it was not disputing the listed value of the property. The parties resolved their differences and filed a consent order, in which they agreed to the terms. The Bankruptcy Court confirmed the First Modified Plan, which reflected the terms of the Consent Order.Smith later filed a third modified plan, seeking to extend the payment term due to delinquent tenants and pandemic-related eviction moratoriums. Freedom objected to the Third Modified Plan, arguing among other things, that the plan was not feasible. The Bankruptcy Court held a hearing and concluded that the objections raised by Freedom were precluded by res judicata. The Bankruptcy Court then confirmed the Third Modified Plan in a written order. Freedom appealed the Bankruptcy Court’s order to the District Court, which affirmed it. Freedom then appealed to the United States Court of Appeals for the Third Circuit.The Court of Appeals affirmed the District Court’s decision, holding that res judicata precluded Freedom’s objections to Smith’s use of rental income to pay its secured claim, to the valuation of the property, and to the plan’s stepped-up payment schedule. The Court also concluded that the Bankruptcy Court did not clearly err when it determined the Third Modified Plan to be feasible. View "In re: Smith" on Justia Law

In White Deer Township, a four-mile gap in Verizon’s wireless coverage overlays Interstate 80; Verizon customers are likely to experience “dropped calls,” “ineffective call attempts,” and “garbled audio.” The area is within Bald Eagle State Forest. A 2000 Pennsylvania moratorium prohibits the construction of cell towers on state forest land, so Verizon’s options were limited. After considering several sites and antenna configurations, Verizon decided to construct a 195-foot monopole topped with a four-foot antenna on privately owned land, comprising 1.9 acres and containing a cabin, shed, pavilion, and privy. Verizon leased 0.0597 acres, in the northeast corner of the property for the tower.The Township then permitted cell towers that complied with a minimum permissible lot size of one acre; cell towers had to be set back “from lot lines and structures a distance equal to the height of the facility, including towers and antennas, plus 10% of such height.” The Zoning Board denied Verizon’s variance applications, finding that Verizon’s alleged hardship was insufficient because it was “not a hardship connected to the capacity for the property to be used reasonably, but rather, the hardship [was connected to Verizon’s] capacity to use the property as desired.” The Third Circuit affirmed summary judgment for Verizon. The denial had “the effect of prohibiting the provision of personal wireless services,” in violation of the Telecommunications Act, 47 U.S.C. 332(c)(7)(B)(i)(II). View "Cellco Partnership v. White Deer Township Zoning Hearing Board" on Justia Law

To improve a stretch of U.S. Route 22 near Altoona, the Pennsylvania Department of Transportation (PennDOT) sought two right-of-way easements from for new drainage pipes, covering less than one-tenth of an acre of Merritt's property. PennDOT initiated condemnation and over Merritts’s objections, acquired title to and possession of the easements. With no success in that state-court proceeding, Merritts filed a federal suit, claiming that PennDOT’s acquisition of the easements and the compensation offered for them violated the U.S. Constitution and Pennsylvania law.The district court dismissed all claims with prejudice, some based on Eleventh Amendment immunity, the remainder under “Burford abstention,” which protects “complex state administrative processes from undue federal interference.” The Third Circuit affirmed in part. The “Ex parte Young” exception to Eleventh Amendment immunity does not allow Merritts’s claims for injunctive and declaratory relief against the PennDOT officials in their official capacities because he does not seek prospective relief from an ongoing violation. Merritts’s section 1983 claims for damages against the PennDOT officials in their individual capacities for allegedly unlawfully acquiring the easements for PennDOT cannot be dismissed under Burford abstention; his claims for damages premised on the allegedly unlawful acquisition of the easements meet the conditions for dismissal under the Rooker-Feldman doctrine, but his claims concerning the denial of just compensation do not. The dismissals on Eleventh Amendment and Rooker-Feldman grounds should have been without prejudice. View "Merritts v. Richards" on Justia Law

Peralta bought a house by an installment contract with the seller, Recon. He stopped making payments. Recon sued. To obtain a second chance, Peralta agreed that if he breached again, Recon could get a judgment for possession and immediately evict him. Another breach would extinguish any rights that Peralta had in the house. Peralta stopped paying. Recon obtained a judgment for possession. Peralta stayed in the house and filed for Chapter 13 bankruptcy. Peralta argued that Chapter 13 lets a bankrupt homebuyer “cure[]” a “default” on a mortgage during the bankruptcy process until the home “is sold at a foreclosure sale” 11 U.S.C. 1322(c)(1). Pennsylvania treats foreclosed installment contracts like mortgages, so Peralta argued that cure gave him an interest in his property.Reversing the bankruptcy court, the district court and Third Circuit ruled in favor of Rencon. An installment contract never has a “foreclosure sale.” The property's title stays with the seller until the contract is paid off. For installment contracts, the closest analog to a foreclosure sale is a judgment for possession. Recon got a judgment before Peralta tried to cure, so that remedy was unavailable. That judgment was entered before Peralta filed for bankruptcy, so his home was not part of his bankruptcy estate. Mere possession without a good-faith claim to it did not change that. View "In re: Peralta" on Justia Law

The plaintiffs filed suit under 42 U.S.C. 1983 challenging a Jersey City ordinance curtailing the ability of property owners and leaseholders to operate short-term rentals. The plaintiffs alleged that having passed an earlier zoning ordinance legalizing short-term rentals, which enticed them to invest in properties and long-term leases, the city violated their rights under the Takings Clause, the Contract Clause, and the Due Process Clauses by passing the new ordinance, which, they allege, undermined their legitimate, investment-backed expectations and injured their short-term rental businesses. The plaintiffs also sought a preliminary injunction. The district court dismissed the complaint.The Third Circuit affirmed. Not every municipal act legalizing a business activity vests the business owner with a cognizable property right. The plaintiffs’ forward-looking right to pursue their short-term rental businesses is not cognizable under the Takings Clause, but the plaintiffs articulated three cognizable property rights: use and enjoyment of their purchased properties, long-term leases, and short-term rental contracts. Because the properties may still be put to multiple economically viable uses, there has been no total taking of those “properties.” Rejecting “partial takings” claims, the court noted that the plaintiffs may have relied on the previous ordinance in deciding to invest in short-term rentals but they failed to take into account the restrictions in place in that ordinance and the city’s strong interest in regulating residential housing. View "Nekrilov v. City of Jersey City" on Justia Law

Delaware’s Unclaimed Property Law (UPL), Del. Code tit. 12 section 1101, allows the state to escheat certain types of unclaimed property held by businesses chartered in the state, if the particular business holding the property is not the owner of it, and if there has been no contact with the owner for a specified period of time. Delaware initiated an audit of Siemens, which is incorporated under Delaware law. After a near-decade-long audit process, Siemens sued the state, challenging the constitutionality of the audit and arguing that Delaware’s actions conflict with federal common law limiting the scope of any state’s escheatment authority.The district court dismissed most of Siemens’s claims and denied its motion for a preliminary injunction on the sole surviving claim, which alleged a violation of procedural due process. The Third Circuit vacated. The district court erred in concluding that Siemens failed to show irreparable harm based on its procedural due process claim, and in dismissing Siemens’s federal preemption claim as unripe. In considering the audit, the district court paid insufficient heed to a holder’s payment obligations with respect to interest and penalties under the statute and the consequences of not meeting those obligations. The court affirmed the dismissal of Siemens’s expedited-audit procedural due process claim. View "Siemens USA Holdings Inc. v. Geisenberger" on Justia Law

Venoco operated a drilling rig off the coast of Santa Barbara, transporting oil and gas to its Onshore Facility for processing. Venoco did not own the Offshore Facility but leased it from the California Lands Commission. Venoco owned the Onshore Facility with air permits to use it. Following a 2015 pipeline rupture, Venoco filed for Chapter 11 bankruptcy and abandoned its leases, relinquishing all rights in the Offshore Facility.Concerned about public safety and environmental risks, the Commission took over decommissioning the rig and plugging the wells, paying Venoco $1.1 million per month to continue operating the Offshore and Onshore Facilities. After a third-party contractor took over operations, the Commission agreed to pay for use of the Onshore Facility. The Commission, as Venoco’s creditor, filed a $130 million claim for reimbursement of plugging and decommissioning costs. Before the confirmation of the liquidation plan, Venoco and the Commission unsuccessfully negotiated a potential sale of the Onshore Facility to the Commission. The Commission stopped making payments, arguing it could continue using the Onshore Facility without payment under its police power.After the estates’ assets were transferred to a liquidation trust, the Trustee filed an adversary proceeding, claiming inverse condemnation, against California. The district court affirmed the bankruptcy court’s rejection of California's assertion of Eleventh Amendment sovereign immunity. The Third Circuit affirmed. By ratifying the Bankruptcy Clause of the U.S. Constitution, states waived their sovereign immunity defense in proceedings that further a bankruptcy court’s exercise of its jurisdiction over the debtor's and the estate's property. View "In re Venoco, LLC" on Justia Law