In re Spookyworld v. Town of Berlin

• Decision Date: 25 September 2003
• Docket Number: No. 03-1315.,03-1315.
• Citation: 346 F.3d 1
• Parties: In re: Spookyworld, Inc., Debtor. Spookyworld, Inc., Plaintiff, Appellant, v. Town of Berlin, et al., Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 1

346 F.3d 1

In re: Spookyworld, Inc., Debtor Spookyworld, Inc., Plaintiff, Appellant, v. Town of Berlin, et al., Defendants, Appellees.

No. 03-1315.

United States Court of Appeals, First Circuit.

Heard August 1, 2003.

Decided September 25, 2003.

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Stephen Gordon with whom Stephen Gordon & Associates was on brief for appellant.

Peter J. Camp with whom Adam J. Brand and Brand & Associates were on brief for appellees.

Before BOUDIN, Chief Judge, BALDOCK,^* Senior Circuit Judge, and HOWARD, Circuit Judge.

BOUDIN, Chief Judge.

This appeal concerns efforts by the Town of Berlin to bring certain attractions owned by appellant Spookyworld, Inc. ("Spookyworld"), into compliance with the Massachusetts Building Code. 780 C.M.R (passim) (6th ed.1997). Spookyworld was created in 1991 by sole shareholders David and Linda Bertolino. The corporation built a horror theme park in Berlin, Massachusetts, on land leased from a trust controlled by the Bertolinos. The park celebrated Halloween, opening every year only for the month of October.

From modest beginnings, Spookyworld's business grew quickly: in 1997, it grossed $1,880,000, and by 1998, it was employing approximately 500 people during its annual month of operation. In 1998 the park contained three buildings housing a total of five attractions: a barn, which included a haunted house and a "celebrity area" on the main floor and a haunted "mine shaft" in the basement; a "museum display"; and a metal building containing a 3-D wax museum.

On September 30, 1998, the building inspector for the Town of Berlin, Lawrence Brandt, issued three certificates of inspection to Spookyworld, one for each building. Shortly thereafter, on October 7, Brandt sent a letter to David Bertolino rescinding the certificate covering the haunted house and the haunted mine shaft. According to Brandt, recent amendments to the Massachusetts Building Code required that these two attractions have sprinkler systems installed. 780 C.M.R. § 413.4 (6th ed.1997).¹

Because of Brandt's actions, Spookyworld faced the prospect of having to close two of its principal draws for the duration of the critical month of October. Spookyworld therefore immediately appealed Brandt's decision to the building code appeals board under Mass. Gen. Laws, ch. 143, § 100 (West 2002). Under that provision, Spookyworld's appeal had the effect of staying all enforcement proceedings against it, unless state or local officials could present evidence that the stay would "involve imminent peril of life or property." Id.; see also 780 C.M.R. § 122.3.3 (6th ed.1997).

Spookyworld then began negotiations with town officials, attempting to work out an interim solution whereby the haunted house and the haunted mine shaft could continue to operate through October without shutting down for sprinkler installation. Duncan Baum, the town's assistant fire chief, and Gene Novak, a regional building inspector, participated in the negotiations. Among the options discussed was a "fire watch," which would have involved Spookyworld's paying the town to station fire personnel at the park during its hours of operation.

The negotiations ultimately broke down, and on October 16, 1998, the town filed a complaint against Spookyworld in Worcester Superior Court. The complaint sought a temporary restraining order, shutting down the haunted house and the haunted mine shaft until such time as sprinkler systems could be installed in each; the complaint also sought a fine for each day of non-compliance. The court issued the temporary restraining order later that day.

One hour after the order issued, Spookyworld filed a chapter 11 petition under the Bankruptcy Code and sought to continue operating both attractions by virtue of the automatic stay provided by the statute. 11 U.S.C. § 362(a) (2000). The very next day, however, Spookyworld was forced to shut down the attractions when town officials came to the park and threatened to arrest Spookyworld employees for non-compliance with the court order.

In response, Spookyworld filed an adversary complaint in bankruptcy court, seeking a preliminary injunction to halt the state court proceedings and prevent any action on the part of the town to close park facilities. At an emergency hearing held before the bankruptcy court on October 20, 1998, counsel for the town claimed that continued operation of the two facilities in question posed an immediate danger to the safety of the park's customers. The town's counsel also represented that the town's actions enjoyed the support of the highest public safety officials of the state. The bankruptcy court refused to grant Spookyworld's requested injunction, citing the police power exception to the automatic stay. 11 U.S.C. § 362(b)(4) (2000).

Shortly thereafter the Worcester Superior Court held a hearing on the continuation of the town's temporary restraining order. Counsel for the town made representations at this hearing similar to the ones he had made before the bankruptcy court. After the hearing, the court converted the temporary restraining order into a preliminary injunction. The haunted house and the haunted mine shaft remained closed for the rest of October 1998.

On February 9, 1999, Spookyworld filed an amended adversary complaint in bankruptcy court. The amended complaint alleged that the Town of Berlin and various of its officials had willfully violated the automatic stay. The amended complaint also contained a section 1983 claim, 42 U.S.C. § 1983 (2000), a section 1985 claim, id. § 1985, and several state law claims including libel, slander, interference with contractual relationships, and violations of Mass. Gen. Laws, ch. 12, § 11H-I (West 2002). In due course, defendants moved for summary judgment on all claims.

On August 2, 2001, the bankruptcy court ruled that Spookyworld's automatic stay claim was a core bankruptcy claim and that all of Spookyworld's other claims were non-core claims. In re Spookyworld, 266 B.R. 1, 6-11 (Bankr.D.Mass.2001). The bankruptcy court granted defendants' motion for summary judgment with respect to the automatic stay claim, 28 U.S.C. § 157(b)(1) (2000); and, as to the rest of Spookyworld's claims, framed proposed findings of fact and conclusions of law recommending the grant of summary judgment in favor of defendants. 28 U.S.C. § 157(c)(1) (2000); Spookyworld, 266 B.R. at 11-20.

Spookyworld filed a timely appeal to the district court challenging the bankruptcy court's grant of summary judgment on the core automatic stay claim. Possibly the notice could be read also to embrace a challenge to the bankruptcy court's proposed findings of fact and conclusions of law with regard to the non-core claims. If the latter was intended, use of an appeal was a procedural misstep; the proposed findings and conclusions were not a judgment subject to "appeal" but recommendations to the district court. The correct, and required, course was to file "specific objections" to those recommendations that were disputed by Spookyworld. 28 U.S.C. § 157(c)(1) (2000); Fed. R. Bank. P. 9033.

On December 19, 2001, no specific objections to the recommendations having been filed within the time provided, the district court adopted the bankruptcy court's proposed findings of fact and conclusions of law; accordingly, the district court, by order dated the same day, granted judgment to the defendants on the non-core claims. Whether Spookyworld was immediately aware of the December 19 actions is unclear, but at no point did it seek to reopen this judgment based on lack of notice.

The appeal as to the core claims was more protracted. Over a year later and after briefing by both sides the district court on January 23, 2003, issued a memorandum and order affirming (on grounds described below) the bankruptcy court's grant of summary judgment to defendants on Spookyworld's core automatic stay claim. The district court then dismissed Spookyworld's appeal on January 24, 2003. Spookyworld's district court brief also attacked the recommendations on the non-core claims but the district court noted that those had already been disposed of by the December 19, 2001, judgment. Spookyworld filed a notice of appeal to this court on February 21, 2003.

In this court, Spookyworld contests both the district court order of December 19, 2001, entering judgment for the defendants on the non-core claims (the "non-core order") and the memorandum and order of January 23, 2003, affirming the bankruptcy court's disposition of the core automatic stay claim (the "core order"). At the threshold, defendants say that Spookyworld's notice of appeal does not encompass the non-core order, and that therefore we lack power to consider it on the merits. Fed. R.App. P. 3(c); Smith v. Barry, 502 U.S. 244, 248, 112 S.Ct. 678 116 L.Ed.2d 678 (1992) ("Rule 3's dictates are jurisdictional in nature....").

Fed. R.App. P. 3(c)(1)(B) states: "The notice of appeal must designate the judgment, order, or part thereof being appealed." The requirements of Rule 3 are liberally construed, Barry, 502 U.S. at 248, 112 S.Ct. 678, and "[a] mistake in designating a judgment ... in the notice of appeal ordinarily will not result in loss of the appeal as long as the intent to appeal a specific judgment can be fairly inferred from the notice and appellee is not misled by the mistake." Kelly v. United States, 789 F.2d 94, 96 n. 3 (1st Cir.1986). But Rule 3 must still be satisfied, and "non-compliance is fatal to an appeal." Barry, 502 U.S. at 248, 112 S.Ct. 678; Torres v. Oakland Scavenger Co., 487 U.S. 312, 317 n. 3, 108 S.Ct. 2405, 101 L.Ed.2d 285 (1988).

Spookyworld's notice of appeal to this court says in its entirety:

[Now comes] the Appellant Spookyworld, Inc. and appeals the Order of Dismissal of the District Court dated 1/23/03 affirming the decision of the Bankruptcy Court which allowed the Motion of Defendants, Town of Berlin, et al for Summary Judgment.

This language...