Ronald and Frances Gajkowski, William and Jean Abate and Robert Schipske ("Gajkowski creditors"), appeal from the order of the district court which affirmed the order of the bankruptcy court granting Highway Truck Drivers and Helpers Local Union No. 107 ("Debtor 107") relief from the automatic stay provisions of 11 U.S.C. Sec. 362(a).1 The Gajkowski creditors maintain that the full faith and credit provision under 28 U.S.C. Sec. 1738 limited the bankruptcy court's discretion to grant prospective relief from the automatic stay. We need not consider the propriety of the bankruptcy court's decision because, for the reasons stated below, we hold that the matter has been mooted by the intervening judgment of the Pennsylvania Supreme Court.

The Gajkowski creditors brought suit in the Court of Common Pleas of Bucks County, Pennsylvania, against the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (IBT) and its Local 107, (Debtor 107), for damages sustained in a shooting incident on January 25, 1980, at a plant at which members of Local 107 were on strike and picketing. In March, 1984, the jury returned a verdict in favor of the Gajkowski creditors and against both defendants for approximately $1.3 million.

The verdict was initially upheld by an en banc panel of the Bucks County Common Pleas Court. However, the Superior Court of Pennsylvania reversed. On August 31, 1987, the Supreme Court of Pennsylvania affirmed the Superior Court's order to the extent that it exonerated IBT, and reversed the order relieving Debtor 107 of liability. See Gajkowski v. Intern. Broth. of Teamsters, 515 Pa. 516, 530 A.2d 853 (1987).

On October 16, 1987, Debtor 107 filed a voluntary petition for bankruptcy under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court for the Eastern District of Pennsylvania. A Suggestion of Bankruptcy was also filed by Debtor 107 with the Prothonotary of the Pennsylvania Supreme Court.

After the denial of its application for reargument, Debtor 107 filed an "Application for Reconsideration Nunc Pro Tunc of the Denial of Local 107's Application for Reargument" in the Pennsylvania Supreme Court. Reargument was granted on November 18, 1987, and the matter listed for the April, 1988 session of Court in Philadelphia.

Debtor 107 then returned to the bankruptcy court and filed a motion for relief nunc pro tunc from the automatic stay provisions of 11 U.S.C. Sec. 362(a) which were invoked simultaneously with the filing of Debtor 107's petition for bankruptcy under Chapter 11.2 On March 29, 1988, the bankruptcy court issued a ruling that Debtor 107 was relieved from the automatic stay prospectively in order for it to petition the Pennsylvania Supreme Court for reargument. However, the court determined that Debtor 107's prior application for reconsideration was filed in violation of Sec. 362(a), and it therefore refused to countenance those actions of Debtor 107 which occurred prior to the entry of this order.3 Accordingly, Debtor 107 filed an amended application for reconsideration nunc pro tunc, which the Pennsylvania Supreme Court granted on April 7, 1988.

Also on April 7, 1988, Debtor 107 filed a timely appeal to the district court from that portion of the bankruptcy court's order granting the Gajkowski creditors relief from the automatic stay. On April 21, 1988, the Gajkowski creditors filed a notice of cross-appeal from the entire March 29th order.

While these appeals were pending, the Pennsylvania Supreme Court reversed its prior decision and affirmed the decision of the Pennsylvania Superior Court in all respects, thus relieving Debtor 107 of liability for the personal injuries of the Gajkowski creditors. See Gajkowski v. Intern. Broth. of Teamsters, 519 Pa. 320, 548 A.2d 533 (1988). The Gajkowski creditors were denied reargument in the Pennsylvania Supreme Court. They then filed a Petition for Writ of Certiorari in the United States Supreme Court which was denied on April 17, 1989.

Meanwhile, by order dated April 7, 1989, 98 B.R. 698, the district court affirmed the bankruptcy court's decision to lift the automatic stay. This appeal followed.4 Since the district court sat as an appellate court in its review of the bankruptcy court proceedings, 28 U.S.C. Sec. 158(a), our review of the district court's decision is plenary. Universal Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 101 (3d Cir.1981). We have jurisdiction on appeal pursuant to 28 U.S.C. Sec. 1291.

The Gajkowski creditors contend that the bankruptcy court was obligated, under both 28 U.S.C. Sec. 1738 (1982) and the Pennsylvania rules of res judicata, to give preclusive effect to the first judgment of the Pennsylvania Supreme Court which imposed liability on Debtor 107 for the personal injuries they sustained as a result of the strike incident.5 Debtor 107 counters with the position that it was necessary for the Gajkowski creditors to have secured a stay of the bankruptcy order in order to preserve their position on appeal. We need not consider the propriety of the bankruptcy court's order lifting the automatic stay because we find that the subsequent decision of the Pennsylvania Supreme Court reversing its first judgment mooted the Gajkowski creditors' cross-appeal.

The Bankruptcy Code does not specifically require a party aggrieved by an order granting relief from an automatic stay to seek a stay pending appeal. Indeed, there are only two statutory provisions in the Bankruptcy Code where a stay is specifically required to preserve a position pending appeal: (1) 11 U.S.C. Sec. 363(m) provides that the validity of a sale or lease of property of the estate to a good faith purchaser or lessor will not be affected by a reversal or modification on appeal of a bankruptcy court's authorization of such sale or lease, unless such sale or lease were stayed pending appeal; and (2) 11 U.S.C. Sec. 364(e) provides that the validity of any debt or lien granted to a good faith creditor will not be affected by the reversal or modification on appeal of the bankruptcy court's authorizing the trustee to obtain such credit, incur such debt, or grant such priority or lien, unless a stay was obtained pending appeal. When pressed with Debtor 107's contention that the Gajkowski creditors' cross-appeal had become moot, the district court reasoned that because the instant circumstances did not fall into either of the above categories an additional requirement for obtaining a stay should not be implied. We do not find the absence of a particular provision to mean that it was unnecessary for the Gajkowski creditors to have secured a stay. On the contrary, we conclude that clear authority exists to support the argument that it was imperative that the state proceedings be stayed in order to preserve the status quo on their federal appeal.

We have recognized, in the context of bankruptcy proceedings, that "[g]enerally, an appeal will be dismissed as moot when events occur during the pendency of the appeal which prevent the appellate court from granting any effective relief." In re Cantwell, 639 F.2d 1050, 1053 (3d Cir.1981); In re Abbotts Dairies of Pennsylvania, Inc., 788 F.2d 143, 150 n. 6 (3d Cir.1986). In In re Cantwell, the creditors appealed from an order of the district court dissolving a stay of discharge. While the appeal was pending, the bankruptcy court granted the debtor's discharge in bankruptcy. We dismissed the appeal as moot, even though a stay of an order dissolving a stay of discharge is not specifically prescribed under the Bankruptcy Code.

There are decisions in other circuits in which events not identified as requiring a stay in the Bankruptcy Code occurred while the automatic stay had been lifted thereby rendering the pending appeal moot. For example, in Central States, etc. v. Central Transport, Inc., 841 F.2d 92, 96 (4th Cir.1988), the court denied relief on appeal from the confirmation of a reorganization plan where implementation of the plan "created, extinguished or modified rights ... to such an extent that effective judicial relief is no longer practically available." Also, in In re Roberts Farms, 652 F.2d 793 (9th Cir.1981), the court held that appeals from three orders of the bankruptcy court in a Chapter 11 case were subject to dismissal for mootness. Discussing the "stay pending appeal" requirements in the context of equitable considerations, the Ninth Circuit held:

[I]t is obligatory upon appellant ... to pursue with diligence all available remedies to obtain a stay of execution of the objectionable order (even to the extent of applying to the Circuit Justice for relief [U.S.Sup.Ct.Rule 44, 28 U.S.C.A.], if the failure to do so creates a situation rendering it inequitable to reverse the orders appealed from.

In re Roberts Farms, Inc., 652 F.2d at 798.

Fed.Bankr.R. 8005, governing motions for a stay of an order of the bankruptcy court, is in part an adaption of Fed.R.App.P. 8(a). See Fed.Bankr.R. 8005 advisory committee's note. Thus, the necessity of a stay under Rule 8005 has been analogized to the rationale of Rule 8(a):

Although as a general rule a party need not seek a stay of a lower court's judgment in order to protect its right to appeal, the "consequence of failing to obtain a stay is that the prevailing party may treat the judgment of the [lower] court as final [notwithstanding that an appeal is pending.]." 9 J. Moore, Federal Practice p 208.03, at 8-9 (2d ed.1979). Thus, in the absence of a stay, action of a character which cannot be reversed by the court of appeals may be taken in reliance on the lower court's decree. As a result, the court of appeals may become powerless to grant the relief requested by the appellant. Under such circumstances the appeal will be dismissed as moot. Moore, id., at 8-10.

In re Kahihikolo, 807 F.2d at 1542, quoting American Grain Ass'n v. Lee-Vac, Ltd., 630 F.2d 245, 247 (5th Cir.1980).6

We believe these authorities clearly illustrate that, in addition to those situations covered under 11 U.S.C. Sec. 363(m) and Sec. 364(e), a myriad of circumstances can occur that would necessitate the grant of a stay pending appeal in order to preserve a party's position. We believe that in this instance, the order of the Pennsylvania Supreme Court, entered while the Gajkowski creditors' cross-appeal was still pending, prevented the district court from granting any effective relief. Thus, this is a case that required such a stay.

Once relief from the automatic stay was obtained by Debtor 107, the Pennsylvania Supreme Court was free to proceed consistent with the statutory framework of the bankruptcy law. See, e.g. In re D. H. Overmyer Telecasting Co., 53 B.R. 963, 982 (N.D.Ohio 1984), aff'd without op., 787 F.2d 589, 787 F.2d 590 (6th Cir.1986). In particular, the Pennsylvania Supreme Court had jurisdiction to enter judgment after the bankruptcy court entered its order granting relief from the automatic stay. See Mission Indians v. American Management & Amusement, 840 F.2d 1394, 1399 (9th Cir.1987). Accordingly, we are presented with the question of whether the district court had the authority to void, ab initio, the decision of the Supreme Court of Pennsylvania by reversing the decision of the bankruptcy court to lift the automatic stay.7

Because the "judicial proceedings [of any court of any state] shall have the same full faith and credit in every court within the United States ... as they have by law or usage in the courts of such state ... from which they are taken" under 28 U.S.C. Sec. 1738, we conclude that the validly entered judgment of the Pennsylvania Supreme Court is conclusive upon the parties in the matter of state law and must also be conclusive in relation to these federal proceedings. See, e.g., Mills v. Duryee, 11 U.S. (7 Cranch) 481, 3 L. Ed. 411 (1813) (discussing the conclusiveness of state court judgments in relation to federal proceedings under the federal statute enacted in 1790, existing today in substantially the same form at 28 U.S.C. Sec. 1738). To hold otherwise would allow the district court to nullify retroactively a validly entered state court judgment, thereby emasculating the fundamental doctrines of federalism and comity.

Moreover, a valid state court judgment cannot be enjoined or otherwise upset by a federal court on grounds that would not be available in the state court. See 18 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure Sec. 4469, at 668 (1981), citing American Sur. Co. v. Baldwin, 287 U.S. 156, 53 S. Ct. 98, 77 L. Ed. 231 (1932) (dismissing a federal action to enjoin enforcement of the state judgment on combined grounds of claim preclusion and full faith and credit). Because the issue of the bankruptcy court's alleged abuse of discretion could not be reviewed by the state court, and because a pending federal appeal on that issue could not interfere with the state court's jurisdiction of its own proceedings, the validly entered state court judgment cannot now be enjoined or otherwise upset by a federal court. "The full faith and credit clause, together with the legislation pursuant thereto, applies to judicial proceedings of a state court drawn in question in an independent proceeding in the federal courts." American Sur. Co. v. Baldwin, 287 U.S. at 166, 53 S.Ct. at 101.

Therefore, we find that the final state court decision was rendered well within the statutory framework of the Bankruptcy Code, was conclusive in relation to these federal bankruptcy proceedings, and should have been afforded full faith and credit.8 Under such circumstances, the district court was unable to provide the Gajkowski creditors any effective judicial relief. "Federal courts, having jurisdiction only to decide actual cases and controversies are 'without the power to decide questions that cannot effect the rights of litigants in the case before them.' " Ortho Pharmaceutical Corporation v. Amgen, Inc., 882 F.2d 806, 810 (3d Cir.1989). Accordingly, the appeal should have been dismissed as moot.

We will remand the case in accordance with Great Western Sugar Co. v. Nelson, 442 U.S. 92, 99 S. Ct. 2149, 60 L. Ed. 2d 735 (1979) and United States v. Munsingwear, Inc., 340 U.S. 36, 71 S. Ct. 104, 95 L. Ed. 36 (1950), and direct the district court to vacate its judgment and dismiss the matter as moot.9