Celotex Corp., In re

• Decision Date: 04 September 1997
• Docket Number: P,OWENS-ILLINOI,INCORPORATE,No. 96-1592,96-1592
• Citation: 124 F.3d 619
• Parties: In re The CELOTEX CORPORATION, Debtor.laintiff-Appellant, v. RAPID AMERICAN CORPORATION, Successor in interest to Philip-Carey Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 619

124 F.3d 619

In re The CELOTEX CORPORATION, Debtor.

OWENS-ILLINOIS, INCORPORATED, Plaintiff-Appellant, v. RAPID AMERICAN CORPORATION, Successor in interest to

Philip-Carey Corporation, Defendants-Appellees.

No. 96-1592.

United States Court of Appeals,

Fourth Circuit.

Argued April 9, 1997.

Decided Sept. 4, 1997.

ARGUED: Robert Ogilvie Meriwether, Nelson, Mullins, Riley & Scarborough, L.L.P., Columbia, SC, forAppellant. Paul H. Aloe, Rubin, Baum, Levin, Constant & Friedman, New York City, for Appellee. ON BRIEF: R. Bruce Shaw, George B. Cauthen, Nelson, Mullins, Riley & Scarborough, L.L.P., Columbia, SC; David B. Hendrickson, Hendrickson & Long, Charleston, WV, for Appellant. Kenneth R. Friedman, Rubin, Baum, Levin, Constant & Friedman, New York City, of Appellee.

Before HAMILTON and MOTZ, Circuit Judges, and PHILLIPS, Senior Circuit Judge.

Affirmed by published opinion. Judge HAMILTON wrote the opinion, in with Judge MOTZ and Senior Judge PHILLIPS joined.

OPINION

HAMILTON, Circuit Judge:

This action for contribution stems from eight civil proceedings in which the appellant, Owens-Illinois, Inc. (Owens), and the Celotex Corporation (Celotex), a successor in interest to the Philip-Carey Manufacturing Corporation (Old Carey) and a new version of the same company (New Carey), were found jointly and severally liable for personal injuries caused by exposure to asbestos-containing products manufactured by Owens, Old Carey and New Carey. Owens satisfied both its allocated share of the judgments and Celotex's allocated share of the judgments. Celotex's allocated share of the judgments totaled $1,794,298.84.

Prior to the entry of some of the judgments, Celotex filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Middle District of Florida. Owens then sought contribution from another corporate successor of Old Carey, appellee Rapid American Corporation (Rapid). ¹ Accordingly, on October 3, 1994, Owens filed a complaint in the Circuit Court of Monongalia County, West Virginia, against Rapid, as the corporate successor to Old Carey, for contribution in the amount of $1,794,298.84, plus prejudgment interest (the Contribution Action). See W. Va.Code § 55-7-13 (1994). Owens asserted that personal jurisdiction existed over Rapid via Old Carey, who had put its products into the stream of commerce with the expectation that they would reach West Virginia. ²

Pursuant to 28 U.S.C. § 1452(a), Rapid removed the Contribution Action to the United States District Court for the Northern District of West Virginia on the basis that it was "related to" the Celotex bankruptcy case in Florida, 28 U.S.C. § 1334(b). ³ Title 28, United States Code § 1334(b) provides that "[n]otwithstanding any Act of Congress that confers exclusive jurisdiction on a court or courts other than the district courts, the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11." 28 U.S.C. § 1334(b) (emphasis added). According to Rapid's Notice of Removal, the action was related to the Celotex bankruptcy case because "[s]hould [Owens] prevail in its contribution action, [Celotex] would immediately become liable to Rapid as its contractual and common law indemnitor." (J.A. 15).

Rapid had in fact previously filed a proof of claim against the Celotex bankruptcy estate for a contingent and unliquidated amount based on theories of contribution and indemnification. According to Rapid's proof of claim:

Celotex's liability to Rapid is based upon Rapid's right to contribution and indemnification (including costs of defense and attorney's fees) arising from or in connection with persons' and other entities' pending claims and lawsuits against Rapid, or which may arise or be incurred in connection with presently unasserted claims against Rapid, based upon any theory of law, equity or admiralty for, relating to, or arising by reasons of, directly or indirectly, death, personal injuries or personal damages ... to the extent caused or allegedly caused, directly or indirectly, by asbestos or asbestos-containing products or any other activity or omission or products, goods, minerals or other material or exposure thereto....

(J.A. 44-45). Rapid's claim against the Celotex bankruptcy estate was principally based upon a written agreement entitled "General Assignment & Assumption of Liabilities," (J.A. 52), wherein Celotex's predecessor in interest, New Carey, agreed to indemnify Rapid's predecessor in interest, Glen Alden, for all liabilities and defense costs arising out of Old Carey's merger into Glen Alden and Glen Alden's subsequent transfer of all Old Carey's assets to New Carey (the Indemnity Agreement).

Owens also filed a proof of claim against the Celotex bankruptcy estate. A copy of Owens' proof of claim is not in the record, but Owens represents and Rapid does not contest that Owens' claim sought contribution for liabilities it has borne on behalf of Celotex with respect to asbestos-related injury claims.

Turning back to Rapid's Notice of Removal, we note that Rapid took the position that the Contribution Action was a non-core proceeding, and thus, should remain in the district court rather than being referred to the bankruptcy court. In conjunction with its Notice of Removal, Rapid moved to withdraw the automatic reference to the bankruptcy court, see 28 U.S.C. § 157(d), and to dismiss the Contribution Action for lack of personal jurisdiction, see Fed.R.Civ.P. 12(b)(2).

Owens objected to Rapid's removal and sought remand on two bases. Owens contended that the district court lacked subject matter jurisdiction, because the Contribution Action was not related to the Celotex bankruptcy case. See 28 U.S.C. § 1334(b). Owens also contended that equitable grounds such as comity and the state court's expertise in questions of state law warranted remand. See 28 U.S.C. 1452(b).

The district court ordered the bankruptcy court for the Northern District of West Virginia to prepare a report and make recommendations on Owens' motion to remand and Rapid's motion to withdraw the automatic reference. The bankruptcy court did so, recommending that the district court grant Owens' motion to remand the Contribution Action to state court. In the event the district court determined not to remand, the bankruptcy court recommended that the automatic reference be withdrawn. Without conducting a hearing, the district court denied Owens' motion to remand and granted Rapid's motion to withdraw the automatic reference. Finally, the district court granted Rapid's motion to dismiss the Contribution Action for lack of personal jurisdiction. According to the district court, Rapid lacked sufficient minimum contacts with West Virginia to comply with due process requirements. After the district court denied a motion for reconsideration by Owens, Owens noted a timely appeal.

On appeal, Owens does not challenge the withdrawal of the automatic reference, but does challenge the district court's denial of its motion to remand and the district court's dismissal for lack of personal jurisdiction. After initial briefing by the parties in this court, but before oral argument, the bankruptcy court confirmed a plan of reorganization for Celotex (the Confirmed Plan). See In re Celotex, 204 B.R. 586 (Bankr.M.D.Fla.1996). We requested supplemental brief ing from the parties regarding what effect, if any, the Confirmed Plan had on the issues on appeal. From this supplemental briefing, we learned that Rapid objected to the treatment of its claim under the Confirmed Plan, and thus, appealed to the district court. Prior to the district court's consideration of the matter, however, Rapid and the Celotex bankruptcy estate reached what Rapid characterizes as a "global settlement of their various differences and disputes, obviating appeal." (Rapid's Supplemental Br. at 3). The bankruptcy court approved this settlement on February 11, 1997.

The Confirmed Plan neither allowed nor disallowed Owens' claim for contribution against the Celotex bankruptcy estate. Rather, it deemed the claim as one against a trust, created by the Confirmed Plan to address, liquidate, resolve, disallow, or allow and pay all the asbestos related claims against the Celotex bankruptcy estate (the Asbestos Claims Trust). See In re Celotex, 204 B.R. at 602. Under the Confirmed Plan, the Asbestos Claims Trust is deemed the successor for all purposes to the liabilities of Celotex with respect to allowed amounts of asbestos related claims. See id. at 619-620. Owens' claim would then be resolved in accordance with the "Asbestos Claims Resolution Procedures" established by the Confirmed Plan. Id. at 602. We have no knowledge as to the present status of Owens' claim in this process.

For the following reasons, we affirm the district court's denial of Owens' motion to remand and the district court's order dismissing the Contribution Action for lack of personal jurisdiction.

I.

Owens first challenges the district court's denial of its motion to remand the Contribution Action to state court. Before addressing this challenge, however, we must first address the threshold issue raised by Rapid of whether we have the power to review the district court's denial of Owens' motion to remand.

A.

Rapid argues that 28 U.S.C. § 1452(b) expressly precludes our review of the district court's denial of Owens' motion to remand.

Rapid is correct with respect to the district court's decision that equitable grounds did not favor remand, but it is incorrect with respect to the district court's refusal to remand for lack of subject matter jurisdiction.

Section 1452 provides, in pertinent part, as follows (a) A party may remove any claim or cause of action in any civil action ... to the district court for the district where such civil action is pending, if such ...