Bulldog Trucking, Inc., In re

Decision Date22 June 1998
Docket NumberNo. 97-2209,97-2209
PartiesBankr. L. Rep. P 77,730, 10 Fourth Cir. & D.C. Bankr. 408 In re BULLDOG TRUCKING, INCORPORATED, Debtor. Langdon M. COOPER, Trustee for Bulldog Trucking, Incorporated, Plaintiff-Appellee, v. PRODUCTIVE TRANSPORTATION SERVICES, INCORPORATED, Defendant-Appellant.
CourtU.S. Court of Appeals — Fourth Circuit

ARGUED: Robert Joseph Gallagher, M. Shields Gallagher & Gallagher, P.C., Northampton, MA, for Appellant. Joseph Adam Hess, Shawn, Mann & Steinfeld, L.L.P., Washington, DC, for Appellee. ON BRIEF: Joseph L. Steinfeld, Jr., John T. Siegler, Shawn, Mann & Steinfeld, L.L.P., Washington, DC; Langdon M. Cooper, Alala, Mullen, Holland & Cooper, P.A., Gastonia, NC, for Appellee.

Before WIDENER and MURNAGHAN, Circuit Judges, and HILTON, Chief United States District Judge for the Eastern District of Virginia, sitting by designation.

Affirmed by published opinion. Judge MURNAGHAN wrote the opinion, in which Judge WIDENER and Chief Judge HILTON joined.

OPINION

MURNAGHAN, Circuit Judge:

In this case, we are called upon to decide whether a final unappealed judgment is rendered invalid by the district court's allegedly erroneous exercise of jurisdiction to determine defenses asserted under the Negotiated Rates Act of 1993 ("NRA"), Pub.L. No. 103-180, 1993 U.S.S.C.A.N. (107 Stat.) 2044. The case grows out of the bankruptcy of Bulldog Trucking, Inc. ("Bulldog"), a motor common carrier. The trustee in bankruptcy for Bulldog initiated an adversary proceeding against Productive Transportation, Inc. ("PTI"), to recover the difference between the tariff rate filed by Bulldog with the Interstate Commerce Commission ("ICC") and the lower rate actually paid by PTI for Bulldog's services. Summary judgment was awarded to the trustee, and PTI failed timely to appeal. PTI now presents a collateral challenge to the validity of the judgment, arguing that the district court lacked jurisdiction to determine defenses advanced by PTI pursuant to provisions of the NRA. PTI also appeals the district court's denial of a motion to compel the trustee to deposit judgment proceeds into court.

Having carefully considered PTI's arguments, we hold that the judgment is not vulnerable to collateral attack. Furthermore, we discern no error in the district court's denial of PTI's motion to require the trustee to deposit judgment proceeds into court. Therefore, we affirm.

I

Bulldog, a Georgia-based motor carrier, transported freight for PTI between February 28, 1988, and October 12, 1990. On December 11, 1990, Bulldog filed a Chapter 11 bankruptcy petition in the United States Bankruptcy Court for the Western District of North Carolina. The chapter 11 petition was converted to a chapter 7 liquidation on February 14, 1991.

On March 21, 1991, the bankruptcy court entered an order authorizing Trans-Allied Audit Company, Inc. ("Trans-Allied"), to conduct an audit of Bulldog's freight bills for the purpose of determining whether the rates billed conformed to the tariff rates filed by Bulldog with the ICC. Trans-Allied concluded, on the basis of the completed audit, that PTI owed Bulldog $45,047.37 in undercharges. After PTI refused to pay the freight charges, the trustee initiated an adversary proceeding against PTI seeking payment of $45,047.37 with interest.

PTI asserted a counterclaim against Bulldog, alleging that Bulldog's filed rates were unreasonable. Upon PTI's motion, and in light of the Supreme Court's decision in Reiter v. Cooper, 507 U.S. 258, 113 S.Ct. 1213, 122 L.Ed.2d 604 (1993), the bankruptcy court entered an order referring the rate reasonableness issue to the ICC on April 13, 1993. The order permitted PTI to seek a determination by the ICC that Bulldog's filed rates were unreasonable, and an award of reparations in the amount of the difference between the tariff rate and the rate determined to be reasonable by the ICC. See 49 U.S.C. § 11705(b)(3) (1995). 1

PTI and Bulldog were advised that the court would entertain motions for summary judgment on the undercharge claim. The court stated, however, that enforcement of a judgment in the trustee's favor would be stayed for twelve months or until the trustee presented evidence that additional delay was not warranted, to allow the ICC a reasonable opportunity to decide PTI's rate reasonableness counterclaim. Cross-motions for summary judgment were filed by the trustee on June 8, 1993, and by PTI on October 28, 1993.

On December 3, 1993, before the bankruptcy court had taken any action regarding the parties' summary judgment motions, the NRA was signed into law. Although the NRA did not abrogate entirely a cause of action for undercharges, it afforded several remedies to shippers facing such suits. See Cooper v. B & L, Inc. (In re Bulldog Trucking, Inc.), 66 F.3d 1390, 1394 (4th Cir.1995). Section 2(e) made it an unreasonable practice for a carrier to pursue claims for undercharges with respect to freight transported prior to September 1990, and vested the ICC with jurisdiction to determine whether an attempt to collect the filed rate constituted an unreasonable practice. NRA § 2(e)(1) (codified as amended at 49 U.S.C. § 13711). Section 8 granted jurisdiction to the ICC to resolve disputes over whether shipments provided by a carrier were contract carriage or common carriage. NRA § 8 (codified as amended at 49 U.S.C. § 13710(b)). Shipments transported as contract carriage are exempt from the filed rate requirement; therefore, carriers may not claim undercharges for such shipments. See B & L, Inc., 66 F.3d at 1394-95.

On December 8, 1993, PTI moved the bankruptcy court to refer its unreasonable practice and contract carriage defenses to the ICC for adjudication along with the rate reasonableness counterclaim. The bankruptcy court denied PTI's motion on February 25, 1994, and PTI noted an interlocutory appeal to the district court.

On July 13, 1994, while PTI's interlocutory appeal was still pending before the district court, the bankruptcy court issued a Recommended Order and Memorandum Decision advising the district court to enter summary judgment in favor of the trustee. The district court adopted the proposed order and memorandum decision of the bankruptcy court in full on December 8, 1994.

The district court held that the antiforfeiture provisions of the bankruptcy code, see 11 U.S.C. §§ 541(c)(1) & 363(l ), precluded the enforcement of § 2(e) of the NRA against the trustee. Therefore, the court concluded that the unreasonable practice defense was unavailable to PTI. The court further determined that § 8 of the NRA did not divest the district court of jurisdiction to decide the issue of contract carriage. According to the district court, § 8 of the NRA was unenforceable in bankruptcy because it conflicted with the jurisdictional provisions of 28 U.S.C. §§ 157 and 1334. After considering and rejecting PTI's contract carriage defense on the merits, the district court awarded summary judgment to the trustee.

Notwithstanding the continued pendency of PTI's counterclaim before the ICC, the district court directed that judgment be entered immediately and certified as final under Fed.R.Civ.P. 54(b). Acknowledging PTI's right to have the rate reasonableness claim determined by the ICC, however, the court stated that it would not rescind the April 13, 1993, order permitting PTI to pursue its counterclaim. 2 PTI failed timely to appeal the district court's final judgment.

Approximately six months later, in June 1995, the district court ordered that ten interlocutory appeals regarding the NRA's applicability in bankruptcy proceedings be stayed pending our decision in Cooper v. Stonier Transp. Group, Inc. (In re Bulldog Trucking, Inc.), 66 F.3d 1400 (4th Cir.1995). Notwithstanding the entry of final judgment on the trustee's undercharge claim, PTI's interlocutory appeal of March 1994 was among those stayed by the district court.

In B & L, Inc. and Stonier, consolidated appeals arising out of the Bulldog bankruptcy proceedings, we considered whether the NRA was applicable in the bankruptcy context. We held, first, that the unreasonable practice defense afforded shippers by § 2(e) did not violate the antiforfeiture provisions of the bankruptcy code. B & L, Inc., 66 F.3d at 1398; Stonier, 66 F.3d at 1402. Second, we determined that the NRA required referral of a defense of unreasonable practice to the ICC for initial decision, subject to review by the court of original jurisdiction. B & L, Inc., 66 F.3d at 1398; Stonier, 66 F.3d at 1402 n. 2. Finally, we concluded that referral of a contract carriage defense to the ICC was mandated by § 8 of the NRA. B & L, Inc., 66 F.3d at 1399-1400; Stonier, 66 F.3d at 1402.

Following our decisions in B & L, Inc. and Stonier, the district court entered a general order remanding the ten stayed appeals to the bankruptcy court. On August 14, 1996, PTI filed a renewed motion to refer the contract carriage and unreasonable practice defenses to the Surface Transportation Board 3 for determination. The bankruptcy court denied PTI's motion on September 4, 1996, and the district court affirmed. The court reasoned that the defenses PTI sought to refer had already been determined in the summary judgment proceeding. Therefore, the court concluded, PTI was precluded by the doctrine of res judicata from raising the issues again.

PTI also sought an order requiring the trustee to deposit judgment proceeds collected from PTI into court pending determination of PTI's counterclaim by the ICC. The bankruptcy court denied PTI's motion on July 18, 1996, and the district court affirmed on July 30, 1997. PTI timely appealed.

II

We have jurisdiction of the appeal pursuant to 28 U.S.C. § 158(d). See Capitol Credit Plan v. Shaffer, 912 F.2d 749, 751 (4th Cir.1990). "Because the district court sits as an appellate court in bankruptcy, our review of the district court's decision is plenary. In...

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