Eagle Picher Industries, Inc., In re, EAGLE-PICHER
| Decision Date | 16 December 1997 |
| Docket Number | EAGLE-PICHER,No. 95-4128,95-4128 |
| Citation | 131 F.3d 1185 |
| Parties | , 31 Bankr.Ct.Dec. 1116, Bankr. L. Rep. P 77,583, 28 Envtl. L. Rep. 20,492 In re:INDUSTRIES, INC., et al., Debtors. NORPAK Corporation, Appellant, v. INDUSTRIES, INC., Appellee. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Jeffrey J. Harmon (briefed), Thomas W. Coffey (argued and briefed), Kevin R. Feazell (briefed), Cors & Bassett, Cincinnati, OH, for Appellant.
Kim Martin Lewis, Douglas S. Tripp (briefed), Frost & Jacobs, Cincinnati, OH, Stephen Karotkin (argued and briefed), Weil, Gotshal & Manges, New York City, for Appellee.
Before: MARTIN, Chief Judge; RYAN and BATCHELDER, Circuit Judges.
BATCHELDER, J., delivered the opinion of the court, in which RYAN, J., joined. MARTIN, C.J. (p. 1191), delivered a separate concurring opinion.
In this appeal, Norpak Corporation contests the bankruptcy court's disallowance of its contingent environmental claim against Eagle-Picher Industries, Inc. For the reasons stated below, we affirm, in part, and remand this case to the bankruptcy court for further proceedings consistent with this opinion.
Debtor Eagle-Picher filed for relief under Chapter 11 of the Bankruptcy Code on January 7, 1991. The bankruptcy court set October 31, 1991, as the "General Claims Bar Date" for filing proofs of claim against the debtor, and Norpak timely filed its proof of claim on the bar date. Norpak's claim is a contingent claim for the environmental cleanup costs associated with real property it purchased from Eagle-Picher in 1956.
On March 17, 1993, Eagle-Picher objected to Norpak's claim arguing that the claim should be disallowed pursuant to 11 U.S.C. § 502(e)(1)(B), a section permitting the disallowance of certain contingent claims for reimbursement or contribution. Specifically, Eagle-Picher argued that Norpak's claim should be disallowed because Norpak and Eagle-Picher are co-liable to a third-party-namely, the federal or state environmental authorities. On January 9, 1995, the bankruptcy court sustained Eagle-Picher's objection. The district court affirmed the bankruptcy court's decision on September 13, 1995.
The facts of this appeal are undisputed. On November 30, 1956, Vincent J. Coraci purchased Eagle-Picher's property at 70-76 Blanchard Street, Newark, New Jersey (the "Blanchard Street property"). The property is currently owned by Norpak and another related entity wholly owned by Coraci. Prior to selling the property to Coraci, Eagle-Picher had conducted a lead processing operation on the premises in which lead was smelted, pulverized, and processed for use in lead-based paint. As a result of these operations, Eagle-Picher has been identified as a potentially responsible party ("PRP") under federal and state environmental laws.
Given the nature of Eagle-Picher's former operations on the premises of the Blanchard Street property and environmental problems which have emerged on adjacent properties, Norpak believes that it will eventually encounter environmental problems stemming from Eagle-Picher's earlier business activities. It is those potential cleanup costs which form the basis of Norpak's claim in bankruptcy court.
As noted above, the bankruptcy court set October 31, 1991, as the bar date for filing proofs of claim against Eagle-Picher, and Norpak timely asserted its proof of claim based on its contingent environmental liability. No other environmental proofs of claim were filed against Eagle-Picher prior to the bar date. While this appeal was pending, however, Eagle-Picher entered into a settlement agreement with the Environmental Protection Agency ("EPA") by which the agency is allowed to file claims against Eagle-Picher in the future.
The issue now before us is whether the bankruptcy court erred in disallowing Norpak's contingent environmental claim against Eagle-Picher pursuant to 11 U.S.C. § 502(e)(1)(B).
" '[I]n appeals from the decision of a district court on appeal from the bankruptcy court, the court of appeals independently reviews the bankruptcy court's decision, applying the clearly erroneous standard to findings of fact and de novo review to conclusions of law.' " In re Century Boat Co., 986 F.2d 154, 156 (6th Cir.1993) (quoting In re G.S.F. Corp., 938 F.2d 1467, 1474 (1st Cir.1991)) (brackets in original); see also In re Martin, 761 F.2d 1163, 1166 (6th Cir.1985).
Section 502(e)(1)(B) provides that "the court shall disallow any claim for reimbursement or contribution of an entity that is liable with the debtor on ... the claim of a creditor, to the extent that ... such claim ... is contingent as of the time of allowance or disallowance of such claim." 11 U.S.C. § 502(e)(1)(B). The section is not intended to "immunize debtors from contingent liability, but instead protects debtors from multiple liability on contingent debts." In re Allegheny Int'l, Inc., 126 B.R. 919, 923 (W.D.Pa.1991). In order for a claim to be disallowed under § 502(e)(1)(B), therefore, the debtor must be able to show the following three elements:
(1) the claim is for reimbursement or contribution;
(2) the claim is asserted by an entity co-liable with the debtor on a primary creditor's claim; and
(3) the claim is contingent as of the time of disallowance.
In re Dant & Russell, Inc., 951 F.2d 246 (9th Cir.1991).
The bankruptcy court found that Eagle-Picher had successfully demonstrated that Norpak's claim met all three requirements of the § 502(e)(1)(B) test for disallowance, and therefore denied Norpak's claim. On appeal, Norpak challenges the bankruptcy court's conclusion on two grounds: (1) that Eagle-Picher is not co-liable with Norpak for the cleanup costs associated with the Blanchard Street property; and (2) that Norpak's claim is not for "reimbursement or contribution."
Norpak first argues that Eagle-Picher is not co-liable with Norpak for the cleanup costs associated with the Blanchard Street property because neither the EPA nor the New Jersey Department of Environmental Protection and Energy ("NJDEPE") has filed claims against Eagle-Picher, and the bar date for filing such claims passed more than four years ago.
Federal Rule of Bankruptcy Procedure 3003, which governs the filing of proofs of claims in Chapter 11 cases, provides that a creditor with a contingent claim must file a proof of claim within the time prescribed by the bankruptcy court. A creditor who fails to do so will no longer be considered a creditor with respect to that claim, unless the creditor is entitled to one of the exceptions for late filings. There are several exceptions to Rule 3003, but only one of them is applicable to the present case.
Federal Rule of Bankruptcy Procedure 9006(b) applies to parties who can demonstrate excusable neglect. Rule 3003(c) of the Federal Rules of Bankruptcy Procedure provides that "the court shall fix and for cause shown may extend the time within which the proofs of claim or interest may be filed." Rule 9006(b)(1) further empowers a bankruptcy court to permit a late filing if the tardiness was the result of excusable neglect. Rules 9006(b)(2) and (3) list specific exceptions and limitations to the scope of Rule 9006(b)(1), but none is applicable to Rule 3003(c). 1 Thus, if the EPA or the NJDEPE could show that its failure to file a timely claim was the result of excusable neglect, the claim would not be time-barred and Eagle-Picher would thus be co-liable with Norpak.
In Pioneer Investment Services v. Brunswick Associates Limited Partnership, a case arising in this circuit, the Supreme Court held that the excusable neglect exception applies to late filings of proofs of claim in Chapter 11 proceedings. 507 U.S. 380, 381, 113 S.Ct. 1489, 1490-91, 123 L.Ed.2d 74 (1993). The inquiry into whether the neglect is excusable "is at bottom an equitable one, taking account of all the relevant circumstances surrounding the party's omission." Id. at 395, 113 S.Ct. at 1498. Adopting the Ninth Circuit's approach in Dix v. Johnson, 95 B.R. 134 (9th Cir.BAP (Cal.) 1988), the Pioneer Court listed several factors to be considered, including (1) the danger of prejudice to the debtor; (2) the length of the delay and its potential impact on the proceedings; (3) the reason for the delay; (4) whether the delay was within the reasonable control of the late party; and (5) whether the late party acted in good faith. Id.
Contrary to Norpak's assertions, then, the bar-date set by the bankruptcy court is not an absolute bar to any future claims by the EPA or NJDEPE. If either of those agencies can demonstrate excusable neglect, Rule 9006(b)(1) would permit it to file a late claim. Under those circumstances, Eagle-Picher would continue to be co-liable with Norpak. This court's holding that § 502(e)(1)(B) does not apply to Norpak's claims would subject Eagle-Picher to paying twice: once to Norpak and once to the EPA or NJDEPE. Section 502(e)(1)(B) was designed to avoid exactly this kind of "double-dipping." See, e.g., Allegheny Int'l, 126 B.R. at 923.
The bankruptcy court never had the opportunity to examine the Pioneer/ Dix factors to determine whether a late filing by the EPA might be possible under the excusable neglect exception. Nor did the EPA have any incentive to seek such a filing, because the bankruptcy court had already disallowed Norpak's claim. It is not clear on the present record whether such a late filing should have been allowed or whether the bankruptcy court necessarily made the right decision under then existing circumstances. Nor can either of those questions be answered without an analysis of the Pioneer/Dix factors. Thus, it would be inappropriate, at this time, for this court to rule that § 502(e)(1)(B) does not apply to Norpak's claims. Instead, this case should be remanded to the bankruptcy court, so that it may conduct the requisite Pioneer/Dix...
To continue reading
Request your trial
-
In re Dow Corning Corp.
...litigation." Id. (citing 16 Wright & Miller, Federal Practice and Procedure ? 3926.2 (2d ed.1996)); see also In re Eagle-Picher Indus., Inc., 131 F.3d 1185, 1189 (6th Cir.1997) ("The unique nature of bankruptcy makes it possible to appeal a single, discreet sic issue while the bankruptcy pr......
-
Von Duprin LLC v. Moran Elec. Serv.
...the environment, while at the same time holding responsible parties accountable for their actions. See In re Eagle-Picher Indus., Inc., 131 F.3d 1185, 1191 (6th Cir.1997). Taken as a whole, the Court determines that Von Duprin's remediation substantially complied with the NCP and resulted i......
-
Franklin County Convention v. American Underwriters
...while at the same time holding responsible parties accountable for their actions. See In re Eagle-Picher Indus., Inc., 131 F.3d 1185, 1191 (6th Cir. 1997) (Martin, C.J., concurring). Taken as a whole, CFA's remediation substantially complied with the NCP and resulted in a "CERCLA-quality" c......
-
In re Koenig Sporting Goods, Inc.
...would otherwise result. United States v. Reed, 141 F.3d 644, 651-52 (6th Cir. 1998); see also Norpak v. Eagle-Picher Indus., Inc. (In re Eagle-Picher Indus., Inc.), 131 F.3d 1185 (6th Cir.1997) (remanding appeal to prevent a miscarriage of justice); Friendly Farms v. Reliance Ins. Co., 79 F......