EI Du Pont de Nemours & Co. v. Cooper
| Decision Date | 13 October 1994 |
| Docket Number | Civ. A. No. 3:94CV57-MU. |
| Citation | 173 BR 550 |
| Court | U.S. District Court — Western District of North Carolina |
| Parties | In re E.I. DU PONT de NEMOURS & CO., Defendant-Appellant, v. Langdon M. COOPER, Trustee for Bulldog Trucking, Inc., Plaintiff-Appellee. |
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Richard D. Fortin, Jeffrey O. Moreno, Donelan, Cleary, Wood & Maser, P.C., Washington, DC, Robert H. Pryor, Smith, Helms, Mulliss & Moore, Charlotte, NC, for E.I. Du Pont de Nemours & Co.
Langdon M. Cooper, Alala Mullen Holland & Cooper, P.A., Gastonia, NC, Joseph L. Steinfeld, Jr., Sims Walker & Steinfeld, P.C., Washington, DC, for Langdon M. Cooper, Trustee for Bulldog Trucking, Inc.
ORDER AFFIRMING DECISION OF BANKRUPTCY COURT DENYING DEFENDANT'S MOTION TO AMEND ORDER OF REFERRAL
This matter came on to be heard on the appeal of E.I. duPont de Nemours & Co. (the "Defendant-Appellant") of the Order of the Bankruptcy Court entered on February 18, 1994, denying the motion of the Defendant-Appellant to modify the stay of Section 362 of the Code to permit it to pursue before the Interstate Commerce Commission (the "ICC" or the "Commission") a statutory claim of unreasonable practice created by Section 2 of the Negotiated Rates Act of 1993 (the "NRA"), Pub.L. No. 103-180, 107 Stat. 2044; and the Court has carefully and thoroughly considered the record, including the Order and Memorandum Decision of the Bankruptcy court, and the briefs of Langdon M. Cooper, Trustee in Bankruptcy for Bulldog Trucking, Inc. (the "Plaintiff-Appellee") and the Defendant-Appellant; and the Court has noted the Defendant-Appellant's request for an expedited consideration of this case; and this Court has determined that the Bankruptcy Court's Order should be affirmed.
In this regard the Court finds and concludes as follows:
This Court has jurisdiction to hear this appeal pursuant to 28 U.S.C. § 158. The Bankruptcy Court's findings of fact are reviewed under the "clearly erroneous" standard, and its conclusions of law are reviewed de novo. Travelers Ins. Co. v. Bryson Properties XVIII, 961 F.2d 496, 499 (4th Cir. 1992), cert. denied, ___ U.S. ___, 113 S.Ct. 191, 121 L.Ed.2d 134 (1992). This appeal concerns only the Bankruptcy Court's conclusions of law and hence should be considered de novo based on the facts found by the Bankruptcy Court.
This appeal raises an issue with broad national implications. The general issue is whether Section 2 of the NRA can retroactively forfeit and modify certain assets of the bankruptcy estate of a defunct motor carrier (like Bulldog Trucking Company, the Debtor herein), i.e., its freight undercharge claims, which are protected by the anti-forfeiture provisions of Sections 363(l) and 541(c)(1)(B) of the United States Bankruptcy Code (the "Code"), 11 U.S.C. §§ 363(l) and 541(c)(1)(B).
The first specific issue for this Court to determine is whether the Bankruptcy Court, in its Order, correctly concluded that Section 9 of the NRA, its legislative history, and 11 U.S.C. §§ 362, 363 and 541 cause Section 2 of the NRA to be "inapplicable" to the Bulldog estate and its Trustee, the Plaintiff/Appellee. The second specific issue for this Court to determine is whether the Bankruptcy Court then correctly denied Defendant/Appellant's motion.
This case is typical of many similar cases appearing since the 1980 deregulation of the trucking industry that have been filed by bankruptcy trustees of motor common carriers and motor common carriers who are themselves debtors-in-possession. The usual fact pattern involves a motor carrier who negotiated with a shipper to charge that shipper less than the tariff rate the Interstate Commerce Act ("ICA") 49 U.S.C. § 10101 et seq. required the carrier to publish and file with the ICC. After the shipments were delivered, and after the shipper paid for the shipments at the "negotiated" rate, the carrier filed a bankruptcy petition.
Since the carrier charged less than the published tariff rate the carrier's bankruptcy trustee contends was the lawful rate, the trustee asserts that a claim exists in favor of the carrier's bankruptcy estate against the shipper for the difference between what the carrier's bankruptcy trustee contends is the lawful filed rate and the parties' negotiated rate. When a bankruptcy petition is filed by or against the carrier, this freight undercharge claim becomes property of the carrier's bankruptcy estate under 11 U.S.C. § 541 which the debtor's trustee may use under 11 U.S.C. § 363(l). The carrier's bankruptcy trustee or the carrier as a debtor-in-possession then files suit against the shipper to collect the difference, i.e., to collect the freight undercharges. Whether the freight undercharge claim is meritorious is a matter for the court to determine. This case is such an action.
The district courts, and hence the bankruptcy courts, clearly have jurisdiction of these cases, i.e., these adversary proceedings, under 49 U.S.C. § 11706(a), 28 U.S.C. §§ 1334 and 157. The NRA makes no changes in this law. If the courts desire, and if the courts believe the ICC can aid them in deciding specific issues, the courts may but are not required to "refer" these cases of the ICC under the doctrine of primary jurisdiction.1 Peter C. Reiter v. Langdon M. Cooper, 507 U.S. ___, ___, 113 S.Ct. 1213, 1219-20, 122 L.Ed.2d 604, 617 (1993) ("Reiter").
On April 6, 1992, the Plaintiff/Appellee filed this adversary proceeding against Defendant/Appellant to collect approximately $ 1.6 million of freight undercharges. On June 24, 1992 the Plaintiff/Appellee moved the Bankruptcy Court for summary judgment, and shortly thereafter the Defendant/Appellant filed a cross motion for summary judgment.
On April 13, 1993, the Bankruptcy Court denied Defendant/Appellant's cross motion for summary judgment, and granted but did not enter partial summary judgment against the Defendant/Appellant and in favor of the Plaintiff/Appellee. On April 13, 1993, the Bankruptcy Court, pursuant to the requirement of Reiter, also modified the automatic Stay of 11 U.S.C. § 362 to permit the Defendant/Appellant to present to the ICC in an administrative reparations action before the ICC any claim of rate unreasonableness it had, and stayed this adversary proceeding for twelve months for the limited purpose of allowing the Defendant/Appellant to request from the ICC a determination as to whether Bulldog's applicable published tariff rates were reasonable, and if the ICC determined that those rates were not reasonable for it to determine what was the reasonable rate and then to award reparations in the amount of the difference between the sum of the tariff rates and the sum of the reasonable rates for the shipments. Defendant/Appellant filed its complaint before the ICC on May 14, 1993.
For reasons not material to this appeal, on October 8, 1993, the Plaintiff/Appellee moved the Bankruptcy Court to make a Rule 54 certification and enter final summary judgment against the Defendant/Appellant. On November 1, 1993, the Bankruptcy Court denied as premature the Plaintiff/Appellant's motion for the Rule 54 certification and immediate entry of final judgment.
On December 3, 1993, the NRA was signed into law by the President. On January 12, 1994, the Defendant/Appellant moved the Bankruptcy Court to expand its prior (April 1993) modification of the stay to allow it to pursue before the ICC all remedies afforded under the NRA. The ICC also filed a brief in this case, which the Court has considered. On January 14, 1994, the Plaintiff/Appellee moved the Bankruptcy Court to reconsider its order issued from the bench on November 1, 1993, denying the Plaintiff/Appellee's earlier motion for a Rule 54 certification and immediate entry of final judgment in his favor.
On February 1, 1994, the Bankruptcy court, after due prior notice to all parties, conducted a consolidated hearing in numerous pending freight undercharge adversary proceedings where it reviewed the record and heard oral argument on all pending motions from all parties, including the ICC. After the hearing the Bankruptcy Court announced it would enter summary judgment in favor of the Plaintiff/Appellee, grant his motion for a Rule 54 certification and deny the motion of the Defendant/Appellant for an amendment to the referral order of April 13, 1993, to allow the Defendant/Appellant to assert remedies under the NRA.
On February 18, 1994, the Bankruptcy Court entered the Order which is the subject of this appeal, and it also entered recommended orders granting the Plaintiff/Appellee's motion for summary judgment and the Rule 54 certification. On June 21, 1994, Judge Robert Potter of this Court adopted the recommended orders of the Bankruptcy Court and entered an Order and Judgment in favor of the Plaintiff-Appellee in the amount of $1,339,853.30 plus interest and costs.
Bulldog was, at all times relevant to these proceedings, a motor common and contract carrier operating in interstate commerce pursuant to authority issued by the ICC. It provided shipping services to its customers ("shippers") primarily in the Southeast United States.
Beginning in the 1980's, the ICC illegally sought to dismantle the national tariff system that required common carriers to file tariffs with the ICC and to collect the tariff rates from shippers, regardless of any private discount, rebate or kickback agreement between the carrier and the shipper.
In 1986 and 1989, the ICC adopted its Negotiated Rates policy that the Supreme Court later declared illegal. Under this policy, the ICC barred a common carrier from enforcing its filed tariff rate if the carrier had billed the shipper for a lower, unfiled (or "negotiated") rate. In NITL — Petition to Institute Rulemaking on Negotiated Motor Common Carrier Rates, 5 I.C.C. 2d 623 (1989) the ICC publicly announced that it approved of the shippers' defense that it was an unreasonable practice to collect a rate higher than the rate...
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