G.S.F. Corp., In re
| Decision Date | 01 April 1991 |
| Docket Number | S.F. CORPORATIO,No. 90-2188,D,90-2188 |
| Citation | 938 F.2d 1467 |
| Parties | 25 Collier Bankr.Cas.2d 113, Bankr. L. Rep. P 74,130 In re G.ebtor, Chase Commercial Corporation, Appellant. . Heard |
| Court | U.S. Court of Appeals — First Circuit |
William E. Ryckman, Jr., with whom Barry Y. Weiner, Lori A. Cianciulli and Shapiro, Israel & Weiner, P.C., were on brief, Boston, Mass., for appellant.
Paul G. Boylan, Boston, Mass., with whom Michael L. Alfano, Portsmouth, N.H., and Cuddy, Lynch, Manzi & Bixby, were on brief, Boston, Mass., for appellee 44 Lowell Junction Road Realty, Inc.
Before BREYER, Chief Judge, BOWNES, Senior Circuit Judge, and TORRUELLA, Circuit Judge.
Chase Commercial Corporation ("Chase") appeals a district court order vacating an injunction issued by the bankruptcy court. The bankruptcy court had enjoined 44 Lowell Junction Road Realty, Inc. ("Lowell") from proceeding against Chase in Massachusetts state court. We vacate the district court order.
The complex posture of this case requires a detailed look at the events leading to this point. Lowell was the landlord, and Chase a secured creditor, of G.S.F. Corporation ("G.S.F.") as of September 5, 1984, when an involuntary bankruptcy petition was filed against G.S.F. Lowell sought relief from the automatic stay in bankruptcy in order to continue to collect rent on the property; Chase sought to protect its security interest in the collateral. Chase, Lowell, G.S.F. and the trustee in bankruptcy executed an agreement on December 18, 1984 ("December 18 Agreement"), which was entered as an order of the bankruptcy court. Under the December 18 Agreement, Chase was to take possession of the former G.S.F. premises, use its best efforts to conduct an auction sale of the collateral located at the property, and restore the property upon completion of the auction. Chase would compensate Lowell for its temporary use and occupancy of the property, in an amount to be determined by the bankruptcy court. Both Lowell and Chase agreed not to file "a claim for administrative expenses in this case." 1
Chase conducted the auction and then quit the premises at the end of January 1985. On January 16, 1985, Lowell filed with the bankruptcy court a "Motion to Determine Use and Occupancy Payments by Secured Creditor in Possession." Two weeks later Lowell moved to withdraw the motion. Chase opposed the motion for withdrawal.
At a May 1, 1985, hearing on the motion for withdrawal, counsel for Lowell explained that after filing the original motion, Lowell learned that Chase had left the premises in a less-than-pristine condition; hence, determining use and occupancy payments was only one of many issues between the parties. As to these new matters, Lowell expressed its doubt that the bankruptcy court--acting under the newly revised Bankruptcy Code--had jurisdiction. Lowell specifically noted the presence on the property of hazardous waste requiring cleanup at Lowell's expense. According to Lowell, in the process of conducting the auction Chase opened up several drums containing hazardous waste, and some of that waste spilled out onto the ground. Lowell also stated that the Massachusetts Department of Environmental Quality Engineering had issued cleanup orders to Lowell.
Although the bankruptcy court did not make an express ruling on the issue, it appears from the hearing transcript that the court decided that it had jurisdiction for two reasons. First, the court found that the December 18 Agreement imposed certain duties that Lowell was now trying to avoid. The Agreement also imposed a duty on the court to determine use and occupancy payments. Thus jurisdiction could be premised on the court's obligation to follow through performance of the Agreement. Second, the court noted that the claims might affect administration of the estate. Chase asserted that any environmental damage to the property was attributable to the debtor, G.S.F., not Chase, and that Chase would pursue indemnification from G.S.F. Thus there was potential liability on the part of G.S.F. The following day At the pretrial hearing, May 29, 1985, the bankruptcy court explained that the purpose of the trial was to carry out the court's obligation under the December 18 Agreement to determine appropriate use and occupancy payments due Lowell. Counsel for Lowell asked:
the court denied Lowell's motion to withdraw its motion.
And would the court entertain questions of hazardous--leaving hazardous waste on the premises, the removal of the landlord's fixtures, damage to the landlord's property and the trespass in terms of the secured party's abandonment of goods on the premises is part of the restoration provision of paragraph seven of the [December 18 Agreement].
The court replied:
If that fits within "restore the premises," then yes; otherwise, no. All that is involved in the [December 18 Agreement] is the reasonable use and occupation and the restoring of the premises, period. Anything that doesn't fit within those terms is not within the Agreement and is not part of this court's concern.
The bankruptcy court at first reacted negatively when Lowell's counsel proposed that it consider environmental damage when calculating use and occupancy payments; the court suggested that Lowell was trying to stretch the December 18 Agreement to encompass matters the parties had never considered. Later, however, the court concluded that "any acts that [Chase] performed in a manner as to cause damage" were within the subject area of the December 18 Agreement. The hearing concluded with the parties agreeing to a discovery timetable, but without an explicit ruling from the bankruptcy court as to the extent of its jurisdiction. Trial was set for September 10, 1985.
On June 21, 1985, Lowell filed a "Second Amended Motion to Determine Use and Occupancy Payments by Secured Creditor in Possession." Paragraph 20 of the Second Amended Motion stated a claim for damages allegedly stemming from the improper removal of collateral from the property. The motion also contained a paragraph, not present in the original motion, referring to the alleged environmental damage:
21. As a result of Chase's acts and omissions, the premises suffered a release or threat of release of hazardous material, as defined in M.G.L. c. 21E, Sec. 5, injuring the premises, necessitating Lowell Junction's containment and removal of hazardous materials from the premises, and depriving Lowell Junction of the use of the premises for a period of approximately five months.
The relief sought by the Second Amended Motion included not only rental payments but also money damages for "the damage suffered as a result of Chase's acts and omissions." In its answer to the motion Chase denied the allegations of paragraphs 20 and 21 and set forth a cross-complaint against G.S.F., seeking indemnification in the event damages were assessed for the release of hazardous materials on the premises.
The bankruptcy court held a final hearing on the matter on August 22, 1985. The hearing concerned the failure of Lowell's president, R. Christian Haufler, to show up at a scheduled deposition. The parties also discussed the scope of the dispute before the bankruptcy court. The court stated that the issues before it were:
(1) what is reasonable use and occupation ... and (2) what, if any, damage has either Chase's occupancy or the auction sale caused, because Chase has the obligation to restore the premises to the condition [they] were in when it went into possession, not what they were when G.S.F. went into possession, but when Chase went into possession.
In elaboration, the bankruptcy court made it clear that it would consider any damage, from hazardous waste or otherwise, that Chase had inflicted upon the property during its occupancy. Any pre-existing damage would not be considered.
The dispute never went to trial. On September 5, 1985, the parties signed mutual releases ("September 5 Releases") and a stipulation of dismissal ("September 5 Stipulation"), whereby Chase agreed to pay of any nature whatsoever ... related, directly or indirectly, to any and all transactions, dealings, occurrences, acts or omissions on or before the date hereof ... including, but not limited to, any and all events or matters that have been, were, or could have been raised in connection with Lowell Junction's Second Motion to Determine Use and Occupancy Payments by Secured Creditor in Possession.
Lowell $100,000 in settlement of the dispute. The September 5 Stipulation stated that the parties had settled "all the issues" raised by Lowell in its Second Amended Motion, and "all issues" in the December 18 Agreement. Further, the Stipulation stated that the parties agreed "to release each other from any and all claims that each may have against the other ... and more particularly, in connection with the matters raised in these proceedings." The September 5 Release executed by Lowell released Chase from all claims
R. Christian Haufler executed Lowell's September 5 Release. Mr. Haufler, an attorney, added a handwritten exclusion to the release, as follows:
Specifically excluded from this release are any claims of whatever nature Lowell Junction has against GSF Corp. and GSF Realty Inc. there [sic] officers, directors, employees, shareholders and agents, and the trustee in bankruptcy In Re: GSF Corp., United States Bank. Corp. [sic], Dis. of Ma.
The September 5 Stipulation was incorporated by reference in an order of the bankruptcy court, also dated September 5, dismissing the case. No judgment was entered by the district court.
Predictably, the matter did not end there. More than two years later, Lowell filed an action in Massachusetts state court naming Chase and Chase Manhattan among the defendants. The complaint alleged that Chase improperly removed permanent fixtures from Lowell's buildings, causing damage, and wrongfully allowed...
To continue reading
Request your trial
-
In re Tippins
... ... See, e.g., Local Loan Co. v. Hunt, 292 U.S. 234, 54 S.Ct. 695, 78 L.Ed. 1230 (1934); Southmark Properties v. Charles House Corp., 742 F.2d 862, 868 (5th Cir.1984). A bankruptcy confirmation order in a bankruptcy case is a judgment for this jurisdictional purpose. Wallis v ... ...
- SPM Mfg. Corp., In re
-
In re Foundation for New Era Philanthropy
... ... Accord, e.g., Liberty Mut. Ins. Co. v. Ward Trucking Corp., 48 F.3d 742, 750 (3d Cir.1995) (federal courts should raise, even sua sponte, jurisdictional 201 BR 386 issues); In re Hall's Motor Transit ... ...
-
In re Cano
... 410 B.R. 506 ... In re Robert CANO, et al., Debtor(s) ... Robert Cano, et al., Plaintiff(s) ... GMAC Mortgage Corp., Defendant(s) ... Bankruptcy No. 02-70359 ... Adversary No. 08-07019 ... United States Bankruptcy Court, S.D. Texas, McAllen Division ... ...
-
Joshua M. Silverstein, Hiding in Plain View: a Neglected Supreme Court Decision Resolves the Debate Over Non-debtor Releases in Chapter 11 Reorganizations
...660, 665 (5th Cir. 1994) ("From . . . section [105] emanate the general equitable powers of bankruptcy courts."); In re G.S.F. Corp., 938 F.2d 1467, 1474 (1st Cir. 1991) (observing that Sec. 105(a) grants bankruptcy courts broad equitable powers); 2 COLLIER ON BANKRUPTCY ¶ 105.01, at 105-5 ......
-
Timothy A. Davis, Defining the Close Nexus: an Analysis of a Bankruptcy Court?s Chapter 11 Postconfirmation Jurisdiction
...Sixth, Eighth, Ninth, Tenth, and Eleventh Circuits have adopted the Pacor test with little or no variation.” See In re G.S.F. Corp., 938 F.2d 1467, 1475 (1st Cir. 1991); Robinson v. Mich. Consol. Gas Co., 918 F.2d 579, 584 (6th Cir. 1990); Gardner v. United States (In re Gardner), 913 F.2d ......