In re Bokum Resources Corp.
| Decision Date | 30 May 1985 |
| Docket Number | Adv. No. 82-0202 G,82-0235 G.,Bankruptcy No. 81-00666 CA |
| Citation | 49 BR 854 |
| Parties | In re BOKUM RESOURCES CORP., a Delaware Corp., Debtor. BOKUM RESOURCES CORP., Plaintiff, v. LONG ISLAND LIGHTING CO., Defendant (82-0202) and Plaintiff (82-0235) v. BOKUM RESOURCES CORPORATION, Defendant and Counterclaimant. |
| Court | U.S. Bankruptcy Court — District of New Mexico |
Stephenson, Carpenter, Crout & Olmsted by G. Stanley Crout, Santa Fe, N.M., for Bokum Resources Corp.
Davis Polk & Wardwell by Steven F. Goldstone, New York City, for Long Island Lighting Co.
The question before the Court is whether issues presently pending for trial between the debtor Bokum Resources (BRC) and its major creditor, Long Island Lighting Company (LILCO), should proceed to trial in the U.S. District Court to a jury, as requested by the debtor, or should be retained in the Bankruptcy Court for trial without a jury. There is third alternative which will be discussed—that of retaining the matter in the Bankruptcy Court for trial to a jury.
An Involuntary Petition under Chapter 11 of the Bankruptcy Code was filed on June 12, 1981. An order for relief entered on December 21, 1981, which was affirmed by the District Court for the District of New Mexico on July 13, 1982. This order for relief was further affirmed by the Court of Appeals for the 10th Circuit on December 27, 1983.
Prior to the Involuntary Petition, controversies arose between BRC and LILCO as a result of Uranium contracts into which the parties entered in prior years. The first such contract was a Uranium Concentrates Purchase Contract, dated January 30, 1976, (the 1976 U.C.P.C.). On April 7, 1978, the 1976 U.C.P.C. was amended and a series of additional contracts were then executed by the parties, dated July 21, 1978. These contracts and their terms are more fully discussed and explored in Long Island Lighting Co. v. Bokum Resources, 40 B.R. 274 (Bankr.N.M.1983).
On November 10, 1980, LILCO had commenced a foreclosure action against BRC in the United States District Court. The jurisdictional basis upon which that action was predicated was diversity of citizenship, pursuant to 28 U.S.C. § 1332. BRC then filed a Counterclaim, on January 9, 1981, containing four Counts. BRC requested a trial by jury as to all counts of the Counterclaim at that time. When the Involuntary Petition was filed on June 12, 1981, the action in the United States District Court was stayed by Order of Judge Juan G. Burciaga, dated August 25, 1981. On January 29, 1982, Judge Burciaga entered an order removing the action pending before him, which by this time had been consolidated with other actions, to the bankruptcy court. The then-authority for that removal was generally based upon 28 U.S.C. § 1471. That action became Adversary Proceeding No. 82-0235 in the bankruptcy court.
Although BRC had demanded a jury trial as to all counts of its Counterclaim, by subsequent agreement of the parties this court did try Counts II, III and IV to a conclusion. That is the decision reported in Long Island Lighting Co. v. Bokum Resources Corp., supra, and is presently on appeal. Count I of BRC's Counterclaim asserted claims against LILCO, alleging tortious interference with BRC's negotiations involving Occidental Petroleum Co. That action remains to be tried, and is one of the matters which is the subject of this opinion.
In response to the Involuntary Petition, BRC filed an Answer and Counterclaim, dated July 23, 1981. In that Answer and Counterclaim, BRC alleged, inter alia, the same tortious interference with contractual relationships which had previously been alleged in the Answer and Counterclaim in the action pending in the United States District Court. Subsequently, on September 8, 1981 BRC filed with the Bankruptcy Court a motion to permit counterclaims, again asserting that LILCO interfered with BRC's business relation with Occidental Petroleum Co. Additional counterclaims were set forth, alleging that "LILCO has refused to accept tender of all uranium concentrates due for delivery to date" and "has thereby breached its contracts and agreements with Bokum."
The breach of contract claims raised by the additional Counterclaims to the Involuntary Petition contain the same allegations commenced by BRC against LILCO in a Complaint filed in the State District Court, County of McKinley, State of New Mexico, on February 19, 1982. That Complaint sought damages from LILCO as a result of the alleged breach of contract. On March 26, 1982, LILCO had this matter removed to the United States District Court for the District of New Mexico who then, on April 20, 1982, transferred the matter to the United States Bankruptcy Court for the District of New Mexico. That action is Adversary Proceeding No. 82-0202. No jury demand can be found in that matter until October 31, 1984, when BRC amended its Complaint to specifically set forth in the record its request for a jury in that matter.
One of the defenses asserted by LILCO to BRC's state court Complaint, subsequently removed to the Federal District Court, is that the contract upon which BRC bases its breach of contract action is an "executory contract" which BRC cannot assume without meeting the requirements of § 365 of the Bankruptcy Code.
A review of the claims between the parties in Adversary Proceeding 82-0202 indicates that, while the action was not filed until after the Bankruptcy proceedings were commenced, these are issues which could have been brought absent bankruptcy in either the New Mexico State Court or the United States District Court, under 28 U.S.C. § 1332, and do not depend for their resolution upon any bankruptcy laws. The sole exception to this determination is the LILCO defense relating to executory contracts.
It has been assumed by the parties that the matters pending in Adversary Proceeding No. 82-0235, as well as those issues presented in BRC's Complaint against LILCO and LILCO's Counterclaim in Adversary Proceeding No. 82-0202, would be tried in the U.S. District Court to a jury. The bankruptcy court has retained these matters for purposes of pretrial procedures. However, on January 30, 1985, I entered an Order suggesting that, as a result of the passage of the Bankruptcy Amendments and Federal Judgeship Act of 1984 ("BAA"), it appeared the matters herein involved would be "core" proceedings which should be tried in the bankruptcy court. Further, it appeared the jury demand in Adversary Proceeding No. 82-0202 was not timely filed, which was further reason for retaining the matter for trial in the bankruptcy court.
Counsel for the parties have had the opportunity to brief the matter and to argue their positions to the Court. Having considered the arguments of counsel and having reviewed the various authorities which have attempted to unravel the core, non-core distinctions, as well as a review of the legislative history leading to the promulgation of the 1984 Bankruptcy Amendments and Federal Judgeship Act, it is my conclusion that the issues remaining to be tried should be tried in the United States District Court to a jury and that they are not properly denominated as "core" proceedings under 28 U.S.C. § 157(b)(2) for reasons set forth in the analysis which I am about to undertake.
The questions to be determined are three:
I. Are the issues presently pending before the Court "core" proceedings or proceedings "related to" this Title 11 case?
II. Are the parties entitled to a jury to determine some or all of the pending issues?
III. If the parties are entitled to a jury, should the matter be tried in the Bankruptcy Court, the U.S. District Court, or the New Mexico state court?
Resolution of whether the matters before the Court are core or related proceedings requires a review of the Bankruptcy Amendments and Federal Judgeship Act of 1984, P.L. 98-353 ("BAA") and decisions construing that Act. Interpretation of the statute begins, of course, with the statutory language. Ernst & Ernst v. Hochfelder, 425 U.S. 185, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976).
The BAA requires, in 28 U.S.C. § 157(b)(3) that the bankruptcy judge determine, on the judge's own motion or on timely motion of a party, whether the proceeding is a core proceeding under § 157 or is a related proceeding. If the matter is determined to be a core proceeding, the bankruptcy court may hear it and render a final determination, subject to appeal. 28 U.S.C. § 157(b)(1). Otherwise, the bankruptcy court may hear a non-core, related proceeding and submit proposed findings of fact and conclusions of law to the district court. 28 U.S.C. § 157(c)(1). Nowhere does the BAA address what is to be done where a jury is requested in either a core or related proceeding. That is a matter which will be later addressed herein.
The BAA lists a non-inclusive series of examples of what is to be regarded as within the definition of a "core" proceeding. 28 U.S.C. § 157(b)(2). Unfortunately, the BAA provides no real definition of the term, leaving that for determination in the courts. The few courts that have had occasion to address this issue have proceeded in different directions and have arrived at varying conclusions. An analysis of those decisions has been undertaken here, in an effort to glean some trend in interpretation. The result yields little by way of guidance; but neither does the statute.
In a decision emanating from this Circuit, out of the U.S. District Court of Colorado, Judge Carrigan determined that a complaint filed by the debtor-in-possession against a defendant/creditor, seeking injunctive relief arising out of an alleged breach of a leasing contract, was a non-core proceeding over which the district c...
To continue reading
Request your trial