In re Chateaugay Corp.
| Decision Date | 07 May 1993 |
| Docket Number | No. 93 Civ. 0554 (JSM).,No. 86 B 11270-11334,86 B 11402 and 86 B 11464 (BRL),86 B 11270-11334,93 Civ. 0554 (JSM). |
| Citation | 154 BR 416 |
| Parties | In re CHATEAUGAY CORPORATION, Reomar, Inc., The LTV Corporation, et al., Debtors. LTV STEEL COMPANY, INC., BCNR Mining Corporation, Nemacolin Mines Corporation, and Tuscaloosa Energy Corporation, Plaintiffs, v. Donna E. SHALALA, Secretary, Department of Health and Human Services; Joseph P. Connors, Sr., Marty D. Hudson, Thomas O.S. Rand, Elliott A. Segal, Carlton R. Sickles, Gail R. Wilensky, John Doe, Trustees of the United Mine Workers of America Combined Fund; and The United Mine Workers of America Combined Fund, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Karen Wagner, Davis Polk & Wardwell, New York City, for LTV Steel Co.
Donald Ayer, Jones, Day Reavis & Pogue, Washington, DC, for LTV.
Jami McKeon, Peter Buscemi, Morgan Lewis & Bockius, Washington, DC, Paul A. Green, John R. Moore, Beins, Axelrod, Osborne, Moody & Green, Washington, DC, for Combined Fund and Trustees.
Roger S. Hayes, U.S. Atty., S.D.N.Y., New York City, Edward A. Smith, Asst. U.S. Atty., for U.S.
David W. Allen, UMWA Health & Retirement Funds, Washington, DC.
John Kraljic, Stroock & Stroock & Lavan, New York City, for Official Committee of Unsecured Creditors.
This case centers around application of the Coal Industry Retiree Health Benefit Act of 1992, Pub.L. 102-486, Subtitle C, 106 Stat. 2776, 3036-56 (1992) () (the "Coal Act"), recently enacted legislation which imposes costs on companies involved in the coal mining industry and their successors in order to provide health and life insurance benefits to retired coal workers. Plaintiffs, all related companies in Chapter 11 reorganization proceedings, seek to determine the effect the Coal Act will have on their obligations.
Plaintiff LTV Steel Company ("LTV Steel") is the parent of plaintiffs BCNR Mining Corporation, Nemacolin Mining Corporation, and Tuscaloosa Energy Corporation (collectively, the "Mining Subsidiaries"). LTV Steel and the Mining Subsidiaries, either in their corporate capacities or through former corporate parents, were signatories to numerous industry-wide contracts known as "National Bituminous Coal Wage Agreements" ("Wage Agreements"), which were the product of multi-employer bargaining by the Bituminous Coal Operators Association with the United Mine Workers of America. The 1950 Wage Agreement, the first such contract, established a trust entitled the "United Mine Workers of America Welfare and Retirement Fund of 1950" (the "1950 Retirement Fund") to provide pension, health and life insurance benefits and mandated contributions from employers based on the amount of coal tonnage mined, as did subsequent Wage Agreements until 1974. The 1974 Wage Agreement established a trust entitled the "United Mine Workers 1974 Benefit Plan and Trust" (the "1974 Benefit Trust") to provide health and life insurance benefits for workers retiring after its inception, and also bifurcated the 1950 Retirement Fund into two separate trusts pursuant to federal law, 29 U.S.C. §§ 1001 et seq., one of which was entitled the "United Mine Workers of America 1950 Benefit Plan and Trust" (the "1950 Benefit Trust") and which mirrored the 1974 Benefit Trust. Each Wage Agreement provided that the employers were to be primarily responsible for health and life insurance benefits during the term of the agreement, while the various trusts were responsible for such benefits when workers were no longer covered by a Wage Agreement or their employer had ceased operations. The last relevant Wage Agreement was negotiated in 1984 and expired on January 31, 1988.
Plaintiffs, along with LTV Steel's parent, The LTV Corporation, and over fifty other affiliates, filed for Chapter 11 bankruptcy protection on July 17, 1986. Subsequently, plaintiffs sought to terminate health benefits to retirees, including benefits required under the 1984 Wage Agreement. However, after introduction of Congressional legislation requiring plaintiffs to continue the benefits and a union strike, plaintiffs resumed provision of the benefits.
In late 1987, plaintiffs announced their intention to cease providing retiree benefits after January 31, 1988, the date of expiration of the 1984 Wage Agreement. When the 1974 Benefit Trust refused to assume responsibility for benefits for affected retirees, plaintiffs obtained a ruling in an adversary proceeding declaring that plaintiffs' obligations had terminated and those of the 1974 Benefit Trust had commenced at the end of the term of the 1984 Wage Agreement. In re Chateaugay Corp., 945 F.2d 1205, 1208 (2d Cir.1991), cert. denied, ___ U.S. ___, 112 S.Ct. 1167, 117 L.Ed.2d 413 (1992).
So matters stood until late 1992 when Congress enacted the Coal Act. Stemming from a legislatively declared intention "to remedy problems with the provision and funding of health care benefits with respect to the beneficiaries of multiemployer benefit plans that provide health care benefits to retirees in the coal industry," Coal Act § 19142, the Coal Act combined the 1950 and 1974 Benefit Trusts into a trust entitled the "United Mine Workers of America Combined Benefit Fund" (the "Combined Fund"), and requires all signatories to any Wage Agreement (or their successors) to make contributions to the Combined Fund, which in turn is responsible for providing benefits to retirees. Each signatory's contribution, which is calculated annually and payable in monthly installments, is based on the number of retirees who worked for the signatory and the current cost of health care, with an additional contribution required for "orphan" beneficiaries who are not allocated to a signatory or would be allocated to a signatory which has gone out of business.
Plaintiff LTV Steel and its affiliates are now preparing, after seven years, to emerge from Chapter 111 and have scheduled a confirmation hearing on a plan that does not provide for payments under the Coal Act, which plaintiffs claim will be at least in excess of $12 million annually. Attempting to settle this issue before the confirmation hearing, plaintiffs have brought this action for a declaratory judgment, seeking to have the Coal Act declared unconstitutional and also seeking to determine its application to them. Only the latter issue is before this Court on plaintiff LTV Steel's motion for partial summary judgment. Defendants the trustees of the Combined Fund (the "Trustees") and the Combined Fund oppose the motion. There being no facts in dispute, this issue is appropriately decided by summary judgment.
LTV Steel argues first that any claim the Combined Fund may have is a pre-petition claim and is thus barred because no timely proof of claim was filed. Under the Bankruptcy Code, a "claim" is defined as a "right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured . . ." 11 U.S.C. § 101(5)(A). Thus, the question is whether the Combined Fund had a "claim" before the petition was filed. Cf. 11 U.S.C. § 101(10) ().
The statutory language defining a "claim" is drafted broadly, and has been so interpreted. In re Robinson, 776 F.2d 30, 34-36 (2d Cir.1985), rev'd on other grounds, 479 U.S. 36, 107 S.Ct. 353, 93 L.Ed.2d 216 (1986); see H.R.Rep. No. 595, 95th Cong.2d Sess. 309, U.S.Code Cong. & Admin.News 1978, pp. 5787, 6266 (). Tort claims have been found to have arisen pre-petition where all the even though the injury had not yet manifested. In re Waterman S.S. Corp., 141 B.R. 552, 556 (Bankr.S.D.N.Y. 1992); In re Johns-Manville Corp., 57 B.R. 680, 689 (Bankr.S.D.N.Y.1986). But see In re Chateaugay, 944 F.2d 997, 1003-04 (2d Cir.1991) (). A claim for statutory liability for post-petition withdrawal from a contractually imposed obligation to pay into pension funds was likewise held to be pre-petition because it arose out of the pre-petition obligation. Pension Ben. Guar. Corp. v. LTV Corp., 875 F.2d 1008, 1019 (2d Cir. 1989), rev'd on other grounds, 496 U.S. 633, 110 S.Ct. 2668, 110 L.Ed.2d 579 (1990); Trustees of Amalgamated Ins. Fund. v. McFarlin's, Inc., 789 F.2d 98, 103-04 (2d Cir.1986).
However, where there is no legal relationship defined at the time of petition, it would be impossible to find even the remotest "right to payment." "The Code's inclusion of `unmatured' and `contingent' claims is usually said to refer to obligations that will become due upon the happening of a future event that was `within the actual or presumed contemplation of the parties at the time the original relationship between the parties was created.'" Chateaugay, 944 F.2d at 1004 (quoting In re All Media Properties, Inc, 5 B.R. 126, 133 (Bankr. S.D.Tex.1980), aff'd mem., 646 F.2d 193 (5th Cir.1981)); see also In re Chateaugay, 944 F.2d at 1005 (). Claims under the Coal Act were not in any sense "contingent" or "unmatured" at the time of the petition; they simply did not exist. There is no basis for terming these claims pre-petition.
The Third Circuit's decision in In re Penn Cent. Transp. Co., 944 F.2d 164 (3d Cir.1991), cert. denied, ___ U.S. ___, 112 S.Ct. 1262, 117 L.Ed.2d 491 (1992), addresses a closely analogous issue. There petitioners sought to assert CERCLA claims against the debtor, who defended on the ground that the claims were...
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