In re Chateaugay Corp.
| Decision Date | 25 September 1996 |
| Docket Number | 96-8258A.,Adv. No. 96-8237A,Bankruptcy No. 86 B 11270 (BRL) to 86 B 11334 (BRL),86 B 11402 (BRL) and 86 B 11464 (BRL) |
| Citation | 201 BR 48 |
| Parties | In re CHATEAUGAY CORPORATION, Reomar, Inc., The LTV Corporation, et al., Debtors. The LTV CORPORATION, LTV Aerospace and Defense Company and LTV Vehicle Corporation f/k/a AM General Corporation, Plaintiffs, v. Tammy Dee BACK, William G. Adamson and John Does 1-10, Defendants. AM GENERAL CORPORATION (formerly known as REN Acquisition Corporation), Plaintiff, v. Tammy Dee BACK, Patricia Tueme, individually and as surviving spouse of Jose Luis Tueme, deceased and as next friend of Luis Hernan Tueme and Edgar Albert Tueme, minor children and Emilia Sanchez, surviving mother of Jose Luis Tueme, deceased, Eric Wilson, Justin Wilson and John Does 1-10, Defendants. |
| Court | U.S. Bankruptcy Court — Southern District of New York |
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Kaye, Scholer, Fierman, Hays & Handler, L.L.P. by Myron Kirschbaum, Edmund M. Emrich, Scott M. Berman, New York City, for the LTV Plaintiffs.
Baer Marks & Upham, L.L.P. by Larry D. Henin, Justin W. D'Atri, Elizabeth R. Binder, New York City, for Plaintiff New AM General Corporation.
Whitman Breed Abbott & Morgan by Norman Kinel, Caroline K. Hall, New York City, for Defendants.
Before BURTON R. LIFLAND, Bankruptcy Judge.
Upon all the pleadings and submissions filed herein by plaintiffs, The LTV Corporation ("LTV"), LTV Aerospace and Defense Company ("LTVAD"), and LTV Vehicle Corporation, f/k/a AM General Corporation ("LTV Vehicle" or "Old AM General") (collectively, the "LTV Plaintiffs"), and by defendants, Tammy Dee Back ("Back") and William G. Adamson ("Adamson"), in Adversary Proceeding No. 96-8237A (the "LTV Adversary Proceeding"); upon all pleadings and submissions filed herein by plaintiff, AM General Corporation, f/k/a Ren Acquisition Corporation ("New AM General") (the LTV Plaintiffs and New AM General hereinafter collectively referred to as the "Plaintiffs"), and by defendants Back, Patricia Tueme ("Tueme"), Amelia Sanchez ("Sanchez"), and Eric Wilson and Justin Wilson (collectively, "Wilson"), in Adversary Proceeding No. 96-8258A (the "New AM General Adversary Proceeding"); upon the record of, and the evidence adduced at, the hearing held before this Court on May 1, 1996 (the "Hearing") to consider the applications of the LTV Plaintiffs and New AM General for the issuance of preliminary injunctions and the motions to dismiss filed by Back, Adamson, Tueme, Wilson and Sanchez (collectively, the "Defendants"); upon the record of all prior proceedings held before this Court in the chapter 11 cases of the above-captioned debtors (the "Debtors"); upon the bench decision rendered and "So Ordered" by this Court at the Hearing; and upon the LTV Plaintiffs' Proposed Findings of Fact and Conclusions of Law, the Defendants' Objection to the Plaintiffs' Proposed Findings of Fact and Conclusions of Law, the Response of the LTV Plaintiffs' to Defendants' Objection and the Defendants' Reply to the Response of the LTV Plaintiffs to Defendants' Objection1 ; and keeping in mind that a court should not blindly accept findings of fact and conclusions of law proffered by the parties, see St. Clare's Hospital and Health Center v. Insurance Company of North America (In re St. Clare's Hospital and Health Center), 934 F.2d 15 (2d Cir.1991) (citing United States v. El Paso Natural Gas Co., 376 U.S. 651, 656, 84 S.Ct. 1044, 1047, 12 L.Ed.2d 12 (1964)), and having conducted an independent analysis of the law and the facts, this Court makes the following findings of fact and conclusions of law.
1. Plaintiffs seek orders preliminarily enjoining, among other things, certain state court product liability actions (the "State Court Actions") involving postal dispatcher vehicles (referred to hereinafter as "Postal Dispatchers" or "DJ-5s"), once produced by Old AM General and its predecessor companies to the extent that such actions attack, challenge, allege fraud or impropriety in connection with, or otherwise question the validity or effectiveness of, the Debtors' confirmed plan, or the orders entered by this Court during the Debtors' chapter 11 proceedings.
2. Defendants oppose the relief requested and move to dismiss the complaints on the grounds that: (i) the Court lacks jurisdiction over these actions; and (ii) the LTV Plaintiffs have failed to state a claim for which relief can be granted.
3. The LTV Plaintiffs are three of the 67 affiliated debtors (the "Debtors") that filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") in this Court on July 17, 1986 (the "Filing Date") and thereafter and were continued in the management and operation of their businesses as debtors in possession.
4. By Order dated May 26, 1993 (the "Confirmation Order"), this Court confirmed the LTV Second Modified Joint Plan of Reorganization, dated February 26, 1993, as amended (the "Plan"), and on June 28, 1993, the "Effective Date" of the Plan occurred. Frito-Lay, Inc. v. LTV Steel Co. (In re Chateaugay Corp.), 10 F.3d 944, 949 (2d Cir. 1993). The Plan has been substantially consummated. Id.
5. Plaintiff New AM General purchased certain assets of Old AM General and Amland Corporation ("Amland") pursuant to this Court's Order dated January 7, 1992 (the "Sale Order").
6. On September 26, 1992 (i.e., prior to the confirmation of the Plan), defendant Tammy Dee Back was allegedly injured as a result of an accident while driving a DJ-5.
7. Defendant William G. Adamson is an attorney with offices in Pennsylvania and New Jersey. Adamson represents defendant Back in connection with an action against LTV Vehicle, New AM General and others entitled Tammy Dee Back v. LTV Vehicle Corporation, et al., At Law No. LX 2539-4, which was commenced in the Circuit Court for the City of Richmond, Virginia (the "Virginia Court") on or about September 23, 1994 (the "Virginia Action"). Adamson also has threatened to institute further litigation or other actions on behalf of Back and other known and unknown persons against Plaintiffs and others in forums other than this Court attacking, challenging, alleging fraud or impropriety in connection with or otherwise questioning the validity or effectiveness of the Confirmation Order, the Plan, the Sale Order and other orders of this Court entered in the Debtors' chapter 11 cases.
8. "John Does 1-10" in Adversary Proceeding No. 96-8237A are presently unnamed defendants on whose behalf or with whose assistance Adamson has threatened to commence litigation against Plaintiffs and others in forums other than this Court.
9. "John Does 1-10" in Adversary Proceeding No. 96-8258A are presently unnamed defendants who have commenced or may commence an action against New AM General in connection with DJ-5s.
10. Defendants Eric Wilson and Justin Wilson commenced a personal injury action against New AM General and other parties, entitled Eric W. Wilson and Justin Wilson v. Seth Childers, Rowley Malcolm, U.S. Postal Service, AM General Corporation, Chrysler Corporation and Does 1 Through 100 Inclusive, Case No. 159048 (Super.Ct.Marin County, California) (the "Wilson Action"), on or about December 23, 1993. The complaint in that action alleges that on or about December 23, 1992, the Wilsons sustained injuries arising from an accident involving a Postal Dispatcher. Complaint For Damages (Negligence and Strict Liability), pp. 4-5 (New AM General Complaint Exh. C).
11. Defendants Patricia Tueme and Amelia Sanchez commenced a personal injury action against New AM General and other parties, entitled Patricia Tueme, Individually and as Surviving Spouse of Jose Luis Tueme, Deceased and as next Friend of Luis Hernan Tueme and Edgar Albert Tueme, Minor Children and Amelia Sanchez, Surviving Mother of Jose Luis Tueme, Deceased v. AM General Corporation, Chrysler Corporation and Hidalgo County, Texas, Case No. C-4333-9S-D (206th Jud.Dist.Ct.Hidalgo County, Texas) (the "Tueme Action"), on or about August 21, 1995. The complaint in that action alleges that on or about September 13, 1993, Jose Luis Tueme died in an accident involving the rollover of a DJ-5 Vehicle. New AM General Complaint, ¶ 10; Plaintiffs' Original Petition, p. 3 (New AM General Complaint Exh. B).
12. The Court notes initially that the underlying facts in these proceedings are not new to this Court and have, in fact, been the subject of numerous hearings before this Court, including hearings involving the sale of assets, confirmation, objections to claims and estimation of claims. Much of the background and history of the Debtors' chapter 11 cases may be found in numerous decisions published by this Court, the District Court and the Second Circuit, and by the record submitted by all parties in connection with the May 1, 1996 hearing.
13. LTV acquired Old AM General and Amland from American Motors Corporation, known as AMC (a subsidiary of Chrysler Corporation), in 1983. Prior to 1985, AMC and Old AM General manufactured a line of postal delivery vehicles, including the DJ-5s. The manufacturing of the DJ-5s, however, constituted only a small portion of Old AM General's business. A large percentage of its business was made up of the manufacture and sale of a high mobility multi-purpose vehicle known as the Hummer. See Debtors' Application For An Order Estimating The Amount of All Postal Vehicle Claims For Voting and Plan Confirmation Purposes dated January 27, 1993 (the "Estimation Motion"), ¶ 6 attached as Exhibit 1 to the Certification of Edmund M. Emrich dated March 4, 1996 (the "Emrich Cert.").
14. Between 1969 and 1984, approximately 144,000 Postal Dispatchers were designed for, manufactured for, and sold to the United States Post Office (and subsequently the United States...
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