In re Circuit City Stores, Inc.

• Decision Date: 06 September 2016
• Docket Number: Case No. 08-35653-KRH
• Court: U.S. Bankruptcy Court — Eastern District of Virginia
• Parties: In re: Circuit City Stores, Inc. et al., Debtors.

557 B.R. 443

In re: Circuit City Stores, Inc. et al., Debtors.

Case No. 08-35653-KRH

United States Bankruptcy Court, E.D. Virginia, Richmond Division.

Signed September 6, 2016

Sarah Beckett Boehm, Dion W. Hayes, Joseph S. Sheerin, McGuire Woods LLP, Richmond, VA, Douglas M. Foley, McGuireWoods LLP, Washington, DC, for Debtor.

MEMORANDUM OPINION

Kevin R. Huennekens

, UNITED STATES BANKRUPTCY JUDGE

This contested matter involves a motion (the “Motion for Protection”) filed by the Circuit City Stores Inc. Liquidating Trust (the “Liquidating Trust”) for protection from a foreign subpoena (the “Subpoena”) issued at the behest of Toshiba Corporation and Toshiba America Electronic Components, Inc. (together, “Toshiba”) in connection with an action in which the Liquidating Trust is not a party, State of Illinois v. Hitachi, Ltd. , currently pending as Case No. 12–CH–35266 in the Circuit Court of Cook County, Illinois (the “Illinois Litigation”). Toshiba seeks to take a discovery deposition of the person or persons designated by Alfred H. Siegel, as Trustee of the Liquidating Trust (the “Liquidating Trustee”) about information known or reasonably available to Circuit City concerning 18 matters listed in the Subpoena (the “Deposition”). The Subpoena requires “Circuit City to produce one or more witnesses ... who are knowledgeable and prepared to testify about each of the matters [designated on] the List of Matters on Which Examination is Requested.” The Subpoena warns that failure to comply with the Subpoena will subject the Liquidating Trust to punishment for contempt of court.

A hearing was conducted on August 17, 2016, to consider the Motion for Protection (the “Hearing”). Counsel for Toshiba appeared at the Hearing and argued that the relief requested by the Liquidating Trust in the Motion for Protection should be denied. The Court found that the Liquidating Trust was incapable of complying with the subpoena, as it did not employ any Circuit City personnel who had knowledge about the matters on which examination was requested. At the conclusion of the Hearing, the Court ruled that it would grant the Liquidating Trust's Motion for Protection. This Memorandum Opinion sets forth the Court's findings of fact and conclusions of law in accordance with Rule 7052 of the Federal Rules of Bankruptcy Procedure

.¹

Factual Background

Before its liquidation at the height of the financial crisis in 2008–09, Circuit City Stores, Inc., together with its affiliated companies, was a national retailer of consumer electronic products with operations throughout the United States (collectively, “Circuit City”). Circuit City filed a petition for relief in this Court under Chapter 11 of the Bankruptcy Code on November 10, 2008 (the “Petition Date”).²

Circuit City continued to operate its national retail business in the ordinary course for a brief period following the Petition Date. On January 16, 2009, the Court authorized Circuit City to cease its business operations and liquidate its assets. A Second Amended Joint Plan of Liquidation was filed on August 9, 2010, and an order confirming the Debtors' Modified Amended Second Joint Plan of Liquidation (the “Plan”) was entered on September 14, 2010 (the “Confirmation Order”).³ The Plan substantively consolidated the Debtors' bankruptcy estates and established the Liquidating Trust to collect, administer, distribute, and liquidate all of the Debtors' remaining assets under Chapter 11 of the Bankruptcy Code. Plaintiff, Alfred H. Siegel was appointed as Liquidating Trustee for the Liquidating Trust and he continues to serve in that capacity.⁴

Over the course of the past six years, The Liquidating Trust has conducted no trade or commerce. The purpose of the Liquidating Trust, as set forth in the Plan, is to liquidate the assets of Circuit City, adjust the claims of creditors, and make distribution to creditors with allowed claims.⁵ The Liquidating Trustee has been actively engaged with winding down the business affairs of Circuit City in accordance with the terms of the Plan. That process is now nearly complete. The Liquidating Trust has been very successful. It has distributed over forty cents on the dollar to creditors and will make another distribution before the end of the 2016 calendar year. The Liquidating Trust maintains custody of certain of Circuit City's books and records and employs a limited staff for the purpose of liquidating the few assets that remain and adjusting the dwindling number of claims that have yet to be resolved.

The Plan generally provided for the transfer of any cause of action held by Circuit City to the Liquidating Trust.⁶ Consistent therewith, and subject to the ongoing supervision of this Court, the Liquidating Trust became a party to certain legacy litigation involving claims that previously belonged to Circuit City in the federal multidistrict litigation styled In re Cathode Ray Tube (CRT) Antitrust Litigation , Case No. 07–5944 JST, MDL 1917 (N.D.Cal.) (the “CRT Action”).⁷ As part of the wind down process, the Liquidating Trust resolved all of its claims against all of the defendants in the CRT Action—including Toshiba—through a series of settlements approved by the Court under Bankruptcy Rule 9019.⁸ Accordingly, the Liquidating Trust is no longer a party in the CRT Action. Toshiba was and apparently remains a defendant in the CRT Action as to claims of plaintiffs other than the Trust.

While the Liquidating Trust was involved in the CRT Action, the Trust complied with the discovery obligations imposed upon it by the Federal Rules of Civil Procedure. The Liquidating Trust produced voluminous documentation to the defendants in the CRT Action, including Toshiba. The Liquidating Trust also gave corporate deposition testimony, pursuant to Federal Rule of Civil Procedure 30(b)(6)

, at the behest of defendants in the CRT Action, including Toshiba. Complying with the discovery requests, especially the requests for deposition testimony, was expensive, as the Liquidating Trust had to maintain access to former Circuit City personnel with the necessary expertise and knowledge to facilitate the Trust's compliance with its discovery obligations in the CRT Action. Upon its exit from the CRT Action, the Liquidating Trust ceased to maintain the access it formally had in order to eliminate the unnecessary expense.

The Subpoena seeks the very same discovery that the Liquidating Trust already provided in the CRT Action. Toshiba claims that it needs to repeat the discovery on account of a rule peculiar to the state of Illinois that prohibits the use of deposition testimony at trial unless the deposition was specially designated as a trial deposition. Even though Toshiba actively participated in discovery in the CRT Action and even though it had the opportunity to make the appropriate Illinois designation at the time, Toshiba now finds it is unable to use the discovery it previously obtained from the Liquidating Trust. As a result, Toshiba caused the Subpoena to be issued to compel the Liquidating Trust to provide the very same testimony that the Liquidating Trust provided years ago.⁹ Unfortunately, the Liquidating Trustee, having wound

down the business, no longer retains the former Circuit City personnel with the requisite expertise and knowledge.

Jurisdiction and Venue

Toshiba argues that this Court lacks jurisdiction to decide this issue. The Court disagrees. Pursuant to 28 U.S.C. § 1334(a)

, “the district court [has] original and exclusive jurisdiction of all cases under title 11.” Further, the district court has “original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11.” 28 U.S.C. § 1334(b). District courts are authorized to refer all cases under Title 11 and all proceedings arising under Title 11 or arising in or related to a case under Title 11 to the bankruptcy judges for the district. See id. § 157(a). By order of reference entered August 16, 1984, the United States District Court for the Eastern District of Virginia has referred all such bankruptcy cases and proceedings to this Court.

This Court has core jurisdiction to interpret its Confirmation Order and to enforce the terms of the confirmed Plan. See In re LandAmerica Fin. Grp., Inc. , 2013 WL 1819984 at *3 (Bankr.E.D.Va. Apr. 30, 2013)

. “[A] bankruptcy court retains core jurisdiction to interpret and enforce its own prior orders, including and especially confirmation orders.” In re Lyondell Chem. Co. , 445 B.R. 277, 287 (Bankr.S.D.N.Y.2011) ; see also

Travelers Indem. Co. v. Bailey , 557 U.S. 137, 151, 129 S.Ct. 2195, 174 L.Ed.2d 99 (2009) (“[T]he Bankruptcy Court plainly ha[s] jurisdiction to interpret and enforce its own prior orders.”); In re Jones , No. 09–14499, 2011 WL 5025329 at *1, 2011 Bankr. LEXIS 4083 at *1 (Bankr.E.D.Va. Oct. 21, 2011) (“Bankruptcy Courts plainly have jurisdiction to interpret and enforce their own prior orders.”) (citing Travelers Indem. Co. , 557 U.S. 137, 129 S.Ct. 2195, 174 L.Ed.2d 99 ). The Confirmation Order provided that the Court would “retain exclusive jurisdiction over all matters arising out of and related to the ... Plan to the fullest extent permitted by law including, but not limited to the matters set forth in Article XI of the Plan.” Confirmation Order ¶ 41. Article XI of the Plan provides for the Court to retain exclusive jurisdiction to “[h]ear and determine all matters related to (i) the property of the Estates from and after the Confirmation Date, (ii) the winding up of the Debtors' affairs, and (iii) the activities of the Liquidating Trust and/or the Liquidating Trustee, including (A) challenges to or approvals of the Liquidating Trustee's activities ....” Plan , Art. XI, ¶ R. This Court has core jurisdiction over matters concerning the Liquidating Trustee's administration of estate property in the Liquidating Trust. See id. ; see also

Dalkon Shield Claimants Trust v. Reiser (In re A.H.

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