In re Congoleum Corp., Case No. 03-51524 (MBK)

CourtU.S. Bankruptcy Court — District of New Jersey
Writing for the CourtMichael B. Kaplan, Chief Judge
Citation636 B.R. 362
Parties IN RE: CONGOLEUM CORPORATION, et al., Debtors.
Docket NumberCase No. 03-51524 (MBK)
Decision Date07 January 2022

636 B.R. 362

IN RE: CONGOLEUM CORPORATION, et al., Debtors.

Case No. 03-51524 (MBK)

United States Bankruptcy Court, D. New Jersey.

Signed January 7, 2022
Hearing Date: November 18, 2021


636 B.R. 368

Daniel M. Stolz, Esq., Donald W. Clarke, Esq., Genova Burns, 110 Allen Road, Suite 304, Basking Ridge, NJ 07920, Local Counsel for Bath Iron Works Corporation

Wade A. Thomson, Esq., Catherine Steege, Esq., Michael A. Doornweerd, Esq., Jenner & Block LLP, 353 N. Clark Street, Chicago, IL 60654, Counsel for Bath Iron Works Corporation

Russell C. Silberglied, Esq., Sarah E. Silveira, Esq., Richards, Layton & Finger, P.A., One Rodney Street, 920 North King Street, Wilmington, DE 19801, Counsel for Occidental Chemical Corporation

Larry D. Silver, Esq., Amanda L. Rauer, Esq., Langsam Stevens Silver & Hollaender LLP, 1818 Market Street, Suite 2430, Philadelphia, PA 19103, Counsel for Occidental Chemical Corporation

MEMORANDUM OPINION

Michael B. Kaplan, Chief Judge

636 B.R. 369

This matter comes before the Court on a motion ("Motion") (ECF No. 8381) filed by Bath Iron Works Corporation ("BIW") seeking to reopen the above-captioned chapter 11 case as well as to enforce several orders against Occidental Chemical Corporation ("Occidental"). Occidental opposes the Motion in its entirety. At the conclusion of the hearing held on November 18, 2021, the Court permitted the parties to submit additional briefing to memorialize the arguments raised during oral argument. The Court has fully considered the submissions of the parties—including post-hearing pleadings—and the arguments set forth on the record. For the reasons set forth below, the Court concludes that the order confirming the chapter 11 plan in this case (the "2010 Confirmation Order") is binding on Occidental, based on principles of res judicata and collateral estoppel. BIW's Motion is GRANTED IN PART.

I. Background

On December 31, 2003, Congoleum along with two affiliates, Congoleum Sales, Inc. and Congoleum Fiscal, Inc., (collectively, "Congoleum" or the "Debtor") filed voluntary petitions for relief in the United States Bankruptcy Court for the District of New Jersey under chapter 11 of the Bankruptcy Code. The cases were jointly administered and captioned In re Congoleum Corporation , 03-51524 (KCF) (the "First Congoleum Bankruptcy"). Debtor listed Occidental on Schedule F as a creditor holding an unsecured priority claim in the total amount of $679,909. On January 7, 2004, the bankruptcy court entered a critical vendor order (the "Critical Vendor Order") and, shortly thereafter, Congoleum paid Occidental's claim in full. Occidental never filed a proof of claim.

During the First Congoleum Bankruptcy, Congoleum negotiated a settlement and buyback agreement with many of its insurers, including Century Indemnity Co. of N.A. ("Century"). The settlement and buyback agreement (the "Century Settlement") provided for a $16.5 million sale of the excess insurance policies back to Century, free and clear and subject to a release of all past, present and future claims under the policies, including claims of additional insureds such as BIW. The policies subject to the sale included—among other things—coverage for asbestos and environmental claims asserted against the Debtor. On August 21, 2006, Congoleum filed a motion ("Century Sale Motion") seeking the bankruptcy court's approval of the sale. The terms of the sale were articulated in the Century Settlement and attached to the Century Sale Motion. The parties dispute whether Occidental was served with the Century Sale Motion. In any event, following a hearing on September 11, 2006, the bankruptcy court approved the sale by order dated September 20, 2006 ("Century Sale Order"). However, the sale was not final. Instead, the parties’ obligations under Century Sale Order were subject to certain conditions precedent, including a requirement that certain findings from the Century Agreement be incorporated into any future confirmation order. See Settlement and Buyback Agreement at 10, Section II "Conditions Precedent," ECF No. 4439-2.

Following approval of the Century Settlement, Congoleum's bankruptcy case progressed, albeit slowly and tortuously. In August 2009, the district court withdrew the reference and assumed authority

636 B.R. 370

over the proceedings in Case No. 09-cv-04371 (JAP). On June 7, 2010, the district court entered an order confirming the Debtor's Fourth Amended Joint Plan of Reorganization ("Plan") (ECF No. 664 in Case No. 09-cv-04371) (the "2010 Confirmation Order"). Paragraph 104 of the 2010 Confirmation Order (the "Finding of Fact" or the "Finding") contained language stating that BIW has "no responsibility for any of the liabilities of the Congoleum Flooring Business (as defined in the Century Sale Settlement)." Id. The First Congoleum Bankruptcy was closed on March 31, 2011.

The issue presently before the Court arises from environmental litigation involving the Debtor, BIW, Occidental, and other parties. Pertinently, on June 12, 2017, DVL, Inc. and DVL Kearny Holdings (collectively, "DVL") commenced litigation in the District of New Jersey against the Debtor and BIW, captioned DVL, Inc. & DVL Kearny Holdings, LLC v. Congoleum Corp. and Bath Iron Works Corp. , Case No. 17-cv-04261 (KM-JBC), 2017 WL 2604068 (the "DVL Lawsuit"). In the DVL Lawsuit—which has since been closed—DVL sought damages against the Debtor and others for over $19 million as a result of the need to remediate environmental contamination on property located in Kearny, New Jersey (the "Kearny Property") that was previously owned by the Debtor. In that proceeding, DVL asserted causes of action under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et. seq. , ("CERCLA") and the New Jersey Spill Compensation and Control Act (the "Spill Act"), as well as under New Jersey common law for public nuisance, negligence, strict liability/abnormally dangerous activity and unjust enrichment. Initially, DVL sued only the Debtor; however, the Debtor impleaded BIW as a third-party defendant on theories of successor liability, and DVL amended its complaint to include BIW as a direct defendant. In the DVL Lawsuit, BIW contended, among other arguments, that DVL's claims against BIW were barred by res judicata, because the 2010 Confirmation Order precludes liability against BIW.

Shortly after the DVL Lawsuit was filed, Occidental initiated proceedings against over 100 defendants, including BIW in a case captioned Occidental Chemical Corp. v. 21st Century Fox America, et al. , Case No. 18-cv-11273 (MCA-JAD) (the "Occidental Lawsuit"). In that action—which remains pending—Occidental seeks to recover costs that it alleges it has and will continue to incur as a result of the United States Environmental Protection Agency ("EPA") identification of Occidental as the primary responsible party for alleged migration of discharged contaminants from various defendants’ properties to a site referred to as the Lower Passaic River, requiring remediation of sediments in the river. Occidental seeks to apportion that liability among numerous parties for alleged environmental contamination. On September 24, 2019, BIW filed a third-party complaint in the Occidental Lawsuit against the Debtor. The Debtor's and BIW's successorship dispute arose just as it had in the DVL Lawsuit, with BIW and the Debtor eventually entering into a stipulation that "[r]esolution of the corporate successorship issues and claims between BIW and Congoleum in the underlying DVL Lawsuit will also resolve the corporate successorship issues and claims between BIW and Congoleum in [the Occidental Lawsuit]." ECF No. 936-1 in Case No. 18-cv-11273. The parties agreed to stay the proceedings between BIW and the Debtor in the Occidental Lawsuit pending the outcome of the DVL Lawsuit.

On July 13, 2020, Congoleum again filed for bankruptcy (the "Second Bankruptcy

636 B.R. 371

Proceeding") under Case No. 20-18488 (MBK). Shortly thereafter, on August 6, 2020, BIW filed an Adversary Complaint for Declaratory Judgment and Other Relief (Adv. Pro. No. 20-01439) (the "Adversary Proceeding") seeking a declaratory judgment from this Court with respect the meaning of the district court's Findings in Paragraph 104 of the 2010 Confirmation Order in the First Congoleum Bankruptcy. Specifically, by way of the Adversary Proceeding, BIW asked this Court to clarify that the district court's Finding in Paragraph 104—which states that BIW has "no responsibility for any of the liabilities of the Congoleum Flooring Business"—means that BIW is not a successor to the Congoleum Flooring Business and is not responsible for any liabilities of the Congoleum Flooring Business, including any environmental liabilities. Ultimately, BIW filed a motion for summary judgment ("2021 Summary Judgment Motion"), which this Court granted on April 13, 2021 ("2021 Summary Judgment Order). (ECF No. in Case No. 20-18488).1 Specifically, this Court found that the Century Sale Order sold the policies free and clear, as well as subject to a release of all past, present and future claims—both asbestos and non-asbestos—including claims of additional insureds, such as BIW....

To continue reading

Request your trial
1 practice notes
  • In re Old Carco LLC, Case No. 09-50002 (MG)
    • United States
    • United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Southern District of New York
    • 27 Enero 2022
    ...B.R. at 188, 189.Key facts distinguish Overton from the facts present here. First, New Chrysler did not ask the Alabama District Court to 636 B.R. 362 interpret whether the Sale Order barred the plaintiffs’ claims, and the Alabama District Court did not issue a ruling whether the plaintiffs......
1 cases
  • In re Old Carco LLC, Case No. 09-50002 (MG)
    • United States
    • United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Southern District of New York
    • 27 Enero 2022
    ...B.R. at 188, 189.Key facts distinguish Overton from the facts present here. First, New Chrysler did not ask the Alabama District Court to 636 B.R. 362 interpret whether the Sale Order barred the plaintiffs’ claims, and the Alabama District Court did not issue a ruling whether the plaintiffs......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT