In re Maislin Industries, US, Inc.
| Decision Date | 31 July 1985 |
| Docket Number | 83-03165-R to 83-03167-R,Bankruptcy No. 83-03161-R to 83-03163-R,85-0120-R.,Adv. No. 85-0091-R |
| Citation | 50 BR 943 |
| Parties | In re MAISLIN INDUSTRIES, U.S., INC., Gateway Transportation Co., Inc., Quinn Freight Lines, Inc., Richmond Cartage Corp., Mi Acquisition Corporation, Maislin Transport of Delaware, Inc., Debtors. MAISLIN INDUSTRIES, U.S., INC., et al., Plaintiffs, v. C J VAN HOUTEN E ZOON INC., Defendant. MAISLIN INDUSTRIES, U.S., INC., et al., Plaintiff, v. QUEMETCO INCORPORATED, DIV R.S.R. CORPORATION, Defendant. |
| Court | U.S. Bankruptcy Court — Eastern District of Michigan |
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Steven F. Alexsy, Detroit, Mich., David G. Sperry and Louis J. Wade, Kansas City, Mo., for Maislin Industries, et al.
John W. Bryant, Kevin N. Summer, Detroit, Mich., and Nathaniel H. Yohalem, Woodbridge, N.J., for C J Van Houten E Zoon, Inc.
Robert D. Schuler, Bloomfield Hills, Mich., and Thomas L. Cook, Dallas, Tex., for Quemetco Inc., div R.S.R. Corp.
RECOMMENDATIONS REGARDING WITHDRAWAL AND DETERMINATION OF CORE STATUS
On July 11, 1983, the debtors (collectively referred to as "Maislin") filed petitions for reorganization pursuant to Chapter 11 of the Bankruptcy Code, 11 U.S.C. § 1101, et seq. Prior thereto, Maislin was engaged in the interstate and international transportation of freight, subject to the jurisdiction of the Interstate Commerce Commission. 49 U.S.C. § 10501 et seq. After filing, Maislin caused Carrier Credit & Collection, Inc. (CCC) to audit its pre-petition freight charges to determine whether Maislin's customers had paid the lawful rates published in its tariffs. 49 U.S.C. § 10701, et seq. CCC concluded that in the three years prior to July 11, 1983, C J Van Houten E Zoon Inc. had underpaid by $318,065.90 and that Quemetco Incorporated had underpaid by $150,848.28. Thus, Maislin filed these separate adversary proceedings to collect these underpayments.
In response, Van Houten filed a motion to withdraw pursuant to 28 U.S.C. § 157(d) or for a determination that the proceeding is not a core proceeding under 28 U.S.C. § 157(b). Quemetco filed a motion to dismiss in which it alternatively requested withdrawal pursuant to 28 U.S.C. § 157(d). Maislin opposes withdrawal in both cases.
Local Rule 33b. of the United States District Court for the Eastern District of Michigan requires the Bankruptcy Judge to make a recommendation concerning these motions.1 These recommendations were joined because they involve the identical legal issue. Also, their joint consideration illustrates a crucial distinction which dictates that only one of the two cases should be withdrawn. Specifically it is recommended that Quemetco's motion be granted and that Van Houten's motion be denied.
28 U.S.C. § 157(d) provides in pertinent part:
The district court shall, on timely motion of a party, so withdraw a proceeding if the court determines that resolution of the proceeding requires consideration of both title 11 and other laws of the United States regulating organizations or activities affecting interstate commerce.
1. Van Houten contends that withdrawal of the reference of its adversary proceedings is required because resolution of Maislin's claim against it requires extensive consideration of the laws of the United States regulating organizations or activities affecting interstate commerce.
Noting that Congress enacted § 157(d) to address concerns raised by the Supreme Court in Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982), Van Houten contends that this provision reflects Congress's intent that litigation concerning complex issues of federal law should be considered in their entirety by district courts with greater expertise in such areas.
Van Houten further contends that the interstate and international trucking industry, which is the subject of this proceeding, is subject to pervasive federal regulation and is governed by a significant body of federal law. Citing the legislative history of the mandatory withdrawal provision, Van Houten concludes that there would appear to be few industries with any greater potential for meeting the Senate's test of "immediately and directly" affecting interstate commerce. Therefore, Van Houten asserts that litigation concerning the trucking industry is precisely the type of proceeding which is required to be resolved exclusively by district courts under § 157(d).
Van Houten further contends that the fact that the plaintiffs are bankrupt entities satisfies the requirement of § 157(d) that withdrawal is mandatory only if resolution of the proceeding requires consideration of both Title 11 and federal interstate commerce laws. Van Houten maintains that consideration of some Title 11 issues is involved in any proceeding which is alleged to fall within the jurisdiction of the bankruptcy court pursuant to 28 U.S.C. § 1334.
2. Quemetco contends that the reference of its adversary proceeding must be withdrawn because resolution thereof requires consideration of both Title 11 and federal interstate commerce laws. Specifically, Quemetco contends that the case involves consideration of Title 11 issues because it has raised the defense of "extinguishment." Quemetco argues that Congress provided in 49 U.S.C. § 11706 that a common carrier providing transportation or service subject to the jurisdiction of the Interstate Commerce Commission must commence a civil action for recovery of transportation charges within three years after the claim accrues. Quemetco maintains that at the end of this period, the right to recover is not merely barred, but extinguished. Quemetco contends that a claim related to a shipment of property accrues on delivery or tender of delivery by the carrier, and that those freight bills for which the plaintiff seeks to collect which were delivered prior to January 23, 1982, which was three years before this adversary proceeding was commenced, have been extinguished. Axinn & Sons Lumber Co., Inc. v. Long Island Rail Road Company, 466 F.Supp. 993 (E.D.N.Y.1978), reh'g denied in part, 518 F.Supp. 733 (E.D.N.Y.1978).
Quemetco contends that consideration of the Bankruptcy Code is required in light of Maislin's contention that 11 U.S.C. § 108 tolls the statutory period set forth in the Interstate Commerce Act.
3. Alternatively, the defendants have requested a determination that these proceedings are not core proceedings under 28 U.S.C. § 157(b)(3). The defendants contend that an action to collect accounts receivable is not a core proceeding, and that to construe such action to recover on a claimed contractual obligation as an action to turn over property of the estate or liquidate an asset of the estate would be contrary to the Supreme Court's holding in Northern Pipeline. In re Atlas Automation, Inc., 42 B.R. 246 (Bkrptcy.E.D.Mich.1984).
Maislin contends that withdrawal of the reference to the bankruptcy court is not required because the issues presented by these adversary proceedings are clear, and do not require interpretation of federal interstate commerce statutes. In this regard, Maislin contends that settled law imposes an absolute duty on the defendants to pay the lawful joint rates and charges contained in tariffs lawfully on file with the Interstate Commerce Commission. Louisville & Nashville Railroad Co. v. Maxwell, 237 U.S. 94 (1915).
Maislin contends that an action to collect freight bills owing the estate is a "turnover action" and thus a core proceeding under 28 U.S.C. § 157(b)(2)(E). Calhoun, Trustee v. Copeland Corp., 51 B.R. 633 (Bkrptcy.W.D.Tenn.1985). Maislin distinguishes In re Atlas Automation, Inc., supra, on the grounds that the debts against Van Houten and Quemetco have matured, and the defendants are liable for the full amount of the tariff. Alternatively, Maislin contends that these cases can be categorized as proceedings "affecting the liquidation of assets of the estate" within the meaning of § 157(b)(2)(O).
With regard to policy considerations, Maislin contends that proceedings to bring accounts receivable into the estate are crucial to bankruptcy's prime objective of getting creditors paid. Grayson-Robinson Stores, Inc. v. Securities & Exchange Commission, 320 F.2d 940 (2nd Cir.1963). Further, Maislin contends that referring such matters to crowded District Court calendars or to the even greater backlogged state court system would greatly impair, if not defeat, the goals of rehabilitation and payment of creditors.
The Court concludes that 28 U.S.C. § 157(d) does not require withdrawal of the reference when resolution of the proceeding requires consideration of only federal interstate commerce laws, or only the Bankruptcy Code; withdrawal is required only when resolution of the proceeding requires substantial consideration of both. This view of Section 157(d) finds overwhelming support in the statutory language and in the case law.
The statutory language is explicit in mandating withdrawal only when consideration of both laws is required. If Congress had intended to mandate withdrawal in every proceeding that involves consideration of the interstate commerce laws, it certainly could have so provided by omitting any reference to Title 11. Nevertheless the reference to Title 11 was included and must be given meaning.
In In re Baldwin-United Corporation, 47 B.R. 898, 899 (S.D.Ohio 1984), the court emphasized:
In order to come within the ambit of this provision of § 157(d), a movant must establish three predicates: First, the movant must be a party. Second, the motion must be timely. Third, resolution of the proceeding before the Bankruptcy Court must require consideration of both Title 11 and other laws of the United States regulating organizations or activities affecting interstate commerce. Emphasis in...
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