In re Metro Transp. Co.
| Decision Date | 29 September 1986 |
| Docket Number | Adv. No. 86-0945K.,Bankruptcy No. 86-03618K |
| Citation | 64 BR 968 |
| Parties | In re METRO TRANSPORTATION COMPANY t/a Yellow Cab Company, Debtor. PENNSYLVANIA PUBLIC UTILITY COMMISSION, Plaintiff and Defendant on Counterclaim, v. METRO TRANSPORTATION COMPANY t/a Yellow Cab Company, Defendant and Plaintiff on Counterclaim. |
| Court | U.S. Bankruptcy Court — Eastern District of Pennsylvania |
Alan Kohler, Debra Paist, Asst. Counsel, Pennsylvania Public Utility Com'n, Michael C. Schnierle, Deputy Chief Counsel, for Prosecutory Staff of the PUC, Harrisburg, Pa., Karen Oill Moury, Asst. Counsel, for Public Utility Com'n.
John S. Estey, David H. Marion, Marvin Krasny, Douglas H. Weiss, Philadelphia, Pa., for debtor.
Mary F. Walrath, Philadelphia, Pa., for Official Creditors' Committee.
1. On January 26, 1982, the Pennsylvania Public Utility Commission (PUC) entered an order issuing eight hundred (800) call or demand certificates of public convenience to Metro Transportation Co., t/a Yellow Cab Co., the Debtor in this proceeding, authorizing the operation of eight hundred (800) taxi-cabs in the city of Philadelphia.
2. The Debtor, on account of the issuance of the aforesaid certificates, operates or have the authority to operate, approximately half of the taxicabs serving the city of Philadelphia at this time.
3. On September 30, 1985, Balboa Insurance Company (hereinafter "Balboa") filed with the PUC a certificate of insurance on the Debtor's behalf, effective October 1, 1985, evidencing that it was renewing insurance coverage to the Debtor which met the insurance requirements of the law of the Commonwealth.
4. On October 12, 1985, the Debtor filed a self-insurance application requesting the PUC to review and approve the self-insurance components of the Debtor's insurance plan under the Balboa policy.
5. On July 2, 1986, the PUC received a notice of cancellation of insurance, which advised that Balboa's insurance coverage issued to the Debtor would be cancelled, effective August 1, 1986.
6. On July 29, 1986, the Debtor filed the instant bankruptcy case seeking reorganization under Chapter 11 of the Bankruptcy Code, principally to attempt to resolve the crisis which would result if Balboa's insurance were cancelled on August 1, 1986.
7. On July 29, 1986, this Court, per Chief Judge Emil F. Goldhaber, issued a Temporary Restraining Order requiring Balboa to continue its insurance coverage of the Debtor through August 6, 1986, and, on August 6, 1986, Judge Goldhaber of this Court issued an Order adopting the Stipulation of the Debtor and Balboa which required Balboa to continue insurance coverage until October 1, 1986, and prohibited the Debtor from filing a complaint for injunctive relief requesting this Court to continue Balboa's insurance coverage after October 1, 1986.
8. On August 12, 1986, the PUC filed the Complaint for Declaratory Order in the instant case, and the matter was scheduled for a hearing on October 8, 1986.
9. On August 4, 1986, the Debtor amended its October 12, 1985, self-insurance application so as to request the PUC to review and approve a revised self-insurance plan, contemplating no participation by a qualified insurance company. Hearings on this Application were scheduled before PUC Administrative Law Judge (ALJ) Herbert Smolen.
10. On August 6, 1986, the Debtor filed a proposed increase in its shared-ride tariff, which the PUC has suspended, pending investigation. On August 18, 1986, the Debtor also filed a Petition for Immediate Rate Relief, seeking a twenty-five cent (25¢) increase in its metered cab-ride rates, upon which the PUC has also rendered no ruling.
11. After a pre-hearing conference before ALJ Smolen on August 11, 1986, Counsel for the Debtor and the PUC prepared and executed, on August 25, 1986, a Settlement Agreement, a copy of which is attached as Appendix "A" to the Order accompanying this Opinion. That Agreement states, inter alia, that "the parties have agreed, . . . that the plan of self-insurance described in this Agreement provides adequate protection to the public, . . ." and that the only issue to be decided by ALJ Smolen was whether the Debtor "has put forth adequate evidence of its financial capacity to fund the plan on an ongoing basis, . . ." (emphasis added).
12. After a hearing on August 25, 1986, before him, ALJ Smolen, on September 12, 1986, issued an Initial Decision recommending that the PUC deny the Debtor's Application, principally because of his finding that "the proposed self-insurance program, as submitted, does not adequately protect the interests of Metro's patrons and/or the general public." The Application was listed for disposition by the PUC on the ALJ's recommendation on September 25, 1986.
13. On September 19, 1986, both the PUC and the Debtor requested that this Court expedite the October 8, 1986, hearing on the Complaint previously filed in this matter, and the Debtor, for the first time, asserted and filed its Counter-Claim, requesting declaratory and injunctive relief. In response, the Court scheduled and conducted a hearing on September 24, 1986.
14. On September 25, 1986, the PUC entered an Order accepting the ALJ's recommendation to deny the Debtor's Application for self-insurance, adopting a revised Motion by PUC Chairman Linda C. Taliaferro stating that "Metro has not submitted sufficient evidence to establish that its proposed plan will adequately protect the travelling public or that it could fund it."
15. The Motion of Chairman Taliaferro did allow that cab drivers "participating in Metro's Installment Settlement Agreement adopted July 29, 1986" could temporarily operate for a 90-day period, provided that they file evidence of required insurance before operating.
16. This Installment Settlement Agreement, which the PUC has asked this Court to approve in a separate adversarial proceeding, Adversary No. 86-0946K, pertains to holders of approximately two hundred (200) of the Debtor's eight hundred (800) certificates. There is no evidence as to whether the cab driver participants in the Installment Settlement Agreement have or could obtain insurance, and the Court finds that most, if not all, would be unable to do so.
17. Denial of relief to the Debtor would, in all likelihood, cause the Debtor to cease doing business and result in a liquidation process in which the Debtor would attempt to sell its eight hundred (800) certificates in market conditions which the Court finds are very poor, due to the crisis which exists in obtaining insurance for taxi-cabs.
18. The Official Creditors' Committee in these proceedings has urged that the PUC and this Court allow the Debtor to continue to operate under the self-insurance program embodied in the Settlement Agreement of August 25, 1986.
19. Denial of the relief sought by the Debtor would greatly adversely affect creditors' interests, as it would not only threaten, but almost assure, significant loss to the assets of the Debtor's estate.
20. If the Debtor discontinues doing business, most, if not all, of approximately one thousand two hundred and fifty (1,250) drivers of Yellow Cab taxi-cabs would be out of work, plus approximately two hundred and fifty (250) other employees of the Debtor as mechanics, dispatchers, and office and administrative employees of the Debtor would lose their jobs as well.
21. The supply of public transportation in the city of Philadelphia, diminution of which is also threatened by financial difficulties of the Southeastern Pennsylvania Transportation Authority (SEPTA), would be significantly reduced by the loss of about half of the present fleet of available taxi-cabs, if relief were denied to the Debtor.
22. The stipulation of PUC staff in the Settlement Agreement of August 25, 1986, that the Debtor's self-insurance plan provides adequate protection to the public suggests that there is some question as to whether the interests of future claimants against the Debtor will not in fact be adequately protected if the Debtor is permitted to operate under the plan set forth in the Agreement, provided that its financial ability to comply with the terms of the Agreement is carefully monitored by the PUC and this Court, and it is allowed to continue to do business only so long as it complies therewith.
23. Balancing the several public interests in issue, the public interest on the whole would best be served by granting the relief sought by the Debtor.
1. As the parties agree, this Court has jurisdiction in this proceeding per 11 U.S.C. § 105(a), 28 U.S.C. § 157(b)(2)(A), 28 U.S.C. § 1334(a), and Bankruptcy Rule 7001(9).
2. While the PUC is hereafter not subject to the automatic stay provided in 11 U.S.C. § 362(a) due to the fact that its Complaint in this action may be construed as an action seeking relief from any such stay, this Court has the power to impose relief in the nature of a stay of any actions, including those of governmental bodies, which threaten the assets of the debtor's estate, pursuant to 11 U.S.C. § 105(a).
3. Although a bankruptcy court should utilize its powers under 11 U.S.C. § 105(a) sparingly, such powers are properly exercised in this case, subject to the conditions set forth in the Settlement Agreement which will minimize the risk to the public found by the PUC in its decision-making process.
4. The Debtor, as well as the creditors of the Debtor and the public, would suffer immediate and irreparable harm if the relief sought herein were denied, and therefore, an injunction, as requested by the Debtor in its Counterclaim, must be issued pursuant to Bankruptcy Rule 7065 and Federal Rule of Civil Procedure 65(d).
This case presents a balancing of powers between a state regulatory agency and a federal bankruptcy court. Such disposition is clearly not, as has been suggested to us by a layman, a matter of whether a federal...
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