In re National Gypsum Co.
| Decision Date | 12 February 1992 |
| Docket Number | BK390-37213-SAF-11.,Bankruptcy No. BK390-37214-SAF-11,Civ. A. No. 3-91-1653-H |
| Citation | 139 BR 397 |
| Parties | In re NATIONAL GYPSUM COMPANY, a Delaware Corporation, Aancor Holdings, Inc., a Delaware Corporation. |
| Court | U.S. District Court — Northern District of Texas |
COPYRIGHT MATERIAL OMITTED
Marvin Collins, U.S. Atty., Rebecca Gregory, Asst. U.S. Atty., Dallas, Tex., David L. Dain, U.S. Dept. of Justice, Environment & Natural Resources Div., John Wheeler, Enforcement LE-134S, U.S.E.P.A., Anna Wolgast, Jeffery K. Gordon, Peter E. Jaffe, U.S. Dept. of Justice, Washington, D.C., for E.P.A., plaintiff.
David L. Dain, U.S. Dept. of Justice, Enviroment & Natural Resources Div., Carolyn Dibona, Office of the Sol., Dept. of the Interior, Washington, D.C., for U.S. Dept. of Interior, plaintiff.
Boe W. Martin, Keith W. Harvey, Johnson & Gibbs, Dallas, Tex., James W. Moorman, David F. Williams, Cadwalader Wichersham & Taft, Washington, D.C., Rebeca O. Beasley, National Gypsum Co., Dallas, Tex., for National Gypsum Co., defendant.
Barbara J. Houser, Leonard M. Parkins, Anne Marie Ferazzi, Sheinfeld Maley & Kay, Dallas, Tex., for Official Committee of Asbestos Claimants of Nat. Gypsum, movant.
There are before the Court two sets of motions that will be considered jointly. The first set of motions consists of:
The second set of motions consists of:
National Gypsum Co. ("Gypsum"), along with its parent corporation, Aancor Holding Inc., (collectively "Debtors"), filed a voluntary petition for bankruptcy on October 28, 1990 under Chapter 11 of the Bankruptcy Code, 11 U.S.C. § 101 et seq. ("Code"). Since the petition date, Debtors have operated their businesses as debtors in possession pursuant to Sections 1107 and 1108 of the Code.
On May 29, 1991 the United States filed its Proof of Claim ("Proof of Claim") on behalf of the Environmental Protection Agency ("EPA") and the Department of Interior ("DOI"). Pursuant to CERCLA,1 the United States' Proof of Claim lists seven sites nationwide at which it alleges the Debtors generated or disposed of hazardous substances ("Listed Sites"). In addition, the United States reserves its right to assert that the Debtors are liable under CERCLA with respect to at least thirteen unlisted sites based on pre-petition conduct ("Unlisted Sites"). For a detailed discussion of the Proof of Claim, and United States' Listed and Unlisted Sites, refer to Section III, infra.
On August 2, 1991 the Debtors filed with the bankruptcy court an Objection to the Proof of Claim, a Motion to Estimate the United States' Claim and a Motion to Classify the United States' Claim. Debtors' motions raised a number of significant legal issues regarding the intersection of the Code and CERCLA.
On August 16, 1991 the United States filed a Motion for Withdrawal of Reference. On September 13, 1991 this Court granted the United States' Motion, withdrawing from bankruptcy court all matters pertaining to the Proof of Claim, and all Debtors' responses to such claim. See September 13, 1991 Memorandum Opinion and Order. 134 B.R. 188. The Court found that disposition of the Proof of Claim implicated the category of cases that requires substantial and material consideration of non-bankruptcy federal statutes, and warrants mandatory withdrawal of reference pursuant to 28 U.S.C. § 157(d). See id.
Once reference was withdrawn, the United States and the Debtors agreed on a schedule for the briefing of significant and controlling legal issues raised by the Proof of Claim, and more specifically, by the interaction of the Code and CERCLA. These legal issues are embodied in the two sets of motions before the Court: The United States' Motion for Legal Determination of Issues Raised in the Debtors' Objection, Motions and/or Counterclaims, and the Debtors' Motion for Summary Judgment Concerning Discharge of any Environmental Liability for Sites not Listed in the United States' Proof of Claim.
Beyond setting a schedule for the briefing of the two sets of motions, the parties were unable to agree on a stipulated schedule for discovery and trial. As a result, on October 15 and 18, 1991 the United States and the Debtors filed, respectively, two separate proposed scheduling orders. The proposed scheduling orders placed before the Court for determination the order in which estimation and determination of liability of the United States claims' should be addressed.
On November 12, 1991 the Court granted Debtors' request for bifurcation of the proceedings into an estimation phase which precedes the liability phase; however, estimation of the Proof of Claim would occur no earlier than the disposition of the two sets of scheduled motions. See November 12, 1991 Memorandum Opinion and Order. The Court found that in view of the Court's mandatory withdrawal of reference, and in order to facilitate the administration of the bankruptcy proceedings, there existed no reason to depart in a case involving CERCLA from the well-established bankruptcy practice and policy favoring estimation of unliquidated claims prior to determination of liability. See id. At that time, the Court found that a potentially large portion of the United States' Proof of Claim was unliquidated. See id. at 5. The Court has not yet adopted a trial and discovery schedule.
The two sets of pleading raise the following controlling questions of law:
The United States argues that future response costs and future natural resource damage costs at the Listed Sites are not claims subject to discharge; Debtors' liabilities at Unlisted Sites are not dischargeable claims; response costs incurred post bankruptcy at property owned by Debtors are entitled to administrative priority; and liability of Debtors for CERCLA claims is joint and several. The United States, however, contests the Court's jurisdiction to address Debtors' liability at the Unlisted Sites.
The Debtors argue, in contrast, that Debtors' potential liability for any future response costs or future natural resource damages at the Listed Sites constitute prepetition claims subject to discharge; Debtors' environmental liabilities for the Unlisted Sites arising from pre-petition conduct are claims; response costs incurred post bankruptcy at property owned by the Debtors are general unsecured claims; and the Proof of Claim should be fixed at an amount reflecting Debtors' equitable share of liability. In addition, Debtors maintain that the Court has subject matter jurisdiction to address Debtors' liability at the Unlisted Sites.
Upon filing for bankruptcy, the Debtors alerted the United States that they may be liable for recovery of cleanup costs at a number of Superfund sites. After preliminary investigation of the Debtors' potential responsibility for hazardous waste clean up, the United States, needing more time to complete its investigations, requested an extension in the bar date set by the bankruptcy court2. The Debtors and the United States identified over twenty sites at which there existed a potential for liability on the part of the Debtors.
By the extended bar date, May 29, 1991, the United States determined to file its Proof of Claim for Debtors' pre-petition conduct at only seven Superfund sites ("Listed Sites"). The United States, however, reserves its right to assert that the Debtors are liable under CERCLA with respect to at least thirteen unlisted sites based on pre-petition conduct ("Unlisted Sites").
The United States Proof of Claim lists seven sites, all of which are on EPA's "National Priorities List4" ("NPL") of sites targeted for Superfund response. The Proof of Claim involves Debtors' liability on primarily three grounds: past...
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