In re Oneida Motor Freight, Inc., Bankruptcy No. 85-03606
| Decision Date | 19 October 1987 |
| Docket Number | 87-0661 and 87-0527.,Adv. No. 87-0513,Bankruptcy No. 85-03606 |
| Citation | 86 BR 344 |
| Parties | In Re ONEIDA MOTOR FREIGHT, INC., Debtor. ONEIDA MOTOR FREIGHT, INC., Debtor, and Delta Traffic Service, Inc., Plaintiffs, v. FELSWAY CORPORATION, Defendant. ONEIDA MOTOR FREIGHT, INC., Debtor, and Delta Traffic Service, Inc., Plaintiffs, v. C & A WALLCOVERINGS, INC., formerly known as Imperial Manufacturing Company, etc., Defendant. ONEIDA MOTOR FREIGHT, INC., Debtor, and Delta Traffic Service, Inc., Plaintiffs, v. The ORMOND SHOPS, INC., Defendant. |
| Court | U.S. Bankruptcy Court — District of New Jersey |
Klinger, Nicolette, Mavroudis & Honig, P.C. by Richard B. Honig, Oradell, N.J., for debtor/plaintiff, Oneida Motor Freight, Inc.
Sims, Walker & Steinfeld, P.C. by Joseph L. Steinfeld, Jr., Washington, D.C., for plaintiff, Delta Traffic Service, Inc.
Slade & Pellman by Linda Gerstel, New York City, and Bursik, Kuritsky & Giasullo by David H.E. Bursik, West Orange, N.J., for defendant, Felsway Corp.
Kalb, Friedman & Siegelbaum, Roseland, and Verner Liipfert, Bernhard, McPherson and Hand, Chartered by Mark J. Andrews, Washington, D.C., for defendant, C & A Wallcoverings, Inc.
Bendit, Weinstock & Sharbaugh by James F. Keegan, West Orange, N.J., and Moore, Berson, Lifflander, Eisenberg & Mewhinney by Larsh B. Mewhinney, New York City, for defendant, The Ormond Shops, Inc.
The above three adversary matters involve similar underlying facts. In each adversary matter the defendants have moved before this Court seeking to have the Court abstain from hearing the within adversary complaint, or in the alternative the dismissal of the complaint, or in the alternative for the entry of a stay and referral of the dispute for further hearing before the Interstate Commerce Commission. Oral argument was heard in all these cases at the same time, all defendants having mutually adopted the argument of one another.
Based upon the factual submissions put forth by the parties and based upon the argument of counsel, the Court makes the following findings:
1. On July 10, 1985, Oneida Motor Freight, Inc. ("Oneida") filed a voluntary petition for reorganization pursuant to Chapter 11 of the United States Bankruptcy Code.
2. On or about October 8, 1985, Oneida entered into an agreement with co-plaintiff, Delta Traffic Service, Inc. ("Delta") whereby Delta would collect on behalf of the debtor the then existing accounts payable of Oneida and would audit Oneida's freight bills.
3. Oneida is, and was at all times hereinafter mentioned, a corporation duly existing under the laws of the State of New York authorized to do business in the State of New Jersey.
4. Oneida was a motor common carrier operating in interstate and intrastate commerce pursuant to authority issued by the Interstate Commerce Commission (ICC) and various state regulatory agencies.
5. On October 30, 1985, the United States Bankruptcy Court for the District of New Jersey entered an order approving Oneida's retention of Delta Traffic for the purposes of auditing Oneida's freight bills within the three year period prior to July 10, 1985. The specific duties of Delta encompassed a determination as to whether or not the freight bills during the said period had been properly rated according to the tariffs filed by Oneida with the ICC and various state regulatory agencies.
6. The Court specifically finds that Oneida operated as a motor common carrier and that each of the defendants did tender freight to said carrier in the normal course of business.
7. Each defendant asserts herein that in the normal course of business at the conclusion of the delivery of the merchandise in question, Oneida submitted bills to the various defendants for the trucking services performed. For purposes of this motion the Court accepts the representation of the defendants that said initial bills were all paid in the ordinary normal course of business.
8. Oneida in the three adversary complaints before the Court seeks undercharges which it states are due to Oneida from the individual defendants based upon their failure to pay the published tariff rate for the freight services rendered:
9. Plaintiff Oneida asserts, and for the purposes of this motion the Court accepts its representation, that Oneida has filed numerous adversary complaints asserting motor carrier undercharges. Oneida asserts that one million dollars worth of said complaints are currently on file before the United States Bankruptcy Court for the District of New Jersey and that approximately three million dollars in claims are pending in other jurisdictions. Thus, Oneida asserts that it is owed a total of 4 million dollars in shipper undercharges.
10. This Court further notes that it has currently on its docket 107 adversarial complaints wherein Oneida and Delta are the plaintiffs.
11. Oneida asserts in its brief that the majority of the adversary proceedings pending in this Court wherein Oneida is the plaintiff are based on freight bills on which the statute of limitations was to expire on July 11, 1987, pursuant to the provisions of Bankruptcy Code Section 11 U.S.C. § 108. It is asserted by Oneida that all of the adversary matters were filed prior to the July 11, 1987 bar date; Oneida asserts, however, that should this Court dismiss the said complaints, the debtor Oneida herein, will be time barred from asserting its causes of action.
Both plaintiffs and defendants in their arguments as alternative relief have suggested that this Court consider a withdrawal of the reference1 of this matter pursuant to 28 U.S.C. § 157(d). This Court finds that it does not have jurisdiction to consider a motion to withdraw the general reference of this matter to the United States District Court. By the express terms of Section 157(d) as well as the Order of Reference dated July 23, 1984, it is the district court and the district court alone that may withdraw the reference of any matter pending before this Court. Interconnect Telephone Services, Inc. v. Farren, 59 B.R. 397 (Bankr.S.D.N.Y.1986). Thus, if the parties wish to pursue the issue of withdrawal of reference, a motion must be brought in the district court.
The within adversary complaints clearly state that they are seeking the collection of a pre-bankruptcy petition account receivable. Pursuant to 28 U.S.C. § 157(b)(3), this Court must exercise its discretion and determine whether adversary complaints, such as those before the Court seeking to collect on a pre-bankruptcy account receivable, constitute core proceedings or are proceedings that are otherwise related to a case under Title 11.
Justice Brennan in Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 502, 102 S.Ct. 2858, 73 L.Ed. 2d 928 (1982) held that the Bankruptcy Code granted an unconstitutional rendering of power to the bankruptcy judges inasmuch as said judges sit as Article I judges with a 14 year appointment as opposed to Article III judges who serve for life. In an attempt to rectify this situation the Congress in 1984 passed a series of amendments clarifying the jurisdiction of the bankruptcy court. Particularly 28 U.S.C. § 157 enumerates certain "core" proceedings which are expressly under the jurisdiction of the United States Bankruptcy Courts. Said core items are expressly set forth in 28 U.S.C. § 157(b)(2)(A) through (O).
There is a generally recognized split of authority as to whether the 1984 Amendments to the Bankruptcy Code have resolved the unconstitutional grant of broad jurisdiction to the bankruptcy courts as struck down in Marathon, supra. Those courts which have found bankruptcy courts as a result of the 1984 Amendments to have jurisdiction to adjudicate state law contract actions by the estate against noncreditor defendants, such as is before the Court in the within matters, include In re Arnold Print Works, Inc. v. Apkin, 61 B.R. 520 (D.Mass.1986)); vacated in part and remanded, 815 F.2d 165 (1st Cir.1987) (); In re National Equipment & Molding Corp., 64 B.R. 239 (Bankr.N.D.Ohio 1986); In re Franklin Computer Corp., 60 B.R. 795 (Bankr.E.D.Pa.1986); In re Baldwin-United Corp., 48 B.R. 49 (Bankr.Ohio 1985).
There is a second line of cases which have expressly held that a broad reading of the 1984 Amendments to the Bankruptcy Code would violate the principles laid down by the Marathon Court. Such cases include In re Acolyte Electric Corp. v. The City of New York, et al., 69 B.R. 155 (Bankr.E.D.N.Y.1986); In re Allegheny, Inc. v. Laniado Wholesale Company, 68 B.R. 183 (Bankr.W.D.Pa.1986); In re Windsor Communications Group, Inc., 67 B.R. 692 (Bankr.E.D.Pa.1986); In re Aristera, 65 B.R. 928 (Bankr.N.D.Tx.1986); In re R.I. Lithograph Corp., 60 B.R. 199 (Bankr.D.R.I.1986); Matter of Century Brass Products, Inc., 58 B.R. 838 (Bankr. D.Conn.1986); In re Satelco, Inc., 58 B.R. 781 (Bankr.N.D.Tx.1986).2
This Court finds that prepetition account receivable collections are merely "related to" a Title 11 bankruptcy case and that the 1984 Amendments passed by Congress were not intended to give this Court a jurisdiction over said matters. It must be remembered that the Marathon case, supra, involved the collection of a prepetition account receivable matter. Nothing in the 1984 Amendments directly addresses the gravamen of the constitutional issue framed by Justice Brennan in Marathon in striking down the Bankruptcy Reform Act of 1978 insofar as it granted overly broad jurisdiction to the bankruptcy judges.
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