In re Pettibone Corp.
| Decision Date | 26 August 1988 |
| Docket Number | Adv. No. 87 A 0243.,Bankruptcy No. 86 B 1563 |
| Citation | 90 BR 918 |
| Parties | In re PETTIBONE CORPORATION, et al., Debtors. PETTIBONE CORPORATION, Debtor-in-Possession, Plaintiff, v. Edwin R. RAMIREZ, Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
James L. Nachman, Winston & Strawn, Chicago, Ill., for plaintiff.
Duncan G. Harris, Schiff, Hardin & Waite, Chicago, Ill., for defendant.
The Plaintiff Debtor Pettibone Corporation ("Pettibone") manufactured and sold certain equipment before filing its related petition for relief under Chapter 11. Defendant Edwin R. Ramirez ("Ramirez") was injured in an accident involving that equipment after the bankruptcy proceeding was filed. He sued in the District Court of New Mexico to recover damages ("Civil Action").
Count I of Pettibone's Amended Complaint in this Adversary case seeks an injunctive order requiring that Ramirez cease prosecution of his pending Civil Action against Pettibone. Pettibone maintains that the filing and prosecution of the Civil Action violates the automatic stay under § 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a). The order sought is intended to implement the automatic stay.
Count II seeks a new injunction to bar the Civil Action, based on asserted expense and other harm alleged to be irreparable if the Civil Action must be defended.
Count III seeks a declaration that any judgment or settlement as may be rendered in favor of Ramirez in the Civil Action be deemed a mere general unsecured claim that arose before commencement of the Chapter 11 case.
Ramirez filed affirmative defenses1 and a counterclaim for declaration that his claim is post petition, is not barred by the stay, and can proceed in the New Mexico court.
The parties cross-moved for summary judgment on Counts I and III of the Amended Complaint. Ramirez also moved for summary judgment on his Counter-Claim. He contends that the filing and prosecution of the Civil Action did not violate the stay, and that his claim arose after the commencement of this case. Ramirez also argues that his claim is an administrative expense under § 503(b), and that proper venue for the Civil Action is the United States District Court for the District of New Mexico.
By agreement of the parties, the Civil Action has been stayed pending this Court's ruling on these cross-motions.
The parties have not questioned that this Court has at least related jurisdiction under 28 U.S.C. § 157(c)(1), and the parties have through their cross motions consented to entry of final judgment by this Court under § 157(c)(2). Moreover, this Court finds that it has core jurisdiction under 28 U.S.C. § 157(b)(2)(A), (B), (G) and (I). The uncontested facts are set forth in the pleadings of the parties and in their filings under Local District Rule 12(e) and (f) and supporting affidavits and other materials filed.
For reasons set forth below, summary judgment is by separate order entered in favor of Ramirez and against Pettibone on Count I of the Complaint, and on Ramirez's counterclaim. The cross motions for summary judgment on Count III are denied.
By separate order, Counts II and III are set for report of status at which the Court will set dates for discovery cut-off and Pretrial conference and trial as to Count II only. For reasons stated in the opinion, Count III will be held in abeyance pending resolution of the Ramirez State Court suit.
On or about December 11, 1985 Pettibone completed manufacture of a certain forklift truck (the "Forklift"). On December 11, 1985, Pettibone conducted a final test of that unit. The Forklift was manufactured pursuant to a Contract between the Department of the Air Force and Pettibone. On December 16, 1985, the Department of the Air Force accepted the Forklift and shipped it to Kirkland AFB, New Mexico.
On January 31, 1986, Pettibone filed a voluntary petition for reorganization under Chapter 11 of the Code. Since that date Pettibone has continued in possession of its property and has operated its businesses as a Debtor-In-Possession, pursuant to 11 U.S.C. §§ 1107 and 1108.
Ramirez was hired by the Department of the Air Force on February 18, 1986 to, among other things, operate forklift trucks at Kirkland AFB, New Mexico. On March 4, 1986, Ramirez sustained serious injuries when the Forklift overturned while Ramirez was operating it at that location.
On July 23, 1986, Ramirez filed suit in the United States District Court for the District of New Mexico, captioned Edwin R. Ramirez v. Pettibone Corp. Inc., doing business through its wholly owned subsidiary Pettibone-Mercury, Inc. ("Civil Action"). .
In his Civil Action, Ramirez alleges that he was injured as a result of negligent design and manufacture of the Forklift by Pettibone. He also alleges that Pettibone failed up to the date of accident to warn him of the Forklift's propensity to over-turn, and failed to instruct him in a safe manner for operating it. Ramirez also alleges that Pettibone is liable to him for damages under a theory of strict liability. Thus, the alleged wrongful acts of negligent design and manufacture occurred pre-petition, while the alleged breach of duty to warn and instruct occurred post petition after Ramirez started using the Forklift truck.
There are ten other civil actions pending against Pettibone which involved accidents occurring after the commencement of the related bankruptcy case. Those cases allegedly all involved equipment manufactured before the petition was filed under Chapter 11, though the facts involving those actions are not yet before this Court. Pettibone is without product liability insurance for the defense of or indemnification against claims arising from any incident occurring from and after October 22, 1985 through July 31, 1987. Thus, the Ramirez Civil Action and the other post-petition accidents referred to are not covered by insurance.
While the parties have objected on relevancy grounds to certain of the foregoing facts, those facts have not been contradicted by opposing affidavits or other materials as required under F.R.Civ.P. 56(e) or Local District Rule 12(f) that has been adopted by and for the Bankruptcy Court. Therefore, they are deemed admitted for purposes of this decision.
Under Rule 56(c) F.R.Civ.P., summary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with any affidavits showing that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2509, 91 L.Ed.2d 202 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986); Howland v. Kilquist, 833 F.2d 639, 642 (7th Cir.1987); Farries v. Stanadyne/Chicago Div., 832 F.2d 374, 378 (7th Cir.1987); Cameron v. Frances Slocum Bank & Trust Co., 824 F.2d 570, 573 (7th Cir.1987); Valley Liquors, Inc. v. Renfield Importers, Ltd., 822 F.2d 656, 659 (7th Cir.), cert. denied, ___ U.S. ___, 108 S.Ct. 488, 98 L.Ed.2d 486 (1987).
The primary purpose for granting a summary judgment motion is to avoid unnecessary trials when there is no genuine issue of material fact in dispute. Farries, 832 F.2d at 379; Wainwright Bank & Trust Co. v. Railroadmens Fed. Sav. & Loan Ass'n of Indianapolis, 806 F.2d 146, 149 (7th Cir.1986). On a summary judgment motion, the inferences to be drawn from the underlying facts must be viewed in the light most favorable to the party opposing the motion. Anderson, 477 U.S. at 255, 106 S.Ct. at 2513-14; Matsushita, 475 U.S. at 586, 106 S.Ct. at 1356; Howland, 833 F.2d at 642; Marine Bank Nat'l Ass'n v. Meat Counter, Inc., 826 F.2d 1577, 1579 (7th Cir.1987); Valley Liquors, 822 F.2d at 659; DeValk Lincoln Mercury, Inc. v. Ford Motor Co., 811 F.2d 326, 329 (7th Cir.1987). Moreover, the existence of a material factual dispute is sufficient only if the disputed fact is determinative of the outcome under applicable law. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510; Howland, 833 F.2d at 642; Egger v. Phillips, 710 F.2d 292, 296 (7th Cir.) (en banc), cert. denied, 464 U.S. 918, 104 S.Ct. 284, 78 L.Ed.2d 262 (1983); ITT Indus. Credit Co. v. D.S. America, Inc., 674 F.Supp. 1330, 1331 (N.D.Ill.1987).
The standard for granting summary judgment mirrors the standard for a directed verdict under Federal Rule of Civil Procedure 50(a). Celotex, 477 U.S. at 323, 106 S.Ct. at 2553; Anderson, 477 U.S. at 250, 106 S.Ct. at 2511; Barry Gilberg, Ltd. v. Craftex Corp. 665 F.Supp. 585, 589 (N.D. Ill.1987). The primary difference between the two motions is procedural; summary judgment motions are usually made before trial and decided on documentary evidence, while directed verdict motions are made at trial and decided on evidence that has been admitted. Anderson, 477 U.S. at 251, 106 S.Ct. at 2511-12. In essence, however, the inquiry under each is the same: whether the evidence presents a sufficient disagreement to require trial or whether one party must prevail as a matter of law. Id. at 251-52, 106 S.Ct. at 2511-12. In determining whether the evidence is sufficient, the Court must consider the substantive evidentiary standard that could be applicable at trials (whether preponderance of evidence, clear and convincing, or other). Valley Liquors, 822 F.2d at 659.
Of course, a party seeking summary judgment always bears the initial responsibility of informing the...
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