In re Professional Sales Corp., Bankruptcy No. 82 B 6226
| Decision Date | 26 April 1985 |
| Docket Number | Adv. No. 84 A 549.,Bankruptcy No. 82 B 6226 |
| Citation | 48 BR 651 |
| Parties | In re PROFESSIONAL SALES CORPORATION, d/b/a Professional Construction Company, and Illinois Crane and Erection Company, Debtors. PROFESSIONAL SALES CORPORATION, Plaintiffs, v. UNITED STATES of America, et al., Defendants. |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
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John H. Redfield, Chicago, Ill., Trustee.
Elizabeth Stein, Asst. U.S. Atty., Chicago, Ill., for defendants.
This case comes to be heard on the motion of Professional Sales Corporation ("PSC") to reinstate a temporary restraining order ("TRO") previously issued by this court against the Environmental Protection Agency of the United States ("EPA"). P.S.C. also requests that this court set a hearing date to consider its motion for a preliminary injunction. The EPA has made a motion to dismiss and to strike the hearing date.1 The threshold question is whether this court has the requisite subject matter jurisdiction to grant PSC's motion. The EPA contends that the court does not have jurisdiction because of the doctrine of sovereign immunity, and on other grounds. Because this court finds that it does possess the necessary jurisdiction, it must next determine whether a temporary restraining order should be entered and a hearing date set.
II.
PSC is in the business of constructing and maintaining industrial and commercial buildings. On January 18, 1983, after protracted litigation, PSC acquired title to a piece of property located at 2200 East 119th Street, Chicago, Illinois, pursuant to a mechanic's lien foreclosure suit. Professional Construction Co. et al. v. Harris Trust & Savings, 77 CH 8552. At the time PSC acquired title, the property was being operated as a hazardous waste site by Cal Harbor Development Corporation and Alburn, Inc., ("Cal Harbor") the judgment debtors, pursuant to an interim status authorization permitted by the EPA.2
PSC has never operated the site for hazardous waste disposal. However, before PSC acquired the property, the Cal Harbor management had a history of violating EPA standards.3 PSC inherited these problems. In addition, Cal Harbor had never completed its application to the EPA in order to convert its interim status into a semi-permanent permit.4 PSC, therefore, also inherited this obligation.
In February of 1983, shortly after PSC acquired title, it caused the interim status permit of the site to be transferred from Cal Harbor to PSC. Representatives of PSC also began discussions with the EPA regarding the granting of an extension in the time which PSC had to complete the application and to clean up the site so that it would comport with EPA standards. Extensions were granted by the EPA, but before PSC complied with the EPA requirements, it filed for relief under Chapter 11 of the Bankruptcy Code on May 18, 1983.
Although the EPA and PSC continued their communications after the filing, PSC was unable to conduct the clean-up or complete the permit application due to its ailing financial condition. Further complications arose when two drums on the site exploded on July 5, 1983, thereby demonstrating the potential dangerousness of the site. In view of this explosion, the results of previous inspections, and PSC's apparent financial inability to rectify the situation, the EPA conducted a superfund removal of hazardous wastes at the site. The removal lasted from approximately July 8, 1983 to October 31, 1983, and involved substantial expenditures of manpower and money. The superfund clean-up also entailed destruction of approximately two million dollars worth of incineration equipment and real estate improvements owned by PSC.
As a result of this superfund clean-up, the property is in a substantially safer condition. Though some toxic wastes remain, the site is in a benign state. Since PSC is not conducting operations on the property, there is little threat of recurrence of the sort of dangers which previously plagued the site. The fact that the site is located in a heavily industrialized part of the city, and is totally surrounded by land fill and dumping grounds, further insures its present safety.
In September of 1983, the EPA gave PSC notice of its tenative decision to terminate the site's interim status, because PSC had failed to timely submit "Part B" of its permit application, and on other grounds. The EPA also gave public notice of its intent to terminate. On January 4, 1984, the EPA held a public hearing regarding its intent to terminate the interim status of the site which PSC owns. On April 12, 1984, the EPA made a final decision to terminate.
On May 10, 1984 PSC brought the present adversary action against the EPA, seeking to enjoin the EPA from revoking PSC's interim status on the basis that the EPA's proposed action would substantially and adversely affect the value of the largest asset of the estate. The EPA contested the action primarily by attacking this court's jurisdiction. Because this court believed that PSC had demonstrated proper grounds for the issuance of a TRO, and that the EPA's jurisdictional attacks were not meritorious in this context, this court granted PSC the relief prayed for. Furthermore, this court gave several extensions of the TRO to preserve the status quo pending decision on the merits.
The EPA filed two appeals of this court's orders granting TROs. United States v. Professional Sale Corporations, Nos. 84 C 6079 and 84 C 6551 (U.S.D.C.N.D.IL.E.D.). During the pendency of these appeals, the last extension of the TRO granted by this court lapsed. The district court, the Honorable Susan Getzendanner presiding, therefore dismissed the appeal as being moot. The dismissal was not without comment, however. Judge Getzendanner, in an opinion dated November 2, 1984, stated that in the event that this court is again faced with a motion by PSC for a restraining order, the court must address the issue of its own jurisdiction before granting further relief. Since PSC on November 13, 1984, made a motion to "reinstate TRO," and for the setting of a hearing date, this court will address the subject of its jurisdiction, as well as other issues presented by the motion, forthwith.
III.
This adversary action was filed in May of 1984. PSC originally stated that this court had jurisdiction under Title 28, Section 1471 of the United States Code. It may be noted that this was prior to the enactment of the Bankruptcy Amendments and Federal Judgeship Act of 1984 ("'84 Act"). The '84 Act supplanted the jurisdiction granted by § 1471 with jurisdiction granted in 28 U.S.C. § 1334(a), (b) and (d) in the hopes of rectifying the constitutional infirmities contained in the prior statutory scheme. Northern Pipeline Construction Co. v. Marathon Pipeline Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982). Section 157(b)(1)-(2) of Title 28 delineates the bankruptcy court's jurisdiction in terms of "core" and "non-core" proceedings.
Since the law controlling jurisdiction has been substantially amended during the pendency of this case, this court feels compelled to clarify the basis of jurisdiction which is controlling in the present action. Section 122 of the '84 Act provided that the new jurisdictional language would be controlling in all actions pending at the time of enactment.5 Therefore, the present action is controlled by the language of the '84 Act, and not by 28 U.S.C. § 1471. PSC's motion to enjoin the EPA is a core proceeding, as that term is defined in 28 U.S.C. § 157(b)(2)(0):
The present action will "affect the liquidation of the assets of the estate" in that the PSC property with the designation of interim status can presumably be sold for substantially more money than it could be sold for without the designation of interim status.
A more problematic issue presented by this case is whether this court has subject matter jurisdiction in light of the EPA's assertion of sovereign immunity. It is beyond question that a federal court has the ability to determine its own jurisdiction. Bankruptcy courts, likewise, possess this ability. In re Dartmouth House Nursing Home, Inc., 30 B.R. 56 (B.A.P. 1st Cir. 1983).
The EPA correctly points out that, generally, the United States may only be sued to the extent that it has waived its sovereign immunity, Lehman v. Nakshian, 453 U.S. 156, 160, 101 S.Ct. 2698, 69 L.Ed.2d 548 (1981); that waivers of immunity are to be strictly construed, Block v. North Dakota, 461 U.S. 273, 103 S.Ct. 1811, 1816, 25 L.Ed.2d 840 (1983); and that consent to be sued may not be inferred from a statute that omits all references to the sovereign, Danning v. United States, 259 F.2d 305, 309 (9th Cir.1958). The EPA maintains that the doctrine of sovereign immunity bars the present action "unless plaintiff can point to some provision of the Bankruptcy Code itself that operates as a waiver of sovereign immunity and empowers this court to enjoin EPAs ..." Defendants' Memorandum of Law at p. 14, incorporated by Adversary Defendants' Memorandum Opposition sic to Motion to Reinstate TRO at p. 3.
That provision is contained in 11 U.S.C. § 106, which provides:
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