In re Worldcom, Inc.
| Decision Date | 20 July 2005 |
| Docket Number | Adversary No. 03-93824.,Bankruptcy No. 02-13533 (AJG). |
| Parties | In re WORLDCOM, INC., et al., Reorganized Debtors. MCI, Inc. and MCI WorldCom Network Services, Inc., Plaintiffs, v. Duane G. West, Defendant. |
| Court | United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Southern District of New York |
Weil, Gotshal & Manges LLP, New York City (Marcia L. Goldstein, Lori R. Fife, Alfredo R. Perez, Adam P. Strochak, of Counsel), for Reorganized Debtors.
Jenner & Block LLP, Washington, DC (David A. Handzo, J. Alex Ward, of Counsel), for Special Counsel to Reorganized Debtors.
Sommer Barnard Attorneys, PC, Indianapolis, IN (Paul T. Deignan, Andrew T. Kight, David J. Bayt, of Counsel), for Duane G. West.
The matter before the Court involves motions for summary judgment regarding whether (1) claims of trespass, unjust enrichment, and unconstitutional taking from the presence, maintenance, and use of fiber optic cable in certain railroad rights of way, post-effective date of the confirmation plan, are "claims" as that term is defined in 11 U.S.C. § 101(5), (2) the liability, if any, for such claims is discharged pursuant to 11 U.S.C. 1141(d)(1)(A) and the confirmation order, and (3) such discharge, if any, operates as an injunction against the continuation or commencement of any action at law or equity for such claims pursuant to 11 U.S.C. § 524(a)(2) and the confirmation order.
The Court has subject matter jurisdiction over this proceeding pursuant to sections 1334 and 157(b) of title 28 of the United States Code, under the July 10, 1984 "Standing Order of Referral of Cases to Bankruptcy Judges" of the United States District Court for the Southern District of New York (Ward, Acting C.J.), and under paragraph 32 of this Court's Order Confirming Debtors' Modified Second Amended Joint Plan of Reorganization under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") (Oct. 31, 2003). This is a core proceeding pursuant to section 157(b)(2)(I) and (O) of title 28 of the United States Code. Venue is properly before this Court pursuant to sections 1408 and 1409 of title 28 of the United States Code.
MCI WORLDCOM Network Services, Inc. ("MWNS") owns an extensive nationwide fiber optic network that provides telecommunications services to the general public. A substantial portion of MWNS's fiber optic network is buried within railroad rights of way. MWNS owns fiber optic cables within CSX Transportation, Inc.'s ("CSX") right of way within Polk County, Georgia. In December 1982, MCI Telecommunications Corp. ("MCIT"), a predecessor to MWNS, entered into an agreement with CSX to install fiber optic cable within the CSX right of way. In 1986, MCIT installed fiber optic cable within the CSX right of way that is adjacent to Duane G. West's ("West") property. Pursuant to the terms of the agreement between CSX and MCIT, CSX can use a small percentage of the fiber optic capacity for switching, dispatching, and communications purposes in connection with its rail operations.1
On July 21, 2002 (the "Commencement Date") and November 8, 2002, WorldCom, Inc. and certain of its direct and indirect subsidiaries2 (collectively, the "Debtor") commenced cases under the Bankruptcy Code. By orders dated July 22, 2002 and November 12, 2002, the Debtor's chapter 11 cases were consolidated for procedural purposes. During the chapter 11 cases, the Debtor had been operating its businesses and managing its properties as debtor in possession pursuant to section 1107(a) and 1108 of the Bankruptcy Code.
On July 29, 2002, the United States Trustee formed the Official Committee of Unsecured Creditors (the "Committee") of the Debtor.
On October 21, 2003, the Debtors filed their Modified Second Amended Joint Plan of Reorganization under the Bankruptcy Code (the "Plan"). By order dated October 29, 2002, this Court established January 23, 2003 as the deadline for the filing of a proof of claim against the Debtor (the "Bar Date"). By order dated October 31, 2003, the Court confirmed the Debtor's Plan (the "Confirmation Order"), which became effective on April 20, 2004 (the "Effective Date"). Upon the Effective Date, the Debtor became MCI WorldCom Communications, Inc. ("MCI").
West is a citizen of the State of Georgia. It undisputed that West owns three parcels of real estate in Polk County, Georgia. However, the parties dispute whether West has a fee interest in the railroad rights of way where the fiber optic cable is buried.
West is the sole named plaintiff in a putative class action lawsuit captioned West v. MCI Communications Corp., C.A. No. 98-9912, filed in Superior Court of the District of Columbia on December 31, 1998 (the "West Lawsuit"). In the West Lawsuit, West, on behalf of himself and a putative nationwide class of similarly-situated landowners, alleged claims of trespass, slander of title, and unjust enrichment, and sought a declaratory judgment and punitive damages on account of the Debtor's installation of fiber optic cable along railroad rights of way that border real property allegedly owned by the landowners. The West Lawsuit does not assert a claim for ejectment or for any other form of equitable relief.
The West Lawsuit alleges that the Debtor installed fiber optic cable along railroad rights of way pursuant to agreements with the railroads, but without the consent of adjoining landowners such as himself. West further alleges that the railroads lacked authority to consent to the installation because the railroads do not always own their rights of way in fee. West claims that the landowners whose property adjoins the rights of way are the owners of the fee interest in the right of way, and it was their consent, rather than the consent of the railroads, that was required in order to authorize the Debtor's fiber optic cable installation.
On March 31, 1999, West moved for certification of a nationwide class in the West Lawsuit pursuant to Rule 23 of the District of Columbia's Superior Court Rules of Civil Procedure, asking the court to certify a class consisting of
All owners, other than the United States Government or the government of any state, of land in the United States or adjacent to a railroad corridor on which Defendants have entered to install, maintain, or operate a fiber-optic or other telecommunications cable without obtaining the consent of the owner of the land.
A decision on the class certification motion was pending when the Debtor filed its chapter 11 petitions, which triggered the automatic stay. West did not file a proof of claim in the Debtor's bankruptcy proceeding.
On July 28, 2003, West filed a limited objection to confirmation of the Debtor's Plan (the "West Limited Objection"). The West Limited Objection was resolved by stipulation and agreement by and between the Debtor and West, dated October 16, 2003 (the "Stipulation"). The Stipulation was entered by the Court on November 4, 2003.
In the Stipulation, the parties agreed that, upon confirmation of the Plan, the Debtor obtains a full and complete discharge of debts and claims to the extent provided in sections 1141 and 524 of the Bankruptcy Code. In addition, the parties agreed that sections 10.01 through 10.04 of the Plan3 pertain to any cause of action, right, or remedy West and any similarly situated landowners, in the West Lawsuit, may have against the Debtor with respect to the post-Effective Date presence of fiber optic cable in railroad rights of way insofar as it is determined that such cause of action, right, or remedy constitutes a claim, as defined by section 101(5) of the Bankruptcy Code, that arose prior to the Effective Date.
On December 24, 2003, the Debtor filed a complaint in this Court against West based upon West's stated intention in the Stipulation that he intends to seek a judicial remedy against the Debtor for post-Effective Date installation and use of the fiber optic cable (the "Complaint"). On January 29, 2004, West filed an answer and affirmative defenses to the Complaint.
On July 30, 2004, the Debtor filed a motion for summary judgment on the Complaint. On August 26, 2004, West filed a response to the Debtor's motion for summary judgment on the Complaint. On September 2, 2004, West filed a cross-motion for summary judgment on the Complaint (hereinafter, collectively the Debtor's motion and West's cross-motion for summary judgment are the "Motions," and individually, "Motion"). On September 23, 2004, the Debtor filed a response to West's Motion. Thereafter, on September 28, 2004, the Court held a hearing regarding the Motions. This Opinion addresses the Motions.
The Debtor contends that the West Lawsuit is without merit in that the Debtor denies that West owns a fee interest in the right of way bordering West's property. In addition, the Debtor argues that the railroads had ample authority to license the use of their rights of way for telecommunications purposes regardless of whether the railroads held fee title or only an easement.4
Further, the Debtor argues that even if West could prevail on his trespass claim, Georgia's eminent domain law would permit the Debtor to take West's property upon the payment of just compensation. The Debtor argues that the compensation West would receive for a trespass claim would be precisely the same compensation under eminent domain. However, the Debtor also maintains that because West did not file a proof of claim, he has knowingly waived his right to seek compensation. Thus, West cannot assert a claim for unconstitutional taking based upon a lack of compensation.
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In re Worldcom, Inc.
...MCI, Inc., 02-13533, 2006 WL 538556 (Bankr.S.D.N.Y. Feb.1, 2006)(rejecting claims under Mississippi law); MCI, Inc. v. West (In re WorldCom, Inc.), 328 B.R. 35 (Bankr.S.D.N.Y.2005) (rejecting claims under Georgia law); In re WorldCom, Inc., 320 B.R. 772 (Bankr. S.D.N.Y.2005) (rejecting clai......
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International Paper v. Mci Worldcom Network
...is without merit, relying on In re WorldCom, Inc., 320 B.R. 772 (Bankr.S.D.N.Y.2005) (WorldCom I), and In re WorldCom, Inc., 328 B.R. 35 (Bankr. S.D.N.Y.2005) (WorldCom II). In WorldCom I, 320 B.R. at 782-83, and II, 328 B.R. at 54, the bankruptcy court held that trespass and unjust enrichm......