Lefkowitz v. Mich. Trucking, LLC (In re Gainey Corp.), 11-8038
| Decision Date | 11 September 2012 |
| Docket Number | No. 11-8038,11-8038 |
| Parties | In re: GAINEY CORPORATION, et al., Debtors. BARRY P. LEFKOWITZ, as Liquidation Trustee of the Gainey Companies Liquidation Trust, Plaintiff-Appellant, v. MICHIGAN TRUCKING, LLC, fka Michigan Truck Acquisition, LLC dba M Trucking, LLC, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Sixth Circuit |
By order of the Bankruptcy Appellate Panel, the precedential effect
of this decision is limited to the case and parties pursuant to 6th
Cir. BAP LBR 8013-1(b). See also 6th Cir. BAP LBR 8010-1©.
File Name: 12b0008n.06
Appeal from the United States Bankruptcy Court
for the Western District of Michigan at Grand Rapids.
Bankruptcy Case No. 08-09092, Adversary Proceeding No. 10-80483.
Before: FULTON, McIVOR, and SHEA-STONUM, Bankruptcy Appellate Panel Judges.
ARGUED: Louis P. Rochkind, JAFFE RAITT HEUER & WEISS, PC, Southfield, Michigan, for Appellants. Michael S. McElwee, VARNUM, LLP, Grand Rapids, Michigan, for Appellee. ON BRIEF: Louis P. Rochkind, Eric D. Novetsky, JAFFE RAITT HEUER & WEISS, PC, Southfield,Michigan, for Appellants. Michael S. McElwee, VARNUM, LLP, Grand Rapids, Michigan, for Appellee.
The Liquidation Trustee in six jointly administered chapter 11 cases appeals an order of the bankruptcy court which dismissed his adversary complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted.
The main issue presented by this appeal is whether the bankruptcy court erred in dismissing the Appellant's adversary complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). The Appellant is the Liquidating Trustee for the Debtors. In his complaint, the Appellant sought a declaratory judgment that the Appellee, Michigan Trucking LLC, the purchaser of Debtors' assets, was liable to Debtors' insurer for deductibles billed after the asset sale, but related to accidents which occurred prior to the asset sale. The bankruptcy court held that the Appellant failed to state a claim for relief because the Appellee could not be held liable for deductibles which were related to accidents1 which occurred prior to the sale of Debtors' assets. The issue before the Panel is whether the bankruptcy court erred in holding that the Appellant failed to state a claim for relief on the grounds that the APA, the Sale Order, the Plan and the Order Confirming the Plan established that the Appellee had no obligation to reimburse the insurer for deductibles related to accidents that occurred prior to the sale to the Appellee.
For the reasons that follow, we affirm the bankruptcy court's May 6, 2011 order dismissing the Appellant's adversary complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim for relief.
The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this appeal. The United States District Court for the Western District of Michigan has authorized appeals to the Panel and no party has timely elected to have this appeal heard by the district court. 28 U.S.C. § 158(b)(6), (c)(1). A final order of the bankruptcy court may be appealed as of right pursuant to 28 U.S.C. § 158(a)(1). For purposes of appeal, a final order "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Midland Asphalt Corp. v. United States, 489 U.S. 794, 798, 109 S. Ct. 1494, 1497 (1989) (citations omitted). An order dismissing an adversary complaint under Federal Rule of Civil Procedure 12(b)(6) is a final, appealable order. Kaye v. Agripool, SRL (In re Murray, Inc.), 392 B.R. 288, 292 (B.A.P. 6th Cir. 2008).
A bankruptcy court's order dismissing a complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) is reviewed de novo. "Under a de novo standard of review, the reviewing court decides an issue independently of, and without deference to, the trial court's determination." Menninger v. Accredited Home Lenders (In re Morgeson), 371 B.R. 798, 800 (B.A.P. 6th Cir. 2007) ).
Contract interpretation is a matter of law which is reviewed de novo. Bender v. Newell Window Furnishings, Inc., 681 F.3d 253, 259 (6th Cir. 2012); Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1195 (Del. 1992). The determination of whether a contract, or a term therein, is ambiguous is also a question of law reviewed de novo. Official Comm. of Unsecured Creditors v. Dow Corning Corp. (In re Dow Corning Corp.), 456 F.3d 668, 676 (6th Cir. 2006). Insurance policies are interpreted under principles of contract law. Upjohn Co. v. N.H. Ins. Co., 476 N.W.2d 392 (Mich. 1991).
Although a bankruptcy court's interpretation of its own orders is to be given "significant deference," the standard of review varies depending on the type of order being reviewed or the type of interpretation the bankruptcy court performed. Terex Corp. v. Metro. Life Ins. Co. (In re Terex Corp.), 984 F.2d 170, 172 (6th Cir. 1993). Interpretation of "an agreed order, like a consent decree,is in the nature of a contract, and the interpretation of its terms presents a question of contract interpretation" which is reviewed is de novo. City of Covington v. Covington Landing Ltd. P'ship, 71 F.3d 1221, 1227 (6th Cir. 1995). Despite this standard of review, some measure of deference is still given to the court's interpretation of its order because "few persons are in a better position to understand the meaning of a consent decree than the district judge who oversaw and approved it." Sault Ste. Marie Tribe of Chippewa Indians v. Engler, 146 F.3d 367, 372 (6th Cir. 1988) (citations omitted) (internal quotation marks omitted).
In contrast, a bankruptcy court's interpretation of orders in which it does "not rely on or interpret the Bankruptcy Code" is reviewed under an abuse of discretion standard. Terex Corp., 984 F.2d at 172. This standard of review applies to a bankruptcy court's interpretation of a confirmation order. Id.
On October 14, 2008, six related entities, Gainey Corporation, Gainey Transportation Services, Inc., Super Service, Inc., Freight Brokers of America, Inc., Lester Coggins Trucking, Inc., and Gainey Insurance Services, Inc. (collectively "Debtors") filed voluntary petitions for reliefunder chapter 11 of the Bankruptcy Code in the Western District of Michigan. Pursuant to an October 16, 2008 bankruptcy court order, the cases are being jointly administered.
The Debtors are privately held Michigan corporations which "primarily provide[d] nationwide over the road trucking, freight hauling, and related freight brokerage and logistics services" in the U.S. and Canada. (Disclosure Statement at § 3.1, Bankr. Case No. 08-09092, ECF No. 1507.) Collectively, the Debtors employed "approximately 1,700 people" and "operate[d] a total ongoing fleet of approximately 1,600 tractors and 3,200 trailers." (Id.) Given the nature of their operations, "the Debtors incur[red] claims on account of bodily injuries, property damages, and claims for worker's compensation suffered in connection with automobile accidents involving the Debtors' Rolling Stock and matters involving its employees." (Id. at § 3.4(d).) At all times pre- andpost-petition, the Debtors maintained liability insurance with several different insurers to cover these claims. The Debtors administered the insurance claims themselves through Gainey Insurance Services, Inc.
On October 9, 2009, the Debtors filed a motion to sell substantially all of their assets in accordance with 11 U.S.C. § 363(f). The sale was to occur through use of a bidding process whereby potential purchasers would submit proposed asset purchase agreements. Any assets not purchased by the successful bidder would remain part of the Debtors' bankruptcy estates. In seeking authority to sell its assets, the Debtors sought to assume certain executory contracts and leases and then assign them to the purchaser.
The Debtors filed their First Amended Joint Plan of Reorganization on October 13, 2009, ("Plan"). As part of the plan confirmation process, a Liquidation Trust was established, and Barry P. Lefkowitz ("Appellant") was appointed as the Liquidation Trustee. Creation of the Liquidation Trust was provided for in the Plan, and the Plan incorporated by reference the Liquidation Trust Agreement ("Trust Agreement"). The Liquidation Trust was set up primarily to administer any assets not sold prior to confirmation, pursue causes of action and insider causes of action that were not sold, resolve any objections to claims and interests, wind down the Debtors' affairs, and "pay expenses of the Liquidation Trust, Claims and Interests arising under . . . the Plan, including distributions to all Administrative Expense Claims . . . ." (Plan at § 5.3(c), Bankr. Case No. 08-09092, ECF No. 1506.)
To continue reading
Request your trial