Penn Cent. Transp. Co., Matter of
| Decision Date | 19 September 1991 |
| Docket Number | Nos. 90-1676,No. 90-1676,No. 90-1678,No. 90-1677,90-1676,90-1677,90-1678,s. 90-1676 |
| Parties | , 22 Bankr.Ct.Dec. 154, 22 Envtl. L. Rep. 20,011 In the Matter of PENN CENTRAL TRANSPORTATION COMPANY. Southeastern Pennsylvania Transportation Authority ("SEPTA"), Appellant inIn the Matter of PENN CENTRAL TRANSPORTATION COMPANY. Consolidated Rail Corporation, Appellant inIn the Matter of PENN CENTRAL TRANSPORTATION COMPANY. United States of America, Appellant into 90-1678. |
| Court | U.S. Court of Appeals — Third Circuit |
Joseph A. Dworetzky, (argued), Drinker, Biddle & Reath, (James F. Kilcur, Gen. Counsel, Southeastern Pennsylvania Transp. Authority, of counsel), Philadelphia, Pa., for Southeastern Pennsylvania Transp. Authority, appellant No. 90-1676.
Richard B. Stewart (argued), Asst. Atty. Gen., Michael M. Baylson, U.S. Atty., Catherine Votaw, Asst. U.S. Atty. Philadelphia, Pa., and Vicki Plaut, Joel M. Gross, and Dirk Snel, Attys. U.S. Dept. of Justice, Environment and Natural Resources Div., Washington, D.C., (John H. Wheeler, David A. Rabbino, and Jon Averback, E.P.A., of counsel), Environmental Protection Agency for the U.S., appellant No. 90-1678.
Kenneth N. Hart (argued), James J. Capra, Alan B. Howard, Donovan, Leisure, Newton & Irvine, New York City and Robert J. Siverd, and Michael L. Cioffi, Penn Cent. Corp., Philadelphia, Pa., for appellee.
Before MANSMANN, NYGAARD and RONEY, * Circuit Judges.
In this appeal arising out of the complicated and protracted Penn Central Transportation Company ("PCTC") bankruptcy proceedings, we are presented with the issue of whether the United States, Southeastern Pennsylvania Transportation Authority ("SEPTA") and Consolidated Rail Corporation ("Conrail") are precluded by the district court's Consummation Order and Final Decree from seeking recovery for hazardous waste clean-up costs under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. § 9601 et seq., from the reorganized company, Penn Central Corporation ("PCC"), after the consummation of those proceedings. The district court found that the United States, SEPTA and Conrail were precluded from bringing their CERCLA claims, and thus denied their petitions seeking leave to sue PCC.
We conclude that the district court erred as a matter of law and that the petitioners are entitled to bring their CERCLA claims against PCC because (1) the CERCLA claims were not discharged by the consummation order because the claims were not then in existence and (2) a legal entity still exists against which claims may be asserted because the restructuring of PCTC into PCC under section 77 of the Bankruptcy Act of 1898, formerly codified at 11 U.S.C. § 205 (repealed 1978), was not a "liquidation type" reorganization. Our jurisdiction is based upon 28 U.S.C. § 1291 and section 24(a) of the Bankruptcy Act, 11 U.S.C. § 47 (repealed 1978).
PCTC and its corporate predecessor, the Pennsylvania Railroad Company, had owned and operated the Paoli Yard from approximately 1915 through 1976. At the time PCTC filed for reorganization under Section 77 of the Bankruptcy Act on June 27, 1970, polychlorinated biphenyls ("PCBs") had been used at the Paoli Yard for over thirty years. For the next six years, the PCTC Trustees owned and operated the Paoli Yard, and continued to use PCBs on the property.
On April 1, 1976, pursuant to the Final System Plan established under the Regional Rail Reorganization Act of 1973, see 45 U.S.C. §§ 716-18, PCTC's Trustees conveyed the Paoli Yard to Conrail; Conrail immediately reconveyed it to the National Railroad Passenger Corporation ("Amtrak"), which has remained its owner until the present time. On that same day, Conrail commenced the operation of a commuter service for SEPTA within the Delaware Valley area, using railroad facilities that included the Paoli Yard.
Two years later, on October 24, 1978 (the "Consummation Date"), the reorganization of PCTC which had begun in 1970 culminated in the district court's issuance of a Consummation Order and Final Decree, which precluded, inter alia, future lawsuits against the reorganized debtor, PCC, "on account of or based upon any right, claim or interest of any kind or nature whatsoever which any such person ... may have in, to or against any of the Debtors, the Trustees of the Properties of the Debtors or any of their assets or properties." Consummation Order and Final Decree, p 7.02 (August 17, 1978). But in 1980 Congress passed CERCLA, which imposed retroactive liability on both present and past owners of facilities where hazardous substances, including PCBs, are being or have been released and it is the passage of this statute which forms the crux of these appeals. 1 During these same years, from 1976 through the early 1980's, we note that Conrail continued to provide commuter service for SEPTA until Congress relieved Conrail of that obligation, effective January 1, 1983, in the Northeast Rail Services Act of 1981, 45 U.S.C. § 744a. SEPTA then began to operate its own commuter service and Conrail discontinued its use of the Paoli Yard.
It was in 1986 that a series of lawsuits was filed in the United States District Court for the Eastern District of Pennsylvania against Conrail, SEPTA, and Amtrak. The suits, including one filed by the United States on behalf of the Environmental Protection Agency, alleged that Conrail, SEPTA and Amtrak had been responsible for the release of PCBs into the environment at the Paoli Yard and in the adjacent residential community since April 1, 1976. Pursuant to CERCLA, the United States sued Conrail, SEPTA, and Amtrak to clean up PCB contamination at the Paoli Yard because of their alleged ownership or operation of the Paoli Yard since April 1, 1976. 2 The United States requested mandatory injunctive relief to remedy PCB contamination and reimbursement of the government's cleanup and related costs.
In June of 1986, Conrail petitioned the United States District Court for the Eastern District of Pennsylvania, which had retained jurisdiction to consider such petitions under its equitable power, for leave to implead PCC in the Paoli PCB cases so that it could assert claims under CERCLA for contribution and indemnity. SEPTA also petitioned for leave to file third-party claims against PCC, and the United States asked for permission to file direct claims against PCC.
On January 14, 1988, the district court issued Memorandum and Order 4311, which resolved many of the issues that had been raised. The district court permitted claims involving direct personal injury and property damage to be brought against PCC and allowed SEPTA and Conrail to pursue third-party claims to the extent that those claims arose out of the personal injury and property damage suits. Additionally, the district court invited briefing on the relevance of the decision of the United States Court of Appeals for the Sixth Circuit entitled, In re Erie Lackawanna Ry. Co., 803 F.2d 881 (6th Cir.1986).
On August 8, 1990, the district court issued Memorandum and Order 4331, finding that its Consummation Order and relevant principles of bankruptcy law precluded Conrail, SEPTA and the United States from asserting claims under CERCLA against PCC after the Consummation Date. In reaching its decision, the district court stated that it would require an unduly broad reading of our decision in Schweitzer v. Consolidated Rail Corp., 758 F.2d 936 (3d Cir.1985)--one that it would not undertake--in order to permit the petitioners to proceed against PCC under CERCLA despite PCTC's final discharge in bankruptcy. In addition, the district court viewed the PCTC Reorganization Plan as a "liquidation type" reorganization and, following the reasoning of the court in Erie Lackawanna, found that PCC could not be held liable for any claims not listed in the Amended Plan of Reorganization. Because the issues on appeal involve questions of law, we exercise plenary review.
We begin with the general proposition that in the context of bankruptcy "the need for finality and certainty is especially acute." Taylor v. Freeland & Kronz, 938 F.2d 420, 425 (3d Cir.1991) (citing Chrysler Motors Corp. v. Schneiderman, 940 F.2d 911, 914 (3d Cir.1991)). Nevertheless, despite the fact that the Consummation Order has been entered in the PCTC bankruptcy proceedings, the petitioners urge us to permit them to sue PCC--i.e., to assert claims now against PCC--years after PCTC's discharge in bankruptcy based upon an "exception" to finality which we carved out in Schweitzer v. Consolidated Rail Corp., 758 F.2d 936 (3d Cir.1985). The issue that we addressed in Schweitzer was "whether a plaintiff in an asbestos-related personal injury action who had no manifest injury prior to the consummation date of his employer's reorganization in bankruptcy had a dischargeable 'claim' within the meaning of section 77" of the Bankruptcy Act. Id. at 939. There, railroad employees brought personal injury claims against the reorganized railroad under the Federal Employers' Liability Act, 45 U.S.C. § 51 et seq. (1982), subsequent to the relevant consummation dates of the debtor company. The employees alleged that because their asbestos-related injuries did not become manifest until after the consummation dates, their claims had not been discharged in the bankruptcy proceedings.
In addressing this issue, we first sought to determine whether the employees had "claims" against their employer under the FELA prior to the consummation dates. Id. at 941. We reasoned that for the employees to have had tort causes of action prior to the consummation dates, they would have had to have...
To continue reading
Request your trial
-
US v. Olin Corp.
...& Sur. Co., Inc. v. Pintlar Corp., 948 F.2d 1507 (9th Cir.1991); O'Neil v. Picillo, 883 F.2d 176 (1st. Cir.1989); In the Matter of Penn Central, 944 F.2d 164 (3rd. Cir.1991); United States v. Kramer, 757 F.Supp. 397 26 The defendant cites and seems to summarize an article entitled, "A Publi......
-
In re Tutu Wells Contamination Litig.
...that CERCLA applies retroactively. Gould Inc. v. A & M Battery & Tire Serv., 933 F.Supp. 431, 438 (M.D.Pa.1996); In the Matter of Penn Central, 944 F.2d 164 (3d Cir.1991). Third-party defendants' claim is without merit, cannot serve as a basis for summary judgment, and warrants no further d......
-
Chateaugay Corp., In re
...Our conclusion is supported by the courts' treatment of CERCLA liability in similar bankruptcy cases. In Matter of Penn Central Transp. Co., 944 F.2d 164 (3d Cir.1991), cert. denied, 503 U.S. 906, 112 S.Ct. 1262, 117 L.Ed.2d 491 (1992), the Third Circuit refused to find that a clean-up clai......
-
Trinity Indus., Inc. v. Greenlease Holding Co.
...CERCLA imposes liability upon parties responsible for contamination occurring before its effective date. In the Matter of Penn Central Transp. Co., 944 F.2d 164, 166 n. 1 (3d Cir.1991). In most respects relevant to this case, the HSCA was modeled after the CERCLA. Gen. Elec. Envt'l Servs., ......