U.S. v. Gurley, 04-2627.

• Decision Date: 20 January 2006
• Docket Number: No. 04-2627.,04-2627.
• Citation: 434 F.3d 1064
• Parties: UNITED STATES of America, Plaintiff/Appellee, v. William Martin GURLEY, Defendant/Appellant, George E. Mills, Jr., Trustee, State of Arkansas, Arkansas Department of Environmental Quality, Intervenor Below/Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

434 F.3d 1064

UNITED STATES of America, Plaintiff/Appellee, v. William Martin GURLEY, Defendant/Appellant George E. Mills, Jr., Trustee, State of Arkansas, Arkansas Department of Environmental Quality, Intervenor Below/Appellee.

No. 04-2627.

United States Court of Appeals, Eighth Circuit.

Submitted: October 12, 2005.

Filed: January 20, 2006.

Kent J. Rubens, argued, West Memphis, AR (Elton A. Rieves, IV, Robert L. Young, and James W. Gentry, Jr., on the brief), for appellant.

Alan S. Tenenbaum, argued, Dept. of Justice, Washington, DC (Lisa E. Jones and Richard M. Gladstein, on the brief), for appellee.

Before RILEY, HANSEN, and COLLOTON, Circuit Judges.

RILEY, Circuit Judge.

William M. Gurley (Gurley) is an owner/operator of two hazardous waste sites: the Gurley Pit in Edmondson, Arkansas (Edmondson site), and the South 8th Street site in West Memphis, Arkansas (West Memphis site). Gurley was found liable for response costs for cleanup of the Edmondson site. The government also obtained a declaratory judgment for liability at the Edmondson site for future response costs. Gurley later filed for bankruptcy in Florida. The government filed a proof of claim in the bankruptcy court for response costs and interest for the Edmondson site pursuant to the existing judgment and declaratory judgment, and also for response costs for the West Memphis site. Gurley moved to withdraw the reference to the contested matter, and the court transferred the matter to the district court in Arkansas.¹ Gurley objected, arguing (1) the court had no subject matter jurisdiction, and (2) the action was never commenced because the government did not serve him with a complaint, therefore any properly filed complaint would be time-barred. The district court disagreed and ultimately entered judgment against Gurley. Gurley moved to alter or amend the judgment, contending the start date for calculating interest was incorrect. The court denied the motion and Gurley's subsequent motion for reconsideration. Gurley appeals. We affirm.

I. BACKGROUND

In March 1992, Gurley was found liable under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9601-9675, for over $1.7 million in response costs the government had incurred cleaning the Edmondson site. United States v. Gurley Refining Co., 788 F.Supp. 1473, 1484 (E.D.Ark.1992), aff'd sub nom. United States v. Gurley, 43 F.3d 1188 (8th Cir. 1994). The district court also awarded prejudgment interest and granted the United States a declaratory judgment for all future response costs associated with the Edmondson site, id. at 1485, estimated at over $6 million, United States v. Gurley, 317 F.Supp.2d 870, 874 (E.D.Ark.2004). In July 1995, Gurley filed a Chapter 7 petition for bankruptcy in a Florida bankruptcy court. Pursuant to the bankruptcy court's order, the government filed a proof of claim on April 24, 1996, then an amended proof of claim on March 23, 1998, seeking response costs for the Edmondson site, including the amount for which the government previously obtained a judgment, post-judgment response costs pursuant to the declaratory judgment, and interest. The government's proof of claim also sought response costs for the West Memphis site, seeking response costs through November 30, 1997, unliquidated response costs after that date, and interest. Gurley filed an objection to the proof of claim, then filed a motion in the Middle District of Florida to withdraw the reference of the contested matter from the bankruptcy court to the district court. The district court granted the motion, then transferred venue to the Eastern District of Arkansas.

The government moved for summary judgment on (1) the Edmondson site based upon the previously granted declaratory judgment, and (2) the West Memphis site for past and future response costs. The district court granted the government partial summary judgment on its proof of claim and set trials on the issues of response costs for the Edmondson site under the declaratory judgment against Gurley, Gurley's liability for the West Memphis site, and response costs for the West Memphis site. The court rejected Gurley's arguments that the government did not serve him with a complaint on the matter, and that Gurley had been denied the right to answer. The court held an evidentiary hearing, and entered judgment against Gurley. Following a bench trial on the amount of response costs, the court ordered further briefing on this issue. Gurley made no argument regarding the start date for accrual of interest. The court issued its decision, holding the government is entitled to (1) almost $14 million for the Edmondson site response costs plus interest from the dates of expenditure through the date judgment was entered on June 30, 2001; (2) almost $7 million for the West Memphis site response costs plus interest from the date the government filed its proof of claim on April 24, 1996, through July 24, 2002; and (3) additional unliquidated interest accruing after July 24, 2002. With respect to the accrual date for interest based on the date of the proof of claim filing, the court held the government is entitled to interest from "the later of (i) the date payment of a specified amount is demanded in writing, or (ii) the date of the expenditure concerned." Gurley, 317 F.Supp.2d at 880 (quoting 42 U.S.C. § 9607).

Gurley moved to alter or amend the judgment, arguing the start date for calculating interest should have been January 1, 2001, the date the government provided certified costs documentation to Gurley, not the date of the government's demand or expenditures. Gurley then filed an amended and supplemental motion to alter or amend the judgment, arguing the start date for calculating interest should have been (1) July 26, 2002, the date the government rested its case in the cost recovery trial, or alternatively (2) January 1, 2001. The court denied Gurley's motions on the ground "[n]ew arguments cannot be raised for the first time in a Motion to Alter or Amend Judgment under rule 59(e)." Gurley filed a motion to reconsider, which was denied.

II. DISCUSSION

A. Subject Matter Jurisdiction

Gurley argues the Arkansas district court lacked subject matter jurisdiction because the government never brought an action or filed a complaint, but only filed its proof of claim in the bankruptcy court. Gurley primarily relies on two cases. See In re C & G Excavating, Inc., 217 B.R. 64 (Bankr.E.D.Pa.1998), aff'd sub nom. Rhodes v. C & G Excavating, Inc., No. Civ.A. 98-6274, 1999 WL 820204 (E.D.Pa. Sept.29, 1999); Easley v. Pettibone Mich. Corp., 990 F.2d 905 (6th Cir.1993). The government responds the district court had subject matter jurisdiction to adjudicate Gurley's objection to the government's proof of claim in Gurley's bankruptcy proceeding under 28 U.S.C. § 1334(b). The government is correct.

Under 28 U.S.C. § 1334(b), district courts have original jurisdiction over bankruptcy cases. The statute provides: "notwithstanding any Act of Congress that confers exclusive jurisdiction on a court or courts other than the district courts, the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11." Id. § 1334(b). District courts, however, need not adjudicate these cases; they may refer them to bankruptcy courts: "Each district court may provide that any or all cases under title 11 and any or all proceedings arising under title 11 or arising in or related to a case under title 11 shall be referred to the bankruptcy judges for the district." Id. § 157(a).

Bankruptcy courts may hear all bankruptcy cases and their "core proceedings": "Bankruptcy judges may hear and determine all cases under title 11 and all core proceedings arising under title 11, or arising in a case under title 11, referred under subsection (a) of this section, and may enter appropriate orders and judgments, subject to review under section 158 of this title." Id. § 157(b)(1). Core proceedings include "allowance or disallowance of claims against the estate." Id. § 157(b)(2)(B). Adjudication of the filing of and objection to a proof of claim in a bankruptcy case is a core proceeding arising under Title 11. In re Wood, 825 F.2d 90, 97 (5th Cir.1987) ("If the proceeding is one that would arise only in bankruptcy, it is also a core proceeding; for example, the filing of a proof of claim or an objection to the discharge of a particular debt.").

While district courts may refer bankruptcy cases to bankruptcy courts, when "resolution of the proceeding requires consideration of both title 11 and other laws of the United States regulating organizations or activities affecting interstate commerce," the district court "shall, on timely motion of a party," withdraw reference of the proceedings to the bankruptcy court. 28 U.S.C. § 157(d). Withdrawing the reference and returning adjudication of a proof of claim to the district court does not change' the proceeding's bankruptcy nature or affect the district court's subject matter jurisdiction granted under 28 U.S.C. § 1334(b). See, e.g., In re Nat'l Gypsum Co., 134 B.R. 188, 192-93 (N.D.Tex.1991).

CERCLA proofs of claim are no exception to this rule. The Bankruptcy Code defines a "claim" in part as a "right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured." 11 U.S.C. § 101(5)(A). The Code also provides any creditor may file a proof of claim. Id. § 501(a). The government's proof of claim fits these broad definitions. The government, as a creditor, asserted a right to payment, part of which had been reduced to judgment regarding the Edmondson site, part of which was the subject of a declaratory judgment regarding that site, and part of which was based on liability for liquidated and...