Celotex Corp. v. AIU Insurance (In Re Celotex Corp.)

187 B.R. 746, 1995 U.S. Dist. LEXIS 15357, 1995 WL 610936
CourtDistrict Court, M.D. Florida
DecidedApril 26, 1995
DocketBankruptcy Nos. 90-10016-8B1, 90-10017-8B1. Adv. No. 91-40. No. 93-1059-CIV-T-17C
StatusPublished
Cited by17 cases

This text of 187 B.R. 746 (Celotex Corp. v. AIU Insurance (In Re Celotex Corp.)) is published on Counsel Stack Legal Research, covering District Court, M.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Celotex Corp. v. AIU Insurance (In Re Celotex Corp.), 187 B.R. 746, 1995 U.S. Dist. LEXIS 15357, 1995 WL 610936 (M.D. Fla. 1995).

Opinion

ORDER ON MOTION FOR LEAVE TO APPEAL

KOVACHEVICH, District Judge.

This cause comes before the Court on the Motion of Appellants, certain insurers, for leave to appeal an interlocutory order entered by the United States Bankruptcy Court, Middle District of Florida, Tampa Division. Appellants request leave to appeal the Bankruptcy Court’s June 3, 1993 Order on Debtor’s Motion for Partial Summary Judgment, which holds that the costs of administering the liability claims against the Debtors in the Bankruptcy Proceeding are defense costs under Defendants’ liability insurance policies (“6/3/93 Defense Costs Order”). (Adv.Dkt. No. 1936).

The 6/3/93 Defense Cost Order is not ap-pealable as a matter of right, does not qualify as an exception to the final judgment rule, and the Court declines to exercise its discretionary jurisdiction. The Court denies Appellants’ Motion.

*748 I. BACKGROUND

Carey Canada, Inc. and The Celotex Corporation (“Debtors”) are named defendants in numerous lawsuits in courts nationwide based on their production and sale of asbestos and asbestos-containing products. These lawsuits seek damages for alleged harm to individuals from asbestos fibers and for alleged harm resulting from the presence of asbestos-containing products in certain buildings (collectively, the “Asbestos Liability Claims”). Starting in the late 1970’s, Debtors filed a number of lawsuits against their insurers in state and federal courts seeking a declaration of insurance coverage for Asbestos Liability Claims.

On October 12, 1990, Debtors filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. The two cases have been consolidated and are being administered jointly by Carey Canada, Inc. and The Celotex Corporation as debtors-in-possession. All suits asserting Asbestos Liability Claims have been and remain stayed pursuant to 11 U.S.C. § 362(a).

On January 18, 1991, Debtors initiated an adversary proceeding in the Bankruptcy Court against all of their liability insurers (“Insurers”) seeking a declaration of potential coverage for Asbestos Liability Claims under Debtors’ various insurance policies. The adversary proceeding also seeks coverage under the policies for the costs of defense allegedly incurred in Debtors’ defense of the numerous suits asserting asbestos liability claims.

By motion in the adversary proceeding dated August 28, 1992, Debtors sought partial summary judgment declaring that the costs of Debtors’ estate for administration and resolution of the asbestos liability claims asserted in the bankruptcy proceeding are defense costs under Debtors’ insurance policies with various insurance company defendants. (Adv.Dkt. No. 948). On December 15, 1992, Judge Baynes orally granted Debtors’ motion. He ruled that Appellants’ obligation to pay defense costs under the policies was not altered within the bankruptcy context, and that the debtor’s legal expenses in responding to any suits constitute defense costs under the insurance policies. (Transcript of 12/15/92 Motion Hearing at 171-73). Judge Baynes deferred until a later date the determination on what amount of defense costs will be allowed. (Id. at 173). After delivering his ruling, Judge Baynes directed Debtors’ counsel to submit a proposed order reflecting the ruling of the Court. (Id.)

When Debtors’ counsel failed to submit the proposed order within the requisite 30 days, Judge Baynes, on April 1, 1993, entered a written order denying Debtors’ motion. (Adv.Dkt. No. 1632). Debtors filed a motion for reconsideration on April 7,1993, claiming the delay was inadvertent and the result of excusable oversight on the part of counsel. (Adv.Dkt. No. 1653A). On June 3, 1993 Judge Baynes entered Debtors’ proposed order and granted Debtors’ Motion for Partial Summary Judgment. (“June Order”). (Adv. Dkt. No. 1936). Appellants timely filed this Motion for Leave to Appeal the June Order.

II. DISCUSSION

Jurisdiction over appeals from final judgments, orders, and decrees of the bankruptcy courts is vested in the federal district courts. 28 U.S.C. § 158(a). The federal district courts also have discretionary jurisdiction over appeals from interlocutory orders and decrees of the bankruptcy courts, allowing such appeals to be filed with leave of court. 28 U.S.C. § 158(a); Fed.R.Bankr.P. 8001(b), 8003.

Appellants do not contend the June Order was a final order giving them appeal as a matter of right pursuant to 28 U.S.C. § 158(a). Instead, Appellants maintain that this Court should accept the appeal pursuant to the Cohen collateral order exception to the final judgment rule, or the Court’s discretionary jurisdiction over interlocutory orders.

A. THE COLLATERAL ORDER EXCEPTION

The collateral order doctrine is a “narrow exception” confined to “trial court orders affecting rights that will be irretrievably lost in the absence of an immediate appeal.” Richardson-Merrell, Inc. v. Koller, 472 U.S. 424, 431, 105 S.Ct. 2757, 2761, 86 L.Ed.2d 340 (1985). The doctrine, first rec *749 ognized by the Supreme Court in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), excepts from the final judgment rule a small class of prejudgment orders.

To fall -within the Cohen exception, an order must (1) conclusively determine the disputed question, (2) resolve an important issue completely separate from the merits of the action, and (3) be effectively unreviewable on appeal from a final judgment. Richardson-Merrell, 472 U.S. at 431, 105 S.Ct. at 2761. To appeal on this basis, Appellants carry the burden and must make a showing on all three elements to prevail. Magic Circle Energy 1981-A Drilling Program v. Lindsey (In re Magic Circle Energy Corp.), 889 F.2d 950, 954 (10th Cir.1989). Failure of any one of the elements results in the failure of jurisdiction. In re Delta Services, 782 F.2d 1267, 1272 (5th Cir.1986).

The June Order conclusively determined the disputed question of whether the costs of administering liability claims against the Debtors in bankruptcy constitute defense costs under the Appellants’ liability insurance policies.

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187 B.R. 746, 1995 U.S. Dist. LEXIS 15357, 1995 WL 610936, Counsel Stack Legal Research, https://law.counselstack.com/opinion/celotex-corp-v-aiu-insurance-in-re-celotex-corp-flmd-1995.