Dynegy Danskammer, L.L.C. v. Peabody Coaltrade International Ltd.

905 F. Supp. 2d 526, 2012 WL 5464619, 2012 U.S. Dist. LEXIS 161401
CourtDistrict Court, S.D. New York
DecidedNovember 7, 2012
DocketCase No. 12-CV-5859 (KMK)
StatusPublished
Cited by17 cases

This text of 905 F. Supp. 2d 526 (Dynegy Danskammer, L.L.C. v. Peabody Coaltrade International Ltd.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dynegy Danskammer, L.L.C. v. Peabody Coaltrade International Ltd., 905 F. Supp. 2d 526, 2012 WL 5464619, 2012 U.S. Dist. LEXIS 161401 (S.D.N.Y. 2012).

Opinion

OPINION AND ORDER

KENNETH M. KARAS, District Judge.

Plaintiff, Dynegy Danskammer, L.L.C. (“Danskammer”), brings this suit against Peabody COALTRADE International Ltd. (“Peabody”) alleging breach of contract for delaying delivery or failing to deliver coal shipments at various times from 2008 to 2011. Plaintiff Danskammer filed a Chapter 11 petition on November 7, 2011. On July 24, 2012, Defendant Peabody moved to withdraw the reference to the bankruptcy court for the breach of contract claim under 28 U.S.C. § 157(d). (Dkt. No. 1.) For the reasons stated herein, Peabody’s Motion to Withdraw the Reference to bankruptcy court is granted.

I. Background

The following facts, drawn from Danskammer’s Complaint, are assumed to be true for purposes of deciding the instant Motion. On January 1, 2008, Peabody and Danskammer entered into a Contract for Sale and Purchase of Guasare Steam Coal (the “Contract”). (Compl. ¶ 8.) Under the Contract, Peabody agreed to sell and deliver, and Danskammer agreed to purchase and receive, the coal. (Id.) On November 7, 2011, Danskammer filed its Chapter 11 petition. Danskammer alleges that Peabody breached the Contract by “failfing] to timely and completely perform its obligations under the agreement, repeatedly delaying coal shipments or declaring force majeure,” (id. ¶ 13), and points to a delay in late 2008 and failures to deliver in February 2009, April 2009, March 2010, and November 2011, (id. ¶ 13-33). Based on these events, Danskammer pleads two causes of actions: (1) breach of contract, [528]*528and in the alternative, (2) an ongoing anticipatory repudiation of the Contract. (Id. ¶¶ 34-57.) Danskammer claims damages including demurrage charges, dead freight charges, and other incidental and consequential damages. (Id. at 15-16.)

Danskammer filed its Debtor’s Complaint against Peabody for breach of contract on June 4, 2012 in bankruptcy court.1 On July 24, 2012, Peabody filed this Motion to Withdraw the Reference to the bankruptcy court. (Dkt. No. 1.)

II. Discussion

A. Legal Standard

1. Jurisdiction and Adjudicative Power of the Bankruptcy Court

With certain exceptions not relevant here, district courts have original jurisdiction over all civil proceedings “arising under” or “related to” title 11. See 28 U.S.C. § 1334. Pursuant to 28 U.S.C. § 157, district courts may refer “all cases under title 11 and all core proceedings arising under title 11” to the district’s bankruptcy court. 28 U.S.C. § 157(b)(1). Section 157(b)(2) provides a non-exclusive list of proceedings designated as “core.” Id. § 157(b)(2). Until recently, the bankruptcy court’s role depended on whether the proceeding was “core” or “non-core.” With respect to core proceedings, the bankruptcy court could issue a final determination, but with respect to non-core proceedings, it was permitted only to “submit proposed findings of fact and conclusions of law to the district court,” which were then subject to de novo review in the district court. 28 U.S.C. § 157(c); see Cent. Vt. Pub. Serv. Corp. v. Herbert, 341 F.3d 186, 189-91 (2d Cir.2003) (explaining the role of bankruptcy courts in core and non-core proceedings).

In Stem v. Marshall, _ U.S. _, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011), the Supreme Court altered this framework by holding that the constitutional grant of judicial power to Article III courts, not the statutory designation of “core” or “non-core,” determines whether a bankruptcy judge may issue a final determination. See also Adelphia Recovery Trust v. FLP Grp., Inc., No. 11-CV-6847, 2012 WL 264180, at *2 (S.D.N.Y. Jan. 30, 2012) (explaining Stem’s holding that “Congress’s delineation of core matters in section 1572(b)(2) overstepped constitutional boundaries ... when it allowed bankruptcy courts ‘to enter a final judgment on a state law counterclaim’ ” (quoting Stern, 131 S.Ct. at 2620)); Dev. Specialists, Inc. v. Akin Gump Strauss Hauer & Feld LLP, 462 B.R. 457, 464 (S.D.N.Y.2011) (noting that after Stem, “identifying a claim as ‘core’ or ‘non-core’ under the bankruptcy law does not necessarily determine whether a bankruptcy court is constitutionally empowered to finally adjudicate the matter”). In holding that Article III did not permit a bankruptcy court to adjudicate finally the state law counterclaim at issue in Stem, the Supreme Court considered: (1) whether the counterclaim involved a public or private right; (2) whether the process of adjudicating the creditor’s proof of claim would resolve the counterclaim; and (3) whether the parties consented to final adjudication by the bankruptcy court. 131 S.Ct. at 2608, 2614, 2617.

2. Withdrawal of Bankruptcy Reference

Pursuant to 28 U.S.C. § 157(d), a “district court may withdraw, in whole or in part, any case or proceeding referred under this section ... for cause shown.” [529]*529Prior to Stem, the Second Circuit held in In re Orion Pictures Corp., 4 F.3d 1095, 1101 (1993), that cause for withdrawal should be evaluated based on five factors: “whether the claim or proceeding is core or non-core, whether it is legal or equitable, and considerations of efficiency, prevention of forum shopping, and uniformity in the administration of bankruptcy law.” The Orion court emphasized that “[a] district court considering whether to withdraw the reference should first evaluate whether the claim is core or non-core, since it is upon this issue that questions of efficiency and uniformity will turn.” Id. The Orion court further reasoned that “the fact that a bankruptcy court’s determination on non-core matters is subject to de novo review by the district court could lead the latter to conclude that in a given case unnecessary costs could be avoided by a single proceeding in the district court.” Id.

Following the Supreme Court’s holding in Stem, courts in this district have taken different approaches in adapting the Orion factors to Stem’s holding. Some courts have modified the first prong of Orion (whether a proceeding is core or non-core) and considered whether the bankruptcy court has constitutional authority to finally adjudicate the matter under Stem. See In re Arbco Capital Mgmt., LLP, 479 B.R. 254, 262 (S.D.N.Y.2012) (“This Court concludes, as have others in this district, that the relevant inquiry under the first prong of the Orion

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
905 F. Supp. 2d 526, 2012 WL 5464619, 2012 U.S. Dist. LEXIS 161401, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dynegy-danskammer-llc-v-peabody-coaltrade-international-ltd-nysd-2012.