Huennekens v. Walker (In Re Southern International Co.)

165 B.R. 815, 1994 Bankr. LEXIS 553, 25 Bankr. Ct. Dec. (CRR) 805, 1994 WL 143188
CourtUnited States Bankruptcy Court, E.D. Virginia
DecidedApril 6, 1994
Docket19-30350
StatusPublished
Cited by7 cases

This text of 165 B.R. 815 (Huennekens v. Walker (In Re Southern International Co.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Huennekens v. Walker (In Re Southern International Co.), 165 B.R. 815, 1994 Bankr. LEXIS 553, 25 Bankr. Ct. Dec. (CRR) 805, 1994 WL 143188 (Va. 1994).

Opinion

MEMORANDUM OPINION

BLACKWELL N. SHELLEY, Bankruptcy Judge.

This matter comes before the Court on Kevin R. Huennekens’s (“Huennekens” or “The Trustee”) motion for summary judgment on a counterclaim in three counts made by Carroll Lee Walker (“Walker”) that was submitted with his answer to a complaint filed by the trustee. This Court has jurisdiction over the matter by virtue of 28 U.S.C. § 1334 and Title 11 of the United States Code and by order of reference entered by the Judges of the United States District Court for the Eastern District of Virginia. Upon consideration of the arguments of counsel, affidavit, and evidence presented at *818 the January 28, 1994 hearing, the Court makes the following findings of fact and conclusions of law.

Findings of Fact

Southern International Company, L.P. (“Southern”) developed specialty products for the home construction and remodeling markets and also sold a pressurized wood treatment for dimensional lumber. In some of its manufacturing processes, it used a chromat-ed copper arsenate solution (“CCA”) which is evidently classified as a toxic substance. On December 7, 1990, several of Southern’s trade creditors filed an involuntary Chapter 7 petition against it. While the involuntary petition was not opposed by Southern; it did successfully move to convert the Chapter 7 into a Chapter 11 on January 3, 1991. However, on motion by the United States Trustee, this Court ordered the case be converted back to a Chapter 7 on April 5, 1991. In the Memorandum Opinion issued in relation to that decision, this Court stated that Southern’s inadequate cash flow and rapid loss of assets combined with the lack of a reasonable likelihood of reorganization within a reasonable time were sufficient grounds to order Southern’s Chapter 11 converted back to a Chapter 7.

After the conversion back to Chapter 7, Huennekens was appointed as Chapter 7 trustee on April 9, 1991 and an April 30, 1993 notice was sent out to all creditors and parties in interest that the meeting of creditors (“the creditors’ meeting” or “the § 341(a) meeting”), pursuant to 11 U.S.C. § 341(a), was to be held on May 30, 1991 at 2:00 p.m. A portion of the notice stated that:

At the meeting, the trustee may give notice of his intention to abandon property that is burdensome or of inconsequential value.... Any objections thereto must be filed pursuant to Local Rules 303 and 304.

During the duly scheduled § 341(a) meeting, the Trustee, having received no timely-filed objections, abandoned Southern’s wood treatment facility (“The Facility”) at which the CCA solution was used.

On or about July 19, 1991 a major rainfall caused an overflow of the facility’s tanks containing the CCA solution (“The Spill”), contaminating Southern’s land and surrounding properties. The spill necessitated an Environmental Protection Agency cleanup. After the spill occurred, Walker has alleged that the Trustee, despite his alleged abandonment of the facility, continued to exercise dominion over Southern’s facility by attempting to negotiate a lease of the facility and seeking employment of a firm to repair and stabilize the equipment containing the CCA solution. The trustee alleges that he effectively abandoned the facility (before the July 19 spill) at the May 30, 1991 creditors’ meeting but that he “continued to receive correspondence and inquiries regarding the Facility.” Trustee’s Memorandum in Support of Motion to Dismiss and Motion for Summary Judgment, P.3. As a result of this correspondence, on January 23, 1992, the Trustee “filed and served written notice of his abandonment of the Facility as well as all other tangible assets of the Debtor”. Id. In his counterclaim, Walker seems to allege that the notice which stated that the trustee may abandoned property at the § 341(a) meeting and the actual oral notice of abandonment given at the § 341(a) meeting were insufficient and that the post-spill written notice of January 23, 1992 actually marked the point where the trustee effectively abandoned the property consequently making the trustee responsible for the facility during the time the contamination occurred.

Walker chose to make these allegations in an answer filed in response to the trustee’s complaint to recover fraudulent conveyances Walker allegedly received. The complaint itself was filed over two years after the spill and over a year since the trustee served written notice of abandonment. In his answer, filed June 1, 1993, Walker not only responded to the allegations made in the complaint but also filed the counterclaim, in three counts, based on the July 19, 1991 spill. In counts I & II, the counterclaim accuses the Trustee of negligence in allowing the spills to occur and also asks that he be held strictly liable for the contamination. As a result of the spill, Walker alleges that he became liable on certain Southern indebtedness totalling $2.3 million on which Walker was guarantor. Count III of the counter *819 claim alleges that portions of Walker’s own land located adjacent to the contaminated facility were in turn contaminated as a result of the spill. This counterclaim asks for $390,000 in damages as a result of this pollution to Walker’s land.

This Counterclaim is the object of the trustee’s motion for summary judgment. In his motion, the Trustee gives four defenses upon which he alleges summary judgment should be granted: 1) Counts I, II, and III are moot since the trustee abandoned the facility before the contamination occurred (i.e. at the § 341 meeting), 2) that Counts I and II are barred by the applicable statute of limitations, 3) that Count II should be dismissed because strict liability was improperly pled and that even if properly pled, strict liability does not apply in this situation, and 4) that Counts I and II are barred because the trustee owed no duty to Walker as guarantor of Southern’s loans.

Conclusions of Law

Federal Rule of Civil Procedure 56(c), incorporated into the Bankruptcy Code by Bankruptcy Rule 7056, states in pertinent part:

The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

FED.R.CIV.P. 56(C). Determining materiality relies on an examination of the relevant substantive law:

As to materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).

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Cite This Page — Counsel Stack

Bluebook (online)
165 B.R. 815, 1994 Bankr. LEXIS 553, 25 Bankr. Ct. Dec. (CRR) 805, 1994 WL 143188, Counsel Stack Legal Research, https://law.counselstack.com/opinion/huennekens-v-walker-in-re-southern-international-co-vaeb-1994.