In Re Pacific Gas & Electric Co.

279 B.R. 561, 2002 Bankr. LEXIS 884
CourtUnited States Bankruptcy Court, N.D. California
DecidedJanuary 8, 2002
Docket19-40228
StatusPublished
Cited by7 cases

This text of 279 B.R. 561 (In Re Pacific Gas & Electric Co.) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Pacific Gas & Electric Co., 279 B.R. 561, 2002 Bankr. LEXIS 884 (Cal. 2002).

Opinion

*562 MEMORANDUM DECISION REGARDING CHROMIUM CLAIMS

DENNIS MONTALI, Bankruptcy Judge.

I. INTRODUCTION

The court has been asked to answer a question for which there is just a little help in the reported decisions and a little more found in national and local bankruptcy rules. That question is, may a bankruptcy judge, rather than a district judge, make the decision whether or not to abstain from having personal injury and wrongful death claims heard and tried before the district judge sitting as a bankruptcy court. For the reasons that follow, this bankruptcy judge concludes that he not only has the legal authority to make that decision, but he also has the legal obligation and responsibility to do so. To pass the important question to a district judge in this case at this time, while arguably permissible, would amount to an abdication of duty. This is not because — in the ab *563 stract — a district judge is unable to make the decision. Clearly he or she is able to do so, and with an enormous effort could come to know and understand how the factors relevant to the abstention decision apply in this enormously complex case. Rather, it is because this bankruptcy judge, who has presided over virtually every aspect of this Chapter 11 reorganiza.tion, from moments after the petition was filed until now, when it is time to evaluate the proposed reorganization plan and the accompanying disclosure statement, is better situated — in a real and practical sense — to make the critical analysis of whether and how keeping those personal injury and wrongful death claims in the federal bankruptcy system as compared to leaving them for resolution in the state court system will impact the debtor’s crucial reorganization.

For the reasons that follow, the court first decides that it can and should make the decision; then it decides that abstention is proper so that those claims can be resolved in state court.

II. DISCUSSION

A. Procedural Setting

Approximately 1,250 individuals (the “Chromium Claimants” or “Claimants”) have filed proofs of claim (the “Chromium Claims” or “Claims”) in this Chapter 11 case. The Chromium Claims allege personal injury 1 and wrongful death claims (for convenience, referred to simply as “personal injury claims” throughout this decision, both with reference to the Chromium Claims and generally in discussing statutory provisions), purportedly caused by exposure to chrome six (hexavalent chromium) from facilities owned or operated by debtor Pacific. Gas and Electric Company (“PG & E”). On November 14, 2001, PG & E filed its Omnibus Objections to Chromium Claims, setting forth various defenses to the Chromium Claims (the “Omnibus Objections”). On the same date, PG & E filed a motion to certify and transfer (“Motion To Certify”) the Chromium Claims to the United States District Court for the Northern District of California, San Francisco Division (the “District Court”).

Walter J. Lack, Esq. and associated counsel filed an opposition to the Motion To Certify on behalf of 1,035 Chromium Claimants (the “Lack Claimants”). Similarly, T. Scott Belden, Esq. filed an opposition to the Motion To Certify 2 on behalf of 232 Chromium Claimants (the “Belden Claimants”). The Lack Claimants also filed a motion for abstention (“Abstention Motion”), which the Belden Claimants joined. Finally, the Belden Claimants filed a motion for relief from stay (the “Stay Motion”), which the Lack Claimants joined.

The Lack Claimants are plaintiffs in eight lawsuits (the “Lack Lawsuits”) and the Belden Claimants are plaintiffs in three lawsuits (the “Belden Lawsuits”), all pending in the various California Superior Courts. Approximately 15 other Chromium Claimants are plaintiffs in three other lawsuits (the “Other Lawsuits”, and together with the Lack Lawsuits and the Belden Lawsuits, the “State Court Lawsuits”). The plaintiffs in the Other Law *564 suits did not join in the Abstention Motion or in the Stay Motion, and they did not oppose the Motion to Certify.

There is some slight confusion in the present record as to which Chromium Claimants are plaintiffs in the State Court Lawsuits, and which plaintiffs in the State Court Lawsuits did not timely file proofs of claim in PG & E’s Chapter 11 case by the claims bar date, thus presumably removing those plaintiffs from the group described as the Chromium Claimants. Further, some of the State Court Lawsuits were filed after PG & E filed Chapter 11 on April 6, 2001, in violation of the automatic stay of 11 U.S.C. § 362(a). These matters are not material to the legal and factual analyses pertinent to the court’s decisions on the three motions before it. The orders that will be entered to carry out the decision will straighten out any present uncertainties.

Taking the substance of the Abstention Motion and the Stay Motion together, they ask the court not to resolve the Omnibus Objections, but to permit the Lack Lawsuits and the Belden Lawsuits to proceed to final judgments in state courts. Counsel for the Chromium Claimants agree, however, that enforcement of any judgments will remain subject to the automatic stay of 11 U.S.C. § 362(a) and the claims distribution process as part of PG & E’s contemplated reorganization. The Chromium Claimants’ opposition to the Motion to Certify is consistent with their position in support of their own two motions.

The Motion To Certify, the Abstention Motion and the Stay Motion all came on for hearing on January 3, 2002. At the hearing, Michael S. Lurey, Esq. appeared on behalf of PG & E. Walter J. Lack, Esq. appeared on behalf of the Lack Claimants and Thomas J. Anton, Esq. and T. Scott Belden, Esq. appeared on behalf of the Belden Claimants. After considering the extensive briefs and supporting papers presented, together with the oral arguments of counsel, the court took all three motions under submission. This Memorandum Decision disposes of those motions.

B. This Court Has Authority to Decide Abstention Motion

1. Title 28 and Federal Case Law

Several provisions of the Judicial Code, Title 28, refer to the district court or courts; few mention the bankruptcy court. Nevertheless, 28 U.S.C. § 151 3 describes the bankruptcy judges of each judicial district in regular active service as a “unit of the district court to be known as the bankruptcy court....” And section 157(a) authorizes each district court to refer to the bankruptcy judges of the district “... any and all cases under title 11 and any and all proceedings arising under title 11 or arising in or related to a case under title 11....” In this district the referral has been made. See

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Cite This Page — Counsel Stack

Bluebook (online)
279 B.R. 561, 2002 Bankr. LEXIS 884, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-pacific-gas-electric-co-canb-2002.