In Re WorldCom, Inc.

320 B.R. 772, 2005 Bankr. LEXIS 160, 44 Bankr. Ct. Dec. (CRR) 73, 2005 WL 332415
CourtUnited States Bankruptcy Court, S.D. New York
DecidedFebruary 14, 2005
Docket18-01800
StatusPublished
Cited by11 cases

This text of 320 B.R. 772 (In Re WorldCom, Inc.) is published on Counsel Stack Legal Research, covering United States Bankruptcy 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
In Re WorldCom, Inc., 320 B.R. 772, 2005 Bankr. LEXIS 160, 44 Bankr. Ct. Dec. (CRR) 73, 2005 WL 332415 (N.Y. 2005).

Opinion

MEMORANDUM DECISION REGARDING DEBTORS’ REQUEST FOR AN ORDER ENFORCING PLAN AND CONFIRMATION ORDER TO BAR PROSECUTION OF ACTIONS TO COLLECT ON CLAIMS INITIATED BY VICTOR O. BROWNING AND OSCAR PINKSTON

ARTHUR J. GONZALEZ, Bankruptcy Judge.

Reorganized Debtor, WorldCom Inc. (which became MCI WorldCom Communications, Inc. after the effective date of the confirmed plan), seeks an order barring, as discharged claims, the prosecution of two putative class actions raising trespass claims concerning its use of fiber optic cable that it installed along certain railroad rights of way.

I. Jurisdiction and Venue

The Court has subject matter jurisdiction over this proceeding pursuant to sections 1334(b) and 157(b) of title 28 of the United States Code. This matter is a core proceeding within the meaning of section *774 157(b)(2)(I) and (0) of title 28 of the United States Code. This Court has retained jurisdiction pursuant to ¶¶ 32(e),(h),(i) & (m) of the order dated October 31, 2003 (the “Confirmation Order”) and §§ 13.02(e),(h),(i) & (m) of the Modified Second Amended Joint Plan of Reorganization (the “Plan”). See In re Johns-Manville Corp., 97 B.R. 174, 180 (Bankr. S.D.N.Y.1989). Venue is properly before this Court, pursuant to section 1409(a) of title 28 of the United States Code.

II. Background

On July 21, 2002 and November 8, 2002, WorldCom, Inc. and certain of its direct and indirect subsidiaries (hereinafter the “Debtors”) commenced cases under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”). By entry of the Confirmation Order on October 31, 2003, this Court confirmed a plan of reorganization (the “Plan”). The Plan became effective on April 20, 2004 (the “Effective Date”). On the Effective Date, the Debtors’ assets vested in MCI WorldCom Communications, Inc. (“MCI”) pursuant to the Plan. 1

The Debtors provide a broad range of communication services in over 200 countries on six continents. Through its core communications service business, which includes voice, data, internet, and international services, the Debtors carry more data over its networks than any other entity. The Debtors were the second largest carrier of consumer and small business long distance telecommunications services in the United States, and provided a broad range of retail and wholesale communications services.

On April 11, 2001, Victor O. Browning filed a lawsuit in the District Court of Leavenworth County, General Claims Division in Browning v. MCI WorldCom Network Services et al., No. 0104-CV-144 (Kan. Dist. Ct. Leavenworth County, Apr. 11, 2001). The defendants removed the case to the federal district court in Kansas, which subsequently was transferred to the Northern District of Oklahoma, where it was pending as Civil Action No. 02-604-H (the “Browning Action”). The Browning Action was administratively closed by the federal court upon notification of the Debtors’ bankruptcy filing. Although the matter was initially pled as a class action, no motion for class certification was filed. On May 12, 2004, Mr. Browning filed a motion to reopen the case, together with a renewed motion for remand to state court.

On March 11, 2004, Oscar Pinkston filed a lawsuit in the Circuit Court of Montgomery County, Alabama. Mr. Pinkston’s lawsuit asserted claims against ITC Deltacom (a Georgia-based telecommunications company) and three fictitious defendants. The lawsuit did not name MCI or the Debtors as defendants. On April 23, 2004, three days after the Effective Date, Mr. Pink-ston filed an amended complaint in the Circuit Court of Montgomery County, similar in all respects to the original complaint, except that MCI was added as a defendant. Pinkston v. ITC Deltacom et al., No.2004-646(TMH) (Ala. Cir. Ct. Montgomery County, filed Mar. 11, 2004) (hereinafter “Pinkston Action.”). By Notice of Removal dated May 28, 2004, MCI removed the Pinkston Action to the United States District Court for the Middle District of Alabama, where it is pending as Civil Action No. 04-523 (MEF-SRW).

Mr. Browning’s claims are founded on theories of trespass and unjust enrichment on behalf of a putative class consisting of the owners of land adjacent to the railroad *775 rights of way within which MCI installed fiber optic cable in Kansas, Arkansas, Indiana, Kentucky, Missouri, Nebraska, and Nevada. Mr. Pinkston raises similar claims on behalf of a putative class of landowners in Alabama.

Both Messrs. Browning and Pinkston (collectively the “Plaintiffs”), allege that although MCI obtained consent for MCI’s installation of fiber optic cable from the railroads, it did not seek consent from adjacent landowners who, according to the Plaintiffs, own the fee interest underlying the railroads’ rights of way. The Plaintiffs seek damages for the alleged post-petition trespass and seek disgorgement of the amounts by which MCI allegedly was unjustly enriched through its operation of the fiber optic cable. In addition, Mr. Browning requests that MCI be permanently enjoined from using and maintaining the fiber optic cables. 2

Mr. Browning’s complaint acknowledges that MCI installed the fiber optic cable in question during the late 1980s. The fiber optic cable at issue in Mr. Pinkston’s complaint was installed in 1985, 1986, and 1992.

MCI requested an Order Enforcing the Plan and Confirmation Order to Bar Prosecution of these two actions. A hearing was held on August 24, 2004. This memorandum decision addresses MCI’s request.

III. Discussion

A. Discharge of Debts

MCI contends that’the continuation of the Plaintiffs’ lawsuit violates the discharge injunction provided by the Bankruptcy Code. The Plaintiffs maintain that their suits are for events that occurred post-petition under a theory of continuing trespass.

Under the Bankruptcy Code, the confirmation of a plan discharges “any debt that arose before the date of such confirmation.” 11 U.S.C. § 1141(d)(1)(A). A “debt” is defined as “liability on a claim,” 11 U.S.C. § 101(12); a “claim” is defined 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, or right to any equitable remedy.” 11 U.S.C. § 101(5). Therefore, it is necessary to determine whether such debts arose before or after the petition date.

The court in In re Chateaugay Corp., 53 F.3d 478 (2d Cir.1995) (Chateaugay II)

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Bluebook (online)
320 B.R. 772, 2005 Bankr. LEXIS 160, 44 Bankr. Ct. Dec. (CRR) 73, 2005 WL 332415, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-worldcom-inc-nysb-2005.