In the Matter of Chicago, Milwaukee, St. Paul & Pacific Railroad Company, Debtor. Cmc Heartland Partners v. Union Pacific Railroad

78 F.3d 285
CourtCourt of Appeals for the Seventh Circuit
DecidedApril 3, 1996
Docket95-1412 & 95-2986
StatusPublished
Cited by28 cases

This text of 78 F.3d 285 (In the Matter of Chicago, Milwaukee, St. Paul & Pacific Railroad Company, Debtor. Cmc Heartland Partners v. Union Pacific Railroad) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In the Matter of Chicago, Milwaukee, St. Paul & Pacific Railroad Company, Debtor. Cmc Heartland Partners v. Union Pacific Railroad, 78 F.3d 285 (7th Cir. 1996).

Opinion

TERENCE T. EVANS, Circuit Judge.

Like the Energizer Bunny, litigation growing out of the Milwaukee Road’s bankruptcy proceedings keeps going and going and going. Today, we issue another opinion — to be added to more than a dozen others — in a case stemming from the reorganization of the railroad which began in 1977.

The Chicago, Milwaukee, St. Paul & Pacific Railroad Company, better known as the Milwaukee Road, came to the end of the line in 1977 when it petitioned for reorganization pursuant to § 77 of the Bankruptcy Act of 1898, formerly 11 U.S.C. § 205 (1976) (repealed 1978). The United States District Court for the Northern District of Illinois served as the reorganization court.

In accordance with procedures under the Bankruptcy Act, the reorganization court established deadlines, or bar dates, for the filing of claims against Milwaukee Road, the estate, and its trustee. The first bar date was September 10, 1985, which established the deadline for all post-petition claims (claims arising against Milwaukee Road during the period of reorganization). Notice of this bar date was sent to all known creditors and published in The Wall Street Journal.

On November 12, 1985, the reorganization court entered a consummation order. This order became effective on November 25, 1985, the consummation date. The consummation order set forth a new bar date of December 26, 1985, for claims that arose between the prior September 10 bar date and the November 25 consummation date. This order bars and forever discharges all untimely claims against the trustee, the Milwaukee Road, and its successors and assigns.

The question we face, for the second time, is whether certain claims of the Union Pacific Railroad are among those properly barred by the reorganization court. The claims arise out of an environmental cleanup of a railyard located within the Commencement Bay/Near-shore Tideflats Superfund site in Tacoma, Washington. Union Pacific purchased the land from the Milwaukee Road in 1980 and, as the owner of the land (at least the owner at the time the appeal was filed but more about that later), faces liability for the cleanup. It filed claims for the cleanup against CMC Heartland Partners, successor-in-interest to the Milwaukee Road, under both the Comprehensive Environmental Response, *287 Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9601 et seq., and the Model Toxics Control Act of the State of Washington, Wash.Rev.Code Ch. 70.105D.010 et seq.

We first encountered the question in 1993. A brief review of our decision in In re Chicago, Milwaukee, St. Paul & Pacific R.R., 3 F.3d 200 (7th Cir.1993), will set the stage for our analysis of the present appeal.

We noted that the situation required us to attempt to reconcile conflicting goals of laws that deal with environmental cleanups and those of the bankruptcy code designed to give debtors a “fresh start.” In that context we determined that claims subject to the claims bar included “contingent claims.” In the context of CERCLA, a contingent claim exists, we said, when a party potentially liable for response costs under the Act can tie a debtor to a “known release of a hazardous substance.” At 202. Under that formulation we determined that Union Pacific’s CERC-LA claim was barred.

However, the Washington state Model Act became effective in 1989, four years after the bar date. We joined other courts, e.g., the Court of Appeals for the Third Circuit —In re Penn Central Transp. Co., 944 F.2d 164 (1991), cert. den. 503 U.S. 906, 112 S.Ct. 1262, 117 L.Ed.2d 491 (1992)—in concluding that claims based on a statute enacted after the discharge date are not barred.

That was not the end of the issue. CMC argued that two Washington statutes, the Water Pollution Control Act, Wash.Rev.Code Ch. 90.48, and the Hazardous Waste Management Act, Wash.Rev.Code Ch. 70.105, which existed prior to the bar date, provided the same or similar relief as the Model Act and thus barred the claim. We remanded the case to the reorganization court for a determination “as to what liabilities under the Model Act existed in 1985 by virtue of Washington state statutes then in effect.”

On remand, the district court did an admirably thorough job. Judge George W. Lind-berg referred the issue to Magistrate Judge W. Thomas Rosemond, Jr., who compared the Model Act to those two statutes and a third, which CMC added to the mix after remand, the Washington nuisances statute, Wash.Rev.Code Ch. 7.48.140. Judge Rose-mond issued a recommendation that the claim not be barred. Judge Lindberg considered objections to the recommendation and, with minor modifications, also concluded that the claim was not barred — that Union Pacific was not subject to the same liability for cleanup of the railyard under prior Washington statutes as it was under the Model Act and, therefore, its claim for contribution from CMC did not exist prior to the enactment of the Model Act. CMC appeals that decision as well as a later decision on its Rule 60 motion in the district court based on newly discovered evidence.

In addition, because Union Pacific sold the land to the Port of Tacoma during the pen-dency of the appeal, Union Pacific seeks to substitute the Port as the party prosecuting this case. We decline to substitute parties. This appeal will proceed with the original cast. Given the outcome of this appeal and the agreement between Union Pacific and the Port, we find that there is no reason to order substitution.

As to the appeal itself, our standard of review in the many Milwaukee Road cases was set out some time ago:

Because the district court’s entry of an injunction in this case was both a bankruptcy decision and an interpretation of its prior consummation order, we review the court’s decision to bar [the creditor’s] claims for abuse of discretion. Nonetheless, in applying the abuse of discretion standard, we do not give equal deference to every aspect of a court’s decision. The abuse of discretion standard is used to evaluate the reorganization court’s application of the facts to the appropriate legal standard, and the factual findings and legal conclusions underlying such decisions are evaluated under the clearly erroneous and de novo standards, respectively.

In re Chicago, Milwaukee, St. Paul & Pacific R.R., 974 F.2d 775, 779-80 (7th Cir., 1992). The decision on the Rule 60 motion is subject to considerably more deference. It is reviewed for an abuse of discretion.

The railyard in Tacoma was owned and used by the Milwaukee Road from the early years of this century. In 1980, Union Pacific, *288

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Bluebook (online)
78 F.3d 285, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-the-matter-of-chicago-milwaukee-st-paul-pacific-railroad-company-ca7-1996.