Nickum v. Brakegate, Ltd.

128 B.R. 648, 1991 U.S. Dist. LEXIS 8686, 1991 WL 111452
CourtDistrict Court, C.D. Illinois
DecidedJune 19, 1991
Docket91-3088-91-3092 and 91-3155
StatusPublished
Cited by4 cases

This text of 128 B.R. 648 (Nickum v. Brakegate, Ltd.) is published on Counsel Stack Legal Research, covering District Court, C.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nickum v. Brakegate, Ltd., 128 B.R. 648, 1991 U.S. Dist. LEXIS 8686, 1991 WL 111452 (C.D. Ill. 1991).

Opinion

OPINION

RICHARD MILLS, District Judge:

A nimble attempt to bootstrap state court actions into federal cases by way of the bankruptcy court.

Defendants Grefco, Inc. and General Refractories Co. (Grefco) removed these six actions (which we have consolidated for decision) to this Court and ask that we transfer them to the United States Bankruptcy Court for the Southern District of New York.

We must refuse the invitation.

Each of these actions (several of which date back to 1987) were commenced in Illinois state court against Grefco and other Defendants seeking recovery for personal injuries allegedly caused by the Plaintiffs’ and their family members’ exposure to asbestos-containing products and diatoma-ceous earth. On October 9, 1990, Grefco was granted leave by the state court to file a third-party action against the Manville Corporation Asbestos Disease Compensation Fund (Manville Fund) seeking contribution pursuant to the Illinois Contribution Among Joint Tortfeasors Act, Ill.Rev.Stat. ch. 70, 11301 et seq. 1

On November 23,1990, the United States District Courts for the Eastern and Southern Districts of New York entered an order *650 staying all proceedings against the Man-ville Fund. On February 13, 1991, the district courts certified a non-opt out class action for all persons who “ha[ve] or will have claims [against the Manville Fund] either for wrongful death or personal injury caused by exposure to asbestos, or a claim for warranty, guarantee, indemnification or contribution arising from an obligation of [the Manville Fund] for the payment of a death or personal injury claim.”

The state court entered an order staying all proceedings against the Manville Fund in these actions. 2 The effect of the state court’s order is that the Plaintiffs cannot continue to pursue their claims against the Manville Fund, nor can Grefco and the other Defendants pursue their contribution claims against the Manville Fund.

At a pretrial hearing in Swank on April 5, 1991, Grefco’s counsel advised the state court of his intent to remove Swank and the other cases to this Court. One of the motions considered at that hearing was Plaintiff’s motion to set Swank for trial.

Grefco filed notices of removal in all six actions, contending that these cases are now “related to” the Manville Corporation’s bankruptcy and thus should be transferred to the bankruptcy court “which created this quandary.” Grefco has moved to transfer these cases to the Bankruptcy Court for the Southern District of New York and Plaintiffs have moved to remand the direct actions to state court.

Section 1452 provides that

[a] party may remove any claim or cause of action in a civil action ... to the district court for the district where such civil action is pending, if such district court has jurisdiction of such claim or cause of action under section 1334 of this title.

28 U.S.C. § 1452(a). Section 1334 provides that the district courts have original jurisdiction “of all civil proceedings arising under title 11, or arising in or related to cases under title 11.” Id. § 1334(b). The court to which such claim is removed may remand the claim “on any equitable ground.” Id. § 1452(b).

In support of its notices of removal, Grefco argues that these cases are “related to” the Manville bankruptcy because

the outcome of these proceedings will have an effect on the estate being administered in bankruptcy since the results of plaintiffs’ action[s] and the third party action[s] will alter the Manville Trust’s rights, liabilities, options or freedom of action and will impact the handling and administration of the bankrupt estate and because Illinois law requires resolution of the personal injury claim and the contribution claim in the same proceeding.

Grefco’s motive in seeking to remove these actions lies within the Illinois Code of Civil Procedure. Specifically, 1Í 2-1117 provides that, if Grefco can establish that it was less than 25% at fault for plaintiffs’ injuries, it will only be severally liable for all non-medical damages. Ill.Rev.Stat. ch. 110, 112-1117 (1989). Grefco’s inability to continue its third-party action against the Man-ville Fund decreases its chances of successfully establishing that it was less than 25% at fault for Plaintiffs’ injuries. To avoid this result, Grefco is attempting to use Manville’s bankruptcy and our § 1334(b) “related to” jurisdiction to boot-strap these cases into a single forum.

The general test for determining whether a civil proceeding is “related to” bankruptcy is “whether the outcome of the proceeding could conceivably have any effect on the estate being administered in bankruptcy.” Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir.1984). Furthermore, an action is related to bankruptcy “if the outcome could alter the debtor’s rights, liabilities, options, or freedom of action (either positively or negatively) and which in any way impacts upon the handling and administration of the bankrupt estate.” Id.

In Pacor, the Higgins brought a products liability action against Pacor in a Pennsylvania state court seeking damages for Mr. Higgins’ work-related exposure to *651 asbestos supplied by Pacor. Pacor then filed a third-party complaint against Johns-Manville for indemnification claiming that Manville was the original manufacturer of the asbestos. On August 26, 1982, Man-ville filed for bankruptcy in the Southern District of New York.

In September 1982, the Pennsylvania state court severed the Pacor-Manville third-party action from the Higgins-Pacor direct action. Shortly before the state court began trial in the Higgins-Pacor action, Pacor filed a petition for removal in the bankruptcy court for the Eastern District of Pennsylvania, seeking to remove the entire Higgins-Pacor-Manville dispute. Simultaneously, Pacor moved to transfer the action to the Southern District of New York where the Manville bankruptcy was pending.

The bankruptcy court held that Pacor’s petition for removal was untimely and thus ordered the action remanded to state court. Upon appeal, the district court held that the removal was timely, however, the Higgins-Pacor direct action was not “related to” the Manville bankruptcy and thus would be remanded to state court. On the other hand, the Pacor-Manville third-party action was “related to” the bankruptcy and thus would be transferred to the Southern District of New York.

Pacor appealed that portion of the district court’s order remanding the direct action to state court. After a lengthy jurisdictional discussion, the Third Circuit addressed the merits of the issue and affirmed the district court. Pacor, Inc., 743 F.2d at 994-96.

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

Related

In Re Federal-Mogul Global, Inc.
282 B.R. 301 (D. Delaware, 2002)
Luevano v. Dow Corning Corp.
183 B.R. 751 (W.D. Texas, 1995)
McCratic v. Bristol-Myers Squibb and Co.
183 B.R. 113 (N.D. Texas, 1995)

Cite This Page — Counsel Stack

Bluebook (online)
128 B.R. 648, 1991 U.S. Dist. LEXIS 8686, 1991 WL 111452, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nickum-v-brakegate-ltd-ilcd-1991.