Polysat, Inc. v. Union Tank Car Co. (In Re Polysat, Inc.)

152 B.R. 886, 28 Collier Bankr. Cas. 2d 1157, 1993 Bankr. LEXIS 1073, 24 Bankr. Ct. Dec. (CRR) 219, 1993 WL 119740
CourtUnited States Bankruptcy Court, E.D. Pennsylvania
DecidedApril 15, 1993
Docket16-12734
StatusPublished
Cited by35 cases

This text of 152 B.R. 886 (Polysat, Inc. v. Union Tank Car Co. (In Re Polysat, Inc.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Polysat, Inc. v. Union Tank Car Co. (In Re Polysat, Inc.), 152 B.R. 886, 28 Collier Bankr. Cas. 2d 1157, 1993 Bankr. LEXIS 1073, 24 Bankr. Ct. Dec. (CRR) 219, 1993 WL 119740 (Pa. 1993).

Opinion

MEMORANDUM OPINION

BRUCE I. FOX, Bankruptcy Judge:

The chapter 11 debtor, Polysat, Inc., has filed an adversary proceeding seeking in-junctive relief against the defendant, Union Tank Car Company (hereinafter “UTCC”). The debtor contends that the discharge injunction found in 11 U.S.C. § 524, which arose by confirmation of the debtor’s plan under section 1141(d), bars UTCC from proceeding with litigation it commenced against the debtor in the Pennsylvania Court of Common Pleas. UTCC opposes the relief sought and argues that its claim against the debtor was not discharged.

The debtor initially sought preliminary injunctive relief. At a conference, both parties acknowledged that the relevant facts were not in dispute, and that the legal issue concerning the scope of the debtor’s bankruptcy discharge required an analysis of the Bankruptcy Code provisions found in sections 365 and 1141. Further, they agreed that this court (rather than the state court) should interpret these statutory provisions.

Accordingly, and with the agreement of both parties, I entered an order enjoining the defendant from prosecuting its state court litigation against the debtor, pending further order of this court. The parties also agreed that, in lieu of requiring the defendant to file an answer to the debtor’s complaint, cross-motions for summary judgment under Fed.R.Bankr.P. 7056 would instead be filed. Those two summary judgment motions are presently before me.

*888 As just noted, both parties concur that there are no material facts in dispute. They differ, however, on the scope of this court’s jurisdiction. While defendant UTCC suggests that this proceeding is non-core (UTCC Memorandum at 1-2), I agree with the debtor’s jurisdictional assertion. As the instant proceeding concerns the scope of the discharge injunction arising from sections 524 and 1141 of the Code, it is a core proceeding under 28 U.S.C. §§ 157(b)(2)(A), (I) or (0). Accord, e.g., In re Jacobs, 149 B.R. 983, 989 (Bankr. N.D.Okla.1993); see Beard v. Braunstein, 914 F.2d 434, 444 (3d Cir.1990) (a core proceeding “invokes a substantive right provided by title 11 or ... is a proceeding that, by its nature, could arise only in the context of a bankruptcy case”) (quoting Matter of Wood, 825 F.2d 90, 97 (5th Cir. 1987)); In re Mankin, 823 F.2d 1296, 1308 (9th Cir.1987), cert. denied, 485 U.S. 1006, 108 S.Ct. 1468, 99 L.Ed.2d 698 (1988) (core proceeding is based on a right derived from the federal bankruptcy law). Accordingly, I shall enter a final judgment in this proceeding.

. I.

On April 25, 1986, the debtor’s predecessor — Saturn Chemical, Inc. — entered into a lease agreement with UTCC for the rental of various railroad tank cars which were to be used to transport raw material or finished goods. Under the terms of that agreement, the lessee could obtain the use of specific tank cars from UTCC by entering into riders to the lease: one rider per tank car. The parties ultimately entered into three such riders: two by Saturn Chemical, Inc. and one by Polysat, Inc. (Ex. G, UTCC Cross-Motion for Summary Judgment.)

On June 20, 1989, the debtor filed a voluntary petition in bankruptcy under chapter 11. Among the claims listed on the debtor’s schedules was a prepetition lease claim of UTCC, which was not disclosed as disputed, unliquidated or contingent. 1 The debtor did not assume or reject the lease agreement at any time during its chapter 11 case. See generally 11 U.S.C. § 365. Nor did UTCC seek a court order compelling the debtor to assume or reject the lease agreement. See generally 11 U.S.C 365(d)(2). Furthermore, it is agreed that the debtor tendered no payments to UTCC after the bankruptcy filing in connection with its use or possession of the three tank cars.

There is no question that UTCC knew of the debtor’s bankruptcy filing prior to confirmation. Not only did it receive such notice along with other creditors, but it was a defendant in a preconfirmation adversary proceeding, Adv. No. 89-0976F, brought in this court by the debtor, concerning a chemical spill from one of the leased tank cars.

On July 26, 1991, an order was entered confirming the debtor’s chapter 11 plan of reorganization. The debtor’s plan did not provide for the assumption or rejection of the lease. See generally 11 U.S.C. § 1123(b)(2). By virtue of the debtor’s disclosure of UTCC’s uncontroverted prepetition claim in its bankruptcy schedules, UTCC holds an allowed unsecured claim. 11 U.S.C. § 1111(a). Pursuant to the debt- or’s confirmed plan, UTCC has already received (or will receive) a distribution of *889 fifteen percent on its unsecured claim of $3,974.95, as reported in the debtor’s schedules.

Although UTCC had actual notice of, and received all formal notices mailed in, the debtor’s bankruptcy case, UTCC has never filed a request for payment of an administrative expense claim in the debtor’s bankruptcy case. See generally 11 U.S.C. § 503(a). Rather, UTCC made several postconfirmation demands of the debtor for the return of the three tank cars.

On February 4, 1992, after the debtor failed to return the cars, UTCC filed, in Philadelphia Common Pleas Court, an action in replevin and breach of contract against the debtor seeking damages and the return of the tank cars. Court of Common Pleas, Philadelphia County, February Term 1992, No. 0343. On or about June 12, 1992, UTCC filed a motion for a writ of seizure. On June 19, 1992, the state court entered a consent order for the issuance of a writ of seizure pursuant to Pa.R.Civ.P. 1075.1. Thereafter, the debtor returned the tank cars.

On August 4, 1992, UTCC filed in state court an amended complaint seeking monetary damages (and fees and costs) from the debtor in excess of $30,000.00 for nonpayment of the three tank car leases, based upon theories of contract, conversion, quasi-contract and quantum meruit. UTCC asserted that damages began to accrue as of July 1989.

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Bluebook (online)
152 B.R. 886, 28 Collier Bankr. Cas. 2d 1157, 1993 Bankr. LEXIS 1073, 24 Bankr. Ct. Dec. (CRR) 219, 1993 WL 119740, Counsel Stack Legal Research, https://law.counselstack.com/opinion/polysat-inc-v-union-tank-car-co-in-re-polysat-inc-paeb-1993.