Sound Rivers, Inc. v. Taylor (In re Taylor)

572 B.R. 592
CourtUnited States Bankruptcy Court, E.D. North Carolina
DecidedMay 31, 2017
DocketCASE NO. 15-02730-5-SWH; ADVERSARY PROCEEDING 15-00099-5-SWH
StatusPublished
Cited by2 cases

This text of 572 B.R. 592 (Sound Rivers, Inc. v. Taylor (In re Taylor)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sound Rivers, Inc. v. Taylor (In re Taylor), 572 B.R. 592 (N.C. 2017).

Opinion

SUPPLEMENTAL OPINION ON ORDER REGARDING CROSS MOTIONS FOR SUMMARY JUDGMENT

Stephani W. Humrickhouse, United States Bankruptcy Judge

This matter came before the court on cross-motions for summary judgment. A hearing was held in Raleigh, North Carolina on September 29, 2016. The court entered its Order Regarding Cross Motions for Summary Judgment on March 31, 2017. This supplemental opinion is intended to provide the parties with a more complete explanation of the court’s determination that summary judgment in favor of the plaintiffs is appropriate on the very limited basis that plaintiffs’ claims for declaratory and injunctive relief regarding allegations of violations of the Clean Water Act (CWA), 33 U.S.C. §§ 1311, 1342, and the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. § 6972 are not “debts” as defined by the Bankruptcy [596]*596Code.1

BACKGROUND

The defendants in this matter, Donald and Annie Taylor, own and operate a swine farm in Jones County, North Carolina. The farm sits along a creek in Jones County known as Long Branch, a tributary of the Trent River, which by extension flows into the Neuse River. Plaintiffs are Sound Rivers, Inc. f/k/a Neuse Riverkeeper Foundation (Sound Rivers), a North Carolina not-for-profit organization aiming to preserve waterways within the State of North Carolina, and Waterkeeper Alliance, Inc. (Waterkeeper), a national non-profit organization representing the interests of watershed groups like Sound Rivers.

In July 2012, plaintiffs filed a civil action in the United States District Court for the Eastern District of North Carolina, North Carolina Environmental Justice Network, Neuse Riverkeeper Foundation, Inc., and Waterkeeper Alliance, Inc. vs. Mr. Donald Taylor and Ms. Annie Taylor, individually and d/b/a Taylor Finishing, McLawhorn Livestock Farm, Inc., Mr. Justin T. McLawhorn and Mr. Aaron McLawhorn, Case Number: 4:12-cv-00154-D (the Lawsuit), alleging swine waste or effluent from defendants’ farming operations is improperly handled allowing it to discharge into Long Branch Creek in violation of the CWA and the RCRA. The Lawsuit is a “citizen suit,” a statutorily created private right of action under which private citizens are permitted to seek enforcement of federal environmental laws. There are a total of eleven claims for relief plead in the Lawsuit. Eight of the eleven claims seek injunctive relief.

On May 14, 2015, defendants filed a petition under chapter 11 of the Bankruptcy Code and the Lawsuit was stayed as to defendants by virtue of the automatic stay provisions of 11 U.S.C. § 362. On September 15, 2015, plaintiffs filed a complaint for declaratory relief initiating this adversary proceeding (the Adversary Proceeding). The Adversary Proceeding complaint does not ask nor require this court to decide whether defendants violated the CWA and/or RCRA as alleged in the Lawsuit. Rather, the issue presented is whether the relief requested in the eight injunctive claims are “debts” defined by 11 U.S.C. § 101(12).

On October 7, 2015, defendants filed their answer to the Adversary Proceeding complaint and filed a motion for summary judgment. In their third defense, which disputes the plaintiffs’ standing, defendants assert plaintiffs are unable to identify an injury in fact which would be redressable by this court, an essential element of any request for declaratory relief. Plaintiffs filed a competing motion for summary judgment on August 25, 2016. Defendants filed their response to the plaintiffs’ motion for summary judgment on September 2, 2016. At the outset of defendants’ response to plaintiffs’ motion for summary judgment defendants argue that because plaintiffs have not yet received any relief in the Lawsuit, the effect of asking this court to determine whether injunctive relief is a debt is a prohibited advisory opinion.

The court has wrangled with this matter from every conceivable angle. After extensive review of the briefs and the arguments of the parties, the court notes that the relief requested by the plaintiffs has many of the trappings of an advisory opinion and, quite frankly, an advisory opinion determination would be an “easy out” for the court. But, alas, taking the easy way [597]*597out in this case would not benefit either party or the bankruptcy estate.

Federal courts may not “give opinionfs] advising what the law would be upon a hypothetical state of facts.” Chafin v. Chafin, 568 U.S. 165, 133 S.Ct. 1017, 1023, 185 L.Ed.2d 1 (2013)(internal citations omitted). It is currently unknown whether defendants will ultimately be liable to plaintiffs under any of the various theories asserted in the Lawsuit. Therefore, issuing a declaratory judgment in fact may be premature. However, the court is acutely aware that understanding whether a debt, and by extension a claim, exists and whether and how it can be treated is central to an effective reorganization which has been long sought in this case. The court is sensitive to the not insubstantial financial burden the Lawsuit and prolonged uncertainty of reorganization has placed on the debtors. Thus, despite an unknown outcome in the Lawsuit, this court will exercise its discretion and opt to find that its determination on whether in-junctive relief is a debt does not give rise to a prohibited advisory opinion, and is inclined to take a more flexible and holistic view of this declaratory judgment Adversary Proceeding and its relation to the underlying bankruptcy. A declaratory judgment serves the useful purpose of giving certainty to a bankruptcy case which is otherwise at an impasse without an answer on the issue of what constitutes a “debt.” A declaratory judgment affoids the debtors, and all creditors more certainty about the debtors’ ability to effectively reorganize. Moreover, policy favors declaratory judgments “(1) when the judgment will serve a useful purpose in clarifying and settling the legal relations in issue, and (2) when it will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the preceding.” Aetna Casualty & Surety Co. v. Quarles, 92 F.2d 321, 325 (4th Cir. 1937). The court has, therefore, proceeded to a determination of this Adversary Proceeding and as will be explained more fully below, that the injunc-tive relief requested in the Lawsuit is not a “debt” as defined by 11 U.S.C. § 101(12).

DISCUSSION

Standing In the Context of Environmental Litigation

As a threshold matter, defendants challenge subject matter jurisdiction based upon a lack of constitutional standing. Article III of the United States Constitution limits jurisdiction of federal courts to actual “cases” or “controversies.” U.S. Const. Art III, § 2, cl. 1. Defendants assert plaintiffs bear the burden of proving standing in both the Adversary Proceeding and the Lawsuit; and, as such, must establish: (1) an injury in fact; which is, (2) concrete and particularized; and (3) is actual or imminent. Lujan v. Defenders of Wildlife,

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Cite This Page — Counsel Stack

Bluebook (online)
572 B.R. 592, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sound-rivers-inc-v-taylor-in-re-taylor-nceb-2017.