United States v. Schurkman

728 F.3d 129, 2013 WL 4516466, 2013 U.S. App. LEXIS 17842
CourtCourt of Appeals for the Second Circuit
DecidedAugust 27, 2013
Docket12-3079-cv
StatusPublished
Cited by17 cases

This text of 728 F.3d 129 (United States v. Schurkman) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Schurkman, 728 F.3d 129, 2013 WL 4516466, 2013 U.S. App. LEXIS 17842 (2d Cir. 2013).

Opinion

HALL, Circuit Judge:

This appeal presents the issue of whether a district court, under the All Writs Act, 28 U.S.C. § 1651(a), and the Anti-Injunction Act, 22 U.S.C. § 2283, has the authority to enjoin a party from litigating in state *131 court issues arising out of a consent decree which settled a civil action brought against the party in federal court by the United States. Appellant Joseph S. Manne settled an environmental enforcement action brought against him by the United States through a consent decree providing,. inter alia, that Manne would pay the government an amount equal to the fair market value of a parcel of real property owned by Manne. Under the decree, an independent appraiser was engaged to determine the property’s fair market value. After the appraiser issued a report, Manne unsuccessfully challenged the appraised value in federal court. Manne then filed an action in New York Supreme Court, asserting claims against the appraiser for, among others, fraud and negligent misrepresentation. On application by the government, the district court enjoined the state court proceedings. We hold that the Anti-Injunction Act, which permits a federal court to enjoin a state proceeding in certain limited circumstances, including where an injunction is “necessary in aid of [the federal court’s] jurisdiction,” does not permit the district court in this case to enjoin Manne’s state court suit. Accordingly, we vacate the injunction of the district court.

BACKGROUND

In October 2000, after receiving reports of contaminated wells in East Fishkill, Dutchess County, New York, the Environmental Protection Agency (“EPA”) and the New York State Department of Environmental Conservation identified as the primary source of the contamination a septic tank at a site in East Fishkill owned by Jacob Manne, appellant Joseph S. Manne’s father. 1 EPA later discovered a buried acid waste pit on the site that contained lead, perchloroethene, and other hazardous substances.

In February 2001, after incurring significant costs in cleaning up and removing contaminated soil from the site, EPA forwarded a Notice of Potential Liability and Request for Information informing Jacob Manne that EPA considered him a potentially liable party for the response costs incurred in the cleanup. Following Jacob Manne’s death, the United States brought an action against appellant Joseph S. Manne, in his capacity as trustee of the Jacob Manne Irrevocable Trust (the “Trust”), a trust created and funded by Jacob Manne, and against Steven A.-Schurkman, in his capacity as representative for the Estate of Jacob Manne. The United States alleged that shortly after receiving the notice, Jacob Manne had created the Trust, appointed Schurkman as Trustee, and fraudulently transferred cash and real property into the Trust. These assets were subsequently transferred to Joseph S. Manne, the Trust’s. principal beneficiary.

The United ’ States sought reimbursement of approximately $1.5 million in response costs incurred under sections 104 and 107 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9604 and 9607, for cleanup activities undertaken at the site. According to the Amended Complaint, the site was used during the 1960s and 1970s by J. Manne, Inc., a company owned by Jacob Manne that was engaged in the cleaning and repairing of computer chip racks. . J. Manne, Inc.’s work generated toxic waste materials, including tetrachloroethene, trichloroethene, lead, nitric acid,- and sulfuric acid, all of which were stored at the site. The United States also *132 sought to void as fraudulent conveyances the transfers of cash and real property from Jacob Manne to the Trust and to compel the return of those assets to Jacob Manne’s Estate to satisfy the Estate’s liabilities to the United States.

In 2010, the parties reached a settlement, embodied in a Consent Decree which the district court approved in July 2010. Under the terms of the Consent Decree, Manne 2 agreed to pay the United States an amount equal to the appraised value of certain property which had been transferred by Jacob Manne into the Trust (the “Property”). 3 The appraised value of the Property was to be determined by an appraiser selected by the parties. Pursuant to the Consent Decree, the United States would provide a list of at least three appraisers, from which defendants would choose one. The United States would then retain the appraiser to prepare an appraisal report of the Property within six months of the date the appraiser was selected. The parties agreed' that “[t]he Appraised Value of the Property as determined by the Selected Appraiser shall be unreviewable by any Party to this Consent Decree or by the Court.” Consent Decree ¶ 8.

In exchange for payment of the Property’s appraised value, the United States provided défendants with a covenant not to sue or to take administrative action against Manne and ND-4 pursuant to 42 U.S.C. § 9607(a), regarding the contaminated site. Defendants also received protection from contribution actions arising out of the contamination. See 42 U.S.C. § 9613(f)(2). Schurkman, Manne, and ND-4, in turn, covenanted not to sue “the United States, or its contractors or employees, with respect to the [contaminated site] or this Consent Decree.” Consent Decree ¶ 28.

The parties expressly contemplated the approval and enforcement of the Consent Decree by the district court:

The United States and Settling Defendants agree, and this Court by entering this Consent Decree finds, that this Consent Decree has been negotiated by the Parties in good faith, that settlement of this matter will avoid prolonged and complicated litigation between the Parties, and that this Consent Decree is fair, reasonable, and in the public interest. .

Id. ¶ 1(C). The Consent Decree provided that “[t]his Court shall retain jurisdiction over this matter for the purpose of interpreting and enforcing the terms of this Consent Decree,” id. ¶ 39, and that Manne and ND-4 “shall not challenge the terms of this Consent Decree or this Court’s jurisdiction to enter and enforce this Consent Decree,” id. ¶ 1. Following a period of public notice and comment on the Consent Decree, during which no public comments were received, the district court approved and entered the Consent Decree.

In August 2010, the United States provided the names of three appraisers to defendants, who selected DeWan & Schott Appraisal Associates, LLC (“DeWan & Schott”).

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Bluebook (online)
728 F.3d 129, 2013 WL 4516466, 2013 U.S. App. LEXIS 17842, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-schurkman-ca2-2013.