Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-04-02627/USCOURTS-ca8-04-02627-0/pdf.json

Nature of Suit Code: 423
Nature of Suit: Bankruptcy Withdrawal 28 USC 157
Cause of Action: 

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United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 04-2627

___________

United States of America, *

*

 Plaintiff/Appellee, *

*

v. *

*

William Martin Gurley, *

* Appeal from the United States

 Defendant/Appellant, * District Court for the Eastern

* District of Arkansas.

George E. Mills, Jr., *

*

 Trustee, *

*

State of Arkansas, Arkansas *

Department of Environmental Quality, *

*

 Intervenor Below/Appellee. *

__________

Submitted: October 12, 2005

Filed: January 20, 2006

___________

Before RILEY, HANSEN, and COLLOTON, Circuit Judges. 

___________

RILEY, Circuit Judge.

William M. Gurley (Gurley) is an owner/operator of two hazardous waste sites:

the Gurley Pit in Edmondson, Arkansas (Edmondson site), and the South 8th Street

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The Honorable Stephen M. Reasoner, United States District Judge for the

Eastern District of Arkansas, now deceased.

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site in West Memphis, Arkansas (West Memphis site). Gurley was found liable for

response costs for cleanup of the Edmondson site. The government also obtained a

declaratory judgment for liability at the Edmondson site for future response costs.

Gurley later filed for bankruptcy in Florida. The government filed a proof of claim

in the bankruptcy court for response costs and interest for the Edmondson site

pursuant to the existing judgment and declaratory judgment, and also for response

costs for the West Memphis site. Gurley moved to withdraw the reference to the

contested matter, and the court transferred the matter to the district court in

Arkansas.1

 Gurley objected, arguing (1) the court had no subject matter jurisdiction,

and (2) the action was never commenced because the government did not serve him

with a complaint, therefore any properly filed complaint would be time-barred. The

district court disagreed and ultimately entered judgment against Gurley. Gurley

moved to alter or amend the judgment, contending the start date for calculating

interest was incorrect. The court denied the motion and Gurley’s subsequent motion

for reconsideration. Gurley appeals. We affirm.

I. BACKGROUND

In March 1992, Gurley was found liable under the Comprehensive

Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C.

§ 9601-9675, for over $1.7 million in response costs the government had incurred

cleaning the Edmondson site. United States v. Gurley Refining Co., 788 F. Supp.

1473, 1484 (E.D. Ark. 1992), aff’d sub nom. United States v. Gurley, 43 F.3d 1188

(8th Cir. 1994). The district court also awarded prejudgment interest and granted the

United States a declaratory judgment for all future response costs associated with the

Edmondson site, id. at 1485, estimated at over $6 million, United States v. Gurley,

317 F. Supp. 2d 870, 874 (E.D. Ark. 2004). In July 1995, Gurley filed a Chapter 7

petition for bankruptcy in a Florida bankruptcy court. Pursuant to the bankruptcy

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court’s order, the government filed a proof of claim on April 24, 1996, then an

amended proof of claim on March 23, 1998, seeking response costs for the

Edmondson site, including the amount for which the government previously obtained

a judgment, post-judgment response costs pursuant to the declaratory judgment, and

interest. The government’s proof of claim also sought response costs for the West

Memphis site, seeking response costs through November 30, 1997, unliquidated

response costs after that date, and interest. Gurley filed an objection to the proof of

claim, then filed a motion in the Middle District of Florida to withdraw the reference

of the contested matter from the bankruptcy court to the district court. The district

court granted the motion, then transferred venue to the Eastern District of Arkansas.

The government moved for summary judgment on (1) the Edmondson site

based upon the previously granted declaratory judgment, and (2) the West Memphis

site for past and future response costs. The district court granted the government

partial summary judgment on its proof of claim and set trials on the issues of response

costs for the Edmondson site under the declaratory judgment against Gurley, Gurley’s

liability for the West Memphis site, and response costs for the West Memphis site.

The court rejected Gurley’s arguments that the government did not serve him with a

complaint on the matter, and that Gurley had been denied the right to answer. The

court held an evidentiary hearing, and entered judgment against Gurley. Following

a bench trial on the amount of response costs, the court ordered further briefing on

this issue. Gurley made no argument regarding the start date for accrual of interest.

The court issued its decision, holding the government is entitled to (1) almost $14

million for the Edmondson site response costs plus interest from the dates of

expenditure through the date judgment was entered on June 30, 2001; (2) almost $7

million for the West Memphis site response costs plus interest from the date the

government filed its proof of claim on April 24, 1996, through July 24, 2002; and (3)

additional unliquidated interest accruing after July 24, 2002. With respect to the

accrual date for interest based on the date of the proof of claim filing, the court held

the government is entitled to interest from “the later of (i) the date payment of a

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specified amount is demanded in writing, or (ii) the date of the expenditure

concerned.” Gurley, 317 F. Supp. 2d at 880 (quoting 42 U.S.C. § 9607).

Gurley moved to alter or amend the judgment, arguing the start date for

calculating interest should have been January 1, 2001, the date the government

provided certified costs documentation to Gurley, not the date of the government’s

demand or expenditures. Gurley then filed an amended and supplemental motion to

alter or amend the judgment, arguing the start date for calculating interest should have

been (1) July 26, 2002, the date the government rested its case in the cost recovery

trial, or alternatively (2) January 1, 2001. The court denied Gurley’s motions on the

ground “[n]ew arguments cannot be raised for the first time in a Motion to Alter or

Amend Judgment under rule 59(e).” Gurley filed a motion to reconsider, which was

denied.

II. DISCUSSION

A. Subject Matter Jurisdiction

Gurley argues the Arkansas district court lacked subject matter jurisdiction

because the government never brought an action or filed a complaint, but only filed

its proof of claim in the bankruptcy court. Gurley primarily relies on two cases. See

In re C & G Excavating, Inc., 217 B.R. 64 (Bankr. E.D. Pa. 1998), aff’d sub nom.

Rhodes v. C & G Excavating, Inc., No. Civ.A. 98-6274, 1999 WL 820204 (E.D. Pa.

Sept. 29, 1999); Easley v. Pettibone Mich. Corp., 990 F.2d 905 (6th Cir. 1993). The

government responds the district court had subject matter jurisdiction to adjudicate

Gurley’s objection to the government’s proof of claim in Gurley’s bankruptcy

proceeding under 28 U.S.C. § 1334(b). The government is correct.

Under 28 U.S.C. § 1334(b), district courts have original jurisdiction over

bankruptcy cases. The statute provides: “notwithstanding any Act of Congress that

confers exclusive jurisdiction on a court or courts other than the district courts, the

district courts shall have original but not exclusive jurisdiction of all civil

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proceedings arising under title 11, or arising in or related to cases under title 11.” Id.

§ 1334(b). District courts, however, need not adjudicate these cases; they may refer

them to bankruptcy courts: “Each district court may provide that any or all cases

under title 11 and any or all proceedings arising under title 11 or arising in or related

to a case under title 11 shall be referred to the bankruptcy judges for the district.” Id.

§ 157(a).

Bankruptcy courts may hear all bankruptcy cases and their “core proceedings”:

“Bankruptcy judges may hear and determine all cases under title 11 and all core

proceedings arising under title 11, or arising in a case under title 11, referred under

subsection (a) of this section, and may enter appropriate orders and judgments,

subject to review under section 158 of this title.” Id. § 157(b)(1). Core proceedings

include “allowance or disallowance of claims against the estate.” Id. § 157(b)(2)(B).

Adjudication of the filing of and objection to a proof of claim in a bankruptcy case

is a core proceeding arising under Title 11. In re Wood, 825 F.2d 90, 97 (5th Cir.

1987) (“If the proceeding is one that would arise only in bankruptcy, it is also a core

proceeding; for example, the filing of a proof of claim or an objection to the discharge

of a particular debt.”).

While district courts may refer bankruptcy cases to bankruptcy courts, when

“resolution of the proceeding requires consideration of both title 11 and other laws

of the United States regulating organizations or activities affecting interstate

commerce,” the district court “shall, on timely motion of a party,” withdraw reference

of the proceedings to the bankruptcy court. 28 U.S.C. § 157(d). Withdrawing the

reference and returning adjudication of a proof of claim to the district court does not

change the proceeding’s bankruptcy nature or affect the district court’s subject matter

jurisdiction granted under 28 U.S.C. § 1334(b). See, e.g., In re Nat’l Gypsum Co.,

134 B.R. 188, 192-93 (N.D. Tex. 1991).

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CERCLA proofs of claim are no exception to this rule. The Bankruptcy Code

defines a “claim” in part as a “right to payment, whether or not such right is reduced

to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,

disputed, undisputed, legal, equitable, secured, or unsecured.” 11 U.S.C.

§ 101(5)(A). The Code also provides any creditor may file a proof of claim. Id.

§ 501(a). The government’s proof of claim fits these broad definitions. The

government, as a creditor, asserted a right to payment, part of which had been reduced

to judgment regarding the Edmondson site, part of which was the subject of a

declaratory judgment regarding that site, and part of which was based on liability for

liquidated and unliquidated response costs for the West Memphis site. And while

district courts have exclusive jurisdiction over controversies arising under CERCLA,

see 42 U.S.C. § 9613(b), this is not inconsistent with the district court in this case

having jurisdiction over adjudication of the government’s CERCLA proof of claim.

Gurley’s cited cases are not to the contrary. See C & G Excavating, 217 B.R.

at 66; Easley, 990 F.2d at 912. Gurley argues these cases stand for the proposition

that the filing of a proof of claim in bankruptcy court does not take the place of the

necessary step of commencing an action by the filing of a complaint in district court.

As the government correctly points out, both of Gurley’s cited cases involved

personal injury claims and a plan of reorganization that provided tort plaintiffs would

file suit and recover from insurance outside of the bankruptcy process. See C & G

Excavating, 217 B.R. at 65 & n.3; Pettibone Corp. v. Easley, 935 F.2d 120, 121 (7th

Cir. 1991). Gurley’s plan contained no such provision. Thus, any such cases with

language regarding the necessity to file outside of the bankruptcy process do not

apply here.

B. Personal Jurisdiction and Service of Process

Gurley argues the district court did not have personal jurisdiction over him

because he was not served by the government with a complaint. Gurley is incorrect.

By filing its proof of claim in the bankruptcy proceeding, the government participated

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in the proceeding under 28 U.S.C. § 1334 to share in the recovery of Gurley’s estate’s

assets being held in rem by the bankruptcy trustee. See Tenn. Student Assistance

Corp. v. Hood, 541 U.S. 440, 448 (2004) (“The discharge of a debt by a bankruptcy

court is similarly an in rem proceeding.”); Katchen v. Landy, 382 U.S. 323, 327

(1966) (reasoning bankruptcy courts have jurisdiction to adjudicate controversies

relating to the bankrupt’s property). Because it was an in rem proceeding, there was

no need to establish personal jurisdiction over Gurley. Further, under the Federal

Rules of Bankruptcy Procedure, which apply to adjudication of proofs of claim

(instead of the Federal Rules of Civil Procedure), see Fed. R. Bankr. P. 7002, 7003,

there was no need for the government to issue a summons or serve a complaint. Fed.

R. Bankr. P. 3001-3005. 

C. CERCLA Statute of Limitations

Gurley argues the government’s filing of its proof of claim was time-barred

because the government was required to file a separate CERCLA action outside of the

bankruptcy process and serve a complaint on him. Because the government did not

do so, Gurley claims the government did not initiate an action for response costs

within the applicable limitations period. Again, we disagree. The filing of its proof

of claim constituted the government’s requisite “action” to recover costs under

CERCLA. See In re Nat’l Gypsum Co., 139 B.R. 397, 411 (N.D. Tex. 1992).

Furthermore, as discussed above, the government was not required to serve a

complaint. Fed. R. Bankr. P. 3001-3005. No other redundant action or service of a

complaint by the government outside of the bankruptcy process was required.

Regarding the Edmondson site, CERCLA provides for a three-year statute of

limitations from the completion of all response action once a declaratory judgment

of liability has been entered. 42 U.S.C. § 9613(g)(2). The government’s filing of its

proof of claim on April 24, 1996, fell within three years of September 12, 1994, the

completion date for the government’s response action. Regarding the West Memphis

site, CERCLA provides for a six-year statute of limitations following initiation of

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Gurley’s motion was styled as one under Federal Rule of Civil Procedure

59(e), but it was actually a motion to reconsider the court’s allowance of costs and

interest under the government’s proof of claim. Federal Rule of Bankruptcy

Procedure 9023 provides Rule 59 applies in bankruptcy cases except as provided by

Federal Rule of Bankruptcy Procedure 3008. Rule 3008 and 11 U.S.C. § 502(j)

govern motions to reconsider the allowance of claims. 

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physical on-site construction of remedial action. Id. The government’s filing of its

proof of claim fell within six years of the initiation of remedial action at the West

Memphis site.

D. Calculation of Interest

Gurley argues the district court incorrectly calculated interest past the

bankruptcy petition date of July 26, 1995, and the 1992 decision against Gurley, see

Gurley Refining, 788 F. Supp. at 1485, constitutes issue preclusion and equitable

estoppel as to the start date for calculation of prejudgment interest. The government

responds Gurley raised these arguments for the first time in Gurley’s motion to alter

or amend the judgment, thus the district court did not abuse its discretion in denying

Gurley’s motion.2

 See In re Kirwan, 164 F.3d 1175, 1177-78 (8th Cir. 1999) (stating

motions to reconsider may be granted only for cause); In re Mathiason, 16 F.3d 234,

239 (8th Cir. 1994) (stating this court reviews for an abuse of discretion a bankruptcy

court’s decision on a motion to reconsider). Gurley claims vague references by his

attorney at the trial court’s costs hearings raised the issue of interest calculation. He

also claims arguments made in his pretrial and post-trial pleadings preserved the

issue, but he offers no specific citations to the record for these arguments.

Without scouring the record for Gurley’s alleged arguments, see United States

v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991) (“Judges are not like pigs, hunting for

truffles buried in briefs.”), it does not appear Gurley raised these arguments,

especially with respect to issue preclusion and equitable estoppel, before his motion

to alter or amend the judgment. The district court did not abuse its discretion in not

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addressing Gurley’s arguments, and Gurley has not shown cause why his motion for

reconsideration should have been granted. See In re Kirwan, 164 F.3d at 1177-78;

In re Mathiason, 16 F.3d at 239. 

III. CONCLUSION

We affirm both the district court’s judgment entered against Gurley and the

district court’s denial of Gurley’s motion for reconsideration.

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