Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-04-02489/USCOURTS-ca8-04-02489-0/pdf.json

Parties Involved:
Apex Oil Company
Appellant
Melodie Cope
Appellee
Joyce E. Dock
Appellee
Norma Goben
Appellee
Vickie Hopkins
Appellee
Rose Kirby
Appellee
Carolyn F. Klocke
Appellee
Kenneth Klocke
Appellee
Ted Luebbert
Appellee
Tracie Monroe
Appellee
Katherine Sparks
Appellee
Jim Stufflebean
Appellee
Linda Stufflebean
Appellee

Document Text:

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 04-2489

___________

In re: Apex Oil Company, Inc., *

*

Debtor. *

______________________ *

*

Apex Oil Company, Inc., *

* Appeal from the United States

Debtor/Appellant, * District Court for the

* Eastern District of Missouri.

v. *

*

Katherine Sparks, Kenneth Klocke, *

Carolyn F. Klocke, Joyce E. Dock, *

Tracie Monroe, Norma Goben, *

Vickie Hopkins, Jim Stufflebean, *

Linda Stufflebean, Ted Luebbert, *

Melodie Cope, Rose Kirby, *

*

Interested Parties/ *

Appellees. *

___________

Submitted: February 18, 2005 

Filed: April 29, 2005 (Corrected 5/17/05)

___________

Before WOLLMAN, HANSEN, and BENTON, Circuit Judges.

___________

WOLLMAN, Circuit Judge.

Appellate Case: 04-2489 Page: 1 Date Filed: 04/29/2005 Entry ID: 1897221
1

The Honorable Henry E. Autrey, United States District Judge for the Eastern

District of Missouri.

2

The Honorable Barry S. Schermer, United States Bankruptcy Judge for the

Eastern District of Missouri.

-2-

Apex Oil Company (Apex) appeals from the district court’s1

 order affirming

the bankruptcy court’s2

 denial of Apex’s motion to reopen its bankruptcy case

pursuant to 11 U.S.C. § 350(b). We affirm.

I.

In 1967, Clark Oil & Refining Corporation (Clark) purchased a petroleum

refinery in Hartford, Illinois. In 1981, Apex acquired Clark by merger and continued

to operate the refinery through Clark and another subsidiary (Apex Holding Co.). On

December 24, 1987, Apex and most of its subsidiaries (including Apex Holding Co.

and Clark) filed for bankruptcy under Chapter 11 of the Bankruptcy Code. As part

of that bankruptcy case, Apex sold the refinery to the Premcor Refining Group, Inc.

(Premcor), on November 22, 1988. Apex was reorganized and reincorporated during

the pendency of the bankruptcy proceedings, and Clark was fully merged into the new

corporation.

The bankruptcy court confirmed Apex’s reorganization plan on August 16,

1990. In accordance with 11 U.S.C. § 1141(d)(1), the plan discharged Apex, its

property, and its bankruptcy estate from any claims, debts, and liens that arose before

the confirmation date (as well as debts specified in 11 U.S.C. §§ 502(g), 502(h), and

502(i)) but that were not provided for in the plan. The discharge applied regardless

of whether a given creditor filed a proof of claim, whether the debt was allowed under

11 U.S.C. § 502, or whether the creditor accepted the plan. 11 U.S.C. §

1141(d)(1)(A). The discharge also operated as an injunction against the

commencement of an action to collect or recover as a personal liability of Apex any

Appellate Case: 04-2489 Page: 2 Date Filed: 04/29/2005 Entry ID: 1897221
3

The John Doe defendants are allegedly employees, contractors, subcontractors, and agents of Apex and Premcor. 

4

The case was subsequently remanded to the Madison County court, and is

currently pending there. Three additional suits have since been filed against Apex

and Premcor in Madison County.

-3-

debt discharged by the plan. 11 U.S.C. § 524(a). The bankruptcy court subsequently

declared the plan final and closed Apex’s bankruptcy estate on September 30, 1996.

On July 29, 2003, a group of Hartford, Illinois, homeowners (appellees here)

filed a class action complaint against Apex, Premcor, and 50 John Doe defendants in

the Circuit Court of Madison County, Illinois.3

 The complaint alleged that, through

their design, operation, and maintenance of the refinery and its accompanying

pipelines and storage tanks, Apex, Premcor, and the John Doe defendants have

allowed 4 million gallons of gasoline and other petroleum products to form an

underground toxic plume beneath Hartford. The complaint further alleged that the

plume has destroyed property values in Hartford and has jeopardized the health of

Hartford’s residents. The complaint sought injunctive relief and damages on

nuisance, trespass, and strict liability theories. The complaint also requested the

institution of a medical monitoring program for Hartford’s residents.

Apex promptly removed the case to the United States District Court for the

Southern District of Illinois.4

 In its answer and affirmative defenses, Apex asserted

that the appellees’ claims arose prior to the confirmation order and thus were

discharged by the 1990 bankruptcy plan. While the case was pending in the Southern

District of Illinois, Apex filed a motion to reopen in the bankruptcy court. In

addition, Apex requested that the bankruptcy court enforce the discharge order

against the appellees, hold the appellees in contempt for violating the discharge

injunction, and direct the appellees to dismiss their claims against Apex. The

Appellate Case: 04-2489 Page: 3 Date Filed: 04/29/2005 Entry ID: 1897221
5

See, e.g., Beezley v. Cal. Land Title Co. (In re Beezley), 994 F.2d 1433, 1434

(9th Cir. 1993).

-4-

bankruptcy court denied the motion to reopen and therefore found it unnecessary to

reach Apex’s other asserted grounds for relief. The district court affirmed.

II.

As the second reviewing court in a bankruptcy case, we apply the same

standard of review as the district court. Valner v. O’Brien (In re O’Brien), 351 F.3d

832, 836 (8th Cir. 2003). Accordingly, we review the bankruptcy court’s legal

conclusions de novo and its factual findings for clear error. Id.

We review the bankruptcy court’s denial of Apex’s motion to reopen for abuse

of discretion. See Dworsky v. Canal Street Ltd. Partnership (In re Canal Street Ltd.

Partnership), 269 B.R. 375, 379 (8th Cir. BAP 2001); Woods v. Kenan (In re Woods),

173 F.3d 770, 778 (10th Cir. 1999); Citizens Bank & Trust Co. v. Case (In re Case),

937 F.2d 1014, 1018 (5th Cir. 1991); Hawkins v. Landmark Fin. Co. (In re Hawkins),

727 F.2d 324, 326-27 (4th Cir. 1984). We may not reverse the bankruptcy court’s

ruling unless we have a “definite and firm conviction that the bankruptcy court

committed a clear error of judgment in the conclusion it reached upon a weighing of

the relevant factors.” In re Canal Street, 269 B.R. at 379.

The relevant statute, 11 U.S.C. § 350(b), provides that “[a] case may be

reopened in the court in which such case was closed to administer assets, to accord

relief to the debtor, or for other cause.” Apex contends that because bankruptcy cases

are reopened as a matter of routine, the bankruptcy court erred by refusing to reopen

on a ground not previously recognized by case law or statute (i.e., when the relief

sought by the debtor is not available,5

 when the debtor acts deceitfully or

Appellate Case: 04-2489 Page: 4 Date Filed: 04/29/2005 Entry ID: 1897221
6

See, e.g., Stark v. St. Mary’s Hosp. (In re Stark), 717 F.2d 322, 324 (7th Cir.

1983) (debtor may reopen where there is no evidence of fraud or intentional design).

7

See, e.g., In re Quackenbos, 71 B.R. 693, 696 (Bankr. E.D.Pa. 1987). 

-5-

fraudulently,6

 or when there is undue prejudice to creditors due to the delay in

bringing a motion to reopen after the grounds for a motion become apparent7

). 

We disagree for two reasons. First, we decline to adopt Apex’s restrictive view

of the bankruptcy court’s discretion. The statute is clearly phrased in permissive

language and states that bankruptcy courts may, but are not required to, reopen a

closed bankruptcy estate in order to—among other things—accord relief to the

debtor. Apex’s interpretation would establish a per se rule requiring a bankruptcy

court to grant a motion to reopen whenever the previously recognized circumstances

that Apex describes are absent. We reject Apex’s argument that unambiguous,

precatory language may somehow be interpreted as mandatory. Instead, we agree

with those courts which have held that it is within the bankruptcy court’s discretion

to base its decision to reopen on the particular circumstances and equities of each

particular case. See In re Shondel, 950 F.2d 1301, 1304 (7th Cir. 1991); In re Case,

937 F.2d at 1018; In re Hawkins, 727 F.3d at 326-27.

Second, we disagree with Apex’s assertion that the bankruptcy court relied

upon impermissible factors in denying the motion to reopen. The bankruptcy court

stated that its decision not to reopen Apex’s bankruptcy case was supported by: (1)

the availability of relief in another jurisdiction (at that time, the Southern District of

Illinois); (2) the presence of other defendants in the class action litigation not subject

to the bankruptcy court’s jurisdiction; (3) the passage of time between the class action

and the closure of Apex’s bankruptcy estate (almost seven years), as well as the fact

that all property of the estate had either been distributed to creditors or re-vested in

Apex; and (4) the class action litigation’s nonexistent impact on Apex’s bankruptcy

estate. 

Appellate Case: 04-2489 Page: 5 Date Filed: 04/29/2005 Entry ID: 1897221
8

Although the alternative forum referred to by the bankruptcy court was a

federal district court, the difference between federal and state court adjudication of

the issue is not of sufficient significance to cast doubt upon the bankruptcy court’s

ruling.

9

We decline, as Apex urges us to do, to view the district court’s decision to

reopen the case as an abstention from adjudicating the underlying dischargeability

issue. The district court here did not abstain from making a decision whether to

-6-

The availability of relief in an alternative forum is a permissible factor on

which to base a decision not to reopen a closed bankruptcy case. Although the

bankruptcy court is in the best position to interpret its own orders, see In re Chicago,

Milwaukee, St. Paul & Pacific R.R. Co., 6 F.3d 1184, 1194 (7th Cir. 1993), Congress

granted state courts concurrent jurisdiction to consider bankruptcy issues arising from

Chapter 11 proceedings. 28 U.S.C. § 1334(b). In addition, although the bankruptcy

court in this case may have been more familiar with the prior circumstances of Apex’s

bankruptcy, it had no familiarity with the appellees or their claims because those

claims were not asserted against Apex in the 1990 bankruptcy case. The appellees’

claims are already being adjudicated in state court, and the related dischargeability

issue could be ruled upon in that forum in light of Apex’s assertion of a

dischargeability defense in the state court action. Accordingly, the bankruptcy court

did not commit a clear error of judgment in finding that the availability of relief in an

alternative forum with jurisdiction over all defendants weighed against reopening the

case.8

 In addition, Apex has provided no evidence to support its assertion that

adjudication in the state court, which is already acquainted with the appellees’

underlying claims, would somehow be less efficient than adjudication in the

bankruptcy court, which would be facing such claims for the first time.

The bankruptcy court also permissibly relied upon the settled nature of the

estate in declining to reopen Apex’s bankruptcy case. The act of reopening a closed

bankruptcy case is typically ministerial and presents a limited range of issues,

including whether further administration of the estate appears to be warranted.9

Appellate Case: 04-2489 Page: 6 Date Filed: 04/29/2005 Entry ID: 1897221
reopen Apex’s bankruptcy case, but in fact denied the motion. We further note,

without deciding, that if the bankruptcy court’s decision were characterized as an

abstention, we would likely lack jurisdiction to hear Apex’s appeal. See 28 U.S.C.

§ 1334(d).

-7-

Lopez v. Specialty Restaurants Corp. (In re Lopez), 283 B.R. 22, 26 (9th Cir. BAP

2002). Given the bankruptcy court’s undisputed findings that the estate had been

fully administered and that the outcome of the class action would have no adverse

affect on the estate or any of Apex’s former creditors, no further administration of the

estate appears to be necessary.

Finally, we note that “[t]he longer the time between the closing of the estate

and the motion to reopen ... the more compelling the reason for reopening the estate

should be.” In re Case, 937 F.2d at 1018. We find no error in the bankruptcy court’s

ruling that Apex did not present a compelling reason to reopen its bankruptcy case

more than seven years after it was closed.

Apex protests that adjudication in the state court will deprive it of the fresh

start to which the 1990 bankruptcy entitles it, and that its right as a debtor to

adjudicate the dischargeability issue in bankruptcy court should be respected. We

disagree. Apex’s fresh start is effected through the enforcement of the 1990 plan and

its discharge injunction; the state court is fully competent to determine whether the

plan and the injunction apply to the appellees’ claims. In addition, as evidenced by

its grant of concurrent jurisdiction to state courts, Congress explicitly declined to

create a right to adjudication of Chapter 11 issues in bankruptcy court in all instances.

In short, we agree with courts that have found that a debtor’s desire to adjudicate an

issue in bankruptcy court, rather than in an alternative forum, constitutes insufficient

grounds on which to reopen a bankruptcy case. E.g., In re Dabbs, 72 B.R. 73, 75

(Bankr. N.D.Ala. 1987); In re Carter, 38 B.R. 636, 638 (Bankr. D.Conn. 1984).

The judgment is affirmed. 

______________________________

Appellate Case: 04-2489 Page: 7 Date Filed: 04/29/2005 Entry ID: 1897221