In the

United States Court of Appeals

For the Seventh Circuit

____________

No. 02-4030

In re: CONSOLIDATED INDUSTRIES CORP., 

Debtor.

ENODIS CORPORATION,

Plaintiff-Appellant,

v.

EMPLOYERS INSURANCE OF WAUSAU,

Defendant-Appellee.

____________

Appeal from the United States District Court

for the Northern District of Indiana, Hammond Division.

No. 4:02CV50—Allen Sharp, Judge.

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ARGUED MAY 27, 2003—DECIDED MARCH 9, 2004

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Before ROVNER, DIANE P. WOOD, and WILLIAMS, Circuit

Judges.

ROVNER, Circuit Judge. This case presents the odd situation of one party suing another for contempt of a bankruptcy court order to which neither was a party. Because we

do not believe that appellant Enodis is the proper party to

raise a contempt claim and we further do not believe that
2 No. 02-4030

appellee Wausau acted in contempt of the order, we affirm

the dismissal of Enodis’s adversary complaint. 

I.

The debtor in this Chapter 7 case is Consolidated Industries, Corp., a manufacturer of residential furnaces. Enodis

owned Consolidated until it sold the debtor to William Hall

in 1998. Under the terms of Hall’s stock purchase agreement, Enodis continued to provide insurance for the debtor

for three years after the sale, although Hall promised that

either he or Consolidated would reimburse certain selfinsurance and coverage costs that Enodis was obligated to

pay under its insurance agreements. Consolidated guaranteed payment of these costs. Employer’s Insurance of

Wausau was one of Enodis’s insurers.

At the time the debtor entered bankruptcy, it was the

defendant in several product liability suits, including a

California class-action entitled Salah v. Consolidated Indus.

Corp., No. CV 738376 (Cal. Sup. Ct. Santa Clara Cty). On

August 14, 2000, the bankruptcy court issued an order

releasing the Salah plaintiffs from the automatic stay

subject to certain conditions, which in relevant part stated

that:

(a) Any judgment entered in favor of the Salah Class

Action Plaintiffs which is not covered by insurance shall

have no effect on the determination of the amount of

the Salah Class Action Plaintiff’s [sic] allowed claims

filed in this bankruptcy.

In re Consolidated Industries Corp., No. 98-40533, at 2

(Bankr. N.D. Ind. Aug. 14, 2001) (order lifting automatic

stay). 

By mid-2001, the Salah plaintiffs had negotiated a settlement with Wausau and another of Consolidated’s insurers in which Wausau agreed to pay more than $1.7 million
No. 02-4030 3

dollars to settle the plaintiffs’ claims against third parties

who had sold furnaces manufactured by Consolidated. The

insurers submitted the settlement to the bankruptcy court

for approval, but the Trustee objected. The insurers overcame the Trustee’s objection by chipping in an extra

$100,000 to compensate the estate for expenses it had

incurred fighting the insurers’ defenses to coverage. At

a hearing on November 14, 2001, the bankruptcy court

approved the settlement, although the written order approving the settlement was not entered until November 23,

2001. In the settlement agreement, Wausau expressly

reserved its rights to pursue “any other Persons for subrogation, contribution, contractual or other relief with respect

to the sharing or reimbursement of defense fees and costs

incurred under [its] Polic[y].” Enodis did not attend the

hearing at which the bankruptcy court approved the

settlement, nor did it object to the settlement. 

Wausau quickly moved to recover the amount it paid under the settlement agreement from Enodis. On November

16, 2001, Wausau drew $500,000 on a letter of credit set up

under the insurance agreement to secure Enodis’s payment

of self-insured retention expenses. Wausau also has attempted to recover from Enodis the rest of what it paid in

the settlement. 

Enodis instituted this adversary proceeding to recover the

$500,000. Enodis’s complaint raised four claims to recover

the $500,000 payment. Enodis claimed first that the draw

violated the automatic stay; second, that Wausau’s draw

was in contempt of the August 14, 2000, order releasing the

Salah plaintiffs from the automatic stay; third, that

Wausau acted in contempt of the court at the November 14,

2001, hearing by not disclosing its plan to seek compensation from Enodis for the amount it paid under the settlement (which under Enodis’s theory would create an administrative expense when Enodis exercised its contractual

rights against Consolidated); and fourth, that Wausau
4 No. 02-4030

should be equitably estopped from seeking recompense from

Enodis because of alleged misrepresentations Wausau made

to the bankruptcy court in regard to the settlement. 

Wausau moved to dismiss the complaint for failure to

state a claim. The bankruptcy court held a hearing on the

motion on March 13, 2002, and in an oral decision, dismissed the complaint. The court held that Enodis was not

entitled to enforce the August 14, 2000 order because it was

not a beneficiary of the order. It further held Wausau could

not be held in contempt of the August 14 order because the

order did not bind Wausau. The court found that even

assuming that at the settlement hearing Wausau was

wilfully silent about its intent to pursue Enodis, Wausau

had not acted in contempt because it had expressly reserved

its right to pursue third parties in the settlement agreement itself. The court found no duty for Wausau to speak of

its plans, ruling that any expenses Enodis might try to bill

to the estate would not be entitled to administrative

priority. Finally, the court found that Enodis could not

bring an equitable estoppel claim as a separate cause of

action. 

Enodis appealed, raising three arguments in the district

court. First, it claimed that the bankruptcy judge had not

properly evaluated the motion to dismiss. Second, it argued

that Wausau had acted in contempt of the August 14 order

by “duping” the trustee into violating the order, and third,

Enodis argued that because it was a creditor of the debtor,

it was a beneficiary of the August 14 order.

The district court rejected Enodis’s arguments and affirmed. The court found that the bankruptcy court had properly evaluated the motion to dismiss, accepting Enodis’s

factual allegations as true. Further, the court found that

the bankruptcy court was justified in judicially noticing

prior documents in the main bankruptcy case. The district

court then agreed with the bankruptcy court that the
No. 02-4030 5

August 14 order did not prohibit Wausau’s actions. Enodis

now appeals to this court

II.

A Rule 12(b)(6) dismissal of an adversary complaint in

bankruptcy presents an issue of law that we review de novo.

Boim v. Quranic Literary Inst., 291 F.3d 1000, 1008 (7th

Cir. 2002). However, the bankruptcy court’s decision in this

case in large part depended on its interpretation of its own

earlier orders. We will not reverse a court’s interpretation

of its own order unless it is a “clear abuse of discretion,”

because a court that issued an order is in the best position

to interpret it. In re VMS Securities Litigation, 103 F.3d

1317, 1323 (7th Cir. 1996); In re Mars-Winn Co., Inc., 103

F.3d 584, 595 (7th Cir. 1996).

As an initial matter, an adversary proceeding is not the

proper vehicle to present a contempt claim, as civil contempt is a method of enforcing a court order, not an independent cause of action. D. Patrick, Inc. v. Ford Motor Co.,

8 F.3d 455, 459 (7th Cir. 1993). The proper vehicle to

enforce a court order is a motion in the original case. Id.

But even aside from this procedural problem, Enodis is not

the proper party to assert any alleged contempt of the

August 14 order. Generally, contempt claims may only be

brought by the party aggrieved by the contemptuous actions. Cf. Flight Engineers Intern. Ass’n v. Eastern Air

Lines, Inc., 301 F.2d 756, 758-59 (5th Cir. 1962). Enodis

argues that as a creditor, it has a pecuniary interest

protected by the August 14 order. But the estate itself is the

true party harmed by any violation of the August 14 order,

and the code charges the trustee to pursue the interests of

the bankruptcy estate. See 11 U.S.C. § 323(a). Status as a

creditor is not sufficient to allow a party the right to allege

contempt of an order seeking to protect the estate, particularly in a complex bankruptcy such as this. Bankruptcy law
6 No. 02-4030

does allow a creditor to bring a derivative claim on behalf

of the estate, but only in limited circumstances. See Fogel

v. Zell, 221 F.3d 955, 965-66 (7th Cir. 2000); Matter of

Perkins, 902 F.2d 1254, 1258 (7th Cir. 1990). To do so, a

creditor must show that the trustee has unjustifiably

refused the creditor’s demand to pursue a colorable claim

and obtain leave from the bankruptcy court to proceed. See

Fogel, 221 F.3d at 965. The record in this case shows that

Enodis did not attempt to make the required showing, and

thus it cannot enforce the August 14 order.

III.

We do not believe, however, that a remand to the bankruptcy court for a determination of whether Enodis ought to

be allowed to pursue its claims is justified, because the

bankruptcy court and district court have both considered

the contempt claim on the merits and found no basis for

contempt of the August 14 order. The core of Enodis’s

contempt claim is the scope of the August 14 order. The

bankruptcy court interpreted its order according to its

terms and found that the only party bound by the order was

the Salah plaintiffs. Enodis urges a far more expansive

view of the order, arguing essentially that the order bars

any party from creating any expense against the estate in

connection with the Salah litigation. But the bankruptcy

court is the best judge of the meaning of its own order, and

we will not disturb its reasonable interpretation. In re VMS

Securities Litigation, 103 F.3d at 1323. Wausau is not

named in the order, and the bankruptcy court wisely

decided not to engage in the gymnastics that would be

required to make that order appear to apply to Wausau.

Enodis’s claim that Wausau defrauded the court about its

intent to proceed against Enodis is foreclosed by Wausau’s

explicit reservation of rights in the written settlement

presented to the court. Wausau had vigorously litigated its
No. 02-4030 7

liability for the tort claims against the debtor during the

bankruptcy proceedings, and its explicit reservation of

rights, when viewed in light of its conduct during the

bankruptcy, was sufficient notice to the bankruptcy court

about its attempt to pursue Enodis for the costs it incurred

under the settlement. Thus, Wausau’s resort to the letter of

credit did not constitute a contempt of the court.

IV.

Enodis’s final attack on the dismissal faults the bankruptcy court for making factual findings in a Rule 12(b)(6)

proceeding. Enodis complains that the bankruptcy court

improperly decided that had it known about Wausau’s

intent to draw on the letter of credit, it would nonetheless

have approved the settlement. But Enodis overstates its

case. Of course, a judge reviewing a motion to dismiss under

Rule 12(b)(6) cannot engage in fact-finding. See International Marketing, Ltd. v. Archer Daniels Midland Co., 192

F.3d 724, 730 (7th Cir. 1999). But the bankruptcy court

both recognized the proper standard of review and did not

engage in fact-finding. Rather, the bankruptcy court’s

hypothetical is just an expression of the court’s opinion that

the facts Enodis presented in its complaint were insufficient

to establish contempt as a matter of law. Enodis’s claim

therefore fails. 

In light of our disposition of the issues above, we need not

decide whether Enodis’s claims arising out of the letter of

credit transaction are administrative expenses. We AFFIRM

the district court’s judgment.
8 No. 02-4030

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—3-9-04