IN THE UNITED STATES DISTRICT COURT 

FOR THE WESTERN DISTRICT OF PENNSYLVANIA 

IN RE: 1 

CENTER FOR ADVANCED ) 

MANUFACTURING & TECHNOLOGY, ) 

a/k/a CAMTECH, 

Appellee, i 

1 Civil Action No. 05-329 Erie 

i Bankruptcy NO. 03-12940 

v. ) 

1 

WRIGHTCO TECHNOLOGIES, rNC., ) 

Appellant. ) 

RIEhIORANDUM OPINION 

McLAUGHLIN, SEAN J. 

This matter is before the Court upon Appellant Wrightco Technologies' ("Wrightco") 

motion for leave to appeal an interlocutory order entered by Bankruptcy Judge Warren W. Bentz in 

the above captioned adversary proceeding. The Bankruptcy Judge's order, dated October 19,2005, 

denied Wrightco's motion to dismiss the underlying bankruptcy case. For the reasons set forth 

below, we deny Wrightco's motion for leave to appeal the Bankruptcy Judge's interlocutory order 

denying the motion to dismiss. 

I. BACKGROUND 

On December 2, 2003, the Debtor filed a voluntary Chapter 11 bankruptcy petition in the 

above referenced bankruptcy case. On August 2, 2004, the Debtor filed a plan of reorganization 

("the Plan") and a disclosure statement. On October 14, 2004, .the Plan was confirmed by the 

Bankruptcy Court. Specifically included within the Plan was a provision allowing the Debtor to 

pursue post-confirmation causes of action, as contemplated by Section 1 123(b) of the Bankruptcy 

Case 1:05-cv-00329-SJM Document 11 Filed 02/13/06 Page 1 of 8
Code,' by having the "Debtor's attorney. . . file appropriate complaints in the Bankruptcy Court or 

other court of appropriate jurisdiction . . . on behalf of the Estate." 

On June 10,2005, the Debtor filed a complaint in the above captioned adversary proceeding 

and asserted the following causes of action (collectively, "the Causes of Action") against Wrightco: 

Count I - Turnover (1 1 U.S.C. 5 542(a)) 

Count I1 - Breach of Contract (1 1 U.S.C. 5 544(b)) 

Count I11 - Fraudulent Transfer (1 1 U.S.C. 5 548 (a) & (b)) 

Count IV - Fraudulent Transfer (1 1 U.S.C. 5 544(b) & 12 Pa.C.S.A. 5 5105) 

Count V - Fraudulent Transfer (1 1 U.S.C. 5 544(b) & 12 Pa.C.S.A. 5 5104(a)(l)) 

Count VI - Fraudulent Transfer (1 1 U.S.C. 5 544(b) & 12 Pa.C.S.A. 5 5104(a)(2)) 

On July 15,2005, Wrightco filed a motion to dismiss the complaint and alleged, inter alia, 

that the Bankruptcy Court lacked standing to adjudicate the adversary proceeding because only a 

trustee may bring an avoidance action under 5 5 542, 544, and 547-50. Wrightco relied upon the 

United States Supreme Court's decision in Hartford Underwriters Insurance Co. v. Union Planters 

Bank, 530 U.S. 1 (2000), which held that, in the context of 1 1 U.S.C. 5 506, the language "the 

trustee may" means that a trustee has exclusive standing to pursue recovery under 5 506(c). On 

October 19,2005, the Bankruptcy Judge denied Wrjghtco's motion, holding that "the interpretation 

of 'the trustee may' in fj 506(c) does not apply to other sections of the bankruptcy code." 

1 Sect ion 1 123(b) provides in relevant part: 

(b) Subject to subsection (a) of this section, a plan may - * * * * * * 

(3) provide for - 

(A) the settlement or adjustment of any claim or interest belonging to the 

debtor or to the estate; or 

(B) the retention and enforcement by the debtor, by the trustee, or by a 

representative of the estate appointed for such purpose, of any such claim 

or interest . . . 

11 U.S.C. 5 1123(b). 

Case 1:05-cv-00329-SJM Document 11 Filed 02/13/06 Page 2 of 8
11. STANDARD OFREVIEW 

District courts are vested with jurisdiction to hear appeals from bankruptcy courts pursuant 

to 28 U.S.C. 5 158. Section 158(a)'s grant ofjurisdiction over appeals from interlocutorybankruptcy 

court orders is left to the discretion of the district court. Because the statute offers no standard as to 

how a district court should exercise its discretion in granting interlocutory appeals, courts have 

uniformly turned to analogous statute, 28 U.S.C. 5 1292(b), for guidance. Section 1292(b) requires 

consideration of the following three factors in determining whether to grant an interlocutory appeal: 

(1) whether the order involves a controlling question of law; 

(2) whether there is substantial ground for a difference of opinion 

on .the controlling question of law; and 

(3) whether immediate appeal would materially advance the 

termination of the litigation. 

28 U.S.C. 5 1292(b). 

111. DISCUSSION 

It is undisputed that this motion for interlocutory appeal involves a controlling issue of law. 

"An order involves a controlling issue of law if, on appeal, a determination that the decision 

contained error would lead to reversal." Doward v. Consolidated Rail Corn., 505 F.Supp. 58, 59 

(E.D. Pa. 1980). Here, the controlling issue of law is whether the Debtor, CAMTech, has standing 

to assert the Causes of Action set forth in the complaint. Additionally, it is readily apparent that 

immediate appeal would materially advance the termination of the litigation, as a reversal of the 

Bankruptcy Judge's order denying the motion to dismiss would result in the dismissal of the 

underlying adversary proceeding. Thus, we focus our analysis on whether "there is a substantial 

ground for a difference of opinion on the controlling question of law." 28 U.S.C. 5 1292(b). 

For there to be "substantial grounds for difference of opinion" on an issue, it must involve 

more than strong disagreement between the adversaries. Rather, the requisite d.ifference of opinion 

exists only where the issue is difficult and is of first impression. See, e.g., Klinghoffer v. S.N.C. 

Achille Lauro, 921 F.2d 21,25 (2nd Cir. 1990). For the reasons stated below, we conclude that there 

is no substantial ground for difference of opinion on the issue presented herein. 

InHartford Underwriters, the Supreme Court held that the operative phrase "the trustee may," 

3 

Case 1:05-cv-00329-SJM Document 11 Filed 02/13/06 Page 3 of 8
under the avoidance power promulgated under 5 506, is to be construed as a limitation on the party 

who may exercise such avoidance power: 

[Tlhe statute appears quite plain in specifying who may use § 

506(c)-"[tlhe trustee." It is true, however, as petitioner notes, that all 

this actually "says" is that the trustee may seek recovery under the 

section, not that others may not. The question thus becomes whether 

it is a proper inference that the trustee is the only party empowered to 

invoke the provision. We have little difficulty answering yes. 

~ Id. at 6. Wrightco argues that, because the phrase "the trustee may" also appears in each section of - 

the bankruptcy code upon which CAMTech based its Causes of Action, to wit, §§ 542,544 and 548, 

' the Hartford Underwriters decision similarly limits the ability of a non-trustee to bring an avoidance 

I action under those sections. Because the debtor, CAMTech, is not a trustee, Wrightco concludes that 

the holding of Hartford Underwriters mandates dismissal of the underlying avoidance proceeding 

I for lack of standing. We disagree. 

First, we note, as did the Bankruptcy Judge, that the holding in Hartford Underwriters is 

legally distinguishable from the instant action. The Hartford Underwriters Court expressly limited 

its holding to independent actions brought under § 506: 

We do not address whether a bankruptcy court can allow other 

interested parties to act in the trustee's stead in pursuing recovery 

under § 506(c). Amici American Insurance Association and National 

Union Fire Insurance Co. draw our attention to the practice of some 

courts of allowing creditors or creditors' committees a derivative right 

to bring avoidance actions when the trustee refuses to do so, even 

though the applicable Code provisions, see 11 U.S.C. 50 544, 545, 

547(b), 548(a), 549(a), mention only the trustee. See, u., In re 

Gibson Group, Inc., 66 F.3d 1436,1438 (C.A.6 1995mhatever the 

validity of that practice, it has no analogous application here, since 

petitioner did not ask the trustee to pursue payment under 0 506(c) 

and did not seek permission from the Bankruptcy Court to take such 

action in the trustee's stead. Petitioner asserted an independent right 

to use § 506(c), which is what we reject today. Cf. In re Xonics 

Photochemical, Inc., 841 F.2d 198, 202-203 (C.A.7 1988) (holding 

that creditor had no right to bring avoidance action independently, but 

noting that it might have been able to seek to bring derivative suit). 

- Id. at 13 n. 5. The Third Circuit has declined to extend this ruling beyond the context of 5 506(c). 

- See Official Committee of Unsecured Creditors of Cybernenics Corp. v. Chinery ("Cyber~enics II"), 

330 F.3d 548, 558 (3d Cir.2003) (en banc) (holding that Hartford Underwriters does not prevent a 

Case 1:05-cv-00329-SJM Document 11 Filed 02/13/06 Page 4 of 8
creditor's committee from bringing an avoidance action under $ 544(b)). Despite the Supreme 

Court's reservation in footnote five and the Third Circuit's opinion in Cryogenics 11, Wrightco 

advocates a reading of Hartford Underwriters that would put an end to derivative standing actions: 

The Court: Your reading of Hartford would ring the death knell 

for derivative standing cases, wouldn't it? 

Mr. Skiba: A good chance. 

The Court: Well, not a good chance, it would, wouldn't it? 

Mr. Skiba: I believe it would. 

The Court: Notwithstanding the fact that there's a specific section 

of the Code, Section 1 109, that contemplates that type 

of action, correct? 

Mr. Skiba: Yes. 

(Transcript of Hearing on Motion for Leave to Appeal Interlocutory Order ("Transcript"), January 

We disagree with the trustee's expansive reading of Hartford Underwriters. Although 

derivative standing was not sought in this case, CAMTechYs attempt to bring a post-confirmation 

avoidance action is analogous because the mechanics for doing so appear in the Plan documents and 

were approved by the Bankruptcy Court: 

Mr. Skiba: [Tlhis not a derivative standing case. 

The Court: It's not, but functionally this case is coming on, as I 

understand it, that the plan documents authorized the 

plaintiff here to take this action. The plan documents 

would have had to [have] been approved by the 

Bankruptcy Court. So in some form or fashion the 

Bankruptcy Court, just like in a derivative standing 

situation, gave its imprimatur to this potentiality, did 

it not? 

Mr. Skiba: Yes. 

(Transcript, p. 6). Several Courts have concluded that Hartford Underwriters is distinguishable in 

such circumstances. See, e.g., C~ber~enics 11,330 F.3d at 580 (holding that bankruptcy courts have 

the equitable power to authorize creditors' committees to sue derivatively to avoid fraudulent 

transfers for the benefit ofthe estate); InreRailworks Corn., 325 B.R. 709,723 (Bankr. D.Md. 2005) 

(holding that Hartford Underwriters does not prevent a representative of the estate from bringing a 

Case 1:05-cv-00329-SJM Document 11 Filed 02/13/06 Page 5 of 8
post-confirmation avoidance action in accordance with a confirmed plan); In re J. Allen Steel Co., 

323 B.R. 425,432-34 (Bankr. W.D.Pa. 2005), vacated on other grounds, 2005 WL 3695753 

(W.D.Pa. Dec 12,2005) (distinguishing Hartford Underwriters and concluding that the unsecured 

creditors' committee could pursue avoidance actions assigned to it by the debtor under a confirmed 

plan); In re Together Development Corn., 262 B.R. 586, 593 (Bankr. D.Mass. 2001) (holding that 

Hartford Underwriters did not apply where the debtor stipulated that the creditors' committee could 

pursue avoidance actions). 

Moreover, Hartford Underwriters is also distinguishable on its facts. In Hartford 

Underwriters, debtor Hen House Interstate, Inc. obtained workers' compensation insurance from 

petitioner Hartford Underwriters as part of its Chapter 11 reorganization strategy. Although Hen 

House repeatedly failed to pay its monthly premiums, Hartford, which knew nothing of Hen House's 

bankruptcy, continued to provide insurance. When the reorganization attempt fell through, Hen 

House converted its case to a Chapter 7 liquidation and a trustee was appointed. Hartford, alerted 

to the bankruptcy, sought to recover approximately $50,000 in overdue premiums from the 

bankruptcy estate but found it almost entirely without unencumbered assets. In other words, 

Hartford was a singular entity acting both unilaterally and exclusively for its own benefit: 

The petitioner in Hartford Underwriters was an insurer who, by 

continuing coverage despite Hen House's failure to pay its premiums, 

became an administrative lender with claims subordinate to those of 

the secured creditors. When it learned of Hen House's bankruptcy, it 

attempted to use § 506(c) to recover the premiums it was owed, but 

it did so in a strikingly unilateral fashion. The insurance premiums 

were not costs incurred by the trustee that, if recovered, would have 

yielded a common benefit. Instead, they would have satisfied only 

Hartford's outstanding claim. Nor did Hartford seek the court's or the 

trustee's permission to recoup the expense, but rather it sued in its 

own name and for its own direct benefit. 

1 Cybernenics 11, 330 F.3d at 558. The significance of this factual distinction was noted at oral 

argument: 

The Court: [Wlouldn't you agree that the Hartford case is quite 

dike this case factually? 

I Mr. Skiba: Yes. 

Case 1:05-cv-00329-SJM Document 11 Filed 02/13/06 Page 6 of 8
The Court: In this sense. That you had a singularly interested 

entity, Hartford, out for its own piece of the pie and it 

-- as a matter of fact, I think the Thud Circuit in 

Cybergenics used some pejorative term [that] 

smacked of the fact that they were off purely on their 

own mission. 

(Transcript, p. 7). See also Cyberaenics 11,330 F.3d at 559 ("This difference in contexts is crucially 

important, for while the question in Hartford Underwriters was one of a nontrustee's right 

unilaterally to circumvent the Code's remedial scheme, the issue before us today concerns a 

bankruptcy court's equitable power to craft a remedy when the Code's envisioned scheme breaks 

down.") (emphasis in original). 

Although Wrightco correctly notes that each of the above-cited cases distinguishiitbrtford 

Underwriters involved actions brought by a creditors' committee, rather than by the debtor, we find 

that the facts in this case are more analogous to those cases than to the "strikingly unilateral" actions 

of the creditor in Hartford. Here, the debtor is pursuing the Causes of Action in accordance with the 

clear terms of a confirmed bankruptcy plan, approved by the Bankruptcy Court, and under the 

jurisdiction ofthe Bankruptcy Court. Within that context, the Bankruptcy Court correctly concluded 

that "the Supreme Court's Hartford Underwriters decision is not an impediment to the Debtor's 

action . . . because the Debtor [is] appropriately seek[ing] to enforce the Causes of Action that it 

retained under the Plan." (Memorandum Opinion and Order, Dkt. #1, Ex. 4, p.5). We find no 

substantial ground for difference of opinion as to this conclusion. 

IV. CONCLUSION 

For the reasons state above, we conclude that Wrightco has failed to demonstrate a 

substantial ground for difference of opinion as to the questions of law involved in the Bankruptcy 

Judge's October 19,2005 opinion. Accordingly, Wrightco's motion for leave to appeal interlocutory 

order is DENIED. This action is DISMISSED. 

An appropriate Order follows. 

Case 1:05-cv-00329-SJM Document 11 Filed 02/13/06 Page 7 of 8
IN RE: ) 

1 

CENTER FOR ADVANCED j 

MANUFACTLRING & TECHNOLOGY, ) 

dkla CAMTECH, 1 

Appellee, i 

) Civil Action No. 05-329 Erie 

) Bankruptcy No. 03-12940 

v. 

) 

WRIGHTCO TECHNOLOGIES, INC., ) 

Appellant. ) 

1 

ORDER 

AND NOW, this 13th day of February, 2006, for the reasons set forth in the accompanying 

Memorandum Opinion, 

IT IS HEREBY ORDERED that Wrightco's motion for leave to appeal interlocutory order 

is DENIED. This action is DISMISSED. 

cm: All counsel of record.- 

IS/ Sean J. McLaughlin 

United States District Judge 

Case 1:05-cv-00329-SJM Document 11 Filed 02/13/06 Page 8 of 8