NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

_____________ No. 15

- 2164

_____________ In re: G

- I HOLDINGS INC, f/k/a GAF Corporation, et al., Debtors

NEW YORK CITY HOUSING AUTHORITY, Appellant v. G

- I HOLDINGS, INC.

_____________ On Appeal from the United States District Court for the District of New Jersey District Court No. 2

- 14

- cv - 06103 District Judge: The Honorable Stanley R. Chesler Submitted Pursuant to Third Circuit L.A.R. 34.1(a)

July 14, 2016 Before: SMITH, ROTH , and REN DELL , Circuit Judges

(Filed: July 18, 2016 )

_____________________ OPINION 

_____________________ SMITH, Circuit Judge.

 This disposition is not an opinion of the full court and pursuant to I.O.P. 5.7 does2

The New York City Housing Authority (NYCHA) has creatively tried to repackage its claim agains t G

- I Holdings for property damage as a claim for injunctive relief in the hopes of getting a better outcome this time around

. Specifically, NYCHA argues that its “new” claim is a non - dischargeable injunctive claim for pollution abatement brought by NYCHA in its capacity as a governmental entity. By turning its monetary claim for property damage into a

“ regulatory ” action , NYCHA hoped to avoid the steep discounting , inherent in most bankruptcy proceedings, of its claim for monetary damages

. We hold that
NYCHA cannot so easily circumvent federal bankruptcy laws . We will therefore affirm the District Court’s judgment in all respects

. I. NYCHA is a public corporation created under New York law to construct and maintain public housing for lower

- income resid ents in New York City. Approximately 419,000 residents are currently housed in NYCHA’s 2,702 residential properties. G

- I Holdings is the corporate successor to a manufacturer of housing products that contained asbestos. F acing close to 500,000 asbestos

- related lawsuits, G

- I Holdings filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in 2001

. During the bankruptcy process, NYCHA submitted a
P roof of C laim seeking roughly half a billion dollars for property damage to its

not constitute binding precedent.3

buildin gs. As a result of the well

- documented carcinogenic effects of exposure to asbestos fibers , NYCHA claimed that it had to u ndertake extensive, and expensive, precautionary measures whenever it removed A sbestos C ontaining M aterial (ACM) from any of its buil dings. The Proof of C laim filed by NYCHA did not mention injunctive relief or allege that it s claim was non

- dischargeable. On November 9 , 2009, the Bankruptcy Court in conjunction with the District Court approved the Eighth Amended Joint Plan of Reorgani zation (Plan) , which disposed of all covered claims against G

- I Holdings and barred the holders of such claims from re asserting them against the reorganized G

- I Holdings

. NYCHA never appealed the Confirmat ion Order finalizing th e P lan. However, three y ears later NYCHA filed a complaint against G

- I Holdings in which it sought an injunction to compel G

- I Holdings to remove ACM from
hundreds of NYCHA ’s buildings. In this complaint, NYCHA put forward two reasons why this claim was not barred by the now

- fin alized Plan . First, NYCHA argued that its request for an injunction was not a “ c laim” as defined by the Plan and thus was not barred by the res judicata effect of the District Court’ s Confirmation Order

. Second, NYCHA argued that as a governmental entity , it should be allowed to use its inherent regulatory power to force G

- I Holdings to remediate the environmental damage caused by the ACM . The Bankruptcy and4

District Courts rejecte d both of these arguments, and we do the same

. 1
II. NYCHA ’s request for a n injunction is most certainly a c laim as defined by the Plan. The Plan specifically states that a “ c laim” include s “any right to any equitable remedy.” JA 1202. Thus, to the extent NYC H A is acting as a creditor seeking to enforce a claim for injunctive relief, this claim is barred by the clear
term s of the Plan.
NYCHA , however, argues that it is not an ordinary creditor. Instead, it claim s that it can exercise its inherent power as a governmental entity to compel G

I Holdings to remediate the ongoing environmental harm resulting from the ACM it produced

. In support, NYCHA cites several cases which stand for the much narrower proposition that an entity cannot simply “discharge” future compliance with state and local environmental laws by entering into bankruptcy

. See, e.g., In re Torwico Elec. , Inc. , 8 F.3d 146 (3d Cir. 1993); In the Matter of Quanta Resources Corp. , 739 F.2d 912 (3d Cir. 1984)

. A brief explanation of our holding in Torwico will help clarify why

1 We have jurisdiction pursuant to 28 U.S.C. § 158(d)(1) , the District Court had jurisdiction pursuant to 28 U.S.C. 158(a)(1) , and the Bankruptcy Court had jurisdiction pursuant to 28 U.S.C. 157(b). “ W e exercise de novo review over ord ers granting motions to dismiss.” In re Plassein Int’ l Corp. , 590 F.3d 252, 256 (3d Cir. 2009)

.5

NYCHA ’s attempt to invoke this except ion fails. In Torwico , the New Jersey Department of Environmental Protection and Energy (NJDEPE) issued an order requiring Torwico to submit a written plan explaining how it would close the seepage pit that was allegedly polluting local waterways. 8 F.3d at 147

- 48. Torwico argued that this was a “claim” under its bankruptcy reorganization plan and thus was discharged because the NJDEPE did not file a timely proof of claim. Id. at 148. We disagreed, explaining that the s tate was exercising its police po wers to “enforc e laws requiring Torwico to clean up the hazardous waste it is responsible for under state law.” Id. We thus held that “a debtor cannot maintain an ongoing nuisance in direct violation of state environmental laws. The state can exercise i ts regulatory powers and force compliance with its laws, even if the debtor must expend money to comply. ” Id. at 150. Torwico

– and the judicially created exception NYCHA is trying to invoke

– i s thus limited to situations in which a state is not attempt ing to enforce a “right to payment” but is instead invoking its “right to force the debtor to comply with applicable environmental laws by remedying an existing hazard.” Id. This case is easily distinguishable from Torwico and the other similar cases
NYC HA cites . First, NYCHA does not point to a single law which requires G

- I Holdings to mitigate the property damage resulting from its products or which permits NYCHA to hold G

- I Holdings liable for the environmental harm caused by6

its products . Instead, t he only laws mentioned impose a duty on NYCHA to provide safe housing for its residents. Second, NYCHA is a pu blic corporation
created for the specific purpos e of providing housing to lower

- income residents in New York City. It has not been given authori ty to enforce New York’s environmental laws. Third, as NYCHA admits, t he asbestos fibers in ACM only create a health hazard when ACM is removed or otherwise disturbed during apartment renovations

. The s tate is thus not confronted with a polluter whose

co nduct necessitate s injunctive relief to stop ongoing pollution

. Instead , the injury here is the additional cost associated with renovating apartments that contain
ACM

. These additional costs are properly conceptualized as a form of property damage to NYC HA that occurred when the ACM material was installed. Thus,
NYCHA ’s claim for injunctive relief is merely an attempt to force G

- I Holdings to
foot the bill for remediation of a past harm. This type of claim was dealt with in
G

- I Holdings’ bankruptcy proc eeding and cannot be relitigated now.
NYCHA ’s claim is thus properly characterized as a “repackaging of a forfeited claim for damages.” Torwico , 8 F.3d at 150

. NYCHA is not a regulatory agency seeking to enforce a state or local law; it is simply a cred itor seeking to circumvent the limitations on its recovery of monetary damages from G

- I Holdings7

under the Pla n . 2 We will accordingly affirm the District Court’s judgment in all respects.

2 T he Bankruptcy Court therefore properly denied NYCHA’s request to amend its P roof of C laim to incorporate these “new” cla ims.