Opinion ID: 2680424
Heading Depth: 2
Heading Rank: 3

Heading: Subrogation Claim

Text: Finally, Asarco contends that it is entitled to assert a contribution claim as a 27 subrogee, based on the fact that it paid the sum approved in the settlement, which was made and approved while Asarco was a debtor‐in‐possession in a Chapter 11 bankruptcy proceeding, after it had emerged from bankruptcy. The argument is founded on the premise that as the reorganized debtor, Asarco is a separate legal entity from the former debtor‐in‐possession and paid the debtor’s CERCLA liability. Therefore, Asarco asserts that its claims are timely under the alternative statute of limitations in 42 U.S.C. § 9613(g)(4), which provides that “[n]o action based on rights subrogated pursuant to this section by reason of payment of a claim may be commenced under this subchapter more than 3 years after the date of payment of such claim.” If that provision applies, both the Everett Smelter and the MCMA claims would be timely, since the payment of the settlement amount occurred on December 9, 2009, which was less than three years before the filing of the later of Asarco’s two amended complaints, which was filed in October 2012. For the reasons set forth below, we reject Asarco’s argument and conclude that the Asarco that filed for bankruptcy as debtor‐in‐possession and entered the settlement and the Asarco that emerged from bankruptcy and paid the settlement amounts are not separate legal entities for purposes of pursuing 28 post‐confirmation subrogation claims. Having paid its own debt, Asarco is not entitled to assert a subrogation claim. “To determine whether or not entities are the same the court must look to the substance of the [Reorganization] Plan.” Cross Media Mktg. Corp. v. CAB Mktg., Inc., 367 B.R. 435, 451 (Bankr. S.D.N.Y. 2007). Here, the terms of the Plan establish that Asarco is the same legal entity as the debtor in the bankruptcy proceeding (the “Debtor”) and is therefore not a subrogee. Provisions of the Reorganization Plan: • define “Reorganized ASARCO,” which is the plaintiff here, to be one and the same as the Debtor as of the effective date of the Plan. It defines “Reorganized ASARCO” as “ASARCO and/or any of its successors . . . on or after the Effective Date,” Reorganization Plan, ¶ 298, and defines “ASARCO” as “ASARCO LLC” which is “a Delaware limited liability company and one of the Debtors herein,” id., ¶¶ 21, 25. • continue the Debtor’s existence as Asarco. Id., art. 10.11 (“Reorganized ASARCO shall continue its existence after the Effective date.”). • vest the claims and causes of action of the Debtor and the bankruptcy estate in Asarco. Id., art. 10.12 (“Except as otherwise expressly provided in the [Plan], on the Effective Date, all of ASARCO’s and its Estate’s property and assets shall vest in Reorganized ASARCO . . . .”); id., art. 10.13 (“Any and all claims and causes of action that were owned by ASARCO or its Estate as of the Effective Date . . . shall vest in Reorganized ASARCO on the Effective Date . . . .”). 29 • maintain the Debtor’s identical equity owners as the owners of the Reorganized Asarco. Id., art. 10.11 (“The equity interests in Reorganized ASARCO shall continue to be held by ASARCO USA Incorporated.”). Because the Asarco that emerged upon reorganization is not a different entity from the Asarco that entered bankruptcy as the Debtor, Asarco’s payment of the settlement lacks the basic requirement of subrogation – the existence of a subrogee that is a distinct entity from the subrogor. See US Airways, Inc. v. McCutchen, 133 S. Ct. 1537, 1546 (2013). As the Supreme Court put it in that case, “[s]ubrogation simply means substitution of one person for another; that is, one person is allowed to stand in the shoes of another and assert that person’s rights against a third party.” Id. at 1546 n.5 (internal quotation marks omitted). Asarco is still wearing its own shoes; it agreed to pay and paid its own debts. The district court thus properly dismissed Asarco’s subrogation claims, and correctly concluded that the statute of limitations for subrogation claims has no bearing on this case. 30