Court Opinion

ID: 813904
Source: CourtListenerOpinion
Date Created: 2012-12-19 15:39:44+00
Date Added: 2024-06-11T18:00:50.273603
License: Public Domain

11-4587-bk
Kling Realty Co. v. Texaco, Inc. (In re Texaco, Inc.)

                  UNITED STATES COURT OF APPEALS
                      FOR THE SECOND CIRCUIT
                               SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY
ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY FEDERAL
RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN
CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY
ORDER"). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT
REPRESENTED BY COUNSEL.

          At a stated term of the United States Court of Appeals
for the Second Circuit, held at the Daniel Patrick Moynihan
United States Courthouse, 500 Pearl Street, in the City of New
York, on the 19th day of December, two thousand twelve.

PRESENT:    ROBERT D. SACK,
            DENNY CHIN,
            RAYMOND J. LOHIER, JR.,
                            Circuit Judges,

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IN RE TEXACO, INC.,
                               Debtor.

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KLING REALTY COMPANY, INC., WALET
PLANTING COMPANY, KATHLEEN WALET
MEITKAMP, DEANNA CECIL WALET GONDRON,
MERLIN P. WALET, JR., HERMAN CHARLES
WALET, CAROLYN MARIE WALET, ARTHUR
STERN, J.D. MIER, SALLY A. MIER,                              11-4587-bk
MURIEL O. LEVINSON, ANN C. MARTINEZ,
KATHRYN S. CEJA, BRENDA S. BUXH,
DAVID L. STERN, MICHAEL L. SNUR, CARY
S. SOLOMON, AMY F. TILLEY, WILLIAM A.
SNUR, DREW M. LERNER, DOUGLAS P.
LERNER, REID S. LERNER, J. LIONEL
KLING TRUST,
                         Appellants,

                               -v.-
TEXACO, INC.,
                                                               Appellee.*

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FOR APPELLANTS:                                                     William E. Steffes, Steffes,
                                                                    Vingiello & McKenzie, LLC, Baton
                                                                    Rouge, Louisiana, Edward P. Landry,
                                                                    Landry, Watkins, Repaske & Breaux,
                                                                    New Iberia, Louisiana, J. Michael
                                                                    Veron, Alonzo P. Wilson, Turner D.
                                                                    Brumby, Veron Bice Palermo &
                                                                    Wilson, LLC, Lake Charles,
                                                                    Louisiana.

FOR APPELLEE:                                                       Martin J. Bienenstock, Philip
                                                                    Abelson, Proskauer Rose LLP, New
                                                                    York, New York.

                             Appeal from the United States District Court for the

Southern District of New York (Seibel, J.).
                             UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,

AND DECREED that the judgment of the district court is AFFIRMED.

                             Appellants Kling Realty Company, Walet Planting

Company, and others ("Kling") appeal from the October 6, 2011

judgment of the United States District Court for the Southern

District of New York (Seibel, J.) affirming the August 3, 2010
order of the United States Bankruptcy Court (Drain, J.), which

(1) found that all claims asserted by Kling against Texaco, Inc.

("Texaco") in a certain action in Louisiana state court (the

"Louisiana Action") were discharged by the bankruptcy court's

March 23, 1988 order confirming Texaco's Chapter 11 second

amended joint plan of reorganization (the "Confirmation Order");

(2) directed Kling to dismiss all such claims; and (3) enjoined

                                                            
              *
          The Clerk of Court is directed to amend the official
caption to conform with the above.
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Kling from pursuing those claims.                                               We assume the parties'

familiarity with the underlying facts, the procedural history of

the case, and the issues presented for review.

                             In essence, Kling argues on appeal that the bankruptcy

court erred by dismissing its claims and enjoining it from

pursuing claims that Texaco engaged in tortious conduct by

spreading contaminated mud and fluids around the portion of

Kling's property known as Section 27, both after the date

Texaco's bankruptcy petition was filed (the "Petition Date") and

after the date its plan of reorganization was confirmed (the
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"Confirmation Date").                                               Kling also contends that the bankruptcy

court lacked subject matter jurisdiction to dismiss its claims

arising after the Confirmation Date.

                             In an appeal from a district court's review of a

bankruptcy court's order, this Court reviews the bankruptcy

court's factual findings for clear error and its legal

conclusions de novo.                                               Browning v. MCI, Inc. (In re WorldCom,

Inc.), 546 F.3d 211, 216 (2d Cir. 2008).                                               Pursuant to the
Bankruptcy Code, the confirmation of a plan of reorganization

"discharges the debtor from any debt that arose before the date

of such confirmation."                                               11 U.S.C. § 1141(d)(1)(A) (2010).
                                                            
              1
          Kling does not challenge the dismissal of its contract
claims, and therefore those claims are abandoned on appeal.
Moreover, to the extent that Kling asserted contract claims
below, the bankruptcy court and district court properly concluded
that they arose before the Petition Date, as the lease was both
executed and terminated prior to that date. See Ogle v. Fid. &
Deposit Co. of Md., 586 F.3d 143, 146 (2d Cir. 2009) ("Under
contract law, a right to payment based on a written
indemnification contract arises at the time the indemnification
agreement is executed.") (citation and internal quotation marks
omitted).
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            For substantially the reasons articulated by the

district court, we conclude that the bankruptcy court did not err

in concluding that Kling's tort claims for restoration of Section

27 arose before the Petition Date and were discharged by the

Confirmation Order.    See Kling Realty Co. v. Texaco, Inc. (In re

Texaco, Inc.), No. 10-CV-8151 (CS), 2011 U.S. Dist. LEXIS 111533

(S.D.N.Y. Sept. 28, 2011).

            To the extent Kling now asserts that Texaco's post-

Petition and post-Confirmation clean-up operations on Section 27

caused damage "separate and distinct from any damage caused by

contamination deposited on the property prior to the Petition

Date," Amended Br. for Appellants at 26, that argument also

fails.    First, Kling forfeited this argument by failing to argue

to the district court that Texaco had caused additional damage to

Section 27 after the Petition Date or after the Confirmation

Date.    On the contrary, in its district court brief, Kling framed

Texaco's tortious activity as a failure to restore the property

to its original condition.    See Br. of Appellants at 37-41, Kling
Realty Co. v. Texaco, Inc. (In re Texaco, Inc.), No. 10-CV-8151

(CS), 2011 U.S. Dist. LEXIS 111533 (S.D.N.Y. Sept. 28, 2011).

Indeed, rather than alleging separate damage to the property,

Kling characterized Texaco's post-Petition and post-Confirmation

clean-up operations as "inadequate and superficial," and alleged

that Texaco had merely attempted "to bury the contamination left

from its operations."    Id. at 48, 18.   By failing to raise its

claims of post-Petition and post-Confirmation damage to the

district court, Kling did not preserve that issue for review by

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either the district court or this Court.   See Asbestosis

Claimants v. Am. S.S. Owners Mut. Prot. & Indem. Ass'n (In re

Prudential Lines Inc.), 533 F.3d 151, 161 (2d Cir. 2008) (citing

Nostas Assocs. v. Costich (In re Klein Sleep Prods., Inc.), 78

F.3d 18, 29 (2d Cir. 1996)).

          Second, even if Kling had not forfeited the issue, we

conclude that Kling's tort claims based on Texaco's clean-up

operations arose prior to the Petition Date, and therefore were

necessarily discharged by the subsequent Confirmation Order.     "A
common law claim for damages to property from contamination

arises when '[a]ll of the physical events required to establish

the elements of . . . such claims occurred.'"   Goldman, Sachs &

Co. v. Esso Virgin Islands, Inc. (In re Duplan Corp.), 212 F.3d

144, 157 (2d Cir. 2000) (quoting Texaco, Inc. v. Sanders (In re

Texaco, Inc.), 182 B.R. 937, 951 (Bankr. S.D.N.Y. 1995)).      Kling

contends that "Texaco's 'clean-up' operations consisted of

removing the toxic waste and mud in certain pits [associated with

oil and gas wells in Section 27], and spreading it across the
Kling property."   Amended Br. for Appellants at 16.   Kling

further alleges that these clean-up operations spread "drilling

fluids used during oil and gas operations (which are hazardous

and toxic)."   Amended Reply Br. for Appellants at 17.   Even

assuming Kling's allegations are true, the contaminated mud and

fluids that Kling alleges Texaco spread around Section 27 after

the Petition Date and after the Confirmation Date were already on

the property at the latest by the time Texaco (a) ceased its oil

and gas production on Section 27, (b) plugged and abandoned its

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wells on Section 27, and (c) released all its rights to Section

27 -- all of which occurred before the Petition Date.      Thus,

because all the physical events required to establish the

elements of Kling's tort claims based on contamination of Section

27 occurred prior to the Petition Date, those claims arose before

the Confirmation Date and were discharged by the Confirmation

Order.    Similarly, because Kling's tort claims arose before the

Petition Date, those claims do not constitute administrative

expenses under Reading Co. v. Brown, 391 U.S. 471 (1968).
            Finally, we reject Kling's claim that the bankruptcy

court lacked subject matter jurisdiction to dismiss all its

claims in the Louisiana Action and enjoin it from pursuing those

claims.    "A bankruptcy court retains post-confirmation

jurisdiction in a chapter 11 proceeding only to the extent

provided in the plan of reorganization."    Hosp. & Univ. Prop.

Damage Claimants v. Johns-Manville Corp. (In re Johns-Manville

Corp.), 7 F.3d 32, 34 (2d Cir. 1993).    Here, the plan of

reorganization provided that the bankruptcy court retained

jurisdiction, inter alia, to take any action to resolve any
disputes arising out of or relating to any claim, and to construe

and to take any action to enforce the plan.    Insofar as the

bankruptcy court concluded that all of Kling's claims in the

Louisiana Action arose prior to the Petition Date and were

discharged by the Confirmation Order, the bankruptcy court was

well within its jurisdiction to take action to enforce the plan.

Kling's assertion that it should have the opportunity to amend

its complaint in the Louisiana Action to assert post-Confirmation

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claims merely serves to support the bankruptcy court's conclusion

that all the claims actually asserted in the Louisiana Action

arose prior to the Petition Date and were discharged by the

Confirmation Order.

          We have considered Kling's remaining arguments and find
them to be without merit.   Accordingly, we AFFIRM the judgment of

the district court.

                               FOR THE COURT:
                               Catherine O'Hagan Wolfe, Clerk

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