512 B.R. 774
Bankr. D. Del.2014Background
- Caribbean Petroleum entities filed Chapter 11 after a catastrophic October 23, 2009 explosion that ended operations and prompted numerous personal-injury and wrongful-death suits in Puerto Rico.
- The bankruptcy Court confirmed a Fourth Amended Joint Plan of Liquidation (the Plan) that included broad releases for officers, directors, guarantors (including Gad and Ram Zeevi) and enjoined prosecution of released claims.
- The Zeevis move to enforce the Plan releases (and a separate Settlement Agreement) to bar Tort Plaintiffs and related defendants from pursuing claims in Puerto Rico; Tort Plaintiffs, Intertek, and Cape Bruny Cos. object.
- Tort Plaintiffs assert their claims are individual personal-injury/wrongful-death claims (and some alter-ego allegations) that never became property of the bankruptcy estate and therefore were not released by the Plan or the Settlement Agreement.
- Intertek and Cape Bruny Cos. assert their contribution/indemnity and limitation defenses are direct claims that were not released; Intertek was not a party to the Settlement Agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Court's post-confirmation jurisdiction to adjudicate applicability of Plan releases to non-debtor third parties | Tort Plaintiffs: no jurisdiction because resolution affects only non-debtors and not the estate | Zeevis: Court should interpret and enforce the Plan it confirmed, so it has jurisdiction | Court has jurisdiction to interpret and enforce its Confirmation Order/releases, so it may decide applicability of Plan releases; but will defer to Puerto Rico Court on Settlement Agreement matters the court did not approve |
| Whether Plan releases bar Tort Plaintiffs' individual personal-injury/wrongful-death claims | Zeevis: alter-ego and successor-type claims are generalized and therefore estate property that were released | Tort Plaintiffs: claims are personal, particularized injuries that did not become estate property and were not released | Held: Plan releases do not bar Tort Plaintiffs; those claims were personal and not estate property |
| Whether Intertek's contribution/indemnity claims against Zeevis were released | Zeevis: releases apply broadly to claims "relating to the Debtors" | Intertek: its contribution/indemnity claims are direct, arise only after payment, are not estate property, and Intertek was not a party to the Settlement Agreement | Held: Intertek's claims are not released and may proceed; they are direct and contingent on future payment and were not estate property |
| Whether the Court will enforce releases in the Settlement Agreement (between Tort Plaintiffs and Liquidation Trustee) | Zeevis: the Settlement Agreement should be enforced to bar suits | Tort Plaintiffs: settlement language and implementation govern; this Court did not approve the Settlement Agreement | Held: Court defers to Puerto Rico Court on the Settlement Agreement because this Court did not review or approve it; declines to enforce Settlement Agreement releases here |
Key Cases Cited
- Pacor, Inc. v. Higgins, 743 F.2d 984 (3d Cir. 1984) (framework for bankruptcy "related to" jurisdiction and limits on adjudicating post-confirmation disputes affecting only non-debtors)
- In re Resorts Int'l, Inc., 372 F.3d 154 (3d Cir. 2004) (bankruptcy court lacks post-confirmation jurisdiction over matters without a close nexus to the plan or estate)
- In re Emoral, Inc., 740 F.3d 875 (3d Cir. 2014) (successor/continuation theories can render tort claims "generalized" and therefore estate property under certain facts)
- In re Washington Mutual, Inc., 442 B.R. 314 (Bankr. D. Del. 2011) (approving releases in Chapter 11 plans where debtor receives substantial consideration)
- Corning Glass Works v. Puerto Rico Water Resources Authority, 396 F.2d 421 (1st Cir. 1968) (contribution/indemnity claims arise only after payment to the injured party)