514 B.R. 720
Bankr. D.N.J.2014Background
- NYCHA is a large public housing authority in NYC; G-I Holdings filed for Chapter 11 in 2001 and confirmed a Plan in 2009; NYCHA filed an adversary proceeding seeking injunctive and declaratory relief related to asbestos remediation costs; NYCHA claimed restitution/indemnity and post-petition administrative expenses; the Plan discharged pre-petition claims and defined NYCHA’s asbestos-related claim as Class 7 with 8.6% recovery; NYCHA contends its post-petition costs and future obligations are non-dischargeable or administrative expenses and seeks injunctive relief to enforce remediation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether NYCHA’s injunctive relief claim is barred by the Plan’s discharge. | G-I violated Plan terms; NYCHA’s equitable relief isn’t barred. | Plan discharged all rights to equitable remedies; injunctive relief is barred. | Discharged; injunctive relief claim barred. |
| Whether NYCHA’s administrative expense claim is time-barred or viable. | NYCHA’s post-petition costs are administrative expenses; timely filed. | Administrative expense claim barred by Confirmation Order; not properly pleaded. | Barred and not established as an administrative expense. |
| Whether NYCHA’s non-dischargeability claim is timely or available under pre-BAPCPA law. | Non-dischargeability under 1141(d)(6) pre-BAPCPA should apply. | Pre-BAPCPA §1141(d)(6) does not apply; time-barred under Rule 4007. | Not applicable; time-barred/no viable non-dischargeability claim. |
| Whether NYCHA may amend its Proof of Claim post-confirmation to add injunctive relief. | Leave to amend should be freely given; not a new claim. | Post-confirmation amendments are disfavored; prejudice to Debtor; plans bar. | Amendment not allowed; NYCHA bound by Plan. |
| Whether NYCHA’s injunctive relief could be treated as a “claim” under §101(5) (or not) and thus dischargeable. | Injunctive relief can be a claim under §101(5) in environmental contexts. | In this case, injunctive relief is a pre-petition obligation discharged by Plan. | Injunctive relief here is a discharged claim under Plan. |
Key Cases Cited
- Ohio v. Kovacs, 469 U.S. 274 (U.S. 1985) (environmental injunctions can be dischargeable unless linked to ongoing harm or payment)
- In re CMC Heartland Partners, 966 F.2d 1143 (7th Cir. 1992) (CERCLA orders may be claims if they stop ongoing pollution; not if merely cleanup funds)
- In re Chateaugay, 944 F.2d 997 (2d Cir. 1991) (injunctions to clean up can be non-dischargeable if they create a right to payment)
- In re Torwico Elec., Inc., 8 F.3d 146 (3d Cir. 1993) (regulator vs creditor role determines whether environmental injunction is a claim)
- United States v. Apex Oil, Co., 579 F.3d 734 (7th Cir. 2009) (government injunctive obligation not a monetary claim; not discharged)
- In re Brown, 186 F.3d 301 (3d Cir. 1999) (leave to amend proofs of claim freely given; factors for prejudice)
- Ben Franklin Hotel Assocs., 186 F.3d 301 (3d Cir. 1999) (amendment standards and prejudice considerations)