Kaiser Group International, Inc.
00-02263 | Bankr. D. Del. | Jan 30, 2009
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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
IN RE: : Chapter ll
KAISER GROUP INTERNATIONAL, : Bankruptcy CaSe NO. OO-2263-MFW
INC., : Adv. Proc. No. Ol»928-MFW
Debtor. : (Jointly Administered)
KAISER GROUP INTERNATIONAL,
INC , et al.,
Plaintiffs,
v. : MiSc. CaSe No. O7~l24-JJF
MITTAL STEEL OSTRAVA, a.S.,
agent of Nova Hut, a.S.,
ARCELORMITTAL STEEL OSTRAVA
a.S. (formerly known as Nova
Hut, a.S.) and INTERNATIONAL
FINANCE CORPORATION,
Defendants.
KAISER GROUP INTERNATIONAL,
INC., et al.,
Plaintiffs,
v. : MiSc. CaSe No. 07-125~JJF
MITTAL STEEL OSTRAVA, a.S.,
agent of Nova Hut, a.S.,
ARCELORMITTAL STEEL OSTRAVA
a.S. (formerly known as Nova
Hut, a.S.) and INTERNATIONAL
FINANCE CORPORATION,
Defendants.
George E. Rahn, Jr., Esquire Of SAUL EWING, LLP, Philadelphia,
Pennsylvania.
Jonathan M. Landers, Esquire and Robert K. Dakis, Esquire of
GIBSON, DUNN & CRUTCHER LLP, New York, New YOrk.
Mark Minuti, Esquire of SAUL EWING, LLP, Wilmington, Delaware.
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Attorneys for the Debtors and Debtors in POSSeSSiOn.
Warren E. Zirkle, Esquire cf MCGUIRE WOODS LLP, MCLean, Virginia.
Robert J. Stearns, Jr., Esquire and Lee E. Kaufman, ESquire Of
RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware.
Attorneys for Defendants, International Finance COrpOratiOn.
Annapoorni R. Sankaran, Esquire Of GREENBERG TRAURIG, LLP,
Boston, Massachusetts.
Adam D. Cole, Esquire cf GREENBERG TRAURIG, LLP, New York, New
York.
Victoria Watson Counihan, Esquire and Dennis A. Meloro, ESquire
Of GREENBERG TRAURIG, LLP, Wilmington, Delaware.
Attorneys for Defendant AcelOrMittal Steel Ostrava, a.S.
(formerly Nova Hut, a.S.).
MEMORANDUM OPINION
January atf , 2009
Wilmington, Delaware.
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WMM»
ct Judge.
Pending before the Court is a Motion In Support Of Appeal Or
Granting Leave To Appeal Of Debtors' Motion For An Order Pursuant
To Federal Rule Of Bankruptcy Procedure 2004, Or Alternatively A
Bill Of Equitable Discovery, Directing Examination Of, And
Production Of Documents By The International Finance Corporation,
Nova Hut, And Related Parties (D.I. l)1 (the “Motion For Leave To
Appeal”) filed by the Debtors, Kaiser Group International, Inc.
and its subsidiaries. After filing this initial Motionl the
Debtors then filed a Motion For Leave To Supplement The Record
Or, Alternatively, To Remand The Case To The Bankruptcy Court For
Reconsideration Based On Newly Discovered Evidence Pursuant To
Rule 60(b)(2) (D.I. 8) (the “Motion For Leave To Supplement The
Record Or Remand”). In addition, Defendants Mittal Steel
Ostrava, a.s. and ArcelorMittal Steel Ostrava, a.s. (formerly
Nova Hut, a.s.) (“Nova Hut”) filed a Cross-Motion For Damages And
Costs Pursuant To Federal Rule Of Bankruptcy Procedure 8020 (D.I.
9). For the reasons discussed, the Court will deny each of the
pending Motions.
1 Docket Item numbers used in this decision relate to
Misc. Act. No. 07-125~JJF.
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I . PARTIES ’ CONTENTIONS
A. The Debtors' Motion For Leave To Appeal
By their Motion For Leave To Appeal, the Debtors contend
that they have been blocked by Nova Hut and the International
Finance Corporation (“International Finance”), an arm of the
World Bank, from taking discovery. The Debtors contend that Nova
Hut waived any right to insist on arbitration and waived the
benefits of the Court's stay by filing a summary judgment motion
in the adversary proceeding claiming that Kaiser Netherlands, a
non-debtor subsidiary of the Debtors, and the Debtors are in
privity such than an arbitration award in favor of Nova Hut in
the Kaiser Netherlands/Nova Hut arbitration has res judicata
effect here. The Debtors argue that the Bankruptcy Court's Order
is final both under the pragmatic approach to finality, as well
as several exceptions to the final order rule. In the
alternative, the Debtors contend that if the Bankruptcy Court's
Discovery Order is interlocutory, the Court should grant leave to
appeal using the criteria specified in 28 U.S.C. § 1292(b).
The Debtors' Motion For Leave To Appeal is opposed by both
International Finance and Nova Hut. International Finance
contends that the Debtors cannot seek discovery from it because
proceedings against International Finance are currently stayed.
International Finance also contends that the discovery order is
not final, and in any event, the criteria for an interlocutory
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appeal have not been satisfied. Nova Hut echoes similar
arguments.
B. The Debtors' Motion For Leave To Supplement The Record
Or Remand & Nova Hut's Cross-Motion For Damaqes
And Costs
After the filing of their Motion For Leave To Appeal, the
Debtors filed a Motion requesting leave to supplement the record,
or alternatively, remand this case to the Bankruptcy Court, in
light of alleged newly discovered evidence concerning corruption
at the World Bank and International Finance. In this regard, the
Debtors contend that they have conducted private investigations
revealing that International Finance and Mittal Steel Ostrava,
a.s. have had significant dealings over the years and that
International Finance has favored Mittal Steel Ostrava, a.s. in
business transactions. The Debtors contend that this evidence is
relevant to the allegations in their Third Amended Complaint,
that International Finance interfered with the business
relationships and opportunities between the Debtors and Nova Hut.
The Debtors contend that given their newly discovered evidence
concerning International Finance's role in the affairs Of Nova
Hut, discovery into International Finance's involvement with the
contractual relationship between Kaiser and Nova Hut, as well as
any influence by International Finance on the proceedings and
outcome of the Kaiser Netherlands/Nova Hut arbitration is
warranted. Thus, the Debtors seek to introduce this evidence in
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the record here, or remand this matter to the Bankruptcy Court
for it to reconsider its Discovery Order in light of this new
evidence.
In response to the Debtors' Motion, International Finance
contends that the alleged newly discovered evidence raised by the
Debtors cannot be considered on appeal because it was not part of
the Bankruptcy Court's record, International Finance also
contends that Rule 60(b) is inapplicable here, because the
Discovery Order forming the basis Of the Motion For Leave To
Appeal is not a final order, and Rule 60(b) only applies to final
judgments and orders. In the alternative, International Finance
contends that the Debtors cannot demonstrate that relief under
Rule 60(b)(2) is warranted. Nova Hut raises similar arguments
and has filed a Cross-Motion for damages and costs on the grounds
that the Debtors' Motion For Leave To Supplement The Record Or
Remand is a frivolous filing.
II. DISCUSSION
The Debtors invoke Federal Rule of Civil Procedure 60(b)(2)
to support the supplementation of the record in this action or a
remand to the Bankruptcy Court for consideration of the alleged
newly discovered evidence. As a threshold matter, Rule 60(b)(2)
applies to final judgments. Penn West Associatesl Inc. v. Cohen,
371 F.3d 118" date_filed="2004-06-09" court="3rd Cir." case_name="Penn West Associates, Inc. v. Cohen">371 F.3d 118, 124 (3d Cir. 2004) (emphasizing that Rule 60(b)
“applies only to ‘final' judgments and orders”) (citing Torres v.
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Chater, 125 F.3d 166" date_filed="1997-09-18" court="3rd Cir." case_name="Edwin R. Cordova Torres v. Shirley S. Chater, Commissioner of Social Security">125 F.3d 166, 168 (3d Cir. 1997). Moreover, the inquiry
as to whether the Discovery Grder is a final judgment is also
relevant in determining whether the Debtors are entitled to an
appeal as of right. Accordingly, the Court will first determine
whether the Bankruptcy Court's Discovery Order constitutes a
final, appealable order.
Pursuant to 28 U.S.C. § 158(a)(1), the Court has
jurisdiction to hear appeals “from final judgments, orders, and
decrees” of the Bankruptcy Court. In determining whether an
order of the Bankruptcy Court is final, the Court is required to
take a flexible, pragmatic approach. Seel e.q;, In re Armstrong
World Indus., Inc., 432 F.3d 507" date_filed="2005-12-29" court="3rd Cir." case_name="In Re Armstrong World Industries, Inc.">432 F.3d 507 (3d Cir. 2005). Although no
specific combination of factors is dispositive On the question of
finality, the Court should consider, among other things: (1)
whether the order leaves additional work to be done by the
Bankruptcy Court, (2) whether the order implicates purely legal
issues, (3) the impact of the Bankruptcy Court's order upon the
assets of the debtor's estate, (4) the necessity for further
fact-finding on remand to the Bankruptcy Court, (5) the
preclusive effect of the District Court's decision on the merits
of subsequent litigation; and (6) the furtherance of judicial
economy. Generally, pretrial discovery decisions are not
considered to be final decisions subject to immediate appeal,
even under this flexible approach to finality. New York v.
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United States Metals Refining Co., 771 F.2d 796" date_filed="1985-10-18" court="3rd Cir." case_name="State of New York v. United States Metals Refining Company and Amax, Inc. State of New Jersey, Dept. Of Environmental Protection, Intervenor">771 F.2d 796, 799 (3d Cir.
1985) .
The Debtors contend that the Discovery Order fits into an
exception to this general rule. Specifically, the Debtors
contend that an appeal of a discovery order is permitted as of
right where the court denying discovery is in a different federal
circuit than the court where the main proceeding is pending. The
Debtors contend that the rationale behind this exception is
applicable here because the arbitrations between the Debtors and
International Finance and the Debtors and Nova Hut will take
place in the International Court of Claims, and waiting to appeal
the Discovery Order until after the arbitration proceedings are
complete will result in piecemeal litigation.
In the Court's view, however, the cases cited by the Debtor
are distinguishable from the circumstances here. Particularly,
the exception noted by the Debtors pertains to cases in which the
only proceeding pending between the parties is the application
for discovery, and the denial of discovery would not otherwise be
reviewable by an appellate court reviewing a final decision in
the main proceeding. §eeL §;g;, Cusumano v. Microsoft Corp., 162
F.3d 708, 712 (1st Cir. 1998); Barrick Groupl Inc. v. Mosse, 849
F.2d 70, 72 (2d Cir. 1988). In contrast, this case does not
involve circumstances in which the order denying discovery stems
from a different federal jurisdiction than where the main
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proceeding is pending, and the underlying claims between the
Debtors and Nova Hut and the Debtors and International Finance
remain pending in the Bankruptcy Court. Further, the Court is
not persuaded that this case presents a situation where the
denial of discovery would be unreviewable after the final
resolution of the underlying action. Accordingly, the Court
concludes that the Debtors have not established the applicability
of this exception to the general rule that discovery orders are
interlocutory,
The Debtors also contend that orders denying discovery
pursuant to Bankruptcy Rule 2004 are inherently final. However,
the majority of courts have reached a contrary conclusion.2 §eeL
e.q;, Matter of Vance, 165 F.3d 34" date_filed="1998-09-01" court="7th Cir." case_name="United States v. Rafael A. Martinez A/K/A Victor Martinez, Jose Tineo, Florencio Herpin, A/K/A Papo, and Arnaldo Garcia, A/K/A Naldo, A/K/A Nardo">165 F.3d 34 (7th Cir. 1998); Hoffenberg v.
Cohen (ln re Towers Fin. Corp.), 164 B.R. 719" date_filed="1994-03-16" court="S.D.N.Y." case_name="Hoffenberg v. Cohen (In Re Towers Financial Corp.)">164 B.R. 719, 721 (S.D.N.Y.
1994); Countrvwide Home Loansh;lnc. v. Office of the U.S.
Trustee, 2008 WL 2388285 *4 (W.D. Pa. June 11, 2008). Indeed,
even in the case cited by the Debtors, the court ultimately
concluded that the order appealed from was not interlocutory,
even though it suggested such orders might be final in certain
circumstances. In re Blinder Robinson & Co., Inc., 127 B.R. 267" date_filed="1991-05-17" court="D. Colo." case_name="Intercontinental Enterprises, Inc. v. Keller (In Re Blinder, Robinson & Co.)">127 B.R. 267,
277 (D. COlO. 1991).
2 That the Bankruptcy Court also denied the Debtors'
request for an equitable bill of discovery does not alter the
Court's conclusion regarding finality. Indeed, the Debtors cite
no case law supporting such a proposition.
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The Debtors also invoke the collateral order doctrine to
support their position that the Bankruptcy Court's Discovery
Order is immediately appealable. However, since the initial
formulation of this doctrine in Cohen v. Beneficial Indus. Corp.,
337 U.S. 541" date_filed="1949-06-20" court="SCOTUS" case_name="Cohen v. Beneficial Industrial Loan Corp.">337 U.S. 541, 546 (1949), the Third Circuit has limited the
application of this doctrine to circumstances in which the
information sought is either privileged or a trade secret. §§e$
e.g., Bacher v. Allstate Ins. Co., 211 F.3d 52" date_filed="2000-04-20" court="3rd Cir." case_name="Maureen Bacher Richard Bacher v. Allstate Insurance Company">211 F.3d 52, 53, 57 (3d Cir.
2000). Because neither of these circumstances is implicated
here, the Court concludes that the collateral order doctrine is
inapplicable for purposes of establishing that the Discovery
Order is appealable as of right. Countrv-Wide Home Loans, 2008
WL 2388285 at *5.
Alternatively, the Debtors contend that the Court should
grant leave to appeal the Discovery Order under the criteria set
forth in 28 U.S.C. 1292(b) for certification of interlocutory
appeals in civil proceedings. Under Section 1292(b), a party
moving for certification of an interlocutory appeal must
demonstrate that: (1) the order from which the appeal is sought
involves a controlling question of law, (2) there is substantial
ground for difference of opinion with respect to that question,
and (3) an immediate appeal may materially advance the ultimate
termination of the litigation. A court will only grant an
interlocutory appeal if all three requirements are met. Trotter
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v. Perdue Farms, Inc., 168 F. Supp. 2d 277" date_filed="2001-10-15" court="D. Del." case_name="Trotter v. Perdue Farms, Inc.">168 F. Supp. 2d 277, 287 (D. Del. 2001).
The decision to certify an order for appeal under Section 1292(b)
lies within the sound discretion of the court. Moreover,
certification of an interlocutory appeal is granted sparingly and
only in exceptional circumstances. Hulmes v. Honda Motor Co.,
936 F. Supp. 195" date_filed="1996-08-12" court="D.N.J." case_name="Hulmes v. Honda Motor Company, Ltd.">936 F. Supp. 195, 208 (D.N.J. 1996), a_ff'_d 141 F.3d 1154 (3d Cir.
1998).
Applying these principles to the circumstances of this case,
the Court declines to grant leave to appeal the Discovery Order.
The Court is not persuaded that the Discovery Order implicates a
controlling question of law in this action. Further, the Court
is not persuaded that substantial grounds for difference of
opinion exist in light of the fact that the parties have been
unable to locate any case law suggesting that discovery should
commence in an action that has been stayed pending arbitration.
Having concluded that the Discovery Order is not final and
not appealable as of right or under the criteria for allowing
interlocutory appeals, the Court will also deny the Debtors'
Motion For Leave To Supplement Or Remand under Rule 60(b)(2).
Penn West, 371 F.3d 118" date_filed="2004-06-09" court="3rd Cir." case_name="Penn West Associates, Inc. v. Cohen">371 F.3d at 124. Accordingly, the Court will deny
each of the Debtors' pending Motions. The Court will further
deny Nova Hut's Motion For Damages and Costs as the Court cannot
conclude that the Debtors' Motion To Supplement the record is
wholly frivolous, notwithstanding the Debtors' failure to
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identify the precise evidence it contends warrants consideration
on remand.
III. CONCLUSION
For the reasons discussed, the Court will deny the Debtors'
Motion For Leave To Appeal and The Debtors' Motion To Supplement
The Record Or Remand. In addition, the Court will deny Nova-
Hut's Cross-Motion For Damages And Costs.
An appropriate Order will be entered.
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