United States District Court, E.D. Missouri, Eastern Division
MEMORANDUM AND ORDER
W. SIPPEL UNITED STATES DISTRICT JUDGE
County of San Mateo, City of Imperial Beach, and County of
Marin (Appellants) filed this appeal seeking to overturn the
bankruptcy court's order that they dismiss their lawsuits
against the Reorganized Peabody Energy Corporation (PEC). The
Bankruptcy Court ordered that Appellants dismiss their
complaints against the Reorganized PEC on the grounds that
the causes of action in those complaints constituted
dischargeable claims that Appellants failed to file before
the deadline the bankruptcy court set. After a review of the
briefs and the record in this matter, I find that the
bankruptcy court reached the correct legal conclusion
regarding the First Causes of Action in Appellants'
complaints and did not abuse its discretion regarding the
remaining causes of action. As a result, I will affirm the
bankruptcy court's order.
Peabody Energy Corporation and its affiliates filed for
Chapter 11 bankruptcy protection in 2016 in the United States
Bankruptcy Court for the Eastern District of Missouri. The
bankruptcy court set October 11, 2016 as the deadline for
governmental units to assert claims that arose prepetition.
On March 17, 2017, the bankruptcy court entered its order
confirming PEC's Plan of Reorganization (Chapter 11
Plan). On April 3, 2017, the Chapter 11 Plan went into effect
and Reorganized PEC emerged from bankruptcy. The Chapter 11
Plan established the deadline of May 3, 2017 for all
creditors to assert claims against PEC that arose between the
filing of the bankruptcy petition and the Plan's
are three governmental entities in California. None of the
Appellants filed a claim in PEC's bankruptcy proceeding.
Instead, on July 17, 2017, shortly after PEC's plan went
into effect, Appellants each filed a separate, nearly
identical, lawsuit in three separate California state courts.
The lawsuits sought damages and injunctive relief from
multiple fossil fuel industry defendants for their role in
contributing to global warming. PEC is a named defendant in
these three lawsuits. The complaints allege that the
defendants are responsible for greenhouse gas emissions
between 1965 and 2015. The complaints seek compensatory
damages, equitable relief, punitive damages, attorneys'
fees, disgorgement of profits, and cost of suit.
Appellants' eight causes of action is the same, and they
are presented in the same order across the three complaints:
The First Cause of Action in each complaint (“First
Causes of Action”) brings a public nuisance action on
behalf of the People of the State of California. The
remaining causes of action are brought on behalf of the
government entities themselves and are as follows: (Second)
Public Nuisance; (Third) Strict Liability-Failure to Warn;
(Fourth) Strict Liability-Design Defect; (Fifth) Private
Nuisance; (Sixth) Negligence; (Seventh) Negligence-Failure to
Warn; (Eighth) Trespass. These lawsuits were removed to
August 28, 2017, Reorganized PEC filed a motion in the
bankruptcy court seeking an order enforcing the discharge and
injunction provisions of its Chapter 11 Plan. Specifically,
PEC asked the bankruptcy court to enjoin Appellants from
prosecuting their causes of action against PEC and to require
Appellants to dismiss those actions with prejudice. The
bankruptcy court found Appellants' claims against PEC had
been discharged in bankruptcy. The bankruptcy court granted
Reorganized PEC's motion, enjoined Appellants from
prosecuting the PEC causes of action, and directed Appellants
to dismiss the PEC causes of action with prejudice.
Appellants appealed the bankruptcy court's decision to
court has jurisdiction over the appeal pursuant to 28 U.S.C.
§ 158(a)(1). Appellants filed a timely notice of appeal.
a bankruptcy court's judgment is appealed to the district
court, the district court acts as an appellate court and
reviews the bankruptcy court's legal determinations de
novo and findings of fact for clear error.” Fix v.
First State Bank of Roscoe, 559 F.3d 803, 808 (8th Cir.
2009) (internal quotation and citation omitted). Issues
committed to the bankruptcy court's discretion are
reviewed for an abuse of that discretion. In re
Zahn, 526 F.3d 1140, 1142 (8th Cir. 2008). A bankruptcy
court's interpretation of its own prior orders, including
a confirmed Chapter 11 plan, is committed to the discretion
of the bankruptcy court and is reviewed for abuse of
discretion. See, e.g., In re Dial Bus. Forms,
Inc., 341 F.3d 738, 744 (8th Cir. 2003). A bankruptcy
court abuses its discretion when it fails to apply the proper
legal standard or if it bases its order on findings of fact
that are clearly erroneous. Id.
raise four issues on appeal, which fall into two general
categories. The first issue requires me to determine whether
Appellants' First Causes of Action, which sought relief
under a statutory remedial provision that only allowed them
to seek abatement, raised claims that were discharged by the
Chapter 11 Plan and Confirmation Order. The remaining issues
pertain to whether Appellants' causes of action were
exempt from discharge under certain exceptions included in
the Chapter 11 Plan.
Chapter 11 Plan contains provisions (“EPA Settlement
Provisions”) that clarify the extent to which
Environmental Law claims and actions brought pursuant to a
government entity's police powers are exempt from
discharge under the Plan. Those provisions came after
“significant negotiations between the Debtors, the U.S.
Environmental Protection Agency, the Department of the
Interior, other governmental entities, and many Indian
Nations as part of a settlement in connection with the plan
confirmation process (EPA Settlement).” [Memorandum
Opinion, ECF Doc. No. 18-2, A0752, 0757] Appellants argue
those provisions apply to their claims and protect them from
Government Bar Date
initial matter, Appellants did not file a proof of claim
before the established deadline of October 11, 2016.
[See Memorandum Opinion, ECF Doc. No. 18-2, A0752,
0759] They filed their complaints against PEC more than three
months after the Effective Date of the Reorganized PEC's
Chapter 11 Plan. The complaints they filed allege that
PEC's activity between the years 1965-2015 contributed to
climate change and has imposed significant costs on
Appellants. [See, e.g., Marin Complaint, Exhibit C,
ECF Doc. No. 18-2, A0619, 0695]
“do not dispute that they received notice of the
Debtors' bankruptcy cases, and the other operative
deadlines in the Debtors' bankruptcy cases.”
[Memorandum Opinion, ECF Doc. No. 18-2, A0752, 0759] They
contend that they were not bound by the deadline for
governmental units to file claims because their complaints
bring claims that were exempted from discharge under
PEC's confirmed Chapter 11 Plan. I address those
arguments more fully below in Parts III(b) and (c). Because I
find that Appellants' causes of action were not exempt,
and because Appellants chose not to file a proof of claim
before the deadline, I also find that their claims were
discharged under the Plan and Confirmation Order.
Discharge of the First Causes of Action
review de novo the question of whether
Appellants' First Causes of Action constitute discharged
claims under the PEC Chapter 11 Plan. In the First Causes of
Action, Appellants seek injunctive relief pursuant to
California's Public Nuisance Enabling Statute. I find
that Appellants' First Causes of Action are claims that
were discharged under the Chapter 11 Plan.
Bankruptcy Code defines the term “claim” as
either a “right to payment” or a “right to
an equitable remedy for breach of performance if such breach
gives rise to a right to payment.” 11 U.S.C. §
101(5)(A, B). The Code's use of the phrase “right
to payment” “is usually referring to a right to
payment recognized under state law.” Travelers Cas.
& Sur. Co. of Am. v. Pac. Gas & Elec. Co., 549
U.S. 443, 450-51 (2007). Under the Bankruptcy Code, a
debtor's breach of a state statutory provision
constitutes a breach of performance. Ohio v. Kovacs,
469 U.S. 274, 279 (1985) (“There is no indication in
the language of the statute that the right to performance
cannot be a claim unless it arises from a contractual
argue that California's Public Nuisance Enabling Statute
only enables them to seek injunctive relief, and they do not
have a separate right to payment as a result of PEC's
alleged conduct. Accordingly, they argue, their request for
injunctive relief is not a claim under the Bankruptcy Code.
it may be the case that Appellants cannot seek damages under
the Public Nuisance Enabling Statute for actions they brought
in the name of the People of the State of California, the
fact that Appellants can, and did, include a separate cause
of action for damages in their complaints is ...