Free Motion for Reargument - District Court of Delaware - Delaware

Case 1:04-cv-01265-SLR Document 16 Filed O4/10/2006 Page 1 of 4
UNITED STATES DISTRICT COURT
DISTRICT OF DELAWARE
In re Chapter 7
US WOOD PRODUCTS, INC., Bankruptcy Case N0. 00-03198 (MFW)
Debtor.
PANOLAM INDUSTRIES, INC., etal.,
Appellants, Civil Action No. 1:04-cv-01265 (SLR)
V.
MONTAGUE S. CLAYBROOK,
Appellee.
MOTION FOR REARGUMENT BY APPELLANT,
PANOLAM INDUSTRIES, INC.
Panolam Industries, Inc. ("Panolam"), states as follows for its Motion for
Reargument:
1. Jurisdiction: This is an appeal, by Panolam, of an order of the bankruptcy
court below denying Panolam’s motion to dismiss bankruptcy trustee Montague
Claybrook’s bankruptcy preference complaint against Panolam as barred by the statute of
limitations contained in Bankruptcy Code § 546(a), 11 U.S.C. § 546(a). The bankruptcy
court’s order was an interlocutory order. The Court has jurisdiction over this appeal
pursuant to 28 U.S.C. § l58(a)(3) because the Court granted Panolam’s motion for leave
to appeal the bankruptcy court’s order.
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Case 1:04-cv-01265-SLR Document 16 Filed 04/10/2006 Page 2 of 4
2. Motion for Reargument Authorized: On March 31, 2006, the Court
entered its Order affirming the order of the bankruptcy court below. Delaware Local
Rule 7.1.5. permits this Motion for Reargument, and this motion is timely filed, within 10
days after the Court’s entry of the March 31, 2006 Order.
3. Background: In the underlying bankruptcy preference lawsuit, the trustee
seeks to avoid and recover from Panolam $1,014,635.07 of alleged preferential payments
Panolam received from the debtor in bankruptcy, U.S. Wood Products, Inc., within the
last 90 days before the commencement of U.S. Wood Products’ bankruptcy case on July
31, 2000.
4. Because this Court’s Order is interlocutory, like the bankruptcy court’s
order, the court of appeals would lack appellate jurisdiction to consider an appeal of this
Court’s Order unless and until the case is remanded the bankruptcy court, tried on the
merits, and a final judgment is entered and appeal once again proceeds through this
Court. See 28 U.S.C. § 158(d) ("The courts of appeals shall have jurisdiction of appeals
from all final decisions, judgments, orders, and decrees entered under subsections (a) and
(b) of this section.").
5. The basis for this Court’s March 31, 2006 order was essentially that the
appointment of the trustee as interim Chapter 7 trustee, pursuant to Bankruptcy Code
(11 U.S.C.) § 701(a)(1), on July 30, 2002, was an event that triggered a l—year extension
of the limitations period to sue for preferences pursuant to § 546(a)(1)(B) of the
Bankruptcy Code, 11 U.S.C. § 546(a)(1)(B), despite the fact that § 701 is not among the
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Case 1:04-cv-01265-SLR Document 16 Filed 04/10/2006 Page 3 of 4
sections listed in § 546(a)(l)(B) as triggering the extension. See March 31, 2006 Order,
pp. 3-4.
6. Grounds for Reconsiderationz On about April 4, 2006, District Judge
Kent Jordan reached the opposite conclusion to the conclusion reached by this Court’s
March 31, 2006 Order in Georgia-Pacyic Corporation v. Burtch, Misc. Nos. 03-157
(KAJ) and 03-158 (KAJ), on essentially identical operative facts. Copies of Judge
Jordan’s Memorandum Opinion and Order are attached together as Exhibit A. Judge
Jordan’s opinion held that the trustee’s preference lawsuits against Georgia-Pacific
Corporation and Unisource Worldwide, Inc. are barred by the statute of limitations
because they were filed more than 2 years after the commencement of the underlying
bankruptcy case of Allied Digital Technologies, and that the appointment of Jeoffrey
Burtch as interim Chapter 7 trustee under Bankruptcy Code § 701 was not an event which
gives rise to a 1-year extension of the limitations period under § 546(a)(l)(B). Indeed,
Judge Jordan reversed the bankruptcy court’s opinion in Burtch v. Georgia-Pacyic Corp.
(In re Allied Digital Technologies Corp.), 300 B.R. 616 (Bankr.D.Del. 2003), which is
one of the principal authorities upon which the bankruptcy judge in the present case
based her opinion in declining to dismiss the trustee’s lawsuit against Panolam.
7. The decision of this Court in the March 31, 2006 Order and the decision of
Judge Jordan in the Burtch case are in irreconcilable conflict. Panolam submits that it is
therefore in the interest of justice for the Court to grant reargument and reconsider the
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Case 1:04-cv-01265-SLR Document 16 Filed 04/10/2006 Page 4 of 4
basis for the Court’s March 31, 2006 Order. In this respect, Panolam also requests that
the Court grant a hearing to hear and consider the arguments of counsel.
CONCLUSION
For all the reasons stated above, Appellant, Panolam Industries, Inc., requests that
the Court enter an order granting reargument of this case in a hearing at which the Court
can hear and consider the arguments of counsel.
Dated: April 10, 2006
Wilmington, DE Gff
PEPPER HAMILTON LLP
David M. Fournier (No. 2812)
James C. Carignan (No. 4230)
Hercules Plaza, Suite 5100
1313 N. Market Street
P.O. Box 1709
Wilmington, DE 19899-1709
(302) 777-6500
MILLER, CANFIELD, PADDOCK AND
STONE, P.L.C.
Donald J. Hutchinson, Esq.
150 West Jefferson Avenue, Suite 2500
Detroit, MI 48226
(313) 963-6420
C ounsel for Panolam Industries, Inc.
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