The first decision held that LTV's obligations under the Coal Industry Retiree Health Benefit Act of 1992 ("Coal Act"), Pub.L. No. 102-486, 106 Stat. 2776, 3036-3056, were not pre-petition claims that must be disallowed under Chapter 11 of the Bankruptcy Code. In re Chateaugay Corp., 154 B.R. 416 (S.D.N.Y. 1993). The second decision rejected LTV's Due Process and Takings Clause attacks on the constitutionality of the Coal Act.
Courts have defined taxes, for the purpose of bankruptcy cases, as the Supreme Court did in Feiring: "those pecuniary burdens laid upon individuals or their property, regardless of their consent, for the purpose of defraying the expenses of government or of undertakings authorized by it." Id., see New Neighborhoods, Inc. v. West Virginia Workers' Compensation Fund, 886 F.2d 714, 720 (4th Cir. 1989); In re Chateaugay, 154 B.R. 416, 420 (S.D.N.Y. 1993); In re Chateaugay, 153 B.R. 632, 637 (Bankr.S.D.N.Y. 1993). This definition has been further explicated by the four-prong test set forth in In re Lorber Indus. of California, Inc., 675 F.2d 1062, 1066 (9th Cir. 1982).
Therefore, LTV's Coal Act obligations do not represent pre-petition claims that must be disallowed as untimely.Id. (quoting In re Chateaugay Corp., 154 B.R. 416, 419 (S.D.N Y 1993)) (internal citations omitted). As the District Court observed, "[t]here is nothing inChateaugay II that indicates that its principle should not be applied in the environmental context."
"); In re Sunarhauserman, Inc., 126 F.3d at 819. In contrast, PBGC points to the Coal Industry Retiree Health Benefit Act of 1992, 22 U.S.C. § 9701-9722, (Coal Act), and cases in which courts under its provisions wrestled with bankruptcy priorities, most notable of which is LTV Co. v. Shalala (In re Chateaugay Corp.), 154 B.R. 416 (S.D.N.Y. 1993), aff'd, 53 F.3d 478 (2d Cir. 1995). [T]here is no doubt that the charges incurred by LTV Steel not only are a result of its association with previous collective bargaining agreements, but also are a direct consequence of its continued corporate existence; the Coal Act only imposes obligations on signatories which are still "in business."
Indeed, the court in In re Chateaugay Corp. held that, "where there is no legal relationship defined at the time of petition, that is, where the statute imposing the liability has not been enacted, it would be impossible to find even the remotest right to payment." In re Chateaugay Corp. , 154 B.R. 416, 419 (S.D.N.Y. 1993).Here, CERCLA had been enacted prior to the confirmation of Old RCPI's bankruptcy on July 30, 1985.
"Claims under the Coal Act were not in any sense 'contingent' or 'unmatured' [prior to enactment]; they simply did not exist." In re Chateaugay Corp., 154 B.R. 416, 419 (S.D.N.Y. 1993). The parties' contractual obligations entered prior to the enactment of the Coal Act are not continued under the Act.
See In re Dow Corning Corp., 244 B.R. 705, 715 (Bankr. E.D. Mich. 1999) (citingPension Benefit Guaranty Corp. v. White Motor Corp. (In re WhiteMotor Corp.), 731 F.2d 372, 374 (6th Cir. 1984)) ("co-liability exists when each party is obligated to pay the same person for the same benefits even if the obligations of each party arise from a different source."); see also LTV Steel Co. v. Shalala (In re Chateaugay Corp.), 154 B.R. 416, 420 (S.D.N.Y. 1993) ("although the source of the liability may differ, each debtor must be liable to the same party for essentially the same claim"); McAllister Towing v. Ambassador Factors (In re Topgallant Lines), 154 B.R. 368, 381 fn.12 (S.D. Ga. 1993) (quoting In re Slamans, 148 B.R. at 625) ("`Liable with' means that `the parties are liable to the same creditor at the same time on the same debt'"). As the court in Dow Corning explained:
In re Westmoreland Coal Co., 213 B.R. 1, 17-19 (Bankr. D. Colo. 1997). Westmoreland was not decided in the context of determining whether Coal Act benefits may be modified under § 1114(g), but in the context of determining whether Coal Act premiums are entitled to administrative priority under § 1114(e). But see also LTV Steel Co. v. Shalala (In re Chateaugay Corp.), 154 B.R. 416, 423 (S.D.N.Y. 1993) ( policy behind § 1114(e) supports conclusion that claims under Coal Act are entitled to administrative expense priority), aff'd, 53 F.3d 478 (2d Cir. 1995). In any event, the court does not find Westmoreland persuasive because, even if the plan, fund, or program was "established" by statute, it is "maintained" by the debtors.
In any event, some version of shared liability is essential. Dant Russell, Inc. v. Burlington N.R.R. Co. (In re Dant Russell, Inc.), 951 F.2d 246, 248 (9th Cir. 1991). There is not the requisite shared liability when A is liable to B and B is liable to C but A is not liable to C. LTV Steel Co. v. Shalala (In re Chateaugay Corp.), 154 B.R. 416, 420 (S.D.N Y 1993), aff'd, 53 F.3d 478 (2d Cir. 1995); In re Baldwin-United Corp., 55 B.R. 885, 890-91 (Bankr.S.D.Ohio 1985); 4 COLLIER at ¶ 502.06[2][b]. It is inescapable that the "liable with" requirement means that both the debtor and the co-obligor must be liable to some other creditor. That is the element that is missing here.
In its analysis, the court applied the Lorber factors holding that "workers' compensation obligations of Debtors must be considered `taxes' entitled to priority status under 507(a)(7)(E). See also, In re Chateaugay, 1995 WL 656967 *1 (S.D.N.Y. 1995) (reversing, in part, Judge Conrad's decision in In re Chateaugay, 153 B.R. 632 by adopting analysis and conclusion of court in In re Chateaugay, 177 B.R. at 184, and holding that Minnesota's reimbursement claim was entitled to tax priority status); In re Chateaugay, 154 B.R. 416, 421 (S.D.N.Y. 1993) (finding that Coal Act obligations were taxes and noting that "mandatory contributions to a state insurance fund under a workman's compensation scheme were found to constitute taxes") ( citing In re Pan American Paper Mills, Inc., 618 F.2d 159, 162 (1st Cir. 1980)), aff'd, In re Chateaugay, 53 F.3d 478 (2d Cir. 1995), cert. denied, LTV Steel Co. Inc. v. Shalala, ___ U.S. ___, 116 S.Ct. 298, 133 L.Ed.2d 204 (1995). The Debtor asserts, however, that the above mentioned case law either did not adequately distinguish among the types of workers' compensation obligations an employee may have; namely the debtor's instant obligation to repay benefits paid to workers by the State. Additionally, according to the Debtor, the cases did not address the expanded excise tax analysis set forth by the Sixth Circuit Court of Appeals' in Ohio Bureau of Workers' Compensation v. Yoder (In re Suburban Motor Freight, Inc.) ("Suburban II"), 36 F.3d 484 (6th Cir. 1994).