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HETRA COMPUTER & COMMUNICATION INDUS. INC. v. MILLIGAN

United States District Court, Southern District of New York


March 28, 2003

HETRA COMPUTER & COMMUNICATION INDUSTRIES, INC.; JAMES GRAY; PATRICK SPAIN; JWP INC., APPELLANTS,
v.
R. KEITH MILLIGAN, INDIVIDUALLY; R. KEITH MILLIGAN, AS GENERAL PARTNER OF HELENE HOLDING COMPANY; DIAN H. MILLIGAN, AS GENERAL PARTNER OF HELENE HOLDING COMPANY, APPELLEES, JWP, INC., DEBTOR.

The opinion of the court was delivered by: Denise Cote, United States District Judge.

MEMORANDUM OPINION AND ORDER
The appellant, Emcor Group, Inc. (formerly known as JWP Inc., and hereinafter "JWP") appealed from the April 10, 2002 Order of the Bankruptcy Court (the "April 2002 Order"), denying JWP's motion to compel Keith Milligan, his company and Dian Milligan, his wife (collectively "Milligan"), to comply with a July 27, 1999 Order issued by the Bankruptcy Court (the "July 1999 Order"), and denying JWP's motion for reargument. The appellant had sought reargument of the Bankruptcy Court's ruling at a March 22, 2002 hearing (the "March 2002 Hearing"), in which the court had held that it did not have subject matter jurisdiction over the dispute between the parties and for that reason could not enforce its July 1999 Order.

The underlying dispute between the parties involved liability, under an indemnification contract, for the environmental clean-up of a certain piece of property. The underlying dispute resulted in the filing of several claims in the bankruptcy and the initiation of an adversary proceeding. The parties ultimately reached a settlement agreement which resolved the underlying dispute, the related bankruptcy claims and the adversary proceeding. The terms of the settlement were incorporated into an order dated February 25, 1995 (the "February 1995 Order"). Because Milligan did not comply with the terms of the February 1995 Order, the Bankruptcy Court issued the July 1999 Order requiring Milligan to comply with the terms of the settlement.

Milligan appealed, arguing that the Bankruptcy Court did not have jurisdiction to enforce the terms of a settlement agreement. On August 22, 2000, this Court affirmed the July 1999 Order, concluding that the Bankruptcy Court did have jurisdiction to enforce the settlement because its terms had been incorporated into an order. Milligan v. Hetra Comp. & Comm. Indus., Inc., No. 99 Civ. 10463 (DLC), 2000 WL 1201459, at *5 (S.D.N.Y. August 22, 2000). This Court's ruling was affirmed in a summary order by the Second Circuit Court of Appeals. See In re JWP, Inc., No. 00-5067, 2001 WL 792502, at *1 (2d Cir. July 11, 2001)

It is unclear precisely why the Bankruptcy Court believed it did not have jurisdiction. To the extent that the Bankruptcy Court was ruling that it no longer retained jurisdiction to enforce the July 1999 and February 1995 Orders, that issue was resolved in the decisions of this Court and the Second Circuit described above.

The Bankruptcy Court may have believed, however, that it did not have jurisdiction because the Bankruptcy Court had never had jurisdiction over the underlying dispute. That determination may have been based upon an incomplete understanding of the underlying dispute and the circumstance which led to the issuance of the February 1995 and July 1999 Orders. The bankruptcy judge who had presided over the underlying dispute is deceased and the case was reassigned to another judge. It appears that the parties did not inform the Bankruptcy Court at the March 2002 Hearing that the underlying dispute had been the subject of several claims and an adversary proceeding during the bankruptcy. Moreover, in their submissions on appeal the parties have not argued or explained why the Bankruptcy Court had subject matter jurisdiction over the underlying dispute. Accordingly, it is hereby

ORDERED that JWP will submit by April 25, 2003, its legal and factual support for its contention that the Bankruptcy Court had subject matter jurisdiction over the underlying dispute. Milligan will submit his response by May 30, 2003. JWP will submit its reply by June 13, 2003.

SO ORDERED:

20030328

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