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IN RE QUIGLEY COMPANY

April 8, 2005.

In re: QUIGLEY COMPANY, INC., Chapter 11, Debtor. QUIGLEY COMPANY, INC., Plaintiff,
v.
A.C. Coleman, THE OTHER PARTIES LISTED ON EXHIBIT A TO THE COMPLAINT, JOHN DOES 1-1000 AND JANE DOES 1-1000, Defendants.



The opinion of the court was delivered by: VICTOR MARRERO, District Judge

DECISION AND ORDER

This case is before the Court as a motion by the Ad-Hoc Committee of Tort Victims (the "Committee") for leave to appeal from an injunction issued by the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"), Prudence Carter Beatty, J., on December 17, 2004 in the above-captioned adversary proceeding. See Injunction Pursuant to 11 U.S.C. §§ 105(a) and 362(a) and Federal Rule of Bankruptcy Procedure 7065, In re Quigley Company, Inc., Adv. Proc. No. 04-04262 (Bankr. S.D.N.Y. Dec. 17, 2004) ("Preliminary Injunction"). The effect of the injunction was to extend the automatic stay provision of the United States Bankruptcy Code, 11 U.S.C. § 101 et seq. ("Bankruptcy Code"), that currently protects debtor Quigley Company, Inc. ("Quigley"), to Quigley's parent company, Pfizer, Inc. ("Pfizer"), on the grounds that Pfizer allegedly has the right to draw on substantial insurance policies that constitute the primary asset of Quigley's estate. That injunction was entered pursuant to 11 U.S.C. § 362, the automatic stay provision of the Bankruptcy Code, as well as 11 U.S.C. § 105(a), which authorizes bankruptcy courts to "issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of" the Code.

The Committee's motion seeks a determination that it may appeal the injunction to this Court pursuant to 28 U.S.C. § 158(a)(1), which grants district courts jurisdiction to hear appeals "from final judgments, orders, and decrees" of bankruptcy courts. In the alternative, it asks this Court to grant it leave to appeal the injunction pursuant to 28 U.S.C. § 158(a)(3), which authorizes appeals, "with leave of the court, from other interlocutory orders and decrees" of the bankruptcy court.

  Quigley argues that the Preliminary Injunction is non-final and therefore not appealable as of right, and that discretionary leave to appeal should not be granted. It also contests the legal standard that ought to apply to this Court's consideration of the Committee's motion. For reasons explained below, the Court agrees with Quigley: the Preliminary Injunction is interlocutory under the legal standards articulated by the Second Circuit, and the Committee has failed to make the showing necessary for the Court to grant leave to appeal.

  I. BACKGROUND

  Quigley, a wholly-owned subsidiary of Pfizer that had manufactured a number of refractory products, filed for bankruptcy on September 3, 2004 after being inundated with a slew of asbestos exposure suits by putative victims who had used Quigley's products.*fn1 Quigley's bankruptcy filing caused all of the suits proceeding against it to be stayed automatically pursuant to 11 U.S.C. § 362(a). On that same date, Quigley filed an adversary proceeding seeking to enjoin all asbestos-related proceedings against Pfizer individually pursuant to 11 U.S.C. §§ 362(a) and 105(a) on the grounds that Quigley and Pfizer share rights in certain insurance policies and are joint beneficiaries of an insurance trust that is used to satisfy settlements, judgments, and defense costs related to asbestos suits against each of the companies.

  After holding several hearings, the Bankruptcy Court concluded that Quigley's bankruptcy estate would be immediately and irreparably injured if the automatic stay were not extended to asbestos-related suits against Pfizer that had the potential to deplete shared insurance policies and trust. See Preliminary Injunction at 3-4. Under the terms of the injunction, parties to the action are "stayed, restrained and enjoined from taking any action in any and all pending or future Asbestos Related Claims against Pfizer during the pendency of Quigley's chapter 11 case." Id. at 5-6.*fn2 The Preliminary Injunction states that its intent is to extend the automatic stay provisions of 11 U.S.C. § 362(a), which would only apply to suits against Quigley in the absence of an injunction, to these asbestos-related claims. See id. at 6 ("the automatic stay of section 362(a) of the Bankruptcy Code extends to: (1) all pending and future Asbestos Related Claims against Pfizer; and (2) against any property in which both Pfizer and Quigley have a legal, beneficial, contractual or other interest").

  While the Preliminary Injunction does not indicate that any future hearings will be held to determine whether the injunction should be made permanent, it does provide for two procedures by which parties subject to the order may seek relief from it. First, the Preliminary Injunction states that a party who "asserts that it holds an Asbestos Related Claim solely against Pfizer based on a product having no relation to Quigley or any product not manufactured, sold or distributed by Quigley" may obtain relief from the Preliminary Injunction by demonstrating to the Bankruptcy Court that it holds a Pfizer-only claim and that the insurance policies and trust Pfizer shares with Quigley "could not be utilized to satisfy any portion of the defense costs, settlements or judgments related to the Pfizer-only Claim." Id. at 6. Second, and more importantly for the purposes of this motion, the injunction indicates that the provisions governing relief from the automatic stay applicable to suits against Quigley also allow parties to seek relief from the extension of the automatic stay to asbestos-related suits against Pfizer. See id. at 7 ("nothing contained in this order shall prohibit any party in interest from seeking relief from the automatic stay of section 362(a) of the Bankruptcy Code or the terms of this order by filing an appropriate motion with the Court").

  On December 27, 2004, the Committee simultaneously filed the instant motion and a notice of appeal of the Preliminary Injunction.

  II. DISCUSSION

  A. THE PRELIMINARY INJUNCTION IS INTERLOCUTORY

  This Court cannot rule on the merits of the Committee's appeal unless it determines that the Preliminary Injunction is a final order or, if the injunction is interlocutory, that leave to appeal the injunction should be granted pursuant to the provisions of 28 U.S.C. § 158(a) and 28 U.S.C. § 1292(b). See In re Enron Corp., 316 B.R. 767, 770 (S.D.N.Y. 2004).

  Turning first to the question of whether the Preliminary Injunction should be considered final, the Court concludes that the Committee has failed to demonstrate that the standards for finality articulated by the Second Circuit have been satisfied. While the Committee is correct in its contention that the Second Circuit has adopted a flexible approach to finality in the bankruptcy context, see In re Chateaugay Corp., 880 F.2d 1509, 1511 (2d Cir. 1989); In re Ionosphere Clubs, Inc., 139 B.R. 772, 777 (S.D.N.Y. 1992) ("Because bankruptcy proceedings often continue for long periods of time, and discrete claims within those proceedings are frequently resolved prior to the conclusion of the entire bankruptcy, the concept of finality in bankruptcy matters is more flexible than in ordinary civil litigation."), a bankruptcy order is nonetheless interlocutory unless it "completely resolve[s] all of the issues pertaining to a discrete claim, including issues as to the proper relief." In re Pegasus Agency, Inc., 101 F.3d 882, 885 (2d Cir. 1996) (quoting In re Prudential Lines, Inc., 59 F.3d 327, 331 (2d Cir. 1995). The resolution of a dispute in the bankruptcy context "does not simply refer to the determination of a separable issue. Rather, a `dispute' in this context means at least an entire claim for which relief may be granted." Flor v. BOT Fin. Corp. (In re Flor), 79 F.3d 281, 283 (2d Cir. 1996).

  The Court agrees with the Committee that the Bankruptcy Court has not manifested any intention to revisit the Preliminary Injunction itself unless it appears that Quigley's reorganization efforts are not succeeding. Nonetheless, the Court concludes that the Preliminary Injunction is interlocutory because it does not conclusively determine whether any individual action against Pfizer should be stayed for the duration of Quigley's insolvency proceeding. The language of the injunction states that "all objections to the relief sought by the Motion and in the Complaint, are overruled on their merits," Preliminary Injunction at 5, and further declares that the injunction is intended to remain in effect "during the pendency of Quigley's Chapter 11 case," id. at 6. Nothing in the injunction itself indicates that the Bankruptcy Court intends to reexamine the existence of the Preliminary Injunction in the future. The Bankruptcy Court did indicate on the record that "when it becomes obvious that nothing's happening, then I will consider modifying or eliminating [the preliminary injunction], or, at some point, somebody will put a proposal before me and people will object to it or not. . . ." (Memorandum of Quigley Company and Pfizer Inc. Opposing Motions of Ad Hoc Tort Victims' Committee and Reaud, Morgan & Quinn, L.L.P. for Leave to Appeal under 28 U.S.C. § 158(a)(3), dated Jan. 6, 2005 ("Quigley Mem.") at 4 (quoting Nov. 17 Hr'g Tr. at 41).) But under In re Lomas, 932 F.2d 147 (2d Cir. ...


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