In re Lac-Megantic Train Derailment Litigation

Case Type:
Business
Case Status:
Affirmed
Citation:
No. 17-1108 (1st Circuit, Jun 02,2021) Published
Tag(s):
Ruling:
The Federal Rules of Bankruptcy Procedure, and not the Federal Rules of Civil Procedure, apply to cases for which federal courts have jurisdiction under the "related to" jurisdictional grant of 28 U.S.C. § 1334(b). Consequently, a notice of appeal was untimely when the motion for reconsideration was untimely under Fed. R. Bankr. P. 9023, resulting in the running of the appeals period.
Procedural context:
The US district court, which assumed jurisdiction of a bankruptcy case and of ancillary litigation under 28 U.S.C. § 1334(b), confirmed the plan of liquidation for the debtor and granted the remaining defendant's motion to dismiss the ancillary litigation. The district court filed a final judgment for the third-party (non-bankrupt) defendant. 28 days after the court entered the final judgment, the tort plaintiffs moved for reconsideration of an order dismissing the litigation. The third-party defendant objected and argued that the motion to reconsider was untimely under Fed. R. Bankr. P. 9023. The district court denied the tort plaintiffs' motion. The tort plaintiffs appealed.
Facts:
In June 2013, a Canadian refinery arranged for a transnational shipment of crude oil from North Dakota. The shipment involved several railroad companies. On July 6, 2013, the train derailed and the contents of several of the rail cars exploded. While the derailment occurred in Canada, responsibility for the rail cars rested in Montreal, Maine and Atlantic Railway (MMA) at the time of the derailment and explosion. The explosion caused death, injury, and property damage. Wrongful death lawsuits were filed in state courts in Texas and Illinois. MMA filed a bankruptcy petition in the District of Maine. The tort actions were removed to federal district courts pursuant to 28 U.S.C. § 1334(b) or 28 U.S.C. § 1332(a). The tort plaintiffs and MMA’s bankruptcy trustee asked the Maine District Court to transfer all the tort actions to the District of Maine under 28 U.S.C. § 157(b)(5). The District Court granted the motion and created an omnibus docket for the tort actions and other third-party claims. Canadian Pacific Railway Company was added as an additional defendant. The bankruptcy trustee for MMA and the tort plaintiffs settled their disputes. The settlement was included in MMA’s plan of liquidation. As part of the settlement, the tort plaintiffs sought dismissal of their claims against all defendants other than Canadian Pacific. The district court confirmed MMA’s liquidating plan and the tort plaintiffs’ motions to dismiss. Canadian Pacific moved to dismiss the plaintiffs’ consolidated complaint. The plaintiffs moved to amend the complaint to, among other things, add several Canadian Pacific subsidiaries based in the United States, including the Soo Line Railroad Company. The district court granted Canadian Pacific’s motion to dismiss and denied the plaintiffs’ motion to amend. The district court entered final judgment for Canadian Pacific. Plaintiffs moved for reconsideration of the denial of their motion to amend their complaint 28 days after the district court had entered final judgment for Canadian Pacific. In this motion, plaintiffs expressed their intention to replace Soo Lines (an American subsidiary of Canadian Pacific) for Canadian Pacific as the defendant. Canadian Pacific objected and argued that the motion to reconsider was untimely under Fed. R. Bankr. P. 9023. Rule 9023 states that motions to reconsider must be filed within 14 days. The district court denied the motion to reconsider, and plaintiffs appealed.
Judge(s):
Lynch and Selya, Circuit Judges, and Katzmann, Judge of the US Court of International Trade, sitting by designation

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