SUNBEAM CORPORATION V. HONORABLE RONNIE C. DORTCH, JUDGE, HANCOCK CIRCUIT COURT
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2009-SC-000501-MR
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APPELLANT
SUNBEAM CORPORATION
V.
.
RENDERED : MAY 20, 2010
TO BE PUBLISHED
-. V..
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ON APPEAL FROM COURT OF APPEALS
CASE NO . 2009-CA-000863-OA
HANCOCK CIRCUIT COURT NO . 08-CI-00022
HONORABLE RONNIE C . DORTCH,
JUDGE, HANCOCK CIRCUIT COURT
APPELLEE
AND
SHERRY J . MCGLENON AND
TERRY L. PARKER, CO-EXECUTORS
OF THE ESTATE OF LEON J . FISCHER
REAL PARTIES IN INTEREST
OPINION OF THE COURT BY JUSTICE ABRAMSON
AFFIRMING
Sunbeam Corporation appeals from a 2009 Order of the Court of Appeals
denying its petition for a writ to compel its dismissal from a wrongful death
action . Agreeing with the Court of Appeals that Sunbeam has failed to
establish its entitlement to extraordinary relief, we affirm .
RELEVANT FACTS
Sunbeam Corporation (now known as American Products, Inc., but
referred to in these proceedings by its former name) is one of several
defendants in a wrongful death suit now proceeding in the Hancock Circuit
Court. The wrongful death action is being pursued by Sherry McGlenon and
Terry Parker, the real parties in interest who are co-executors of the estate of
their father, Leon Fischer . Fischer died from lung-related mesothelioma, and
the executors allege that he contracted that disease as a result of being
exposed to asbestos fibers during the course of his career as a maintenance
worker, including during his work for National Aluminum in Hawesville,
Kentucky. At National Aluminum, allegedly, Fischer was exposed to asbestoscontaining furnaces supplied by Sunbeam or a predecessor in interest .
Sunbeam moved to be dismissed from the executors' suit on the ground that
its 2002 reorganization under the bankruptcy laws discharged any claim that
Fischer may have had against it.
When the trial court indicated that it would deny the motion to dismiss,
Sunbeam added to its motion a contention that jurisdiction over claims bearing
on its discharge was lodged exclusively in the bankruptcy court and
accordingly that the Hancock Circuit Court lacked jurisdiction to proceed . By
order entered April 23, 2009, the trial court denied the motion to dismiss,
whereupon Sunbeam moved the Court of Appeals for a writ compelling the
dismissal. The Court of Appeals denied extraordinary relief and explained that
in its view the trial court was acting within its jurisdiction over wrongful death
cases and that otherwise Sunbeam had an adequate remedy by appeal from
the trial court's alleged error in not giving effect to Sunbeam's discharge.
Pursuant to CR 76 .36(7)(a), Sunbeam now appeals from the Court of
Appeals' decision, and reiterates its contentions that only the bankruptcy court
has jurisdiction to construe its discharge and that it will suffer irreparable
injury if not given immediate relief from the trial court's erroneous refusal to
give effect to Sunbeam's discharge . Although our reasoning differs slightly
from that of the Court of Appeals, we agree that the writ was properly denied
and so affirm that Court's Order.
ANALYSIS
Sunbeam asserts, correctly, that it is not, as the Court of Appeals
apparently believed, attacking the trial court's jurisdiction to entertain
wrongful death cases . It is attacking rather the court's jurisdiction to construe
Sunbeam's bankruptcy discharge, a subject matter, according to Sunbeam,
reserved exclusively for bankruptcy courts . Sunbeam, however, has read the
bankruptcy court's exclusive jurisdiction too broadly. While it is true that state
courts lack jurisdiction to modify or to grant relief from a bankruptcy court's
discharge injunction, they retain, with a few exceptions not pertinent here,
concurrent jurisdiction under 28 U.S .C . § 1334(b) "to construe the discharge
and determine whether a particular debt is or is not within the discharge ." In
re Pavelich, 229 B .R . 777, 783 (B .A .P . 9th Cir. 1999) . See also, In re Stabler,
418 B .R. 764, 770 (B .A.P. 8th Cir. 2009) (with a few exceptions, "state courts
have concurrent jurisdiction to determine the dischargeability of a debt," as
well as "whether [certain debts] constituted post-petition debts outside the
penumbra of the discharge and discharge injunction .") ; In re Hamilton, 540
F.3d 367, 373 (6th Cir. 2008) ("[sjtate courts have unbridled authority to
determine the dischargeability of debts" but an incorrect interpretation that
effectively modifies the discharge order is ineffective .) ; In re McGhan, 288 F.3d
1172 (9th Cir. 2002) (approving of Pavelich, supra) ; In re Lenke, 249 B.R . 1
(Bankr. D . Ariz. 2000) ("'[T]he bankruptcy court's jurisdiction [to determine that
a debt has been discharged] is concurrent with that of the appropriate local
court.') (brackets in original ; quoting from lA Collier On Bankruptcy § 17 .28A
at 1739 (14th ed. 1978)) ; In re Honeycutt, 228 B . R. 428, 430 (Bankr. E. D . Ark.
1998) (With a few exceptions, "state courts have concurrent jurisdiction with
the bankruptcy court to determine the dischargeability of debts .") .
In Herring v. Texaco, Inc., 165 P. 3d 4 (Wash. 2007), the Supreme Court
of Washington had before it a case, like this one, in which the defendant's
Chapter 11 bankruptcy discharge was alleged to bar an asbestos-related
wrongful death claim . The plaintiff maintained that the decedent's claim had
not been discharged, and the Court, noting its authority to address the issue,
explained that "[sttate courts have concurrent jurisdiction with federal
bankruptcy courts over dischargeability issues. . . . While state courts lack the
power to modify or dissolve an order, we do have the power to determine its
applicability when discharge is raised as a defense to a state cause of action
filed in state court." Id. at 7-8 (citations omitted) . We agree .
Here, the executors are not asking the trial court to exempt Fischer's
claim from Sunbeam's discharge . They assert rather that Fischer's claim was
not discharged, on the ground, apparently, that Sunbeam did not comply with
requirements for bringing asbestos claims within the discharge . The merits of
that assertion are not before us . We are concerned only with whether the trial
court has jurisdiction to entertain it, and as the cases cited above make clear,
it does .
Against this conclusion, Sunbeam cites three cases in support of its
contention that only the bankruptcy court has jurisdiction to consider the
dischargeability of a debt . Two of them, Matter of Halpern, 50 B .R. 260 (Bankr.
N.D . Ga . 1985), affd 810 F. 2d 1061 (11th Cir. 1987), and Matter of Moccio, 41.
B .R . 268 (Bankr. D. N.J . 1984) address claims that fall within exceptions to the
general rule of concurrent state court jurisdiction . Those exceptions do not
apply here . In the third, In re Comer, 723 F .2d 737, 740 (9111 Cir. 1984), the
Court noted that "the 1970 Amendments to the Bankruptcy Act . . . imposed
exclusive jurisdiction upon the bankruptcy courts to determine
dischargeability ." The Comer Court did not address 28 U .S .C . § 1334, which
divides jurisdiction between bankruptcy and state courts under the current
Bankruptcy Code. To the extent that Comer might be construed as authority
for the proposition that bankruptcy courts have exclusive jurisdiction to
determine dischargeability under current law, we find it unpersuasive in light
of the more recent United States Court of Appeals for the Ninth Circuit
authority cited above, McGhan, which is to the contrary .
Finally, Sunbeam contends that even if the trial court is acting within its
jurisdiction, a writ should still issue because the trial court is acting
erroneously "and there exists no adequate remedy by appeal or otherwise and
great injustice and irreparable injury will result if the petition is not granted."
Estate of Cline v. Weddle, 250 S .W.3d 330, 334 (Ky. 2008) (reiterating the
narrow grounds upon which a writ of prohibition or mandamus may be
granted) ; Cox v. Braden, 266 S.W .3d 792 (Ky. 2008) (writs are disfavored and
are to be granted only in extraordinary circumstances) . Where the trial court is
acting within its jurisdiction, "a showing of no adequate remedy by appeal is
`an absolute prerequisite' to obtaining a writ for extraordinary relief." Estate of
Cline, 250 S .W.3d at 335 (quoting The Independent Order of Foresters v.
Chauvin, 175 S .W.3d 610 (Ky. 2005)) .
Sunbeam claims that it lacks an adequate remedy by appeal "because
without relief from the lower court's erroneous denial of its motion to dismiss,
it will be forced to prepare for and defend itself before a court that lacks
jurisdiction on a matter that has already been discharged in bankruptcy ." As
explained above, however, the trial court has jurisdiction to consider whether
the executors' claim has been discharged . Otherwise, as correctly noted by the
Court of Appeals, under our law the ordinary expense of litigation does not
render an appeal inadequate . Estate of Cline, 250 S.W.3d at 335 (citing
Chauvin) . Sunbeam's resort to foreign authority for a different rule is not
persuasive. Finally, Sunbeam's unsupported assertion that the executors'
claim is being pursued in bad faith is equally unpersuasive as a basis for
extraordinary relief.
CONCLUSION
In sum, although for reasons slightly different than those relied upon by
the Court of Appeals, we agree with that Court that the trial court has
jurisdiction to consider the dischargeability of the executors' claim against
Sunbeam and that Sunbeam has an adequate remedy by appeal should it
desire review of the trial court's rulings on that question . Accordingly, we
affirm the July 9, 2009 Order of the Court of Appeals denying Sunbeam's
petition for a writ.
All sitting . All concur .
COUNSEL FOR APPELLANT:
Rebecca F. Schupbach
Wyatt, Tarrant 8s Combs, LLP
500 West Jefferson Street, Suite 2800
Louisville, KY 40202-2898
HONORABLE RONNIE C . DORTCH, APPELLEE
Circuit Court Judge
P.O . Box 169
Hartford, KY 42347
COUNSEL FOR REAL PARTIES IN INTEREST:
Rickie A . Johnson
Kenneth L. Sales
Joseph Donald Satterley
Sales, Tillman, Wallbaum, Catlett 8v Satterley
1900 Waterfront Plaza
325 West Main Street
Louisville, KY 40202-4251
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