Free Motion to Expedite - District Court of Delaware - Delaware

Case 1:08-cv-00188-SLR

Document 7

Filed 07/24/2008

Page 1 of 5

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE In re: BUFFETS HOLDINGS, INC., a Delaware corporation, et al., Debtors. Chapter 11 Jointly Administered Case No 08-10141

Delmarva Power & Light Company, Potomac Electric Power Company, Atlantic City Electric Company, Florida Power & Light Company, and Sacramento Municipal Utilities District, Appellants, v. Buffet Holdings, Inc., Appellees.

Case No. 1:08-cv-00188-SLR

MOTION FOR RELIEF FROM ORDER OF MEDIATION AND FOR EXPEDITED CONSIDERATION OF APPEAL Appellants, Delmarva Power & Light Company, Potomac Electric Power Company (together Pepco Holdings Inc. or "PHI"), Florida Power & Light Company ("FPL") and Sacramento Municipal Utility District move the Court under the circumstances of this appeal to grant relief from the application of the Order requiring mediation and, for the reasons set forth below, permit appellants to submit their arguments for decision by the Court. In the event the Court determines that mediation must continue and be completed, appellants request in the alternative (1) that the Court order briefing to commence immediately and proceed in an expedited manner simultaneously with the mediation and (2) that the appellants' representatives having settlement authority be permitted to appear telephonically at the mediation on August 13,

Case 1:08-cv-00188-SLR

Document 7

Filed 07/24/2008

Page 2 of 5

2008 and not be required to bear the expense of traveling to Delaware to appear in person at the mediator's office. 1 Counsel of record would appear in person. On information and belief, the debtor in possession appellee is opposed to the relief requested here. In support of their Motion, the appellants state as follows: 1. In this appeal Debtors insist that mediation is necessary because it may lead to a resolution of the dispute with the appellants. For PHI at least, this is not possible. PHI seeks an appellate ruling on the legal issues it raises in this appeal. As indicated in the declaration attached as Exhibit A, PHI seeks a resolution on the record that vacates the relief below on the grounds that it was contrary to applicable law and rules. PHI is not interested in a monetary resolution without such a ruling. Therefore, it is difficult to conceive of how mediation could accomplish what PHI seeks here. Even if a resolution were possible short of a appellate ruling, PHI opposes any resolution that would require the terms to be kept confidential. 2. The delay imposed by requiring mediation in this case is also potentially prejudicial to appellants. Utility appeals of Section 366 issues in the past have been thwarted because the appeals have become subject to dismissal upon debtor's motion alleging that the matter has become moot due to the fact that the appellate court can no longer provide effective relief for the parties. Such motions have been prompted by (1) the debtors' termination of service due to the sale or closure of facilities served by the utility; (2) the confirmation of the debtor in possession's plan of reorganization or (3) the debtor/appellee's sudden decision before the appeal is decided to pay the deposit originally demanded by the utility. Despite utility
1

In this case, the debtors have insisted, and the mediator has directed, that appellants must appear in person at the mediation in Wilmington. This is fundamentally unfair to parties that will have to travel from California and Florida, particularly given the nature of the issues before the Court. Sacramento Municipal Utility District has already advised the undersigned that it will not able to shoulder the expense of traveling to Wilmington for the mediation but will be able to participate in the mediation telephonically. Florida Power & Light and PHI have advised that unless otherwise excused by the Court, they will send a representative to the mediation in Wilmington on August 13th.

Case 1:08-cv-00188-SLR

Document 7

Filed 07/24/2008

Page 3 of 5

arguments that these appeals are not moot (because the relief granted against them is capable of repetition and yet evades review), many appellate courts have not thus far been receptive to such utility arguments. In this case, appellants filed their notice of appeal on March 20, 2008, but no mediation has occurred to date. Despite repeated requests from the appellants that any mediation be expedited for the very reasons identified herein, the mediation in this case was not scheduled until August 13, 2008. The unexplained slow pace of the mediation here followed by the normal briefing schedule to this Court could well push consideration of the appeal into the winter and result in yet another motion to dismiss by the appellee. 3. The orders from which the utilities appeal in this case impose the kind of relief entered routinely in large chapter 11 cases in this District and to which appellants have consistently objected. In case after case, and with uncanny consistency, the motions filed by debtors and the objections lodged by utilities in these proceedings are nearly identical. Yet no appellate decisions reviewing bankruptcy court rulings under BAPCPA occur. As the attached PHI declaration makes clear, this is true typically because the objecting utilities' deposit demands are either paid by debtors after all non-objecting utilities have become bound by the bankruptcy court's order or, if the objections are litigated (as here), the debtors ultimately succeed in moving on the grounds of mootness to dismiss the appeal before an appellate decision is rendered. In some cases, the debtor/appellee has sought to end the appeal by just paying the deposit originally demanded by the utility. In such situations, however, the complexity and cost of mediation is hardly necessary if a simple agreement on the record to pay the requested deposit is proposed. The parties would at least know at that point if a resolution of the appeal is acceptable to the utility. 4. The deficiencies in the adequate assurance motions filed by debtors in possession

Case 1:08-cv-00188-SLR

Document 7

Filed 07/24/2008

Page 4 of 5

(including this one) are fundamentally obvious from the utilities' perspective and will not be better understood by negotiations. As appellee is well aware, the utility position is that such debtor in possession motions routinely seek emergency relief under Section 366 of the Bankruptcy Code without notice to utilities; begin contested matters but fail to serve moving papers in accordance with Bankruptcy Rules 7004 and 9014; request the bankruptcy court to enjoin utilities without filing an adversary proceeding under B.R. 7001; and request the bankruptcy court to impose "procedures" and authorize forms of adequate assurance that are contrary to state law tariffs and the express requirements of Section 366(c). 5. There can be little dispute that the Bankruptcy Court in Delaware as a matter of course grants the relief described above and overrules repeated utility objections. To see these results, one only has to review the dockets of the scores of cases filed since the amendments to Section 366 contained in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA"). Many of these cases filed nationally during 2005 and 2006 are listed in the PHI declaration. Moreover, many additional cases filed in Delaware alone in 2007 and 2008 are identified on the attached Exhibit B (including several where appellee's counsel in this case sought nearly identical relief to the relief under review on this appeal). 2 Thus, while there is significant disagreement between the parties over the merits of the Section 366 relief sought by debtors in bankruptcy court, all participants would surely agree at least that such requested relief has been sought as a matter of course in this District since 2005. 6. From appellants' perspective, the goal of 28 U.S.C. 158 is to permit meaningful review on the merits of bankruptcy court orders that create legitimate disputes over the

2

Indeed in Diamond Glass, Inc. et al. (08-10601), counsel's Motion for adequate assurance at paras. 39 and 40 cites specifically to the Bankruptcy Court's unreported decision below in this case, even quoting from the transcript of the hearing in this case, as well as several other unreported cases in this District, as authority for propriety and similarity of the relief requested under Section 366.

Case 1:08-cv-00188-SLR

Document 7

Filed 07/24/2008

Page 5 of 5

interpretation of applicable law. No issue in bankruptcy causes more consternation and expense for utilities than their persistent challenges to bankruptcy court rulings under Section 366 of the Bankruptcy Code. Consequently, the utilities believe that such disputes are not appropriate for mediation, at least where the mediation could be responsible for further delay and expense that is prejudicial to the utility's appeal. Respectfully submitted,

/s/William Douglas White William Douglas White Kevin R. McCarthy MCCARTHY & WHITE, PLLC 8180 Greensboro Drive, Suite 875 McLean, Virginia 22102 Tel: (703) 770-9265 /s/Michael P. Morton Michael P. Morton Michael P. Morton P.A. 1209 North Orange Wilmington DE (302) 426-1313 Attorneys for Delmarva Power & Light Company, Potomac Electric Power Company, Atlantic City Electric Company, Florida Power & Light Company, and Sacramento Municipal Utilities District

Case 1:08-cv-00188-SLR

Document 7-2

Filed 07/24/2008

Page 1 of 9

Case 1:08-cv-00188-SLR

Document 7-2

Filed 07/24/2008

Page 2 of 9

Case 1:08-cv-00188-SLR

Document 7-2

Filed 07/24/2008

Page 3 of 9

Case 1:08-cv-00188-SLR

Document 7-2

Filed 07/24/2008

Page 4 of 9

Case 1:08-cv-00188-SLR

Document 7-2

Filed 07/24/2008

Page 5 of 9

Case 1:08-cv-00188-SLR

Document 7-2

Filed 07/24/2008

Page 6 of 9

Case 1:08-cv-00188-SLR

Document 7-2

Filed 07/24/2008

Page 7 of 9

Case 1:08-cv-00188-SLR

Document 7-2

Filed 07/24/2008

Page 8 of 9

Case 1:08-cv-00188-SLR

Document 7-2

Filed 07/24/2008

Page 9 of 9

Case 1:08-cv-00188-SLR

Document 7-3

Filed 07/24/2008

Page 1 of 2

Delaware Cases Seeking Relief Against Utilities June, 2007 ­ June, 2008
Diamond Glass Inc. Buffets Holdings Inc. Wickes Holding Friedman's Idleaire JHT Holdings, Inc. Whitehall Jewelers Holdings Goodys Family Holdings Charys Holding Co. Domain Inc. Sharper Image Syntax-Brillian Corp. Holley Performance Products, Inc. Synova Health Group Inc. Aegis Mortgage Corporation SCO Group Inc. Amp'd Mobile Inc. Tweeter Home Entertainment Group Fitness Company Holdings Group American Home Mortgage Fedders Corp. 08-10601 08-10141 08-10212 08-10161 08-10960 08-11267 08-11261 08-11153 08-10289 08-10132 08-10322 08-11407 08-10256 07-11893 07-11119 07-11337 07-10739 07-10787 07-10936 07-11047 07-11182

Case 1:08-cv-00188-SLR

Document 7-3

Filed 07/24/2008

Page 2 of 2