Baltimore Marine Industries, Inc.

129 U.S.C. §§2101-2109 (2005).
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IN THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF MARYLAND, NORTHERN DIVISION
*
IN RE BALTIMORE MARINE *
INDUSTRIES, INC. *
Debtor *
* * * * * * *
*
THE INDUSTRIAL UNION OF *
MARINE AND SHIPBUILDING * CIVIL NO: WDQ-04-3802
WORKERS OF AMERICA/ * BANKRUPTCY NO.: 03-80215-JS
INTERNATIONAL ASSOCIATION *
OF MACHINISTS AND *
AEROSPACE WORKERS, AFL-CIO *
AND ITS LODGE S-33, *
Appellants *
*
*
v. *
*
ALAN M. GROCHAL, *
LIQUIDATING AGENT *
Appellee. *
*
*
* * * * * * * * * * * * *
MEMORANDUM OPINION AND ORDER
On July 23, 2004, Alan M. Grochal, Liquidating Agent
for Baltimore Marine Industries Inc.(“BMI”)’s bankruptcy, moved
to pay certain pre-petition medical claims on behalf of BMI’s
employees. The International Association of Machinists (“IAM”)
opposed Grochal’s motion based upon its pending Worker
Adjustment and Retraining Notification Act1 (“WARN”) claims
against BMI. IAM contends that payment of these lower priority
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2Section 507 was subsequently amended to raise the
individual cap to $4,925. The change was not retroactive.
3Section 502 of the Bankruptcy Code provides that a claim
is deemed “allowed” unless a party in interest objects. See 11
U.S.C. § 502. Under BMI’s Joint Plan of Liquidation, “Allowed
Claim(s)” means any Claim...as to any such claim, either
objection to the allowance thereof has been filed, or if an
objection to the allowance thereof has been filed, the
objection has been overruled or the amount of such claim fixed
by a Final Order.” See Appellee Brief at p.3.
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medical claims will unlawfully reduce any potential WARN Act
award. On October 21, 2004, the Bankruptcy Court granted
Grochal’s motion. IAM filed a timely notice of appeal and moved
for a stay of the Bankruptcy Court’s order pending appeal. On
November 8, 2004, the Bankruptcy Court denied the motion.
As the medical claims have already been paid, Grochal
contends that the appeal is now moot. For the reasons discussed
below, the Court will dismiss this appeal as moot.
BACKGROUND
The Bankruptcy Code provides for a $4,6502 per employee
cap on certain allowed3 unsecured claims, including pre-petition
medical and wage claims. See 11 U.S.C. § 507 (2005). Payment
of an employee’s medical claims may reduce his wage claim. See
id. It is undisputed that IAM’s pending WARN Act wage claims, if
successful, would have priority over the medical claims. The
Bankruptcy Court, however, found that the potential WARN Act
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claims were not ripe because they were not “allowed” under the
Joint Plan of Liquidation and the Bankruptcy Code. The
Bankruptcy Court, therefore, approved Grochal’s payment of the
“allowed” pre-petition medical claims. See Tr. at pp. 26-29.
IAM argues that the Bankruptcy Court erred by allowing payment
of lower priority claims before litigation of its WARN Act
claims.
STANDARD OF REVIEW
A case is moot when the issues presented are no longer
“live” or the parties lack a legally cognizable interest in the
outcome. City of Erie v. Pap’s A.M., 529 U.S. 266 (2000).
Federal courts lack jurisdiction to decide moot cases because
their constitutional authority extends only to actual cases and
controversies. Iron Arrow Honor Society v. Heckler, 464 U.S.
67, 70 (1983). To survive an assertion that a claim is moot, a
party must have suffered an actual injury that “can be redressed
by a favorable judicial decision.” Id.
ANALYSIS
Shortly after the Bankruptcy Court’s denial of IAM’s
motion to stay, Grochal paid all of the pre-petition medical
claims. Notwithstanding payment of these claims, IAM contends
that this appeal is not moot, because the Court could determine
that these payments were made at the estate’s risk. IAM,
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therefore, requests that any potential WARN Act award should not
be reduced by payment of the pre-petition medical claims.
As section 507 of the Bankruptcy Code requires the
reduction of any potential WARN Act award, the Court cannot
grant IAM’s requested relief. If IAM wanted to avoid this
reduction, it should have sought emergency relief from this
Court. See Constructivist Foundation, Inc. v. Bonner, 254 B.R.
863, 865 (D. Md. 2000). As there is no practical judicial
relief available, IAM’s appeal will be dismissed. See Central
States, S.E. & S.W. Areas Pension Fund v. Central Transport,
Inc., 841 F.2d 92, 95 (4th Cir. 1988)(dismissal on mootness
grounds is required only when implementation of an order has
created, extinguished, or modified rights “to such an extent
that effective judicial relief is no longer practically
available”)).
CONCLUSION
For the reasons discussed above, IAM’s appeal will be
dismissed.
April 26, 2005 /s/
Date William D. Quarles, Jr.
United States District Judge
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