ML040020061
| ML040020061 | |
| Person / Time | |
|---|---|
| Site: | Diablo Canyon  |
| Issue date: | 12/22/2003 |
| From: | Tsang K City of San Francisco, CA |
| To: | Office of Nuclear Reactor Regulation, US Federal Judiciary, Bankruptcy Court, Northern District of California |
| References | |
| 01-30923 DM, 94-0742640 | |
| Download: ML040020061 (12) | |
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JAMES L. LOPES (No. 63678)
GARY M. KAPLAN (No. 155530)
LONG X. DO (No. 211439)
HOWARD, RICE, NEMEROVSKI, CANADY, FALK & RABKIN A Professional Corporation Three Embarcadero Center, 7th Floor San Francisco, California 94111-4024 Telephone:
415/434-1600 Facsimile: 415/217-5910 Af Debtor and Debtor in Possession Attorneys Aor NDe LECTRIC CoMPAn PACIFIC GAS AND ELECTRIC COMPANY 8
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I-d. 15 16 17 UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA In re SAN FRANCISCO DIVISION PACIFIC GAS AND ELECTRIC COMPANY, a California corporation, Case No. 01 30923 DM Chapter 11 Case Date:
January 16, 2004 Time:
1:30 p.m.
Place:
235 Pine Street, 22nd Floor San Francisco, California Judge:
Hon. Dennis Montali Debtor.
Federal I.D. No. 94-0742640 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE BY MAIL FOR NOTICE OF MOTION AND MOTION FOR ORDER AUTHORIZING THE DEBTOR TO SETTLE CLAIM NO. 13377 FILED BY THE PRESIDIO TRUST; AND DECLARATION OF GRANT GUERRA IN SUPPORT OF MOTION FOR ORDER AUTHORIZING THE DEBTOR TO SETTLE CLAIM NO. 13377 FILED BY THE PRESIDIO TRUST PROOF OF SERVICE FOR MOTION FOR ORDER AUTHORIZING THE DEBTOR TO SETILE CLAIM NO. 13377
1 PROOF OF SERVICE BY MAIL 2
I am employed in the City of San Francisco, State of California. I am over the 3
age of eighteen (18) years and not a party to the within action; my business address is San 4
Francisco Legal Copy, 100 California St., Suite P-10, San Francisco, California 94111.
5 I am readily familiar with the practice for collection and processing of documents for 6
mailing with the United States Postal Service of San Francisco Legal Copy, and that practice 7
is that the documents are deposited with the United States Postal Service with postage fully 8
prepaid the same day as the day of collection in the ordinary course of business.
9 On December 22, 2003, I served the following document(s) described as:
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- 1) NOTICE OF MOTION AND MOTION FOR ORDER AUTHORIZING THE 11 DEBTOR TO SETTLE CLAIM NO. 13377 FILED BY THE PRESIDIO TRUST; AND 12
- 2) DECLARATION OF GRANT GUERRA IN SUPPORT OF MOTION FOR 13 ORDER AUTHORIZING THE DEBTOR TO SETTLE CLAIM NO. 13377 FILED BY Rmm mR'Na 14 THE PRESIDIO TRUST EIK
- MMU 15 on the persons listed below by placing the document(s) for deposit in the United States 16 Postal Service through the regular mail collection process at San Francisco Legal Copy, 17 located at 100 California St., Suite P-10, San Francisco, California 94111, to be served by 18 mail addressed as follows:
19 Please See Attached Mailing List 20 I declare under penalty of perjury that the foregoing is true and correct. Executed 21 at San Francisco, California on December 22, 2003.
22 23 SAN FRANCIS LEGAL COPY 24 25 26 27 28 PROOF OF SERVICE FOR MOTION FOR ORDER AUTHORIZING THE DEBTOR TO SETTLE CLAIM NO. 13377 1
JAMES L. LOPES (No. 63678)
GARY M. KAPLAN (No. 155530) 2 LONG X. DO (No. 211439)
HOWARD, RICE, NEMEROVSKI, CANADY, 3
FALK & RABKIN A Professional Corporation 4
Three Embarcadero Center, 7th Floor San Francisco, California 94111-4024 5
Telephone:
415/434-1600 Facsimile:
415/217-5910 6
Attorneys for Debtor and Debtor in Possession 7
PACIFIC GAS AND ELECTRIC COMPANY 8*
l UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA 1 0 10 SAN FRANCISCO DIVISION
'11 12 In re Case No. 01 30923 DM 13 PACIFIC GAS AND ELECTRIC Chapter II Case COMPANY, a California corporation, m¶I 14 Date:
January 16, 2004 ArRAMW Debtor.
Time:
1:30 p.m.
ark 15 Place:
235 Pine Street, 22nd Floor Federal I.D. No. 94-0742640 San Francisco, California 16 Judge:
Hon. Dennis Montali 17 18 NOTICE OF MOTION AND MOTION FOR ORDER AUTHORIZING THE DEBTOR TO 19 SETTLE CLAIM NO. 13377 FILED BY THE PRESIDIO TRUST; SUPPORTING MEMORANDUM OF POINTS AND AUTHORITIES 20
[DECLARATION OF GRANT GUERRA IN SUPPORT THEREOF FILED
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SEPARATELY]
22 23 24 25 26 27 28 MOTION FOR ORDER AUTHORIZING PG&E TO SEToLE CLAIM NO. 13377 BY THE PRESIDIO TRUST
1 NOTICE OF MOTION AND MOTION 2
PLEASE TAKE NOTICE that on January 16,2004 at 1:30 p.m., or as soon 3
thereafter as the matter may be heard, in the Courtroom of the Honorable Dennis Montali, 4
located at 235 Pine Street, 22nd Floor, San Francisco, California, Pacific Gas and Electric 5
Company, the debtor and debtor in possession in the above-captioned Chapter 11 case (the 6
"Debtor" or 'PG&E'), will and hereby does move the Court for entry of an Order 7
Authorizing Pacific Gas And Electric Company To Settle Claim No. 13377 Filed By The
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Presidio Trust (the "Motion').
9 By this Motion, PG&E seeks the Court's approval of a certain Settlement 10 Agreement And Mutual Release Of Claims (the "Settlement Agreement") which resolves -a 11 claim (Claim No. 13377) filed by The Presidio Trust (the "Trust") (the "Claim"), and related 12 issues against PG&E arising out of various service contracts and certain easements and H(>ARD 13 licenses located in a portion of the former Presidio of San Francisco Army Base (the WNW Add m"14 "Presidio').
m 15 This Motion is brought pursuant to Rule 9019 of the Federal Rules of Bankruptcy 16 Procedure and is based on the grounds that the proposed Settlement Agreement is fair and 17 equitable and in the best interests of the bankruptcy estate. This Motion is based on this 18 Notice Of Motion And Motion, the accompanying Memorandum Of Points And Authorities 19 in support thereof, the supporting Declaration Of Grant Guerra submitted concurrently 20 herewith, the record of this case, and any admissible evidence presented to the Court prior to 21 or at the hearing on this Motion.
22 PLEASE TAKE FURTHER NOTICE that pursuant to Rule 9014-l(c)(2) of the 23 Bankruptcy Local Rules of the United States District Court for the Northern District of 24 California, any opposition to the Motion and the relief requested herein must be filed with 25 the Bankruptcy Court and served upon appropriate parties (including counsel for PG&E) at 26 least five (5) days prior to the scheduled hearing date. If there is no timely objection to 27 the requested relief as described in this paragraph, the Court may enter an order granting 28 such relief without further hearing.
MOTION FOR ORDER AUTHORIZING PG&E TO SIETLE CLAIM NO. 13377 BY THE PRESIDIO TRUST
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9 10 11 12 13 RAZ No 14 eram 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES FACTUAL BACKGROUND The Trust has administrative jurisdiction pursuant to federal law (16 U.S.C.
§460bb) over a portion of the Presidio denoted as Area B in Title I of Public Law 104-333
("Area B"), legal title to which is held by the United States of America. Area B was previously under the administrative jurisdiction of the National Park Service (the "NPS') of the United States Department of the Interior (1DOI") from October 1, 1994 to June 30, 1998, and during all relevant prior periods, under the administrative jurisdiction of the United States Army (the "Army") until September 30, 1994. Prior to the Trust assuming administrative jurisdiction over Area B, the Debtor entered into various contracts and obtained certain easements and licenses involving Area B in whole or in part. Additionally, PG&E was engaged by the Trust's predecessor, the NPS, to upgrade a 4 kilovolt ("kY")
electric distribution system on Area B to 12 kV. Disputes have arisen between the Trust and PG&E over such contracts, easements, licenses and the upgrade project, including the rights and obligations to which the Trust may have succeeded.
-I.
SUMMARY
AND STATUS OF THIE CLAIM On February 17, 2003, the Trust filed the Claim against the Debtor in the amount of $2,445,813.10, based on an allegation that PG&E had impermissibly used a corridor (the "Fiber Optic Corridor") of land within the Presidio, a substantial portion of which corridor is now within the boundaries of Area B, for the purpose of installing, using, and maintaining a fiber optic telecommunications cable and related facilities. On March 28, 2003, PG&E filed an objection (the "Objection") to the Trust's Claim as being untimely. See Notice of Debtor's Fifth Omnibus Objection and Fifth Omnibus Objection to Late-Filed Claims (Docket No. 12475). The hearing on PG&E's Objection is currently scheduled for December 22, 2003. The Debtor and the Trust have jointly requested that the Court take such hearing off of the Court's calendar in anticipation of seeking the Court's approval of the Settlement Agreement.
MOTION FOR ORDER AUTHORZNG PG&E TO SETTLE CLAIM NO. 13377 BY THE PRESIDIO TRUST a,
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C)
II.
THE SETTLEMENT AGREEMENT TERMS Since filing the Objection, PG&E has conducted negotiations with the Trust to resolve the Claim and other disputes relating to various contracts, licenses and easements relating to Area B or other areas in the Presidio under the Trust's administrative jurisdiction.
Declaration of Grant Guerra In Support Of Motion For Order Authorizing PG&E To Settle Claim No. 13377 By The Presidio. Trust ("Guerra Decl.") 12. On December 17, 2003, the Debtor and the Trust (collectively, the "Parties') finalized and executed the Settlement Agreement,' subject to this Court's approval, the terms of which are summarized below. Id.
A true and correct copy of the Settlement Agreement is attached as Exhibit A to the Guerra Declaration. 2 Under the terms of the proposed Settlement Agreement, the Trust agrees to withdraw the Claim and represents that it has not assigned or transferred any part of the Claim and has not filed or asserted any other claim against PG&E or its bankruptcy estate.
Id. at ¶3. The Trust also agrees not to file or assert any claim in the future that arose prior to the execution of the Settlement Agreement, is eventually discharged by a confirmediplan in PG&E's bankruptcy case, and is related to the subject matter of the Settlement Agreement.
Id. The proposed Settlement Agreement also contains broad mutual releases. Id. In addition, pursuant to the proposed Settlement Agreement, the Parties have agreed to settle certain disputes (described below) involving various agreements, licenses and easements relating to Area B or portions of the Presidio under the Trust's administrative jurisdiction.
'PG&E is not attaching copies of the Settlement Agreement to the service copies of the Guerra Declaration because it is too voluminous. However, PG&E will make copies of such document available to anyone being served with this Motion and the Guerra Declaration. Any person served with this Motion and the Guerra Declaration may obtain a copy of the Settlement Agreement by written request by mail to Howard, Rice, Nemerovski, Canady, Falk & Rabldn Attn: Nathaniel H. Hunt, Three Embarcadero Center, 7th Floor, San Francisco, Californa 94111-4024, or by e-mail request to nhunt~hrice.com.
Additionally, copies of the Settlement Agreement will be available at the hearing on this Motion if the Court or any other person wishes to review it.
2The Settlement Agreement mistakenly designated the Claim as Claim No. 13357.
The Parties have agreed to correct such typographical error. Guerra Decl. ¶2.
MOTION FOR ORDER AUTHORING PG&E TO SETFlE CLAIM NO. 13377 BY THE PRESIDIO TRUST
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Id. at ¶4.
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10 11 12 HOVZQD 13 RM1 AN 14 1FRAMIN t 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A.
The Fiber Optic Arrangement.
In 1986, the Army granted PG&E a license identified as No. DACA05-3-86-543, for the period March 1, 1986 to February 28, 1991, to use the Fiber Optic Corridor, for the purpose of installing, using, and maintaining a fiber optic telecommunications cable and related facilities. PG&E has used the Fiber Optic Corridor for the specified purposes continuously since 1986. After the expiration of the license on February 28, 1991, PG&E and the Army, and subsequently the NPS, which succeeded the Army, entered into negotiations concerning the continued use of the Fiber Optic Corridor to establish an easement. Although PG&E was unable to finalize a comprehensive agreement with either the Army or the NPS, it did, however, obtain an agreement to continue using the Fiber Optic Corridor as a permittee pending final agreement on the easement terms (the "Fiber Optic Arrangement"). The Trust has succeeded to any and all rights and obligations of the NPS and the Army with respect to PG&E in connection with the Fiber Optic Arrangement. The Parties disagree as to the legal effect, enforceability, and interpretation of some or all of the terms of the Fiber Optic Arrangement.
Under the terms of the proposed Settlement Agreement, the Parties agree that the Fiber Optic Arrangement and all of its terms and conditions, including all duties and obligations of either Party, shall be terminated. Additionally, pursuant to the proposed Settlement Agreement, PG&E has abandoned the fiber optic equipment and facilities which it installed and used on the Fiber Optic Corridor, and any such equipment and facilities shall be left in place and become the property of the Trust without compensation therefor. The proposed Settlement Agreement also provides that, upon written request by PG&E, the Parties shall promptly enter into good faith negotiations on the terms and conditions for future use of the Fiber Optic Corridor.
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The Electric Supply Arrangement.
In 1994, the NPS accepted PG&E's technical and cost proposal (the "Electric Supply Arrangement") in response to the NPS's Request for Proposal No.
MOTION FOR ORDER AUTHORIZNG PG&E TO SETTLE CLAIM NO. 13377 BY THE PRESIDIO TRUST I
1 1443RP061094001, Electric Supplier, Presidio, Project Type 92. The Electric Supply 2
Arrangement provides for PG&E to upgrade the existing 4 kV electric distribution system on 3
Area B to 12 kV and to supply electric distribution to the Presidio. The Trust succeeded to 4
any and all rights and obligations of NPS with respect to PG&E in connection with the 5
Electric Supply Arrangement. The Parties disagree as to the legal effect, enforceability, and 6
interpretation of some or all of the terms of the Electric Supply Arrangement, including the 7
obligations of the Parties resulting from the Electric Supply Arrangement and the costs 8
expended by PG&E to engineer the new 12 kV system.
9 Under the terms of the proposed Settlement Agreement, the Parties agree that the 10 Electric Supply Arrangement and all of its terms and conditions, including all duties and 11 obligations of either Party, shall be terminated. Any electric service furnished to the Trust 12 by PG&E shall thereafter be furnished subject to PG&E's applicable tariffs on file with the 13 California Public Utilities Commission (the "Commission") and shall be subject to such 14 changes or modification by the Commission as the Commission may, from time to time, z;;;; ~..15 direct in the exercise of its jurisdiction.
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Undocumented Electric Facilities.
17 The Trust owns and operates the 4 kV electric distribution system serving all 18 areas under the Trust's administrative jurisdiction, with the principal exception of the 19 facilities serving the Wherry Housing/Baker Beach Apartments area (the "Baker Beach 20 Electric Facilities"), which are owned and operated by PG&E. Certain miscellaneous 21 facilities (collectively, the "Undocumented Electric Facilities") that PG&E has previously 22 installed in the Presidio for the distribution of electricity to customers of PG&E (including
-23 the Trust) who are located within the Presidio are located on property under the 24 administrative jurisdiction of the Trust, but are not associated with any easement, license, 25 permit, right to use or other grant of permission from the Army, NPS, or the Trust that can 26 be documented by PG&E despite its best efforts to locate and obtain all relevant 27 documentation of such facilities. The Parties desire to document all such facilities and the 28 terms and conditions under which they may continue to be located at the Presidio.
MOTION FOR ORDER AUTHORING PG&E TO SETTLE CLAIM NO. 13377 BY THE PRESIDIO TRUST 0)
C) 1 Under the terms of the proposed Settlement Agreement, the Parties agree to enter 2
into an Easement for Electric Distribution Facilities, attached to the proposed Settlement 3
Agreement as Exhibit G, for PG&E's continued use and operation of the Baker Beach 4
Electric Facilities and the Undocumented Electric Facilities. In addition, the proposed 5
Settlement Agreement provides that the Parties execute an Agreement for Installation or 6
Allocation of Special Facilities, attached to the proposed Settlement Agreement as Exhibit 7
H, for electric distribution service to the Baker Beach Electric Facilities by PG&E. PG&E 8
shall thereafter maintain the equipment and facilities and provide electric service to the 9
Baker Beach Electric Facilities pursuant to its applicable rate schedules.
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Natural Gas Easement.
11 On September 30, 1994, the day before the formal closing of the Presidio, the 12 Army granted to PG&E an Easement for Pipeline Right-of-Way, identified as No. DACA05-HOMM 13 2-94-588 (the "Natural Gas Easement'), for installation, operation, and maintenance of pipes 14 and other facilities for distributing natural gas to buildings and other users of natural gas 15 located at the Presidio. The Trust has succeeded to all rights and obligations of the Army 16 with respect to PG&E under the Natural Gas Easement. The Parties desire to revise the 17 Natural Gas Easement to reflect current conditions at the Presidio.
18 Under the terms of the proposed Settlement Agreement, the Parties agree to enter 19 into an Amended and Restated Easement, attached to the proposed Settlement Agreement as 20 Exhibit I, for PG&E's natural gas distribution facilities located within the areas of the 21 Presidio under the Trust's administrative jurisdiction and serving customers of PG&E 22 located at the Presidio.
23 ARGUMENT 24 I.
25 THE PROPOSED SETTLEMENT AGREEMENT IS FAIR AND EQUITABLE AND IN THE BEST INTERESTS OF THE ESTATE.
26 27 "The law favors compromise and not litigation for its own sake... " Martin v.
28 Kane (In re A & C Properties! 784 F.2d 1377, 1381 (9th-Cir. 1986). Bankruptcy courts MOTION FOR ORDER AUTHORING PG&E TO SETLE CLAIM NO. 13377 BY THE PRESIDIO TRUST 1
have great latitude in approving compromise agreements that are "'fair and equitable."'
2 Woodson v. Fireman's Fund Ins. Co. (In re Woodson). 839 F.2d 610, 620 (9th Cir. 1988).
3 In determining whether a compromise is "in the best interest of the bankrupt estate" (A & C 4
Properties. 784 F.2d at 1382), courts consider the following factors:
5 (a) The probability of success in the litigation; (b) the difficulties, if any to be encountered in the matter of collection; (c) the complexity 6
of tie litigation involved, and the expense, inconvenience anc~delay necessarily attending it- [and] (d) the paramount interest of the 7
creditors and a pro er deference to their reasonable views in the premises. (Id. at 1381) 8
.9 PG&E respectfully submits that these A & C Properties factors weigh in favor of 10 approving the proposed Settlement Agreement, as demonstrated below.3 11 A.
The Probability of Success is Uncertain.
12 In a case of this type, the outcome is always uncertain, and the probability of 1 3 success is difficult to weigh. As set forth in the Objection, PG&E maintains that the Claim, MOE 14 which relates primarily to its use of the Fiber Optic Corridor, is untimely. Guerra Decl. ¶6.
BnK
&RAW<N 15 Even assuming, arguendo that the Claim is timely, PG&E denies the alleged wrongdoing 16 that forms the basis of the Claim and disputes the amount of damages alleged in the Claim.
17 Id. PG&E maintains that it did not exceed the scope of its permit to use the Fiber Optic 18 Corridor, but rather used the Fiber Optic Corridor pursuant to a hold-over permit granted by 19 the Army pending negotiation of an easement. Id. Additionally, PG&E takes the position 20 that the amount of the Claim, which purports to assess the value of the Fiber Optic Cbrridor, 21 grossly exceeds the fair market value for such a right of way. Id. Moreover, the Parties' 22 respective positions on various disputed and unresolved issues, including with respect to the 23 Fiber Optic Arrangement, the Electric Supply Arrangement, the Undocumented Electric 24 Facilities, and the Natural Gas Easement, will be difficult to establish because they are 25 premised upon negotiations, agreements, and contracts which date back as much as thirty-26 3The second A & C Pro erties factor (the difficulty with respect to collecting a 27 settlement) is not applicable here because the proposed Settlement Agreement does not 28 provide for PG&E to collect any monetary sum. Accordingly, PG&E will not discuss such MOTION FOR ORDER AUTHORIZING PG&E TO SETILE CLAIM NO. 13377 BY THE PRESIDIO TRUST 1
nine years. Id.
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The Disputed Issues Are Complex And Continued Litigation Would Entail Unnecessarv Expense. Inconvenience and Delay.
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The proposed Settlement Agreement is broad in scope; it resolves several 5
complex issues between the Parties relating to obligations, rights and privileges with respect 6
to land facilities and complex service contracts, dating back as long as thirty-nine years. Id.
7 at ¶5. If the proposed Settlement Agreement is not approved, PG&E intends to continue 8
litigating its Objection to the Claim, and, if necessary, additional objections, at considerable 9
expense and inconvenience to both the Parties and the Court. Id. at 17. Litigation of the 10 Claim and various related matters that are resolved under the proposed Settlement 11 Agreement would raise many complex and challenging issues, including: the existence and 12 scope of any land rights held by PG&E in Area B, the ownership interests of the Parties with 13 respect to existing facilities in Area B and the obligations and rights of the Parties under RMg NIOD 14 electric and gas distribution service agreements for utility service to Area B. Id. These 15 complex issues are expected to require extensive analysis and testimony and result in 16 protracted and costly litigation. Id. Further, the uncertainty associated with the failure to 17 resolve such complex issues will inconvenience PG&E's ongoing business operations.
18 Based on the foregoing, PG&E believes that the proposed settlement of these disputes is 19 favorable to the Debtor and should be approved. Id. at ¶5.
20 C.
The Proposed Settlement Agreement Benefits the Creditors.
21 The proposed Settlement Agreement fully resolves the Trust's Claim against the 22 Debtor without the expense, risk and delay inherent in continued litigation. Avoidance of 23 unnecessary litigation will benefit PG&E's creditors by minimizing costs and delay and 24 allowing PG&E's personnel to focus on more critical functions. Id. at ¶8. Moreover, the 25 Trust has agreed to withdraw the Claim against PG&E, thereby eliminating the need to 26 expend further estate resources in litigating PG&E's objections to the Claim. Id.
27 CONCLUSION 28 Based on all of the factors discussed above, PG&E respectfully submits that the MOTION FOR ORDER AUTHORIZING PG&E TO SETILE CLAIM NO. 13377 BY THE PRESIDIO TRUST a
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Accordingly, PG&E respectfully requests that this Court grant the Motion and enter an order approving the proposed Settlement Agreement between the Debtor and the Trust.
DATED: December 22,2003.
Respectfully, JAMES L. LOPES GARY M. KAPLAN LONG X. DO HOWARD RICE, NEMEROVSKI, CANADY, FALk & RABKIN A Professional Corporation By:y Attorneys for Debtor and Debtor in Possession PACIFIC GAS AND ELECTRIC COMPANY WD 122203/1-14199131Axd/1 121272/yl MOTION FOR ORDER AUTHORIZING PG&E TO SETTLE CLAIM NO. 13377 BY THE PRESIDIO TRUST