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In Re: Resource Technology Corp v. Congress Development Co

December 10, 2010

IN RE: RESOURCE TECHNOLOGY CORP., DEBTOR,
SAMUEL J. ROTI, APPELLANT,
v.
CONGRESS DEVELOPMENT CO., APPELLEE.



The opinion of the court was delivered by: Matthew F. Kennelly, District Judge:

MEMORANDUM OPINION AND ORDER

Samuel J. Roti appeals from a bankruptcy court order denying his administrative claim against the Chapter 7 bankruptcy estate of Resource Technology Corporation (RTC). Roti seeks compensation for losses sustained due to the migration of landfill gas onto his hotel property. For the reasons set forth below, the Court affirms.

Background

The Court takes the following facts from the parties' submissions in this appeal and stipulation before the bankruptcy court.

Congress Development Company (Congress) owned and operated a landfill in Hillside, Illinois. In October 2002, Markwell Hillside LLC (Markwell) purchased a Holiday Inn hotel next to the landfill. Roti was the sole member and manager of Markwell and is the assignee of Markwell's claim in RTC's bankruptcy.

Landfills in Illinois must comply with state and federal requirements for the collection and treatment of landfill gas. From 1992 to 1996, Congress controlled landfill gas at its Hillside landfill using a flare system. Congress also used a perimeter gas well system to prevent underground gas migration. In 1996, Congress contracted with RTC to construct and operate a gas collection and control system (GCCS) at the landfill to replace the flare system. A GCCS performs two functions. First, it draws landfill gas from waste disposal cells using a vacuum, reducing the migration of landfill gas into the atmosphere. Second, it destroys potentially harmful and odorous components through combustion. Congress continued to operate the perimeter gas well system.

RTC entered bankruptcy in 1999. It operated as a debtor in possession until the bankruptcy court appointed a Chapter 11 trustee in 2003. On September 21, 2005, the bankruptcy court converted the case to a Chapter 7 proceeding and appointed a Chapter 7 trustee.

Conditions at the landfill deteriorated beginning around 2002, as Roti later described in a brief filed in the bankruptcy court:

Beginning no later than 2002, Congress's consultants were aware that landfill gas at the Landfill was not being collected properly by RTC. . . . RTC's monthly reports always showed exceedances [sic] or deviations from [the Illinois Environmental Protection Agency]'s requirements in at least some of the categories of oxygen, temperature, pressure and/or nitrogen. . . .

In June 2004, an expert retained by Congress in RTC's bankruptcy proceedings, Bryan Stirrat, concluded that "RTC has not operated or maintained the gas collection system at the Hillside Landfill in accordance with the applicable industry standards for the generation of electricity from landfill gas." Mr. Stirrat described a "history of high pressure gas readings, broken fittings, broken valves, broken wellheads, and broken sampling ports indicated an apparent total disregard for the importance of maintaining the gas collection system in a manner consistent with industry standards and recognized operational practices." Mr. Stirrat also wrote that RTC had gas collection wellheads "wrapped in plastic bags and duct tape."

Conditions at the Landfill worsened between 2004 and 2005. . . .

However, it was in 2005 when Congress's representative thought that the conditions in the Landfill "went up the asymptotic curve" and got "really bad." In early 2005, Congress's consultant, Dr. Jay Corgiat, discussed with RTC at a meeting what he believed needed to be done in the well field at the Landfill. RTC responded that it "didn't want to do anything . . . they didn't have the money, they didn't have the resources, they didn't feel the need."

Roti's Post-Trial Br. 11-13; see also Bankr. Ct. Op. 6-7 (summarizing evidence).

Roti alleges that within ten days after the Chapter 7 trustee's appointment, the GCCS failed, spreading malodorous gas onto hotel property and adversely affecting business. Roti testified about the smell as follows:

A: One day we had a catastrophe. The odors came, it was sudden. It was abrupt, and it was horrible. It smelled like death. It was a horrible stench, that you could not eat, and if you were sleeping, you would have woken up in your sleep.

Q: For how long did this continue?

A: It continued through the period of time that -- well, past the time ...


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