Stone & Webster, Inc. v. Saudi Arabian Oil Co.

Opinions of the United
2009 Decisions States Court of Appeals
for the Third Circuit
6-1-2009
In Re: Stone Webster
Precedential or Non-Precedential: Non-Precedential
Docket No. 07-3891
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Recommended Citation
"In Re: Stone Webster " (2009). 2009 Decisions. Paper 1263.
http://digitalcommons.law.villanova.edu/thirdcircuit_2009/1263
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 07-3891
IN RE: STONE & WEBSTER, INCORPORATED, et al,
Debtors.
STONE & WEBSTER, INCORPORATED;
SWE&C LIQUIDATING TRUST, successor in interest
to Stone & Webster Engineering Corporation
v.
SAUDI ARABIAN OIL COMPANY
Saudi American Bank,
Appellant.
On Appeal from the United States District Court
for the District of Delaware
(D.C. No. 06-cv-00399)
District Judge: Honorable Sue L. Robinson
Submitted under Third Circuit LAR 34.1(a)
on February 6, 2009
Before: RENDELL and ROTH, Circuit Judges
and HAYDEN*, District Judge
*Honorable Katharine S. Hayden, United States District Judge for the District of
New Jersey, sitting by designation.
(Opinion filed : June 1, 2009)
OPINION
ROTH, Circuit Judge:
The Saudi American Bank (SAMBA) appeals the District Court’s rejection of its appeal from
the Bankruptcy Court’s denial of its motion to intervene in the underlying adversary
proceeding against the Saudi Arabian Oil Company (Saudi Aramco). The
underlying proceeding was brought by Stone & Webster, Inc. and its subsidiary, Stone &
Webster Engineering Corporation (SWEC), against Saudi Aramco for its breach of a contract
with Bugshan Stone & Webster (BSW), a joint venture between SWEC and Abdullah Said
Bugshan & Brothers,1 to upgrade a large oil refinery at Ras Tanura in Saudi Arabia. We
assume the parties’ familiarity with the facts and the record of prior proceedings, which we
refer to only as necessary to explain our decision. For the reasons given below, we affirm
the District Court’s order.2
1
SWEC and Bugshan were each fifty-percent shareholders in BSW.
2
Jurisdiction initially vested in the bankruptcy court pursuant to 28 U.S.C. § 157(b).
Jurisdiction for the district court's review of the bankruptcy court's order was conferred by
28 U.S.C. § 158(a). In turn, our appellate jurisdiction rests upon 28 U.S.C. §§ 158(d) and
1291. In undertaking our review, we stand in the shoes of the district court, applying a
clearly erroneous standard to the bankruptcy court's findings of fact and a plenary
standard to that court's legal conclusions. See Am. Flint Glass Workers Union v. Anchor
2
SAMBA argues it is entitled to intervene under 11 U.S.C. §1109(b), which provides
that “[a] party in interest, including the debtor, the trustee, a creditors’ committee, an equity
security holders’ committee, a creditor, an equity security holder, or any indenture trustee,
may raise and may appear and be heard on any issue in a case under this chapter.” 11 U.S.C.
§1109(b). SAMBA also suggests it is entitled to intervention as of right under Rule 24(a)(2),
which states that a court must permit anyone to intervene who “claims an interest relating to
the property or transaction that is the subject of the action, and is so situated that disposing
of the action may as a practical matter impair or impede the movant's ability to protect its
interest, unless existing parties adequately represent that interest.” Fed. R. Civ. Pro. 24(a)(2).
SAMBA is not entitled to intervene under either section 1109(b) or Rule 24(a)(2).
SAMBA is not a party in interest to the litigation between SWEC and Saudi Aramco. See
Baron & Budd, P.C. v. Unsecured Asbestos Claimants Comm., 321 B.R. 147, 158 (D.N.J.
2005) (“The test to determine whether an entity is a party in interest is ‘whether the
prospective party in interest has a sufficient stake in the outcome of the proceeding so as to
require representation.’”). Even granting a charitable interpretation to the assignment on
which SAMBA relies to justify its intervention, this Court agrees with the District Court and
the Bankruptcy Court before it that having a claim to proceeds of collateral does not entitle
a party to intervene. As we stated in Mountain Top Condominium Assoc. v. Dave Stabbert
Master Builder, Inc., 72 F.3d 361, 366 (3d Cir. 1995), “a mere economic interest in the
Resolution Corp., 197 F.3d 76, 80 (3d Cir. 1999).
3
outcome of litigation is insufficient to support a motion to intervene.” Holding otherwise
would permit every secured creditor to intervene in its debtor’s litigation. Accordingly,
SAMBA is not entitled to intervene.
For the foregoing reasons, we will affirm the District Court’s order rejecting
SAMBA’s motion to intervene in SWEC’s suit against Saudi Aramco.3
3
We note that SAMBA has not been denied any source of remuneration. As added
security, SAMBA obtained a guaranty from SWEC prior to lending the funds to BSW for
the Ras Tanura project under which SWEC agreed to a payment of 50% of all obligations
owed to SAMBA by BSW, up to $35 million dollars. As part of the bankruptcy
proceedings, the Shaw Group (Shaw) assumed the guaranty under an asset purchase
agreement entered into by Stone & Webster, Inc. and Shaw. SAMBA has already
received a judgment against Shaw for recovery under the guaranty. Also, during the
hearing before the Bankruptcy Court, the court noted that SAMBA could sue Saudi
Aramco for the proceeds owed to it by BSW in Saudi Arabia. SAMBA acknowledged at
the hearing that such an avenue was a possibility.
4