Case Doc 161 Filed 01/19/17 Entered 01/19/17 21:58:37 Desc Main Document Page 1 of 17

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1 Document Page 1 of 17 UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF NORTH CAROLINA CHARLOTTE DIVISION In re KAISER GYPSUM COMPANY, INC., et al. Debtors. KAISER GYPSUM COMPANY, INC., and HANSON PERMANENTE CEMENT, INC. (f/k/a Kaiser Cement Corporation), v. Plaintiffs, AIU INSURANCE COMPANY et al., Defendants. Chapter 11 Case No (JCW) (Jointly Administered) Adv. Proc. No (JCW) PLAINTIFFS' MOTION FOR MANDATORY AND PERMISSIVE ABSTENTION AND SUPPORTING BRIEF JURY TRIAL DEMAND Hearing Date: February 23, 2017 Hearing Time: 9:30 a.m. Debtors Kaiser Gypsum Company ( Kaiser Gypsum ) and Hanson Permanente Cement ( Kaiser Cement, collectively with Kaiser Gypsum, the Debtors ) hereby move for mandatory and permissive abstention and respectfully submit that this Court should abstain from exercising jurisdiction over this action so that the case can be adjudicated in the Oregon state court where the Debtors initially filed it. This abstention request is in addition to the Debtors previously filed, pending Motion to Remand ( Remand Motion ), in which the Debtors seek an order remanding this action to the Oregon state court. I. INTRODUCTION This Court should, and in the case of mandatory abstention must, abstain from hearing this non-core proceeding involving only state law issues because all the factors for mandatory and discretionary abstention are met. The Debtors and the Intervenors, the Unsecured Creditors Committee (the Committee ) and the Oregon Department of Environmental Quality ( Oregon DEQ ), all of which have a strong interest in the efficient administration of the estates and in Page 1 of 17 Motion for Mandatory and Permissive Abstention

2 Document Page 2 of 17 maximizing the value of the estate s insurance assets, support abstention and remand to the Oregon state court. The only parties that oppose abstention and remand are the Insurers, who have an interest in minimizing if not eliminating the insurance assets and have no interest in the efficient administration of the estates. The Debtors respectfully request that the Court grant the Motion for Mandatory and Permissive Abstention. II. BACKGROUND A. The State Court Insurance Coverage Action On September 29, 2016, the Debtors filed this insurance coverage action (the Action ) for declaratory relief pursuant to Oregon s Uniform Declaratory Judgments Act, O.R.S , et seq., and for breach of contract in the Circuit Court of the State of Oregon for the County of Multnomah (the State Court ). Complaint 1-3, The Debtors seek declaratory judgment under state law that they are entitled to insurance coverage under more than 100 insurance policies (the Policies ) issued by the insurer defendants (the Defendant Insurers ) for costs that the Debtors have incurred and will incur at two environmental cleanup sites: one in St. Helens, Oregon involving Debtor Kaiser Gypsum and the other along the Lower Duwamish River in Seattle, Washington involving both Debtors. The Debtors seek relief and damages based on certain Defendant Insurers breach of contract under their respective Policies for losses incurred and to be incurred in the future as a result of alleged environmental property damage at the sites. The Debtors filed the Action in Oregon because, among other reasons, one of the two sites is located there, the venue is convenient to the Debtors, the State of Oregon has enacted a statute that is expressly applicable to insurance coverage actions involving contaminated property in Oregon, and that statute is highly favorable to policyholders. B. The Bankruptcy Cases On September 30, 2016, the Debtors each filed a petition for Chapter 11 bankruptcy relief in the Bankruptcy Court for the Western District of North Carolina (the Bankruptcy Cases ). In their Bankruptcy Cases, the Debtors intend to seek confirmation of a plan of reorganization that Page 2 of 17 Motion for Mandatory and Permissive Abstention

3 Document Page 3 of 17 will establish a 524(g) trust that will fund all 14,000 pending asbestos claims and all future asbestos claims brought against them. The Debtors also intend to seek a bar date for nonasbestos claims and a discharge of their liabilities at the two environmental sites. C. Removal/Motion to Transfer/Motion to Remand On October 20, 2016, Defendants Certain Underwriters at Lloyd s, London and Certain London Market Companies ( London Market Insurers ) removed this action from State Court to the Bankruptcy Court in the District Court of Oregon and filed a Motion to Transfer Venue to this Court ( Venue Motion ). The obvious motivation for both the removal of the Action and the filing of the Venue Motion is the London Market Insurers strong desire to avoid the application of Oregon law and minimize their coverage obligations to the Debtors. This is perhaps best exemplified by the London Market Insurers argument, advanced in addition to various assertions regarding the purported applicability of other state law, that the Oregon environmental statute is unconstitutional. See London Market Insurers Reply Supporting Motion to Transfer Venue, pp Ironically, although it is apparent that the London Market Insurers removed the Action and sought its transfer to this Court in a misguided effort to avoid the applicability of Oregon state law, they openly concede that parties do not get a change of law as a bonus for a change of venue and that the governing law remains the same notwithstanding a change of venue. London Market Insurers Opposition to Motion to Remand, p. 19. The Debtors opposed the Venue Motion and filed the Remand Motion, expressly reserving the right to add an abstention request if the case were transferred to this Court. 1 The 1 The Debtors did not seek abstention in the Oregon Bankruptcy Court because the Ninth Circuit unlike the majority of courts interprets 1334 to be inapplicable to actions removed under 1452 on the basis that a state court proceeding is no longer pending once removed. Schulman v. State of Cal. (In re Lazar), 237 F.3d 967, (9th Cir. 2001); P.S.E. v. Soc'y of Jesus, No , 2006 WL , at *1 (Bankr. D. Or. May 30, 2006) ( [A]bstention does not apply once a proceeding is removed to federal court, because there is no pending state court proceeding. ). Page 3 of 17 Motion for Mandatory and Permissive Abstention

4 Document Page 4 of 17 Committee and the Oregon DEQ, 1 which intervened to defend the Oregon statute from the London Market Insurers constitutionality attack, likewise opposed the Venue Motion and supported the Motion to Remand. At the conclusion of a hearing on the Venue Motion and the Remand Motion, the Oregon Bankruptcy Court granted the Venue Motion in order to provide this Court with the opportunity to decide the Remand Motion and any motion for abstention. See December 12, 2016 Hearing Transcript, p. 65 ( [I] think it's important that on viewing the decision as to whether to remand or to ultimately make a decision on abstention, when that issue is inevitably raised, that the Court that has the main case gets the chance to rule on it. And for that reason, I am inclined to grant the motion to transfer venue. ). III. JURISDICTION The parties agree that this is a non-core proceeding and that this Court has related-to jurisdiction over this action pursuant to 28 U.S.C. 1334(b) (see Notice of Removal 8-9). IV. LEGAL STANDARD AND ARGUMENTJ A. The Court Must Abstain Under the Mandatory Abstention Doctrine met: 1. The Requirements for Mandatory Abstention Are Satisfied Here Pursuant to 28 U.S.C. 1334(c)(2), a court must abstain if all of the following factors are (1) a timely motion to abstain has been made; (2) the action is based upon a state law claim or state law cause of action; (3) the action is merely related to the bankruptcy proceedings and does not arise in or arise under a case under Title 11; (4) the action could not have been commenced in a United States court absent jurisdiction under 28 U.S.C. 1334; (5) the action was pending when the bankruptcy was filed; and (6) the action can be timely adjudicated in the state forum of appropriate jurisdiction. 2 The Debtors are investigating and remediating the St. Helens site under the supervision of the Oregon DEQ. Page 4 of 17 Motion for Mandatory and Permissive Abstention

5 Document Page 5 of 17 In re Constr. Supervision Servs., Inc., No RDD, 2012 WL , at *3 (Bankr. E.D.N.C. July 20, 2012) (internal citations omitted). Bankruptcy courts in North Carolina routinely apply mandatory abstention in adversary proceedings. See, e.g., HH1, LLC v. Lo r Decks at Calico Jacks, LLC (In re HH1, LLC), Adv. No , 2010 WL , at *4 (Bankr. M.D.N.C. Mar. 10, 2016); Suntrust Bank v. Ferrell (In re Pluma, Inc.), No C- 11G, 2000 WL , at *5 (Bankr. M.D.N.C. Sept. 15, 2000). Here, all six factors are satisfied, and the Court must abstain and remand this Action to the Oregon State Court. a. This Motion Is Timely This Action was transferred to this Court on December 27, 2016, and the Debtors promptly filed this Abstention Motion on January 19, As the London Market Insurers recognized, the Debtors could not move for mandatory abstention in the Oregon Bankruptcy Court because the Ninth Circuit has concluded that 1334 does not apply to actions removed under 1452 on the basis that the state court proceeding is no longer pending once removed. In re Lazar, 237 F.3d at ; Soc'y of Jesus, 2006 WL , at *1 ( [A]bstention does not apply once a proceeding is removed to federal court, because there is no pending state court proceeding. ). 2 However, in their initial filing in the Oregon Bankruptcy Court, the Debtors expressly reserved the right to move for abstention in the event that the Action was transferred to this Court. Plaintiffs Opposition to Motion to Transfer Venue, p. 14 n.10. Thus, this Motion is timely filed. 3 The London Market Insurers have acknowledged the Ninth Circuit s interpretation on this point. See London Market Insurers Opposition to Motion to Remand, p. 19 ( In the Ninth Circuit, mandatory abstention does not apply to removed cases. See Schulman v. California (In re Lazar), 237 F.3d 967, (9th Cir. Cal. 2001) (holding that mandatory abstention does not apply in removed cases because no other related state proceeding thereafter exists (internal brackets omitted)). ). Page 5 of 17 Motion for Mandatory and Permissive Abstention

6 Document Page 6 of 17 b. This Action Involves Only State Law Claims The Debtors complaint asserts only two claims: (i) declaratory judgment under the Oregon Declaratory Judgment Act, O.R.S , et seq. and (ii) breach of contract. Both claims are governed by state law, and the Debtors believe that Oregon law applies at least with respect to the St. Helens site in accordance with the Oregon Environmental Cleanup Assistance Act ( OECAA ), O.R.S (2)(a) ( Oregon law shall be applied in all cases [for insurance coverage] where the contaminated property to which the action relates is located within the State of Oregon. ). 3 The Action involves no bankruptcy issues or federal questions. c. The Action Is Merely Related to the Bankruptcy Proceedings It is undisputed that this Action is not a core proceeding and does not arise in or under Title 11. The London Market Insurers have asserted from the outset that this Court has only related-to jurisdiction over this action pursuant to 28 U.S.C. 1334(b). Notice of Removal 9. d. The Action Could Not Have Been Commenced in Federal Court This Action could not have been brought in any federal court because there is no federal question at issue (only a determination of rights under insurance contracts) and no complete diversity. Diversity jurisdiction does not exist for multiple reasons, including the fact that one Defendant Insurer, National Casualty Company, has its principal place of business in Arizona, where Debtor Kaiser Cement is incorporated. Complaint 5, 7. 4 See, e.g., In re GACN, Inc., 555 B.R. 684, 699 (B.A.P. 9th Cir. 2016) (recognizing that a complaint for declaratory judgment regarding parties rights and liabilities under an insurance contract was wholly governed by state law ); James v. Lindstrom, No. 2:15-CV SU, 2016 WL , at *2 (D. Or. Aug. 10, 2016) (recognizing that claims under O.R.S are state-law claims ). Page 6 of 17 Motion for Mandatory and Permissive Abstention

7 Document Page 7 of 17 e. The Action Was Pending When the Bankruptcy Was Filed The Debtors commenced this Action in Oregon State Court on September 29, 2016, the day before the bankruptcy proceedings were commenced. See Complaint. f. The Action Can Be Timely Adjudicated in Oregon State Court Not only is the Oregon State Court capable of timely adjudicating the Action, it is the best forum to hear this dispute because one of the two environmental sites is located there, the State Court forum is convenient, Oregon has articulated a strong interest in insurance coverage disputes involving contamination within its borders, and Oregon law will maximize the assets available to the Debtors estates. 4 All the factors relevant to this requirement have been met. In assessing the timely adjudication requirement, courts in North Carolina look to seven factors: (1) the backlog of the state and federal calendars; (2) the status of the proceedings in state court prior to removal; (3) the status of the proceedings in the federal court; (4) the complexity of the issues to be resolved; (5) whether the parties consent to the bankruptcy court entering judgment in a non-core proceeding; (6) whether a jury demand has been made; and (7) whether the bankruptcy action involves reorganization or liquidation. In re Freeway Foods of Greensboro, Inc., 449 B.R. 860, 878 (Bankr. M.D.N.C. 2011) (citing In re 3G Properties, LLC, No JRL, 2010 WL , at *3 (Bankr. E.D.N.C. Oct. 14, 2010)). The focus in assessing these factors is not on which court may move the fastest, but on whether the case can be adjudicated in state court in light of the needs of the bankruptcy case. Power Plant Entm t Casino Resort Indiana, LLC v. Mangano, 484 B.R. 290, 297 (Bankr. D. Md. 2012). There is a split of authority in the Fourth Circuit as to which party bears the burden of proof as to the timeliness of adjudication in the state court. Id. Although some courts have held that the party seeking abstention bears the burden of proof, other courts have held that imposing the burden of proof on the party seeking abstention is inconsistent with the general rule that the 5 Oregon has expressed its substantial public interest in promoting the fair and efficient resolution of environmental claims involving sites in Oregon. O.R.S , et seq. Page 7 of 17 Motion for Mandatory and Permissive Abstention

8 Document Page 8 of 17 party seeking removal bears the burden of proof as to jurisdiction. See id. at (discussing inconsistent holdings within the Fourth Circuit but finding that it should be presumed that state courts operate with timely and efficient management and the burden is on the party opposing abstention to prove otherwise) (citing Parmalat Capital Fin. Ltd. v. Bank of Am. Corp., 639 F.3d 572, 582 (2d Cir. 2011)). Regardless of which party bears the burden of proof, it is clear that all seven factors weigh in favor of mandatory abstention or are neutral. First, the Oregon State Court will adjudicate this Action efficiently. As noted, the OECAA expressly provides that Oregon law will apply, 5 so any choice of law dispute will be resolved quickly and effectively. The OECAA has streamlined coverage issues that will be contested in another forum, and it has done so in a manner that is highly favorable to policyholders. For example, the OECAA provides: A liability insurer's duty to defend extends to environmental cleanups under written voluntary agreements with environmental agencies; Under all sums policies (like those at issue in this action), insurers are liable for all defense and indemnity costs, up to a policy s limit of liability, regardless of the existence of other applicable insurance; Insurers must cooperate with policyholders to reconstruct missing policies; Non-cumulation provisions in liability policies may not be construed to reduce the limits of coverage simply on grounds that previously issued policies also potentially cover the same environmental loss; and The owned property exclusion in liability policies is limited. O.R.S , et seq. The OECAA is unique to Oregon. Moreover, under Oregon Uniform Trial Court Rule 7.030(4), complex cases must be set for trial as soon as practical, but in any event, within two years from the date of filing unless, for good cause shown, the trial date is extended by the assigned judge. There is no evidence 6 O.R.S (2)(a) Page 8 of 17 Motion for Mandatory and Permissive Abstention

9 Document Page 9 of 17 that good cause will necessitate a longer time period in this case, and the Debtors are incentivized to push for resolution. Further, the number of civil cases filed in the Oregon Circuit Courts has declined in recent years, with over 10,000 fewer cases filed in 2015 compared with 2014, and nearly 10,000 fewer cases filed in 2014 compared with Declaration of Marie Eckert, Ex. A, p. 57. Indeed, the number of civil cases filed in 2015 represents a five-year low. Id. Thus, there is no backlog of cases in the Oregon State Court that would prevent timely adjudication. 6 Second, the status of the proceedings in the State Court and this Court is neutral because the Action has not progressed in either forum. The London Market Insurers and the other Defendant-Insurers have sought and received repeated extensions of time to file their Answers, and no discovery has taken place in either forum. Rather, the parties efforts have been consumed by the London Market Insurers removal of this action, the Venue Motion, and the related Remand Motion. Thus, the status of the proceedings supports abstention. Third, the complexity of the issues to be resolved favors adjudication of this Action in the Oregon State Court. Under the OECAA, Oregon law applies at a minimum to the Debtors claims in respect of the St. Helens site. Federal courts have a policy of applying the state law of the transferor court. In Van Dusen v. Barrack, the Supreme Court held that after a transfer pursuant to 28 U.S.C. 1404(a), the transferee district court generally must apply the state law that the transferor district court would have applied had the case not been moved. Hooper v. Lockheed Martin Corp., 688 F.3d 1037, (9th Cir. 2012) (citing Van Dusen v. Barrack, 376 U.S. 612, 639 (1964)). 7 That same rationale applies here, and the Oregon State Court is the 7 Bankruptcy courts should apply a presumption that a state court will operate efficiently and effectively. Power Plant Entm t Casino Resort Indiana, LLC v. Mangano, 484 B.R. at (Bankr. D. Md. 2012) (citing Younger v. Harris, 401 U.S. 37, 44 (1971)). 8 The London Market Insurers cited Hooper for this rule of law in their Opposition to Kaiser s Motion to Remand, at p. 19, thereby conceding that Oregon law should continue to govern the Debtors state law claims notwithstanding the transfer of this Action. Page 9 of 17 Motion for Mandatory and Permissive Abstention

10 Document Page 10 of 17 best court to apply Oregon law to this highly complex environmental insurance coverage dispute. 8 As noted in the Debtors Motion to Remand, this Action involves more than 100 insurance policies at multiple layers of coverage, issued over many decades. Moreover, there can be little dispute that applying Oregon law to establish insurance coverage for the decadeslong period of activities at the sites and the various types of property damage that impacts several different environmental media (e.g., surface and subsurface soils, groundwater, in-water sediments and tidal mud flats) at the sites, is and will be a complex task. Resolution of state law legal issues will depend on, among other things, testimony by experts knowledgeable in historical best management practices for the handling of hazardous and toxic wastes, fate and transport of contaminants in the subsurface, subsurface remediation decision making, and effectiveness and costs of selected remedial measures. 9 In addition, the state court would be in the best position to decide any potentially unsettled issues of state law. See, e.g., In re Constr. Supervision Servs., 2012 WL , at *5 (determining remand was appropriate where, among other things, the claims in this action involve complex state law issues, which would be better heard in state court. ). Fourth, neither the Debtors nor the London Market Insurers (or any other Defendant- Insurer) have consented to this Court entering judgment in this non-core proceeding, and both the Debtors and the London Market Insurers have asserted their right to a jury trial. This Court could not preside over the jury trial, which would have to take place in the North Carolina District Court. As a result, pre-trial and trial activities likely would be bifurcated, needlessly complicating proceedings and imposing unnecessary costs on the Debtors estates. By contrast, 9 Environmental insurance coverage disputes, like this Action, are highly complex from an institutional, legal and technical point of view. PATRICK J. SULLIVAN, FRANKLIN J. AGARDY & RICHARD K. TRAUB, PRACTICAL ENVIRONMENTAL FORENSICS: PROCESS AND CASE HISTORIES 311 (John Wiley & Sons, Inc. 2001). 10 Id. at 312. Page 10 of 17 Motion for Mandatory and Permissive Abstention

11 Document Page 11 of 17 Oregon State Court where the Debtors filed this action could preside over both pre-trial activities and trial. These factors strongly support the conclusion that Oregon is the best forum to timely adjudicate this Action. Cf. Fed. Home Loan Bank of Seattle v. Deutsche Bank Sec., Inc., 736 F. Supp. 2d 1283, 1291 (W.D. Wash 2010) ( Courts have granted equitable remand solely on the basis of a party s entitlement to a jury trial[.] ) (citing Zweygardt v. Colorado Nat l Bank of Denver, 52 B.R. 229 (Bankr. D. Colo. 1985)); see also In re Roman Catholic Bishop of San Diego, 374 B.R. 756, 764 (Bankr. S.D. Cal. 2007) (finding that the loss of the Seventh Amendment right to a jury trial will cause severe prejudice to the plaintiffs ). Fifth, although the bankruptcy case involves a reorganization, and not a liquidation, the timing of adjudication of this Action is not anticipated to affect the resolution of the main case. At this point, no plan of reorganization has been proposed. In addition, the Debtors believe that at such time that a plan is proposed, the plan can be confirmed irrespective of whether the insurance coverage issues presented by this Action have been fully resolved by settlement or by adjudication. In short, this case can be adjudicated in the State Court consistent with the needs of the bankruptcy case. See Power Plant Entm t, 484 B.R. at The Court Must Reject the London Market Insurers Argument for Application of Ninth Circuit Law In an effort to avoid mandatory abstention here, the London Market Insurers have argued that the Ninth Circuit law on mandatory abstention will apply even if this case is transferred to the Western District of North Carolina and that this Court is somehow bound by the Ninth Circuit s interpretation of 28 U.S.C. 1334(c)(2), which does not allow abstention under these facts. See London Market Insurers Opposition to Motion to Remand, p. 19 (citing Ferens v. John Deere Co., 494 U.S. 516, (1990)). This argument is a clear misstatement of the law. Ferens does not hold that this Court is bound by the Ninth Circuit s minority-view interpretation of a federal statute or that this Court the has been relieved of its obligation to abstain under 28 U.S.C. 1334(c)(2) simply because the Action was transferred from a court in Page 11 of 17 Motion for Mandatory and Permissive Abstention

12 Document Page 12 of 17 the Ninth Circuit. Rather, Ferens held that, in a case involving diversity jurisdiction, a federal court to which an action has been transferred under 28 U.S.C. 1404(a) should apply the state law of the transferor court regardless of which party initiates the transfer. Ferens, 494 U.S. at In Ferens, the plaintiff-husband was injured in an accident in Pennsylvania when his hand was caught in a harvester manufactured by John Deere. After Pennsylvania s two-year statute of limitations expired, plaintiffs (husband and wife) filed tort claims against John Deere in federal district court in Mississippi (invoking diversity jurisdiction) to get the benefit of Mississippi's six-year statute of limitations. Plaintiffs then moved to transfer the case under 28 U.S.C. 1404(a) to federal court in Pennsylvania for the convenience of the parties. The Pennsylvania district court declined to apply the Mississippi statute of limitations, holding that the rule in Van Dusen -- that a transferee court must follow the choice-of-law rules of the transferor court in cases involving a defendant-initiated 1404(a) transfer -- was inapplicable and dismissed the case. The Third Court of Appeals affirmed, but the U.S. Supreme Court reversed, holding that the anti-forum shopping policies underlying Van Dusen still require a transferee court to apply the state law of the transferor court, regardless of which party initiates the transfer. Id. at The London Market Insurers argument that the Ninth Circuit s minority view on abstention is binding in other Circuits has been specifically rejected. See In re Nat l Century Fin. Enters, Inc. Inv. Litig., 323 F. Supp. 2d 861, (S.D. Ohio 2004) (rejecting the application of the Ninth Circuit s minority approach to mandatory abstention in favor of the Sixth Circuit s majority approach in a case transferred from the District of Arizona). The London Market Insurers have not cited to any authority that would require this Court to apply the interpretation of another Circuit to federal statutory law, nor could they. Federal courts are obligated to apply their own best interpretation to federal statutes. Menowitz v. Brown, 991 F.2d 36, 40 (1993) ( Applying Van Dusen by analogy to issues of federal law also runs contrary to the Page 12 of 17 Motion for Mandatory and Permissive Abstention

13 Document Page 13 of 17 principle that, until the Supreme Court speaks, the federal circuit courts are under duties to arrive at their own determinations of the merits of federal questions presented to them[.] ); Kirschner v. Grant Thornton LLP (In re REFCO, Inc. Securities Lit.), 628 F. Supp. 2d 432, 439 (S.D.N.Y. 2008). The London Market Insurers reliance on Ferens or other anti-forum-shopping cases in support of the argument that this Court is somehow bound by the Ninth Circuit s interpretation of federal law is misplaced. If anything, Ferens and the related cases cited by the London Market Insurers support the Debtors argument that Oregon state law will continue to apply, regardless of venue. B. Even If Mandatory Abstention Does Not Apply, the Court Should Permissively Abstain from Hearing This Action Under 28 U.S.C. 1334(c)(1), a district court has the option to permissively abstain in the interests of justice or in the interest of comity with a state court. 28 U.S.C. 1334(c)(1) ( [N]othing in this section prevents a district court in the interest of justice, or in the interest of comity with State courts or respect for State law, from abstaining from hearing a particular proceeding arising under title 11, or arising in or related to a case under title 11. ). In considering whether to permissively abstain, courts have applied a twelve-factor test: (1) the effect or lack thereof on the efficient administration of the estate if a court recommends abstention; (2) the extent to which state law issues predominate over bankruptcy issues; (3) the difficulty or unsettled nature of the applicable law; (4) the presence of a related proceeding in state court or other non-bankruptcy court; (5) the jurisdictional basis, if any, other than 28 U.S.C. 1334; (6) the degree of relatedness or remoteness of the proceeding to the main bankruptcy case; (7) the substance rather then [sic] form of an asserted core proceeding; Page 13 of 17 Motion for Mandatory and Permissive Abstention

14 Document Page 14 of 17 (8) the feasibility of severing state law claims from core bankruptcy matters to allow judgment to be entered in state court with enforcement left to the bankruptcy court; (9) the burden on the bankruptcy court s docket; (10) the likelihood that the commencement of the proceeding in bankruptcy court involves forum shopping by one of the parties; (11) the existence of a right to a jury trial; and (12) the presence in the proceeding of non-debtor parties. In re Constr. Supervision Servs., Inc., 2012 WL , at *4; see also In re Robinson, No , 2012 WL , at *3-4 (Bankr. D. Or. Aug. 22, 2012). These permissive abstention factors under 1334(c) significantly overlap with the analysis to determine whether a case should be remanded under 1452(b). In re Constr. Supervision Servs., Inc., 2012 WL , at *4 ( Although remand and permissive abstention are separate doctrines, virtually the same (if not the identical) factors have emerged for judging the propriety of permissive abstention under 1334(c)(1) as have been articulated for deciding the propriety of remand under 1452(b). ) (internal citations omitted). No one factor is determinative, and courts should apply the factors flexibly. In re Ram of E. N. Carolina, LLC, No ATS, 2013 WL , at *2 (Bankr. E.D.N.C. Nov. 14, 2013) (quotations omitted). To avoid burdening this Court with repetitive briefing, in support of their motion in the alternative for permissive abstention, the Debtors refer to and incorporate by reference their supplemental briefs in support of the Remand Motion, which will be filed on the schedule set by the Court. Page 14 of 17 Motion for Mandatory and Permissive Abstention

15 Document Page 15 of 17 V. CONCLUSION For all of the reasons set forth above, the Debtors respectfully request that the Court grant this Motion, abstain from exercising its jurisdiction and remand this Action to the Oregon State Court. Page 15 of 17 Motion for Mandatory and Permissive Abstention

16 Document Page 16 of 17 DATED this 19th day of January, Respectfully submitted, /s/ John R. Miller, Jr. C. Richard Rayburn, Jr. (NC 6357) John R. Miller, Jr. (NC 28689) RAYBURN COOPER & DURHAM, P.A Carillon 227 West Trade Street Charlotte, North Carolina Telephone: (704) Facsimile: (704) and- Kay M. Brady (admitted pro hac vice) Michael J. Lynch (admitted pro hac vice) K&L GATES LLP K&L Gates Center 210 Sixth Avenue Pittsburgh, PA Telephone: (412) Facsimile: (412) and- C. Marie Eckert (admitted pro hac vice) MILLER NASH GRAHAM & DUNN LLP 3400 U.S. Bancorp Tower 111 S.W. Fifth Avenue Portland, Oregon Telephone: Fax: Attorneys for Debtors Kaiser Gypsum Company, Inc. and Hanson Permanente Cement, Inc. (f/k/a Kaiser Cement Corporation) Page 16 of 17 Motion for Mandatory and Permissive Abstention

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