                                                      United States Court of Appeals
                                                               Fifth Circuit
                                                            F I L E D
              IN THE UNITED STATES COURT OF APPEALS           July 19, 2006

                       FOR THE FIFTH CIRCUIT            Charles R. Fulbruge III
                       _____________________                    Clerk

                           No. 05-10038
                       _____________________

In The Matter Of:   MIRANT CORPORATION; ET AL.,

                                                             Debtors.

MIRANT CORPORATION; MLW DEVELOPMENT LLC;
MIRANT AMERICAS ENERGY MARKETING LP; MIRANT
AMERICAS GENERATION LLC; MIRANT MID-ATLANTIC
LLC; ET AL.,

                                                        Appellants,

                              versus

POTOMAC ELECTRIC POWER COMPANY; FEDERAL
ENERGY REGULATORY COMMISSION,

                                                          Appellees.
                       _____________________

                            No. 05-10419
                       _____________________

In The Matter Of:   MIRANT CORP.,

                                                              Debtor.

POTOMAC ELECTRIC POWER CO.,

                                                           Appellee,

                              versus

MIRANT CORP.; MLW DEVELOPMENT LLC; MIRANT
AMERICAS ENERGY MARKETING LP; MIRANT
AMERICAS GENERATION LLC; MIRANT MID-ATLANTIC
LLC; ET AL.,

                                                      Appellants.
_________________________________________________________________


          Appeals from the United States District Court
                for the Northern District of Texas
            USDC Nos. 4:03-CV-1242-A, and 4:05-CV-95-A
________________________________________________________________

Before JOLLY, SMITH, and GARZA, Circuit Judges.

PER CURIAM:1

     This appeal arises from the Asset Purchase and Sale Agreement

(APSA) entered into between Mirant Corporation (Mirant) and Potomac

Electric Power Company (PEPCO).    This appeal is not the first time

these parties have been before us, see In re Mirant Corp., 378 F.3d

511 (5th Cir. 2004), and we recognize that it may not be the last.

After argument and review of the lengthy briefing and extensive

record in this case it is evident that a single theme lies behind

the thousands of pages generated in this litigation:           Mirant’s

unrelenting    and   unjustified   effort   to   avoid   a   legitimate

contractual obligation it now views as a bad deal.

     In order to secure PEPCO’s acceptance of Mirant’s bid to

purchase certain electric generating facilities, Mirant agreed to

receive assignment of PEPCO’s Purchase Power Agreements (PPAs).2

At the time of negotiations both Mirant and PEPCO acknowledged that

the purchase price for electricity under the PPAs was above market

price, resulting in an agreed “negative value” of approximately

     1
       Pursuant to 5TH CIR. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
     2
       At oral argument Mirant’s counsel conceded that “but for”
the Back-to-Back agreement and the assignment of PEPCO’s PPAs to
Mirant, PEPCO would not have agreed to the total deal entered
between the parties in the APSA.

                                   2
$500 million.     Consequently, the parties reduced the agreed sale

price by $500 million, representing the loss on the PPAs.         Instead

of $3.2 billion, Mirant paid Pepco $2.65 billion.             The parties

memorialized their agreement in the APSA, which included 1) the

transfer of certain power generation facilities to Mirant; 2) the

assignment of PEPCO’s PPAs to Mirant, including the Back-to-Back

arrangement agreed to as a contingency plan in the event that the

PPAs were   not   assignable   to   Mirant;   3)   lease   agreements   and

easements allowing Mirant access to the generating facilities; and

6) inter-connection agreements allowing Mirant to transfer power

along PEPCO’s inter-connection network.

     PEPCO notified Mirant at the December 19, 2000 closing on the

APSA that certain PPAs were unassignable,3 and the parties began

performing under the APSA’s contingency plan known to the parties

as the Back-to-Back Agreement (BTB).      The cost to Mirant under the

BTB is approximately $10-15 million per month.

     In July 2003, Mirant filed for bankruptcy and immediately

filed a motion to reject the BTB (first motion to reject), but did

not attempt to reject the remaining executory portions of the APSA.

PEPCO, because of the automatic stay, was required to continue


     3
       PEPCO was unable to secure the permission of certain power
suppliers to assign their PPA agreements to Mirant. Thus five PPAs
were ultimately unassigned. Consequently, per the terms of Section
2.4 of the APSA, PEPCO gave notice in writing to Mirant that it was
activating the Back-to-Back Agreement as to those unassignable
PPAs. PEPCO delivered this written notice to Mirant at the closing
on the APSA.

                                    3
performance.        On December 9, 2004, the district court denied

Mirant’s first motion to reject, finding that the BTB was not

severable from the APSA and thus was not eligible for rejection

under 11 U.S.C. § 365.        Mirant appeals that order (appeal no. 05-

10038).     In appeal number 05-10038, Mirant raises two points of

error:    1) the finding of the district court that the BTB was not

severable    from    the    APSA;   and   2)    the   standard   for   rejection

articulated in dicta by the district court.

      On the very date the district court denied Mirant’s first

motion to reject, Mirant unilaterally declared that it would no

longer perform its obligations under the BTB and ultimately filed

a second motion to reject with the bankruptcy court.4               This second

motion and related pleadings were withdrawn from the bankruptcy

court by the district court.           On March 1 and March 16, 2005, the

district court ordered Mirant to perform under the BTB until either

1)   rejection      was    approved,   or      2)   Mirant   demonstrated   that

discontinuing performance pending rejection was within the public

interest. (The second motion to reject is still pending before the

district court.) Mirant appeals these March orders (appeal no. 05-

10419) and seeks a stay of the order to perform under the BTB

pending ruling on the merits of its second motion to reject.                  In

      4
       On January 19, 2003, the bankruptcy court issued an order
requiring Mirant to resume performance under the BTB unless and
until one of three contingencies occurred.         One of these
contingencies was that Mirant file “a motion to reject the APSA.”
Consequently, instead of resuming payment, on January 21, 2003,
Mirant filed its second motion to reject.

                                          4
appeal number 05-10419, Mirant raises an additional two points of

error:      1) the district court’s withdrawal from the bankruptcy

court of Mirant’s second motion to reject and related pleadings;

and 2) the district court’s order that Mirant perform under the BTB

until rejection of the BTB or APSA is approved on the merits.

     In section I we address the issues presented in appeal number

05-10038.      Section II addresses the issues involved in appeal

number 05-10419.     For the reasons set forth below we AFFIRM all

orders of the district court.

                                 I

     Appeal no. 05-10038 challenges the district court’s December

9, 2004 order denying Mirant’s first motion to reject the BTB

portion of the APSA.       Section 365(a) of the Bankruptcy Code

provides that “the trustee, subject to the court’s approval, may

assume or reject any executory contract or unexpired lease of the

debtor.”5      11 U.S.C. § 365(a).    Under § 365, “[i]t is well

established that as a general proposition an executory contract

must be assumed or rejected in its entirety.”        Stewart Title

Guaranty Co. v. Old Republic Nat’l Title Ins. Co., 83 F.3d 735, 741

(5th Cir. 1996) (citation omitted). This “often-repeated statement

. . . means only that the debtor cannot choose to accept the


     5
       Through legal fiction, the rejected contract is considered
to be breached by the debtor and the non-breaching party to the
contract is then given an unsecured claim in the bankruptcy estate
equal to the amount of the damages resulting from the breach. See
In re Mirant, 378 F.3d at 519-20.

                                  5
benefits of the contract and reject its burdens to the detriment of

the other party to the agreement.”   Richmond Leasing Co. v. Capital

Bank, N.A., 762 F.2d 1303, 1311 (5th Cir. 1985).     Consequently, to

reject a contract under § 365, a debtor must establish that 1) the

contract is executory, and 2) the contract is either an entire

agreement, or a severable portion of an agreement.    Once a contract

is deemed eligible for rejection, court approval is required for

rejection.6   See 3 Collier on Bankruptcy ¶ 365.03 (15th Ed. Rev.

2004) (“The decision to assume or reject a contract or lease is

subject to court approval.”).




     6
       Under Section 10.1(b)(iii), the APSA provides that in the
event Mirant breaches the BTB agreement PEPCO gets a claim for
damages rather than a release of its APSA obligations. Mirant thus
argues that this provision indicates severability, and that if
Mirant is allowed to reject the contract PEPCO will receive the
remedy it bargained for -- a claim for damages. Although at first
glance this argument may appear to have merit, the contention
ultimately fails. The standard for § 365 rejection is not whether
the non-breaching party will be made whole; nor does the inquiry
examine whether the non-breaching party will ultimately receive the
negotiated remedy.       Instead, § 365 requires a two-part
consideration -- 1) whether there is an executory contract; and 2)
whether the debtor seeks to reject a severable agreement.
Consequently, PEPCO’s contractual remedy for breach of the BTB is,
at this stage in the analysis, irrelevant.

     Additionally, Mirant’s Section 10.1(b) argument was first
presented at oral argument, relying on certain APSA excerpts
provided to the panel at argument in a group of documents entitled
the “Argument Submission.” This “Argument Submission” is not a
part of the record or briefing in this case, nor does it contain
any citation indicating that its content is a part of the record on
appeal.

                                6
       The parties agree that the relevant portions of the APSA are

executory.7          Thus, our analysis of the December 9, 2004 order

begins with the question of severability.                           Once severability is

resolved,      we    consider         the   appropriate          standard    for     approving

rejection.          Thus       we   turn    to   examine,        first     whether    the    BTB

agreement is severable from the APSA, and second, the appropriate

standard for rejection in this context.

                                                 A

       The    issue       of    severability         under   §     365   requires     that    an

executory contract be rejected in toto to prevent a debtor from

picking      through       an       agreement,       accepting       the    benefits       while

sloughing the burdens. See In re Café Partners/Washington 1983, 90

B.R. 1, 5 (Bankr. D.D.C. 1988) (“the Debtor may not pick and choose

from       among    the        desirable    and      undesirable         portions     of     the

contract”).         However, “[i]f a single contract contains separate,

severable agreements the debtor may reject one agreement and not

another.”      Stewart Title Guaranty Co., 83 F.3d at 741.

       The    district          court   found,       and     the    parties    agree,       that

severability for purposes of § 365 rejection is determined by

applying the non-bankruptcy, general legal rules applicable to the

agreement at issue.              See, e.g., In re Café Partners, 90 B.R. at 6

(“[W]hether a contract . . . is an entire contract is not a

       7
       Although the Code does not define “executory contract,” the
legislative history indicates the term refers to a contract “on
which performance is due to some extent on both sides.” In re
Mirant, 378 F.3d at 518.

                                                 7
question of the Federal bankruptcy law but of the law, usually

State   law,   that   would    govern     the   parties’    rights    outside

bankruptcy.”).

     The APSA itself provides that it is to be “governed by and

construed in accordance with the law of the District of Columbia.”

APSA, § 12.6.      Under D.C. law, the well established test of

severability is whether the parties, at the time the agreement was

entered, intended the contract to be severable. See, e.g., Holiday

Homes v. Briley, 122 A.2d 229, 232 (D.C. 1956) (“Whether a number

of promises constitutes one contract or more than one is primarily

a question of intention of the parties.”).           Howard University v.

Durham, 408 A.2d 1216, 1219 (D.C. 1979), observed that while the

intention of the parties controls, “[t]here is no set answer to the

question of when a contract is divisible.”               However, the court

found there were several “factors to be considered” in determining

whether the parties intended the contract to be severable.                 Id.

Those factors as enumerated are:

          1) whether the parties assented to all the
          promises as a single whole; 2) whether there
          was a single consideration covering various
          parts   of    the    agreement   or    whether
          consideration was given for each part of the
          agreement; and 3) whether [the] performance of
          each party is divided into two or more parts,
          the number of parts due from each party being
          the agreed exchange for a corresponding part
          by the other party.

Id.; see also Cahn v. Antioch Univ., 482 A.2d 1216, 1219 (D.C.

1994) (affirming      the   Howard   Univ.   factors).      Based    on   these


                                      8
factors,   the   district   court   concluded   that   the   BTB   was   not

severable from the APSA and thus was not eligible for rejection.

After considering these factors and the corresponding evidence, we

agree.8

      First, the parties clearly “assented to all the promises” --

the   sale of the generation facilities, the lease agreements, the

easements, the BTB agreement, and the inter-connection agreements

-- “as a single whole.”        The parties did not enter separate

contracts or transactions; nor were the various agreements executed


      8
       The APSA itself contains a clause entitled “Severability”
which reads as follows:

           Section 12.11 Severability. If any term or
           other provision of this Agreement is invalid,
           illegal or incapable of being enforced by any
           rule of law or public policy, all other
           conditions and provisions of this Agreement
           shall nevertheless remain in full force and
           effect. Upon such determination that any term
           or other provision is invalid, illegal or
           incapable of being enforced, the Parties shall
           negotiate in good faith to modify this
           Agreement so as to effect the original intent
           of the Parties as closely as possible to the
           fullest extent permitted by applicable law in
           an acceptable manner to the end that the
           transactions contemplated hereby are fulfilled
           to the extent possible.

Mirant argues that this clause indicates the parties’ intent that
the agreement be severable. It contends that the language of the
APSA clearly reveals that the APSA and the BTB were intended to be
two separate agreements. We disagree. This clause only serves to
prevent the termination of the entire agreement should something
outside the control of the parties -- invalidity, illegality, or
impossibility -- occur with respect only to a part thereof. It
does not provide insight into the parties’ view of the
interconnection of the various portions of the APSA.

                                    9
or closed at separate times.         Instead, each part of this agreement

was contained in a five-volume document collectively entitled the

Asset Purchase and Sale Agreement.           This agreement was executed on

June 7, 2000 as one package, and the parties held the closing on

December 19, 2000.9         As further evidence that the parties viewed

this deal “as a single whole,” Section 12.10 of the APSA identifies

the different parts of the agreement and states that collectively

they       “embody   the   entire   agreement   and   understanding   of   the

Parties.”10

       9
       Mirant confuses the issue of execution by arguing that the
BTB agreement is a “separately executed letter agreement.” Mirant
contends that the December 19, 2000 letters from PEPCO to Mirant
constitute the “executing documents” for the BTB agreement. This
argument is misleading and without merit. Schedule 2.4 of the APSA
contains the BTB agreement, with section II.D of Schedule 2.4
outlining how the BTB agreement will be administered. Section II.D
specifically provides that the BTB agreement is “[e]ffective as of
the [c]losing [d]ate” as to all unassignable PPAs, and that PEPCO
was to provide to Mirant “all information which [PEPCO] now has or
hereafter acquires or to which [Mirant] is entitled with respect to
each Unassigned PPA.” Consequently, on the date of the closing of
the APSA, December 19, 2000, PEPCO provided to Mirant letters that
identified the unassignable PPAs     and notified Mirant that the
identified PPAs would be “governed by Section II of Schedule 2.4 of
the Asset Sale Agreement.”     This letter indicates in no way a
separate execution, or a separate agreement. Instead, the letters
only provide “information” required by section II.D, i.e., the
identity of the unassigned PPAs, on the “effective date” of the
Schedule 2.4 agreement, the December 19 closing.
       10
            Section 12.10 states as follows:

               SECTION    12.10    Entire    Agreement.   This
               Agreement, the Confidentiality Agreement and
               the   Ancillary    Agreements    including  the
               Exhibits, Schedules, documents, certificates
               and instruments referred to herein or therein
               and    other    contracts,     agreements   and
               instruments contemplated hereby or thereby,

                                        10
     Second, it is clear that the parties negotiated one single

consideration for the entirety of the deal, including the BTB

agreement.     Mirant’s arguments that consideration for the APSA was

separate or distinct from that of the BTB agreement are, at best,

misguided.11    Further, Mirant’s focus on the exchange of money as


          embody the entire agreement and understanding
          of the Parties in respect of the transactions
          contemplated by this Agreement. There are no
          restrictions,    promises,   representations,
          warranties, covenants or undertakings other
          than those expressly set forth or referred to
          herein or therein.    This Agreement and the
          Ancillary Agreements supersede all prior
          agreements and understandings between the
          Parties with respect to the transactions
          contemplated by this Agreement other than the
          Confidentiality Agreement.

Mirant’s argument that this is merely a standard integration clause
having no bearing on severability is without merit. Clearly, this
section reflects an “integration clause.” However, the language of
the section also indicates that the parties viewed this transaction
as containing a series of supporting documents, embodied in one
unified agreement.
     11
       Mirant makes three arguments to support its contention that
the APSA and BTB were supported by separate consideration. Each
mischaracterizes the agreement between these parties and is thus
without merit. First, Mirant argues that consideration under the
APSA was the $2.65 billion which was distinct and unrelated to the
monthly payments made under the BTB agreement. This argument is
inconsistent with the fact that the $2.65 billion purchase price
included reduction of $500 million to reflect the negative value of
the PPAs -- a fact conceded by Mirant at oral argument.

     Second, Mirant argues that there are different methods or
periods of payment -- lump sum for the APSA, and monthly payments
for the BTB agreement. This argument ignores the fact that, as
discussed below, the monthly payments are not the consideration for
the BTB agreement.

     Finally, Mirant argues that the duration of payment is
different -- one single transfer under the APSA versus the ongoing

                                  11
the only evidence of consideration is misplaced.             Consideration is

a bargained-for promise or performance.          See Restatement (Second)

of Contracts § 71 (1979).        The consideration for the BTB agreement

is not, as Mirant suggests, the monthly payments made by Mirant to

PEPCO.     Nor     was   the   consideration   for   the   power   generating

facilities the $2.65 billion dollars paid by Mirant.               Instead, as

stated by Mirant’s counsel at oral argument, “the consideration the

parties negotiated for was a whole deal.”            That is to say, there

was one amount as consideration for this overall agreement; that

single    amount    reflected    the   negotiated    value    of   the   entire

transaction -- PEPCO agreed to sell its generating facilities and

lease its properties and inter-connective capabilities, and grant

certain easements; Mirant agreed to pay $2.65 billion and take on

the PPAs.12

     The third and final Howard University factor asks whether the

performance required by the alleged separate agreement can be

divided from the performance required by the remainder of the

agreement.    Performance is divisible where the alleged severable


payment by Mirant to PEPCO under the BTB agreement. Mirant would
have the court view the APSA as a single transaction completed on
December 19, 2000.    However, there are many ongoing rights and
obligations under the APSA, other than the BTB agreement, i.e., the
lease and easement agreements and the inter-connection agreements.
     12
        Common sense suggests this view of the consideration
supporting the parties’ agreement. Why would Mirant enter a legal
obligation requiring it to pay an above-market rate for power,
unless Mirant was taking on that obligation in exchange for
something Mirant deemed to be valuable -- in this case the
generation facilities and associated agreements?

                                       12
obligations “can be apportioned into corresponding pairs of part

performances so that the parts of each pair are properly regarded

as agreed equivalents.”13    Restatement of Contracts (Second) § 183;

see also Howard Univ., 408 A.2d at 1219 (“whether performance of

each party is divided into two or more parts, the number of parts

due from each party being the agreed exchange for a corresponding

part by the other party”).         PEPCO’s obligations under the BTB

agreement14   were   not   the   “agreed   equivalent”   of   the   “agreed

exchange” for Mirant’s monthly payment obligations under the BTB

agreement.     Instead,    Mirant’s   payment   of   $2.65    billion   and

assumption of the PPAs along with the BTB, was the agreed exchange

and negotiated equivalent of PEPCO’s transfer of its generating

facilities, lease and easement agreements, and inter-connection

agreements.   Because the parties’ respective obligations under the

BTB are not the “agreed exchange” for the other party’s performance

under the BTB, performance of the BTB is not divisible from

performance of the APSA.


     13
       This principle can be explained thusly: A contract between
two parties, 1 & 2, has three parts, A, B, and C. Performance of
part A is divisible only where Party 1's performance under part A
is the “negotiated exchange” or “agreed equivalent” for Party 2's
performance under part A. In other words the performance of each
party under the subject portion of the contract constitutes equal
and matching equivalents, without reference to or performance under
the remainder of the contract.
     14
       Under the BTB each month PEPCO continues performing under
the unassignable PPAs, purchasing power from the third party,
selling that power in the market, and then billing Mirant for
PEPCO’s loss on the sale.

                                    13
       Each of the Howard University factors points in this case to

one single and indivisible agreement:                 there was assent by the

parties “to all the promises as a single whole”; there was “a

single      consideration     covering        [the]   various   parts   of     the

agreement”; and the performance is not divisible.                Howard Univ.,

408 A.2d at 1219.         Nothing in the record or arguments gives any

indication to the contrary; nor is there any evidence that the

parties intended any part of the agreement to be severable from the

whole.       The record is clear that, as the district court found,

“the furthest thing from the minds of the parties when they entered

into the APSA, and agreed to a contract price of $2.65 billion, was

that    .   .   .   the   Back-to-Back    Agreement     would   be   treated    as

contractual commitment[] separate from and independent of [the]

sale . . . of [Pepco’s] electric generation facilities.”15


       15
        In their briefing and at argument, the parties spent
extensive time discussing Stewart Title Guaranty Co. v. Old
Republic National Title Insurance Co., 83 F.3d 735 (5th Cir. 1996),
and the validity of the “but for” or “essential” test.         Both
parties agree, however, that the law of the District of Columbia
applies, and that the ultimate question under that law is the
intent of the parties at the time the contract was executed.
Further, both parties contend that the Howard University factors
should be considered in determining the parties’ intent.         As
demonstrated by the above discussion, the Howard University factors
indicate the parties did not intend the BTB to be a severable part
of the APSA. Mirant conceded at oral argument that the BTB is not
severable under the “essential” or “but for” test. (Specifically
counsel for Mirant stated, “If the but for test applies we lose.”)
Thus, under either the “essential” test or Howard University
approach the outcome in this case is the same -- no severability.
Consequently, it is unnecessary for us to determine whether the
“essential” or “but for” test, or the Howard University approach
applies.

                                         14
       As the parties to this agreement did not intend it to be

severable from the agreement as a whole, we hold that the BTB

agreement is not separate or severable from the remaining portions

of the APSA.           Consequently, the district court was correct to

refuse Mirant’s motion to reject its obligations under the BTB

agreement under § 365 of the Bankruptcy Code.

                                               B

       As we have determined that the BTB agreement is not severable

and thus not eligible for § 365 rejection, determination of the

applicable      standard       a      debtor       must     meet     for    rejection     is

unnecessary. Nevertheless, we should recognize that the purpose of

§ 365 rejection is to free the debtor from agreements that would

hinder or disable reorganization.                      See, e.g., National Labor

Relations Board v. Bildisco & Bildisco, 104 S.Ct. 1188, 1197 (1984)

(“The fundamental purpose of reorganization is to prevent a debtor

from going into liquidation . . . .                   Thus, the authority to reject

an executory contract is vital to the basic purpose of a Chapter 11

reorganization, because rejection can release the debtor’s estate

from    burdensome          obligations        that       can    impede     a   successful

reorganization.”); In re Nat’l Gypsum Co., 208 F.3d 498, 504 (5th

Cir. 2000) (holding that the purpose of § 365 is to “release the

debtor’s      estate    from    burdensome          obligations       that      can   impede

successful reorganization”); Richmond Leasing Co., 762 F.2d at 1310

(“[§   365]    .   .    .    serves    the     purpose      of     making   the   debtor’s

rehabilitation more likely”).                Mirant is currently operating under

                                              15
a plan of reorganization approved on December 9, 2005, which

provides for continuing performance under the BTB agreement and for

payment to all its pre-petition creditors in full. Consequently it

does not appear on the record before us that performance of the BTB

obligations    is    causing    any     hindrance   to       Mirant’s    successful

reorganization.

      Having determined that the district court’s order denying

Mirant’s first motion to reject was not error, we turn now to

review the March 1 and March 16, 2005 district court orders

requiring    Mirant       to   perform    its   obligations       under    the   BTB

agreement pending resolution of its second motion to reject.

                                         II

      In appeal number 05-10419, Mirant raises two points of error:

first, the district court’s withdrawal from the bankruptcy court of

Mirant’s second motion to reject and related pleadings to allow the

district court to decide these motions; and second, the district

court’s order requiring Mirant to perform its obligations under the

BTB   agreement     pending     court    approval       of    Mirant’s    requested

rejection under § 365.         Each issue will be considered in turn:

                                         A

      Mirant classifies the district court’s withdrawal of the

second motion to reject and related proceedings from the bankruptcy

court as a “complete disruption of the court system.”                        Mirant

contends    that    the    district   court     erred    in    withdrawing   these

pleadings from the bankruptcy court.            Matters under Chapter 11 are

                                         16
within the district court’s original jurisdiction, and reference to

and withdrawal from the bankruptcy court of bankruptcy matters is

left to the discretion of the district court.                 28 U.S.C. § 157(a)

(2005).     Thus, as PEPCO correctly notes, an order withdrawing

referral    of    a   matter    from    bankruptcy    court    is   not    a     final

appealable       order,   and       thus,    this   court    has    no    appellate

jurisdiction to review an appeal from such an order.                      See In re

Matter of Lieb, 915 F.2d 180, 183 (5th Cir. 1990) (finding no

appellate jurisdiction to review a district court’s determination

regarding    withdrawal        as    the    order   was     “neither     final    nor

collateral”); see also Caldwell-Baker Co. v. Parsons, 392 F.3d 886

(7th Cir. 2004) (citing cases from the First, Second, Third, Fifth,

Seventh, Ninth, Tenth and Eleventh Circuits, finding that no

circuit considering the issue has found appellate jurisdiction to

review a grant or denial of withdrawal).16

     16
        28 U.S.C. § 157(d) provides for both mandatory and
permissive withdrawal by the district court. The district court in
its March 1, 2005 order found both applicable.

     First, under 28 U.S.C. § 157(d), mandatory withdrawal is
required where “the [district] court determines that resolution of
the proceeding requires consideration of both title 11 and other
laws of the United States regulating organizations or activities
affecting interstate commerce.” 28 U.S.C. § 157(d) (2005). Here,
resolution of the parties’ dispute required consideration of both
Title 11 and the federal regulation of electricity. This Court’s
instruction in Mirant I provided that FERC be involved in
determining whether rejection of the BTB is appropriate, as well as
the acknowledgment that resolution of rejection will necessarily
impact on a federally regulated electricity contract. See In re
Mirant, 378 F.3d at 520, 524.

     Second, § 157(d) allows for permissive withdrawal “for cause

                                            17
                                   B

     In its final point of error in this second appeal, Mirant

raises questions relating to the portions of the March 1 and March

16, 2005 orders requiring it to perform its obligations under the

BTB agreement during the pendency of its second motion to reject.

Mirant argues that unless and until an executory contract is

assumed or rejected, Mirant has no legal obligation to perform

under that contract. Thus, Mirant contends that the district court

erred in requiring it to perform under the BTB pending rejection.17

Mirant’s position is    contrary to “the universally accepted rule

that a trustee [or debtor] cannot accept the benefits of an

executory   contract   without   accepting   the   burdens   as   well.”


shown.”    The district court made several findings as to why
permissive withdrawal was appropriate. These findings included:
the litigious and seemingly inconsistent positions of Mirant;
judicial economy; the district court’s familiarity with the issues;
and the seemingly inconsistent rulings of the bankruptcy court. See
Holland America Ins. Co. v. Succession of Roy, 777 F.2d 992, 998
(5th Cir. 1985) (“The district court should consider the goals of
promoting uniformity in bankruptcy administration, reducing forum
shopping and confusion, fostering the economical use of the
debtors’ and creditors’ resources, and expediting the bankruptcy
process.”).   On the briefing before us, the arguments made by
Mirant that the district court erred in withdrawing the second
motion for rejection and related pleadings appear frivolous. Such
baseless arguments do not enhance Mirant’s credibility before this
Court.
     17
       Mirant also raises various contentions that the March orders
constitute injunctions that are procedurally deficient, ultimately
resulting in a violation of Mirant’s due process rights. These
arguments are without merit.     As noted below, Mirant had been
ordered at least four times to pay under the BTB.       Had Mirant
complied with these previous orders the district court would not
have had to issue the March orders once again commanding Mirant’s
performance under the BTB agreement pending rejection.

                                  18
Schokbeton Indus., Inc. v. Schokbeton Prods. Corp., 466 F.2d 171,

175 (5th Cir. 1972); see also Bildisco, 104 S.Ct. at 1199 (“If the

debtor . . . continue[s] to receive benefits from the other party

to an executory contract pending a decision to reject or assume the

contract . . . the debtor . . . is obligated to pay.”) (internal

citations omitted).18

     Mirant argues that it has received no post-petition benefit

from the BTB agreement and thus does not fall under this generally

accepted principle. This contention has no basis. Mirant has made

no attempts or offers to compensate PEPCO for the $500 million

discount Mirant received on the sale price of the generating

facilities; it continues to distribute electricity along PEPCO’s

lines     using   the   inter-connection   agreements;   it   continues   to

operate plants on land owned by PEPCO per the lease agreements; it

continues to access certain generating and transfer facilities per

the easement agreements; and so on.         Each day of operation Mirant

benefits from the rights and privileges it obtained in exchange for

the obligations associated with the assignment of the over-market

PPAs and the requirements of the BTB agreement.                Mirant will


     18
       There can be disputes as to the amount the debtor must pay
as the “reasonable value” of the post-petition benefit bestowed by
the non-debtor. See, e.g., Bildisco, 104 S.Ct. at 1199 (holding
that the debtor is required to pay the “reasonable value” for post-
petition benefit, “which, depending on the circumstances of a
particular contract, may be what is specified in the contract”).
However, Mirant argues only that it should not have to pay at all.
Mirant has not disputed the amount it was ordered to pay pending
rejection, and consequently that issue is not before us.

                                     19
continue to receive these benefits as PEPCO is required by the

automatic stay to perform under all these on-going portions of the

APSA, unless and until rejection is approved.     Despite Mirant’s

cites to general bankruptcy principles, there is no authority to

support the position that Mirant may force PEPCO to continue

performance under the BTB while Mirant discontinues and refuses

payment without court permission, indeed in defiance of court

order.

     By the time the district court issued the March orders, Mirant

had been directly or indirectly ordered to perform under the BTB at

least four times.19   Further, to the extent Mirant argues that its

second motion to reject cured any problems with its prior non-

performance this argument is wholly without merit.20     Thus, the

     19
        See Bankruptcy Order, Sept. 25, 2003 (“The debtors shall
continue to perform under . . . the [BTB agreement] . . . until
specifically relieved of such obligation by order of this Court or
such other court of competent jurisdiction.”); Bankruptcy Order,
Sept. 29, 2003 (“Debtors may not discontinue these agreements
without an order of the bankruptcy court entered only after notice
and hearing.”); District Court Order, January 4, 2004 (stating that
any action causing PEPCO to be denied payment under the BTB would
be appropriate only after a specific showing by Mirant to the
court); District Court Order, December 9, 2004 (rejecting Mirant’s
First Motion to Reject the BTB).
     20
       Specifically, Mirant’s claim that it is seeking to reject
the entire APSA in response to the January 19, 2003 order of the
district court appears disingenuous. As the district court noted
in its March 1 order, Mirant’s second motion “again seeks judicial
approval [to] reject[] . . . the BTB.” The second motion purports
to reject “the entirety of the APSA.” However, the motion goes on
to state that the “Interconnection Agreement,” “Easement, License
and Attachment Agreements,” “Local Area Support Agreement,” and
“Site Lease Agreements” are separate from the APSA and thus would
not be included in the rejection. The only remaining portions of

                                20
district court did not err in ordering Mirant to perform under the

BTB pending rejection approval.

                                  III

     For the reasons stated herein, we hold that the BTB agreement

is not severable from the APSA and is thus not eligible for

rejection under 11 U.S.C. § 365.       Further, we hold that the order

of the district court withdrawing Mirant’s second motion to reject

and related pleadings from the district court is not a final

appealable order.   Consequently, we have no appellate jurisdiction

to review the withdrawal.   Additionally, we find that the district

court did not err in ordering Mirant’s performance under the BTB

agreement pending resolution of the second motion to reject.           For

these reasons,   the   district   court   order   of   December   9,   2004




the APSA are the transfer of PEPCO’s generating facilities and the
BTB agreement. The transfer of the generating facilities has been
completely   performed   and   is  thus   no   longer   executory.
Consequently, despite the “clever” labeling of its motion, Mirant
is essentially seeking to reject the BTB.

     This type of legerdemain is not uncommon in the litigious
history of this case.       Mirant’s attempts to avoid its BTB
obligations have not been limited to motions to reject. As pointed
out by FERC in its January 19, 2006 order, Mirant’s initial
proposed plan of reorganization called for the creation of a new
entity -- “New Mirant.” The plan then allowed Mirant to transfer
all its remaining assets, including the generating facilities,
leases, easements, and inter-connection agreements under the APSA
to New Mirant while leaving performance of “its APSA obligations
[previously described in the FERC order as the obligations under
the BTB agreement] with the remaining corporation -- “Old Mirant.”
The result would be that a judgment-proof entity retained the BTB
obligations while the New Mirant enjoyed the benefits of the APSA.


                                  21
involved in appeal no. 05-10038, and the March 1, and March 16,

2005 orders involved in appeal 05-10419 are affirmed.

     Mirant is cautioned that, while we welcome legitimate appeals,

any future appeals that continue the pattern of attempts to reject

the BTB agreement or efforts to refuse payment pending rejection

may well invite the most severe sanctions available to this court.

                               AFFIRMED; SANCTIONS WARNING ISSUED.




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