726 F.2d 620 (10th Cir. 1984), 82-1328, Reliable Elec. Co., Inc. v. Olson Const. Co.

Docket Nº:82-1328.
Citation:726 F.2d 620
Party Name:RELIABLE ELECTRIC CO., INC., Plaintiff-Appellant, v. OLSON CONSTRUCTION COMPANY, Defendant-Appellee.
Case Date:January 24, 1984
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

Page 620

726 F.2d 620 (10th Cir. 1984)

RELIABLE ELECTRIC CO., INC., Plaintiff-Appellant,



No. 82-1328.

United States Court of Appeals, Tenth Circuit

January 24, 1984

Rehearing Denied Feb. 28, 1984.

Jon B. Clarke, Denver, Colo. (Joel Laufer, Littleton, Colo., with him on the brief), of Clarke & Waggener, P.C., Denver, Colo., for plaintiff-appellant.

Charles H. Haines, Jr., Denver, Colo. (John M. Spillane, Denver, Colo., with him on the brief), for defendant-appellee.

Before BARRETT and McKAY, Circuit Judges, and BROWN, [*] Senior District Judge.

BARRETT, Circuit Judge.

Reliable Electric Company (Reliable), the debtor, appeals from a final order of the federal district court affirming a decision of the United States Bankruptcy Court for the District of Colorado that the prepetition unsecured claim of Olson Construction Company (Olson), the creditor, is not subject to Reliable's confirmed Plan of Reorganization. The bankruptcy court found that although Olson possessed actual knowledge of the reorganization proceeding in general, it did not receive adequate notice of the confirmation

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hearing. Thus, Olson's claim was found not to be discharged pursuant to the provisions of the Plan as provided by 11 U.S.C. Sec. 1141. The pertinent facts are undisputed, but a detailed presentation of them is necessary to adequately address the question before us.

Between June, 1979, and December, 1979, Reliable was the electrical subcontractor on a construction project; Olson was the general contractor. On December 26, 1979, Reliable withdrew from the project because it felt Olson had breached the subcontract. On January 30, 1980, Reliable filed a petition for voluntary Chapter 11 reorganization in the United States Bankruptcy Court. Reliable filed a schedule of creditors on February 14, 1980, and amended that schedule on August 28, 1980. Within the schedule, Olson was listed under "Accounts Receivable," but never as a "Creditor."

Sometime between January, 1980, and November, 1980, Jon Clarke, Reliable's attorney, telephoned Charles H. Haines, Jr., Olson's attorney, and informed Mr. Haines that Reliable had instituted Chapter 11 proceedings. However, Olson did not receive any further information from Reliable concerning the proceedings. On November 9, 1980, Reliable filed suit against Olson in Colorado State District Court seeking damages for breach of the subcontract. On or about December 16, 1980, Olson removed the cause to federal bankruptcy court. Thereafter, on December 23, 1980, Olson responded to Reliable's complaint through an Answer and Counterclaim for damages based upon Reliable's alleged prepetition breach of the subcontract.

On January 6, 1981, Reliable filed its Third Amended Plan of Reorganization. The Disclosure Statement attached to this Plan stated that both documents were sent to all of Reliable's known creditors. 1 On January 13, 1981, the bankruptcy court mailed a notice to the scheduled creditors informing them of the time for filing acceptances or rejections of the Plan, of the confirmation hearing, and of the time for filing objections to confirmation. The confirmation hearing was conducted on March 9, 1981, after which the court entered an order confirming Reliable's Third Amended Plan. On March 12, 1981, the court mailed to the scheduled creditors notice of the confirmation order and discharge of Reliable. Because Olson was not a scheduled creditor, it did not receive any of these notices. 2

On August 6, 1981, trial was held on the subcontract dispute between Reliable and Olson. On August 10, 1981, the bankruptcy court entered judgment dismissing Reliable's complaint and granting Olson recovery against Reliable in the amount of $10,378.00. Reliable then filed a claim in the Chapter 11 proceeding on behalf of Olson for $10,378.00 pursuant to Bankruptcy Interim Rule...

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