Dahlin v. Lyondell Chem. Co.

• Decision Date: 26 January 2018
• Docket Number: No. 16-4472,No. 16-3419,16-3419
• Parties: Cheri DAHLIN, Individually and on Behalf of the Estate of Dean Dahlin, Deceased, Plaintiff-Appellee v. LYONDELL CHEMICAL COMPANY; Equistar Chemicals, LP; Equistar GP, LLC, Defendants-Appellants Archer-Daniels-Midland Company, Defendant Cheri Dahlin, Individually and on Behalf of the Estate of Dean Dahlin, Deceased, Plaintiff-Appellant v. Lyondell Chemical Company; Equistar Chemicals, LP; Equistar GP, LLC, Defendants-Appellees Archer-Daniels-Midland Company, Defendant
• Court: U.S. Court of Appeals — Eighth Circuit

881 F.3d 599

Cheri DAHLIN, Individually and on Behalf of the Estate of Dean Dahlin, Deceased, Plaintiff-Appellee

v.LYONDELL CHEMICAL COMPANY; Equistar Chemicals, LP; Equistar GP, LLC, Defendants-Appellants

Archer-Daniels-Midland Company, Defendant

Cheri Dahlin, Individually and on Behalf of the Estate of Dean Dahlin, Deceased, Plaintiff-Appellant

v.Lyondell Chemical Company; Equistar Chemicals, LP; Equistar GP, LLC, Defendants-Appellees

Archer-Daniels-Midland Company, Defendant

No. 16-3419

No. 16-4472

United States Court of Appeals, Eighth Circuit.

Submitted: October 18, 2017

Filed: January 26, 2018

David J. Baluk, Keith E. Patton, SHRADER & ASSOCIATES, Houston, TX, Robert H. Gallagher, Peter G. Gierut, GALLAGHER & MILLAGE, Bettendorf, IA, Michael Gross, Saint Louis, MO, for Plaintiff-Appellee.

Charles Tynan Buthod, Jonathan Havens, Macey Reasoner Stokes, BAKER & BOTTS, Houston, TX, Kevin M. Reynolds, WHITFIELD & EDDY, Des Moines, IA, for Defendants-Appellants.

Before SMITH, Chief Judge, GRUENDER and BENTON, Circuit Judges.

BENTON, Circuit Judge.

Cheri Dahlin sued Lyondell Chemical Company, Equistar Chemicals, LP, and Equistar GP, LLC (collectively "Lyondell"). A jury returned a verdict for Dahlin. Having jurisdiction under 28 U.S.C. § 1291, this court vacates and remands.

I.

Between 1990 and 1995, Dean B. Dahlin worked for two companies as a commercial truck driver. For both, he loaded his truck with benzene-containing pyrolysis gasoline at a petrochemical facility in Clinton, Iowa. He transported the gasoline to a storage facility where he unloaded it. He then returned to the Clinton facility, reloaded, and went back to the storage facility. Drivers did this four-to-six times a day during the summer.

Dean's employers did not own the Clinton facility. From 1988 until late 1993, Quantum Chemical Corporation owned it. In late 1993, Hanson, PLC acquired the Corporation, changing its name to Quantum Chemical Company. The name changed back to Quantum Chemical Corporation in 1996—until March 1997, when it became Millennium Petrochemical, Inc. Later in 1997, Millenium formed a joint venture with Lyondell Chemical Company called Equistar Chemicals, LP. Equistar became the Clinton facility's owner. In 2004, Equistar became Lyondell Chemical Company's wholly owned subsidiary.

In 2009, Equistar and Lyondell Chemical Company, with other affiliated companies, petitioned for Chapter 11 bankruptcy. The bankruptcy court confirmed a reorganization plan in 2010, discharging all existing debts.

Dean was diagnosed in 2012 with myelodysplastic syndrome

, which transformed to acute myeloid leukemia. Dean passed away from AML. His widow, Cheri Dahlin, sued Lyondell, alleging that Dean's benzene exposure at the Clinton facility caused his disease.

Lyondell moved for summary judgment, arguing that Dahlin's claim was discharged in bankruptcy. The district court denied the motion. See Dahlin v. Archer-Daniels-Midland Co. , 2015 WL 11675667 (S.D. Iowa Sept. 29, 2015). A jury awarded Dahlin $1.76 million in compensatory damages and $1.76 million in punitive damages. Post-trial, the district court vacated the punitive damages, but rejected Lyondell's other arguments. Lyondell appeals. Dahlin cross-appeals to reinstate the punitive damages.

II.

Lyondell says that Dahlin's claim was discharged in bankruptcy. The first question is whether this court can review this issue. Lyondell did not raise the discharge issue in a motion for judgment as a matter of law. Instead, it relies on the district court's denial of its motion for summary judgment.

"It is generally true that a denial of summary judgment is interlocutory in nature and not appealable after trial and judgment." New York Marine & Gen. Ins. Co. v. Continental Cement Co., LLC , 761 F.3d 830, 837 (8th Cir. 2014). "[T]he proper redress for an argument denied at summary judgment is not through appeal of that denial, ‘but through subsequent motions for judgment as a matter of law and appellate review of those motions if they were denied.’ " Id. at 838, quoting White Consol. Indus., Inc. v. McGill Mfg. Co. , 165 F.3d 1185, 1189 (8th Cir. 1999).

This court, however, has "not indiscriminately foreclose[d] all appeals taken from the denial of an issue raised at summary judgment. ... [A] distinction [exists] between the denial of a summary judgment motion involving the merits of a claim and one involving preliminary issues, such as a statute of limitations, collateral estoppel, or standing." Id. This court cannot review the denial of summary judgment on an issue involving the merits. See id. But it can review a preliminary issue. Id.

As the district court noted, the discharge issue does not involve the merits of Dahlin's claim. Dahlin , 2015 WL 11675667, at *1 n.1. Like statute of limitations, collateral estoppel, and standing, a bankruptcy discharge issue "is generally preliminary to determination of the merits in a case." See New York Marine , 761 F.3d at 838. This court may review whether Dahlin's claim was discharged in Lyondell's bankruptcy.

This court reviews de novo a district court's grant or denial of summary judgment, applying the same standard as the district court. Rosemann v. St. Louis Bank , 858 F.3d 488, 494 (8th Cir. 2017) ; ReliaStar Life Ins. Co. v. IOA Re, Inc. , 303 F.3d 874, 878 (8th Cir. 2002). Whether a bankruptcy notice satisfies due process is a mixed question of law and fact. See Stauch v. City of Columbia Heights , 212 F.3d 425, 431 (8th Cir. 2000) ("Although, the question of whether the procedural safeguards provided for in the Code are adequate to satisfy due process is a question of law for the court to determine, whether the City indeed provided the Stauches with such procedure is a question of fact for the jury."). "The burden of establishing that a creditor has received appropriate notice rests with the debtor." In re Hairopoulos , 118 F.3d 1240, 1244 (8th Cir. 1997).

III.

"[T]he confirmation of a [Chapter 11 bankruptcy] plan ... discharges the debtor from any debt that arose before the date of such confirmation." 11 U.S.C. § 1141(d)(1)(A) . A "debt" is a "liability on a claim." § 101(12) . Dahlin's lawsuit is a "claim." See § 101(5)(A) (a "claim" includes any "right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured"); Boston & Maine Corp. v. Massachusetts Bay Transp. Auth. , 587 F.3d 89, 100 (1st Cir. 2009) ("A contingent claim is [a] claim that has not yet accrued and is dependent on some future event that may never happen.") (citation and internal quotation marks omitted).

The district court ruled that Dahlin's claim arose before the confirmation of Lyondell's bankruptcy plan. Dahlin , 2015 WL 11675667, at *8. Dahlin does not challenge that ruling, also acknowledging she did not file a proof of claim. The district court's ruling would generally mean that Dahlin's claim was discharged because "a cause of action that accrues prior to the confirmation of the plan constitutes a ‘claim’ dischargeable upon confirmation." Sanchez v. Northwest Airlines, Inc. , 659 F.3d 671, 675 (8th Cir. 2011) ; see also § 1141(d)(1)(A) . Despite that general rule, the district court concluded that Dahlin's claim was not discharged because Lyondell violated Dean's due process rights by not providing sufficient notice of its bankruptcy. Dahlin , 2015 WL 11675667, at *13.

A.

"Inadequate notice is a defect which precludes discharge of a claim in bankruptcy." Chemetron Corp. v. Jones , 72 F.3d 341, 346 (3d Cir. 1995). "The operation of the Bankruptcy Code, including its discharge provisions, is subject to due process constraints." Sanchez , 659 F.3d at 675. Due process requires "notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." Mullane v. Central Hanover Bank & Trust Co. , 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 (1950).

"[B]efore a pre-petition or pre-confirmation claim can be discharged under the applicable provisions of the Bankruptcy Code, a debtor's creditors must be afforded notice of the debtor's bankruptcy case, as well as the deadline for asserting any pre-petition claims against the debtor." Sanchez , 659 F.3d at 675, quoting Zurich Am. Ins. Co. v. Tessler (In re J.A. Jones, Inc.) , 492 F.3d 242, 249 (4th Cir. 2007). "Absent such notice, creditors lack ‘the opportunity to participate in a meaningful way in the course of bankruptcy proceedings.’ " Id. , quoting Hairopoulos , 118 F.3d at 1244.

The level of notice that satisfies due process depends on whether the creditor is "known" or "unknown." See Chemetron , 72 F.3d at 346. "Known creditors must be provided with actual written notice of a debtor's bankruptcy filing and bar claims date." Id. "For unknown claimants, notification by publication will generally suffice." Id. ; see also Tulsa Prof'l Collection Serv., Inc. v. Pope , 485 U.S. 478, 490, 108 S.Ct. 1340, 99 L.Ed.2d 565 (1988) ("For creditors who are not ‘reasonably ascertainable,’ publication notice can suffice.").

B.

The district court concluded that Dean was an unknown creditor entitled only to publication notice. Dahlin , 2015 WL 11675667, at *11. The notice listed over 90 companies as debtors. It included the statutory definition of "claim," noting the deadlines to file a proof of claim. It described who must file a proof of claim, and where and what to file. It explained the consequences of not filing a proof of claim before the bar date. Lyondell published the notice in the national edition of USA Today , the national and international editions of the Wall Street Journal , and regional newspapers, including the Clinton Herald , circulated in Clinton, Iowa. See Chemetron , 72 F.3d at 348-49 ("Publication in national newspapers is regularly deemed sufficient notice to unknown creditors, especially where...