In re Allegheny Intern., Inc.
| Decision Date | 14 June 1994 |
| Docket Number | Civ. A. No. 93-1582. Bankruptcy No. 88-448. |
| Citation | 170 BR 83 |
| Parties | In re ALLEGHENY INTERNATIONAL, INC., Sunbeam Corporation, Sunbeam Holdings, Inc., Almet/Lawnlite, Inc. and Chemetron Corporation, Debtors. CHEMETRON CORPORATION, Appellant, v. Phyllis Jaskey JONES, et al., Appellees. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
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M. Bruce McCullough, George L. Cass, Buchanan Ingersoll, Pittsburgh, PA, Thomas G. Hermann, Laura K. Hong, Dennis G. Terez, Michael B. Axler, Squire, Sanders & Dempsey, Cleveland, OH, and David R. Sargent, Sunbeam-Oster Co., Inc., Tampa, FL, for appellant Chemetron Corp.
William K. Mitchell (argued), Deborah J. Papushak, Armstrong, Mitchell & Damiani, Cleveland, OH, for appellees Phyllis Jaskey Jones, Pamela Jo Swansinger, Sandra Jaskey Hujarski, Patricia Hujarski, Teresa Hujarski Ross, Janice Jaskey Butvin, Frank Butvin, Robert Butvin, Brian Butvin, Susan Butvin, Walter Anielski, Arlene Vans, Yvonne Vans Bekoscke, Anthony Vans, Gregory Vans, Carol Schultz, Mary Shaffer, Brittany Cull and Stephanie Schaffer.
Randall Solomon, Thomas L. Anastos, Baker & Hostetler, Cleveland, OH, Cynthia Baker, Fried, Frank, Harris, Shriver & Jacobson, New York City, and Dennis J. Lewis, Cohen & Grigsby, P.C., Pittsburgh, PA, represented parties to the original bankruptcy action.
We consider the appeal of appellant Chemetron Corporation of the Bankruptcy Court's Memorandum Opinion and Final Order ("Order") entered August 2, 1993 in the underlying Chapter 11 reorganization proceeding and Adversary Proceeding No. 92-2418. By the Order appellee Phyllis Jaskey Jones and eighteen other appellees were permitted to file late claims against Chemetron. Appellees' late claims arise from their allegations against Chemetron and two other defendants (not parties to this appeal) for personal injuries allegedly caused by exposure to radioactive and toxic contamination at two industrial sites, one in Newburgh Heights and one in Cuyahoga Heights, Ohio.
This appeal is pursuant to Bankruptcy Rule 8001(a). Our jurisdiction is pursuant to 28 U.S.C. § 158(a).
Allegheny International, Chemetron and other debtors (collectively "Debtors") filed a petition to reorganize under Chapter 11 of the Bankruptcy Code on February 20, 1988. The Bankruptcy Court ordered the claims bar date to be May 31, 1988. As required by that order, notice of the bar date was provided to creditors listed on Debtors' schedules of liabilities and certain holders of securities. Debtors were ordered to publish the same notice in the national editions of the New York Times and Wall Street Journal.1 Appellees were not listed on the Debtors' schedules and were not personally served with notice of the bar date or the bankruptcy proceedings. On July 12, 1990, the Bankruptcy Court confirmed the Debtors' proposed Plan of Reorganization.
On March 2, 1992, Appellees sued Chemetron and two other companies, McGean-Rohco, Inc. and McGean Chemical Company, Inc., in the Court of Common Pleas in Cleveland, Ohio for injuries they allegedly sustained as the result of exposure to hazardous and radioactive material deposited at the Bert Avenue Site in Newburgh Heights, Ohio by Chemetron. In response to the complaint, Chemetron moved to dismiss the claims as to Chemetron in light of the confirmation of the Plan of Reorganization. Appellees then filed a motion with the Bankruptcy Court seeking permission to file late claims and a separate motion to declare that their claims were not discharged. Chemetron answered the adversary proceeding and counterclaimed, seeking a declaratory judgment against Appellees that their claims against Chemetron were discharged as a result of the reorganization.
On August 2, 1993, the Bankruptcy Court granted Appellees' motion for permission to file late claims against Chemetron and sua sponte permitted appellees to proceed with their litigation against Chemetron in the Ohio lawsuit. The adversary proceeding and Chemetron's counterclaim were dismissed without prejudice. The Bankruptcy Court reserved ruling on the issue whether Appellees' claims are discharged in light of the permission to file the late claims. This appeal followed.
The Bankruptcy Court held that Appellees were known creditors of Chemetron in February 1988 when Chemetron filed for Chapter 11 reorganization. As known creditors, the Bankruptcy Court held that Chemetron was required to serve on them actual notice of the bar date, not notice by publication. Lastly, the Bankruptcy Court concluded that the totality of the circumstances weighed in favor of allowing Appellees to file late claims.
Appellees' Amended Complaint states that in 1965 McGean Chemical Company sold to Chemetron its stock in a manufacturing facility on Harvard Avenue located in Cuyahoga Heights, Ohio, and the Bert Avenue Site, located approximately ½ mile from the manufacturing facility. Chemetron owned and operated the Harvard Avenue plant and the Bert Avenue Site from 1965 until 1975 when Chemetron sold both sites to McGean. Subsequently, McGean merged with Rohco, Inc. to become McGean-Rohco, the current owner of the sites at issue. During its period of ownership, Chemetron manufactured an antimony oxide catalyst at the Harvard Avenue facility. The process required the use of depleted uranium. In 1974 Chemetron dismantled its catalyst production equipment. In 1975 Chemetron disposed of radioactive material from the Harvard Avenue facility at its Bert Avenue Site. In 1980 the Nuclear Regulatory Commission informed Chemetron that decontamination of the Bert Avenue Site was required.
Appellees are former residents of Newburgh Heights and Cuyahoga Heights who allegedly visited or lived in the vicinity of the Bert Avenue Site from as early as the 1930s to 1985.2 Appellees allege that the operation and use of the Harvard Avenue plant and Bert Avenue Site by Chemetron, McGean Chemical Company and McGean-Rohco caused Appellees to be exposed to radioactive and hazardous substances. The exposure allegedly caused a variety of medical problems and increased their risk of future medical problems and cancer. Appellees contend that they first became aware that the alleged exposure to the substances caused their medical problems in either October 1991 or March 1992.
The parties have filed briefs. We heard oral argument on February 25, 1994.
We review the Bankruptcy Court's findings of fact under the clearly erroneous standard. Fed.R.Bankr.P. 8013. Conclusions of law are subject to de novo review. Mellon Bank, N.A. v. Metro Communications, Inc., 945 F.2d 635, 642 (3rd Cir.1991), cert. denied, ___ U.S. ___, 112 S.Ct. 1476, 117 L.Ed.2d 620 (1992). However, where there are mixed questions of law and fact, we undertake "`de novo review of the trial court's choice and interpretation of legal precepts and its application of those precepts to historical facts.'" Id. quoting Universal Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 101-02 (3d Cir.1981); see also, Kilbarr Corp. v. General Services Administration, (In re Remington Rand Corp.), 836 F.2d 825, 828 (3d Cir.1988). Since the issues here are mixed questions of law and fact, we shall review this appeal de novo.
Under Bankruptcy Rule 3003(c)(3) the Bankruptcy Court is required to set a bar date for filing proofs of claim. The bar date is strictly construed to further the objective of finality in bankruptcy proceedings. Charter Crude Oil Co. v. Petroleos Mexicanos (In re Charter Co.), 125 B.R. 650, 654 (M.D.Fla.1991). Confirmation of the debtor's Plan of Reorganization discharges the debtor from claims which arose prior to the confirmation date. Id.; 11 U.S.C. § 1141.
Due process requires that actual written notice of a debtor's bankruptcy filing and bar date be provided to known creditors. New York v. New York, N.H. & H.R. Co., 344 U.S. 293, 296, 73 S.Ct. 299, 301, 97 L.Ed. 333 (1953). Where the names, addresses and interests of potential parties are unknown, notification by publication satisfies the requirements of due process. Id. A "known" creditor is one whose identification as such is either known or "reasonably ascertainable by the debtor." Tulsa Professional Collection Services, Inc. v. Pope, 485 U.S. 478, 490, 108 S.Ct. 1340, 1347-48, 99 L.Ed.2d 565 (1988). An "unknown" creditor is one whose identification is not "reasonably ascertainable" and whose claim is merely "conceivable, conjectural or speculative." Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 317, 70 S.Ct. 652, 658-59, 94 L.Ed. 865 (1950). The principal argument raised by Chemetron in this appeal is that the standard applied by the Bankruptcy Court that Appellees' claims were reasonably foreseeable making Appellees known creditors conflicts with governing bankruptcy law.
The standard adopted by the Bankruptcy Court was: "if at the time of filing it is reasonably foreseeable to a debtor who is or should be aware of the potential consequences of its actions, that a party that is foreseeable will most likely file a claim against the debtor, that party is a `known' creditor of the debtor." Order at 5-6. The Bankruptcy Court also held that a creditor can be "known" even though the debtor does not know the creditor's name and address. Id. at 6. The Bankruptcy Court stated that the aforementioned standard was suggested by the Bankruptcy Court for the Southern District of New York in In re Brooks Fashion Stores, Inc., 124 B.R. 436 (Bankr. S.D.N.Y.1991).
In Brooks, the debtor had no knowledge of the claim of the Michigan Employment Security Commission ("MESC"). Notice of the bar date for filing proofs of claim was published in two national newspapers and a trade paper. A proposed plan of reorganization was confirmed with an order containing a permanent injunction against claims which arose prior to the order's entry. MESC argued...
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