In re American Classic Voyages Co.

• Decision Date: 27 April 2005
• Docket Number: No. 03-3944.,03-3944.
• Citation: 405 F.3d 127
• Parties: In re: AMERICAN CLASSIC VOYAGES CO., Debtor Scott Hefta v. Official Committee of Unsecured Creditors; American Classic Voyages, Co. (D.C. Civil No. 02-01684) In re: American Classic Voyages Co., a Delaware Corporation, f/k/a Delta Queen Steamboat, Co., Debtor Scott Hefta v. American Classic Voyages Co., f/k/a Delta Queen Steamboat Co. (D.C. Civil No. 03-cv-00112) Scott Hefta, Appellant
• Court: U.S. Court of Appeals — Third Circuit

405 F.3d 127

In re: AMERICAN CLASSIC VOYAGES CO., Debtor

Scott Hefta v. Official Committee of Unsecured Creditors; American Classic Voyages, Co. (D.C. Civil No. 02-01684)

In re: American Classic Voyages Co., a Delaware Corporation, f/k/a Delta Queen Steamboat, Co., Debtor

Scott Hefta v. American Classic Voyages Co., f/k/a Delta Queen Steamboat Co. (D.C. Civil No. 03-cv-00112)

Scott Hefta, Appellant

No. 03-3944.

United States Court of Appeals, Third Circuit.

Submitted September 28, 2004.

Filed: April 27, 2005.

Mark T. Power, Hahn & Hessen, New York, NY, for American Classic Voyages Co.

Francis A. Monaco, Jr., Joseph J. Bodnar, Monzack & Monaco, Kevin Gross, Rosenthal, Monhait, Gross & Goddess, Ian C. Bifferato, Bifferato, Bifferato & Gentilotti, Wilmington, DE, for Scott Hefta.

Allain F. Hardin, Fransen & Hardin, New Orleans, LA, Mark T. Power, Hahn & Hessen, New York, NY, for Official Committee of Unsecured Creditors.

Before: RENDELL, FUENTES, and SMITH, Circuit Judges.

OPINION OF THE COURT

FUENTES, Circuit Judge.

Petitioner Scott Hefta, a seaman, sustained serious injuries while employed aboard a steamboat owned by his employer. His attorney sent the employer a letter to put it on notice of a claim relating to Hefta's accident. Shortly thereafter, the employer filed for bankruptcy. Hefta's attorney wrote the court-appointed claims agent informing it that his client was injured and "[had] a claim against the debtor." While the letter also requested a claim form, Hefta did not file a formal claim prior to the court-established bar date.¹ The issues in this case require us to clarify the requirements for an informal proof of claim in bankruptcy. We conclude that Hefta's letter was insufficient to constitute a properly filed claim and that his failure to file a timely proof of claim did not result from excusable neglect. We will affirm the judgment of the District Court.

I. Facts and Procedural History

Scott Hefta, a Jones Act Seaman,² was injured in the course of his employment at the Delta Queen riverboat on June 28, 2000. The vessel was owned and operated by American Classic and/or its subsidiary Delta Queen Steamboat Company ("American Classic" or "Debtors"). Hefta reported the injury to American Classic the next day. Thereafter, counsel for Hefta sent American Classic a letter dated June 15, 2001 to advise it of Hefta's claim. Hefta's employer acknowledged receipt of the letter on July 19, 2001.

Then, in October 2001, American Classic filed for Chapter 11 Bankruptcy in the United States District Court for the District of Delaware. The Debtors cancelled almost all of their scheduled passenger cruises, resulting in approximately 18,000 claims for deposits on cancelled cruises. Several hundred personal injury plaintiffs have also filed claims against Debtors.

Counsel for Hefta received a notification of Debtors' bankruptcy that directed creditors to file proofs of claim with the appointed claims agent, Logan & Company ("Logan"). On February 7, 2002, Hefta's counsel wrote Logan, stating that Hefta "worked on the S/S DELTA QUEEN and was injured on June 29, 2000.³ He has a claim against the debtor." Hefta's letter also requested a "Proof of Claim" form and inquired whether Debtors had insurance coverage for Hefta's injury.

On March 18, 2002, the Bankruptcy Court entered an order setting a claims bar date for April 30, 2002 (the "Bar Date"). Logan sent Hefta and his attorney a notice of the Bar Date, together with a proof of claim form, on March 27, 2002. Failing to appreciate the significance of that notice, neither Hefta nor his attorney filed the proof of claim form prior to the Bar Date.

Instead, Hefta filed a Motion for Relief from Automatic Stay with the Bankruptcy Court on August 1, 2002. The next day, counsel for Hefta received via fax an objection to that Motion on the grounds that the Bar Date had passed. Hefta's counsel claims that only then did he realize that the Bar Date had passed. On August 18, 2002, Hefta's counsel filed a Motion for Enlargement of Time to File Proof of Claim seeking an extension for "excusable neglect" under Federal Bankruptcy Rule of Procedure 9006(b)(1). Hefta's counsel subsequently also argued to the Bankruptcy Court that his February 7, 2002 letter constituted an informal proof of claim. The Bankruptcy Court denied both motions initially and upon reconsideration. The District Court affirmed each of those orders.

II. Jurisdiction and Standard of Review

The bankruptcy court had subject matter jurisdiction pursuant to 28 U.S.C. § 1334. The district court had appellate jurisdiction over the final order of the bankruptcy court pursuant to 28 U.S.C. § 158(a). We have jurisdiction pursuant to 28 U.S.C. §§ 158(d), and 1291. "In reviewing the decision of the Bankruptcy Court, we exercise the same standard of review as the District Court, that is, we review the bankruptcy court's legal determinations de novo, its factual findings for clear error, and its exercise of discretion for abuse thereof." See Manus Corp. v. NRG Energy, Inc. (In re O'Brien Envtl. Energy, Inc.), 188 F.3d 116, 122 (3d Cir.1999). Thus, we review de novo the question of law as to whether Hefta's February 7, 2002 letter constituted an informal proof of claim, and we review the Bankruptcy Court's determination regarding the existence of excusable neglect for abuse of discretion. See Anderson-Walker Indus., Inc. v. Lafayette Metals, Inc. (In re Anderson-Walker Indus., Inc.), 798 F.2d 1285, 1287 (9th Cir.1986) (informal proof of claim issue); Jones v. Chemetron Corp., 212 F.3d 199, 205 (3d Cir.2000) (excusable neglect issue).

III. Informal Proof of Claim

Hefta's primary argument is that his February 7, 2002 letter to the court-appointed claims agent was an informal proof of claim properly filed prior to the Bar Date. Specifically, he contends that the current law of this Court does not require a formal pleading or that the proof of claim be sent to a court. Debtors respond that bankruptcy law almost universally recognizes certain pleading and proof requirements for a properly filed proof of claim, which Hefta did not meet, and that, in any event, Hefta's letter was too vague to actually put Debtors on notice of Hefta's claim.

We addressed the requirements for a proof of claim for the first time nearly one hundred years ago in First Nat'l Bank of Woodbury v. West (In re Thompson), 227 F. 981 (3d Cir.1915). In Thompson, the issue was whether a letter from a bank to the receiver in bankruptcy, stating that the debtor was indebted to the bank for $20,000, was insufficient to constitute a valid proof of claim. The Court observed that the letter "was a mere statement that the bank was a creditor" and that, in any event, "no claim could then have been made" against the bankrupt estate because "the estate had not yet come into being." Id. at 984. Accordingly, the Court refused to permit a late claim and held that the allegedly timely letter from a creditor did not qualify as a proof of claim. The Court specifically noted that the bank's letter did not meet the requirements of even an "informal proof of claim" because the letter failed to state "a demand ... against the estate, and [failed to show] the creditor's intention to hold the estate liable." Id. at 983. Those requirements for a proof of claim have remained constant over the decades.

In more recent times, a number of Courts of Appeals have elaborated on the requirements for a proof of claim in the bankruptcy context and have adopted a slightly more exacting five-part test. See Barlow v. M.J. Waterman & Assocs., Inc. (In re M.J. Waterman & Assocs., Inc.), 227 F.3d 604, 609 (6th Cir.2000); Nikoloutsos v. Nikoloutsos (In re Nikoloutsos), 199 F.3d 233, 236 (5th Cir.2000); Clark v. Valley Fed. Sav. & Loan Ass'n. (In re Reliance Equities, Inc.), 966 F.2d 1338, 1345 (10th Cir.1992). Under the five-part test a document will qualify as an informal proof of claim in bankruptcy only if it is in writing, contains a demand by the creditor on the bankruptcy estate, expresses an intent to hold the debtor liable for the debt, and the document is filed with the bankruptcy court.⁴ See M.J. Waterman, 227 F.3d at 609. If a document meets those four requirements, the bankruptcy court must determine whether, given the particular surrounding facts of the case, it would be equitable to treat the document as a proof of claim. Id. Courts within our circuit have already applied that five-part test. See, e.g., Agassi v. Planet Hollywood Int'l, Inc., 269 B.R. 543, 550 (D.Del.2001); In re Petrucci, 256 B.R. 704, 706 (Bankr.D.N.J.2001).

Petitioner argues that the five-factor test is inconsistent with Thompson. We disagree. In Thompson we pointed out two deficiencies but did not purport to establish a comprehensive test. We stated only that "[w]hether formal or informal, a claim must show (as the word itself implies) that a demand is made against the estate, and must show the creditor's intention to hold the estate liable." Thompson, 227 F. at 983. The facts of that case did not require the Court to explain precisely what constitutes a demand. While we note that the five-part test enumerates several factors in addition to those identified in Thompson, it is entirely consistent with the holding in that case, and, we believe, it more accurately identifies the requirements for a properly filed proof of claim.

The modern formulation of the two-part test in Thompson reflects significant changes in the administration of bankruptcy over the last nine decades. Not only are modern bankruptcy courts themselves creatures of intervening statutes, but also, bankruptcy proceedings today, including those initiated by American Classic, are of a scale and complexity unforeseen in 1915. Bankruptcy proceedings are now governed by elaborate rules of procedure designed to make that scale and complexity manageable.

Two requirements in the five-part test are absent in Thompson: that informal proofs...