In re Edge
| Decision Date | 09 May 1986 |
| Docket Number | Adv. No. 384-0359.,383-00618,Bankruptcy No. 383-00637 |
| Citation | 60 BR 690 |
| Parties | In re Michael Wayne EDGE and Thomas Anderson Roach, Debtors. Frances S. ROACH, Plaintiff, v. Michael Wayne EDGE and Thomas Anderson Roach, Defendants. |
| Court | U.S. Bankruptcy Court — Middle District of Tennessee |
Brenda Rhoton,
Thomas F. Mink, II, Nashville, Tenn., for plaintiff.
Paul E. Jennings, Beth Roberts Derrick, Waddey & Jennings, Nashville, Tenn., for defendant Edge.
C. Kinian Cosner, Jr., Cosner & Waldschmidt, Nashville, Tenn., for defendant Roach.
The question presented is whether the victim of the debtors' (alleged) prepetition negligence has a "claim" in bankruptcy where discovery of the negligence occurred postpetition. I find that the plaintiff has a claim in these bankruptcy cases.
The following constitute findings of fact and conclusions of law. Bankruptcy Rule 7052. This is a core proceeding. 28 U.S.C. § 157(b)(2)(B), (I) (1982 ed., Supp. II 1984).
The debtors were dentists engaged in a joint practice. The plaintiff received dental treatment from both debtors prior to bankruptcy. The debtors separately filed Chapter 7 petitions in March, 1983 and each listed plaintiff as a creditor based on claims not at issue here. The plaintiff received timely notice of both filings. Dr. Roach and Dr. Edge received their discharges on January 31, 1984 and July 30, 1984, respectively.
In late July 1983 the plaintiff discovered she may have received negligent dental treatment from one or both debtors. On July 26, 1984 she sued both debtors in the Circuit Court of Davidson County, Tennessee alleging negligence and demanding compensatory and punitive damages. Motions for sanctions for violation of the stay were filed in this court by the debtors. The plaintiff then filed this adversary proceeding asking a declaration that her "claim" arose postpetition upon discovery of her dental injuries and thus is not subject to the stay of § 362. The debtors contend that the plaintiff's claim arose prepetition when the alleged negligent treatment occurred.
With exceptions enumerated in 11 U.S.C. § 523 (1982 ed.), the discharge in bankruptcy relieves the debtor of all debts that arose before the date of the petition. 11 U.S.C. § 727(b). Ohio v. Kovacs, 717 F.2d 984 (6th Cir.1983), aff'd, 469 U.S. 274, ___, 105 S.Ct. 705, 708, 83 L.Ed.2d 649, 655 (1985). It is not argued that the negligence claims against these debtors are excepted from discharge by § 523.1 The plaintiff rests on the proposition that undiscovered prepetition negligence does not constitute a claim for bankruptcy purposes.
The Bankruptcy Code defines "debt" as "liability on a claim." 11 U.S.C. § 101(11) (1982 ed.). "Claim" is defined in 11 U.S.C. § 101(4) (1982 ed.):
The parties agree that if the plaintiff had a "right to payment" at the time of filing, then the plaintiff has a "claim" and a "debt" in these bankruptcy cases.
The Code provisions reproduced above twice substitute one set of undefined words for another. The definition of debt as liability on a "claim" is not helpful; nor is "right to payment" especially enlightening of the meaning of "claim."
We first attempt to determine the content of these words from the surrounding statutory language. Section 101(4)(A) is broadly worded. If "right to payment" is not all encompassing, the phrase which follows — "whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, secured, or unsecured" — seems intended to include every combination and permutation of events extant or in futuro which might effect a right to payment. This expansive context suggests that "right" should not restrict the compass of "claim". A dictionary approach gives us "a power, privilege, faculty, or demand, inherent in one person and incident upon another." Black's Law Dictionary, 1189 (5th ed. 1979).
Legislative history confirms that Congress intended the broadest definition for "claim" in bankruptcy. The House Report explains: H.R.REP. NO. 595, 95th Cong., 2d Sess. 309 (1979) reprinted in 1978 U.S.CODE CONG. & AD.NEWS 5963, 6266 (emphasis added). One commentator states, "by using the broadest possible language to describe the rights to payment which constitute the claims under subsection 101(4)(A), Congress expressed unequivocally the intention that all monetary rights be asserted and resolved in the bankruptcy proceeding." Matthews, The Scope of Claims Under the Bankruptcy Code (First Installment), 57 AM.BANKR. L.J. 221, 223 (Summer 1983). The Supreme Court recently observed "it is apparent that Congress desired a broad definition of a `claim' and knew how to limit the application . . . when it desired to do so." Kovacs, 469 U.S. at ___, 105 S.Ct. at 709, 83 L.Ed.2d at 656 (footnotes omitted). The United States Court of Appeals for the Second Circuit summarized the legislative history and judicial statements of the extent of claims in bankruptcy:
Robinson v. McGuigan, 776 F.2d 30, 34-35 (2d Cir.1985), cert. granted sub nom., Kelly v. Robinson, ___ U.S. ___, 106 S.Ct. 1181, 89 L.Ed.2d 298 (1986).2
The broad concept of claim intended by Congress in 1978 signalled an important departure from prior law. Under § 63 of the 1898 Act (11 U.S.C. § 103 (1979 repealed)) only those debts which were "provable" were allowed against the bankrupt's estate. Provability was interpreted to exclude most tort claims from consideration in bankruptcy cases. See 3A J. MOORE, COLLIER ON BANKRUPTCY ¶ 63.251 (14th ed. 1975). Holders of "unprovable" tort rights were excluded from distribution of the estate and were permitted to pursue the debtor's postpetition assets. The basic irrationality of admitting to proof claims based on contract but excluding most claims based on tort lead to many convoluted exceptions to the nonprovability of tort claims and eventually to abandonment of the general rule. As one commentator explains:
The effect of the definition is a significant...
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