In re Hansel
| Citation | 160 BR 66 |
| Decision Date | 27 August 1993 |
| Docket Number | Bankruptcy No. 92-41584-H5-7,92-41642-H5-13. |
| Parties | In re Kimberly HANSEL, Debtor. In re Donald Charles CAIN, Sr., Debtor. |
| Court | United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Southern District of Texas |
Roger T. Yokubaitis, Houston, TX, Michael Huddleston, Dallas, TX.
Marvin Isgur, Houston, TX.
REVISED ORDER REGARDING CLAIMS OF REPUBLIC UNDERWRITERS INSURANCE COMPANY OF OKLAHOMA
Before the Court are the issues of whether Republic Underwriters Insurance Company of Oklahoma ("Republic") has filed a timely proof of claim and whether it has standing to object to claims and otherwise participate in these bankruptcy cases. After considering the motion of Republic for new trial, this Court amends its findings and conclusions as set forth herein.
This Court has jurisdiction of this proceeding pursuant to 28 U.S.C. §§ 157 and 1334. Based on a review of the law, the pleadings, and arguments of counsel, the Court finds that Republic did not file a timely proof of claim in the Donald Cain case and does not have standing to object to claims or to otherwise participate in either bankruptcy case.
1. Republic is the underwriter for the homeowners insurance policy of Donald C. Cain and Karen Kay Cain.
2. Kimberly Hansel is Donald Cain's daughter. Her husband is James Hansel.
3. Jennifer Cain is Donald Cain's niece.
4. Cecilia Cain is Jennifer Cain's mother.
5. During 1989, when she was 12 and 13 years old, Jennifer Cain lived with Donald Cain, Kimberly Hansel, and James Hansel, in the home of Donald Cain. Jennifer Cain and her mother did not know at that time that James Hansel had a prior criminal record for sexual assault of a minor.
6. During this time, Jennifer Cain was raped repeatedly by James Hansel.
7. James Hansel has been convicted of sexual abuse of a minor for his assaults on Jennifer Cain and is serving a prison sentence.
8. On July 30, 1990, Jennifer Cain, through Cecilia Cain, filed suit against Donald Cain and Kimberly Hansel in the 165th Judicial District Court in Harris County Texas to recover damages for the rapes (the ). This case was subsequently transferred to the 333rd District Court of Harris County, Texas.
9. The state tort case is defended by counsel hired by Republic. Specifically, Republic hired Alvin Laser to represent Kimberly Hansel and Jay Hirsch to represent Donald Cain.
10. The defense is undertaken pursuant to a purported reservation of rights by Republic, which sent the insureds two letters.
11. The letter dated July 30, 1990, states in part:
". . . any investigation made or actions taken by ourselves or other representatives of the insurer on this claim is done with a full reservation of rights under the policy and with the understanding that any action whatever by ourselves or other representatives of republic Underwriters Insurance Company will not constitute a waiver of any rights the insurance company may have under the policy. . . . we will assume you understand that any action taken in the investigation, adjustments, or defense of this claim is done with a full reservation of rights under the policy, and will not be considered a waiver of any rights under the policy." (emphasis added.)
12. The March 6, 1992 letter states in part: (emphasis added.)
13. A copy of these letters and the insurance policy are attached to this opinion.*
14. On February 20, 1992, the week before the scheduled commencement of the trial of the state tort case, Kimberly Hansel filed a chapter 7 bankruptcy case which was assigned to the docket of the undersigned judge.
15. Also on February 20, 1992, Alvin Laser, hired by Republic, on behalf of Kimberly Hansel, removed the state tort case to the bankruptcy court.
16. It has come to light during the course of this case that although Margaret Little originally represented Kimberly Hansel in this bankruptcy, she did so at the behest of Alvin Laser, the attorney hired by Republic for Kimberly Hansel. Furthermore, Alvin Laser paid the filing fee for Kimberly Hansel's bankruptcy. Kimberly Hansel paid Ms. Little nothing for representation in this bankruptcy.
17. The next day, February 21, 1992, Donald Cain filed a chapter 13 bankruptcy case. That bankruptcy was initially assigned to the docket of Judge Leal.
18. Donald Cain's bankruptcy attorney is Madison Jones. Madison Jones' Chapter 13 Fact Form and Fee Application filed in Donald Cain's bankruptcy contains a time entry for February 18, 1992, two days prior to filing the Cain bankruptcy, for a telephone conference with Jay Hirsch, the attorney hired by Republic, regarding "trial of homeowner policy case and ramifications of filing Chapter 13 case prior to trial of liability issues."
19. Also on February 21, 1992, Jennifer Cain sought an emergency hearing for relief from the automatic stay to allow prosecution of the state tort case to proceed and to remand it back to state court. Judge Leal transferred the Donald Cain case to the undersigned judge for the purposes of that hearing. This Court conducted the hearing on that date in both the Kimberly Hansel and Donald Cain bankruptcies and ordered the state tort case remanded and lifted the automatic stay for the purpose of prosecution of the state tort case. The attorneys hired by Republic, Alvin Laser and Jay Hirsch, were present at that hearing.
20. On March 5, 1992, the clerk of the court issued the Notice of Commencement of Case Under Chapter 7 of the Bankruptcy Code, Meeting of Creditors, and Fixing of Dates for Kimberly Hansel's case which states "Do not File a Proof of Claim Until You Receive Notice To Do So."
21. On April 27, 1992, the clerk of the court issued the Notice of Commencement of the Case Under Chapter 13 of the Bankruptcy Code, Meeting of Creditors, and Fixing of Date for Donald Cain's bankruptcy, setting the meeting of creditors for May 28, 1992, and the deadline to file proofs of claim for August 26, 1992.
22. On May 28, 1992, without seeking to lift the automatic stay, Republic filed a declaratory judgment action in the 165th District Court of Harris County, Texas against Donald Cain, Kimberly Hansel, and Jennifer Cain (through Cecilia Cain as next friend). The declaratory judgment action seeks a determination of whether there is coverage under the insurance policy and whether Republic has a duty to defend Kimberly Hansel and Donald Cain in the state tort case and seeks reimbursement for attorneys fees and costs.
23. On July 14, 1992, this Court held a hearing on an emergency motion to lift stay filed by Jennifer Cain seeking authority to answer the declaratory judgment action. Thereafter, this Court ordered the lifting of the stay.
24. On August 11, 1992, Republic filed in the Donald Cain bankruptcy its Motion of Republic Underwriters Insurance Co. of Oklahoma for Relief from Automatic Stay seeking termination of the automatic stay for cause "for the limited purpose of allowing Republic's action for a determination of its obligations under the Insurance Policy to proceed to trial and judgment in order to obtain a determination as to whether or not there is coverage for and/or a duty to defend the State Court Action."
25. Also, on August 11, 1992, Republic filed in the Donald Cain bankruptcy its Motion of Republic Underwriters Insurance Co. of Oklahoma to Approve Agreed Order Pursuant to Bankruptcy Rule 4001. This motion recites:
There is no exhibit "A" attached to the motion.
26. On August 28, 1992, pursuant to the motion filed by Republic, Judge Leal ordered the lifting of the automatic stay in Donald Cain's bankruptcy to allow Republic to prosecute the declaratory judgment action.
27. On August 31, 1992, Judge Leal vacated the order lifting the stay which had allowed the declaratory judgment action to proceed.
28. On September 17, 1992, for administrative convenience and consistency, the Court ordered the joint administration of the Kimberly Hansel and Donald Cain bankruptcies on the docket of the undersigned judge. The Court ordered: (1) all pleadings shall bear all case names and numbers; (2) Donald Cain's bankruptcy should be transferred to the undersigned judge; and (3) the transfer is for administrative purposes only. There was specifically no consolidation of the estates of the debtors and the order does not provide that one claims register be kept for all claims in both cases. Consequently, the clerk's office maintained two files and two claims registers. Limited joint administration is a common practice in bankruptcy due to the particular facts of the cases.
29. On September 25, 1992, on motion of Republic, this Court ordered the automatic stay annulled in both bankruptcy cases for the purpose of allowing the prosecution of the declaratory judgment action to proceed.
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