Thornton v. Seadrill Ltd.
| Citation | 626 B.R. 422 |
| Decision Date | 02 February 2021 |
| Docket Number | Civil Action No. 6:20-cv-00002 |
| Parties | Chevy THORNTON, Appellant, v. SEADRILL LIMITED, Appellant. |
| Court | U.S. District Court — Southern District of Texas |
Martha A. Geer, Patrick M. Wallace, Scott C. Harris, Whitfield Bryson & Mason, LLP, Raleigh, NC, Vernon Rollins Sumwalt, the Sumwalt Law Firm, Charlotte, NC, for Appellant.
Adam Karl Doerr, Amanda P. Nitto, Robinson Bradshaw & Hinson, P.A., Charlotte, NC, for Appellant.
MEMORANDUM AND OPINION AFFIRMING ORDER OF BANKRUPTCY COURT AND FINAL JUDGMENT
Appellant Chevy Thornton ("Thornton") appeals from the December 19, 2019 Order of the Bankruptcy Court for the Southern District of Texas ("Bankruptcy Court"), in which the Bankruptcy Court denied Thornton's Motion for Leave to File Proof of Claim1 and granted Appellee Seadrill Limited's ("Seadrill") Motion to Enforce the Confirmation Order ("December 19th Order").2 On appeal, Thornton claims the Bankruptcy Court erred because the Notice of the Bar Date (the "Notice") Seadrill provided to him failed to satisfy the requirements of due process. Having considered the Parties' briefs, their oral arguments, the applicable law, and the record before this Court, the Bankruptcy Court's Order is AFFIRMED.
Thornton began working for Seadrill onboard the Sevan Louisiana in 2015.3 (Dkt. No. 7 at 2039, 2104). At that time, Thornton provided Seadrill with his home address, listing it as 110 Hailey Road, Jena, Louisiana (the "Hailey Address"). (Id. at 2105–06, 2269). Thornton later relocated to 125 Warwick Road, Jena, Louisiana (the "Warwick Address").4 When Thornton was hired, Seadrill maintained a procedure by which an employee could update his address in the company's personnel database. To do this, the employee was required to submit a form to the Rig Administrator, who would then forward it to human resources. (Id. at 2067). Beginning in 2016, employees could update information in the database on their own. (Id. at 2063, 2067). Despite moving to a new address, Thornton did not update his information in the personnel database by using either method provided by company policy. (Id. at 2062–63, 2067–68, 2106–07).
In March 2017, Thornton sustained an on-the-job injury. (Id. at 2268–69). The human resources advisor for the Sevan Louisiana provided Thornton with a Statement of Injury form to complete. (Id. at 2043–45). Thornton listed his new Warwick Address on the form and returned it to the human resources advisor. (Id. at 2043–45, 2268–69). Seadrill then transferred his injury claim for handling to York Risk Services Group, Inc. ("York"), a third-party administrator, who sent maintenance and cure payments to his Warwick Address. (Id. at 2220–67).
On September 12, 2017, Seadrill filed a voluntary petition for Chapter 11 relief. (Id. at 295–98). At this time, Seadrill and its affiliates had thousands of employees and between 10,001 and 25,000 creditors. (Id. at 297, 323, 326).
The Bankruptcy Court set a deadline of January 3, 2018 for filing claims "against [Seadrill] that arose or are deemed to have arisen on or before" Seadrill filed its petition for Chapter 11 relief (the "Bar Date"). (Id. at 768). This order also required Seadrill to "mail notice of the Bar Date ... only to [its] known creditors, and such mailing shall be made to the last known mailing address for each such creditor, as reflected in [Seadrill's] books and records at such time." (Id. at 776 (emphasis added)).
Seadrill mailed the Notice to Thornton at the Hailey Address via First Class Mail. (Id. at 1887). Thornton, however, did not receive the Notice until sometime in late January 2018 or early February 2018, after the Bar Date had passed. (Id. at 2119). Shortly thereafter, Thornton forwarded the Notice to his lawyers, (id. ), but he took no further action on the Notice for approximately nine months. (Id. at 1848–54, 1858–84). In the meantime, on April 17, 2018, the Bankruptcy Court entered a Confirmation Order on Seadrill's Second Amended Joint Plan of Reorganization ("Reorganization Plan"). (Id. at 1684–1759). The Reorganization Plan took effect on July 2, 2018. (Id. at 1834).
On November 7, 2018, Thornton filed a lawsuit under the Jones Act, 46 U.S.C. § 688, against Seadrill in the United States District Court for the Eastern District of Louisiana. (Id. at 1848–54). In response, Seadrill moved for the Bankruptcy Court to enforce its Confirmation Order on January 7, 2019. (Id. at 1838–47). Thornton then filed a Motion for Leave to File Proof of Claim on February 7, 2019. (Id. at 1858–84). In support of this Motion, Thornton argued that the Bankruptcy Court should permit him to file a claim against Seadrill even though the Bar Date had passed because (1) the Notice Seadrill provided him did not satisfy the requirements of due process, or, in the alternative, (2) his failure to change his address in accordance with company policy constituted "excusable neglect" under Bankruptcy Rule 9006(b). (Id. at 1909-15).
On December 19, 2019, the Bankruptcy Court granted Seadrill's Motion to Enforce the Confirmation Order and denied Thornton's Motion for Leave to File Proof of Claim. (Id. at 2159– 64). See In re Seadrill Ltd. , et al, No. 17-60079, 2019 WL 7580175, (Bankr. S.D. Tex. Dec. 19, 2019). The Bankruptcy Court also ordered Thornton to dismiss his Jones Act lawsuit with prejudice and to "comply with the [Bankruptcy] Court's [C]onfirmation [O]rder and the confirmed plan in all respects." (Dkt. No. 7 at 2164).
The Bankruptcy Court set forth a Memorandum Opinion in support of its December 19th Order. (Id. at 2159–63). In the Memorandum Opinion, the Bankruptcy Court concluded that the Notice satisfied due process because it constituted actual notice that provided Thornton with ample time to file a proof of claim. (Id. at 2161). Pertinent to the Bankruptcy Court's conclusion was that Thornton delayed filing his Motion for Leave to File Proof of Claim until approximately one year after receiving the Notice. (Id. ). The Bankruptcy Court also concluded that Thornton's conduct did not constitute excusable neglect under Bankruptcy Rule 9006(b).5 (Id. at 2161–63). This appeal ensued.
A federal district court has jurisdiction to hear appeals from final judgments or orders of the bankruptcy courts. 28 U.S.C. § 158(a)(1) ; see also Webb v. Reserve Life Insurance Co., 954 F.2d 1102, 1103-04 (5th Cir. 1992). "When reviewing a bankruptcy court's decision in a ‘core proceeding,’ a district court functions as a[n] appellate court...." First Nat'l Bank v. Crescent Elec. Supply Co. (In re Renaissance Hosp. Grand Prairie Inc. ), 713 F.3d 285, 293 (5th Cir. 2013) (internal quotation omitted). "A ‘core proceeding’ is one that invokes a substantive right provided by the Bankruptcy Code or is a proceeding that by its nature could arise only in the context of a bankruptcy case." Id. (); see also 28 U.S.C. § 157(b)(2). "Generally, a bankruptcy court's findings of fact are reviewed for clear error and conclusions of law are reviewed de novo." In re Renaissance Hosp. Grand Prairie Inc. , 713 F.3d at 294 (internal quotation omitted). "However, for a mixed question of law and fact, the factual premises are reviewed for clear error but the ultimate legal conclusion is reviewed de novo." Id. (quotation omitted). With respect to reviewing a bankruptcy court's findings of fact under the clear error standard, a district court "will reverse only if, on the entire evidence, [it is] left with the definite and firm conviction that a mistake has been made." Templeton v. O'Cheskey (In re Am. Hous. Found. ), 785 F.3d 143, 152 (5th Cir. 2015).
The crux of this appeal is whether the Notice that Seadrill mailed Thornton to the Hailey Address satisfies the requirements of due process. The Bankruptcy Court concluded it did. (Dkt. No. 7 at 2161). On appeal, Thornton disputes this conclusion and asks this Court to find that he was denied due process and grant him leave to file his Jones Act claim. (Dkt. No 12 at 16–31).
Thornton sets forth three arguments in support of his assertion that the Bankruptcy Court incorrectly determined the Notice complied with the requirements of due process. First, he argues the Bankruptcy Court improperly burdened him with ensuring Seadrill mailed the Notice to the correct address. (Id. at 16–25). Second, he contends Seadrill knew or should have known his correct mailing address was the Warwick Address because York, Seadrill's "agent," possessed this information. (Id. at 25–28). Third, he argues the Notice he eventually received did not satisfy due process because he had not previously received any notice of Seadrill's bankruptcy proceedings prior to the Bar Date. ( Id. at 28–31). The Court disagrees and will address these arguments in turn.
Thornton first argues the Bankruptcy Court improperly placed the burden on him to provide Seadrill with the correct address to which the Notice should have been mailed. (Dkt. No. 12 at 16–25). The Court disagrees.
"A creditor's claim can be barred for untimeliness only upon a showing that it received reasonable notice." Greyhound Lines, Inc. v. Rogers , (In re Eagle Bus Mfg., Inc. ), 62 F.3d 730, 735 (5th Cir. 1995) (internal quotation omitted). "Determining whether a creditor received adequate notice depends on the facts and circumstances of each case." Id. Notice of a bar date is deemed "reasonable" only if it satisfies due process requirements. See id. at 736. "Due process requires notice that is reasonably calculated to reach all interested parties, reasonably conveys all of the required information, and permits a reasonable amount of time for response." Id. at 735 (quotation omitted). "A claimant may ... file a late proof of claim if he can show that failure to allow the filing...
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