Gillispie v. Wilmington Trust Co. (In re Motors Liquidation Co.)
Gillispie v. Wilmington Trust Co. (In re Motors Liquidation Co.)
Opinion of the Court
Roger Dean Gillispie ("Appellant") appeals the Memorandum Opinion and Order entered by Judge Glenn, in In re Motors Liquidation Co.,
The Court has jurisdiction of this timely-filed appeal pursuant to 28 U.S.C. section 158(a)(1).
The Court has considered carefully the submissions of all parties and, for the following reasons, affirms the Bankruptcy Decision.
BACKGROUND
Familiarity with the factual and procedural background of this appeal is presumed. Unless otherwise noted, the parties do not dispute the relevant facts, which are summarized below.
In 1991, Appellant was convicted of rape, kidnapping, aggravated robbery, and gross sexual imposition, stemming from two separate incidents in 1988. See Bankruptcy Decision,
"On June 1, 2009 ..., Old GM and certain of its affiliates (collectively, the "Debtors") filed Chapter 11 petitions in [the bankruptcy c]ourt."
The bankruptcy court ordered that the Debtors send notice of the sale procedures to all known creditors by mail and publish notice in several "global, national, and local newspapers." Bankruptcy Decision,
On September 16, 2009, the bankruptcy court entered an order establishing a bar date of November 30, 2009, for any pre-petition creditor to file a proof of claim against Old GM. Bankruptcy Decision,
Although Old GM's agent proffers evidence that notice of both the sale and of the bar date, along with a proof of claim form, were sent to Appellant's last known address, no party disputes that Appellant did not actually receive the correspondence owing to his continued incarceration. See
On December 15, 2009, Appellant filed a petition for a writ of habeas corpus in the United States District Court for the Southern District of Ohio. Appellant alleged, inter alia, that, prior to his criminal trial, he was not provided with the reports of the detectives who originally investigated the crimes, in which the detectives eliminated Appellant as a suspect.
The Ohio Court of Appeals then vacated Appellant's conviction and ordered a new trial, based in part on evidence of a potential alternative perpetrator. State v. Gillispie, No. 24456,
Appellant filed a civil suit against several governmental entities and officials in Ohio asserting claims, inter alia, pursuant to 42 U.S.C. Section 1983 for the infringement of his federal constitutional rights and under state law for malicious prosecution. (Gillispie v. the City of Miami Township et al., No. 13 CV 416 (S.D. Ohio), Compl., Docket Entry No. 1 and Am. Compl., Docket Entry No. 18.) Appellant also asserts claims against several GM employees who he alleges conspired with law enforcement to secure Appellant's arrest and conviction, and against GM itself (both *711Old and New) through a theory of vicarious liability. (See id. at ¶ 53.)
Following the filing of the civil complaint, Appellant filed his motion with the bankruptcy court for leave to proceed in his civil suit against New GM or, alternatively, to file a post-bar-date proof of claim against Old GM. (In re Motors Liquidation Company, et al., 09-50026-MG, Docket Entry No. 12727.) The bankruptcy court denied the motion in its entirety.
DISCUSSION
Generally, a district court "review[s] the bankruptcy court decision independently, accepting its factual findings unless clearly erroneous but reviewing its conclusions of law de novo." Ball v. A.O. Smith Corp.,
Appellant's Claims Against New GM
The Court first turns to Appellant's contention that the Sale Order cannot function to bar his Section 1983 cause of action against New GM. Appellant contends that (1) his interest in a civil judgment upon his Section 1983 cause of action is not within the statutory definition of a "claim"
Provided that the conditions specified in Section 363(f) are met, a bankruptcy court may authorize a trustee or debtor in possession to sell property of the estate "free and clear of any interest in such property" pursuant to Section 363(b). Although courts have not fashioned a precise definition for the term, the Second Circuit has held that successor liability claims against the purchaser in a Section 363 sale constitute "interest[s] in such [sold] property" that can be extinguished by a Section 363 sale if they fall within the statutory definition of a claim as set forth in 11 U.S.C. section 101(5) (" Section 101(5)"). See Elliott v. GM LLC (In re Motors Liquidation Co.) ("Elliot"),
Section 101(5) defines the term "claim" as:
(A) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or
(B) right to an equitable remedy for breach of performance if such breach *712gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured.
To determine whether a contract-based civil cause of action or other potential payment obligation constitutes a contingent claim under Section 101(5), rather than a future claim not encompassed by that definition, courts look to whether the obligation arose from pre-petition conduct and whether any "future event that [would trigger the obligation] was within the actual or presumed contemplation of the parties at the time the original relationship between the parties was created." In re Chateaugay Corp. ("Chateaugay I"),
Appellant argues that, in the absence of a Second Circuit decision explicitly applying the fair contemplation test to a tort claim,
Appellant selectively quotes language from the Second Circuit's opinion in LTV Steel Co. v. Shalala (In re Chateaugay Corp.) ("Chateaugay II"),
Appellant points to several cases for the proposition that a cause of action for malicious prosecution, which similarly requires that the underlying case against the civil plaintiff be terminated in his favor, does not constitute a claim for bankruptcy purposes until the civil cause of action is ripe to be successfully litigated. The Court is not persuaded by this authority, which generally addresses the question of whether a malicious prosecution cause of action constitutes the property of a debtor's bankruptcy estate, an analysis that does not turn on the existence of a "claim" against the debtor as specified in Section 101(5). See e.g., In re Jenkins,
Here, Appellant's civil suit is clearly premised on the pre-petition conduct of GM's employees, and Appellant's ability to bring this suit was contingent only on the vacatur of his conviction. Although a favorable termination of his criminal proceedings was not assured, Appellant's decades-long quest to establish his innocence and overturn his conviction leads to the inescapable inference that the eventual occurrence of such a contingency was well within his actual contemplation prior to the petition. Appellant's Section 1983 cause of action against New GM is thus a claim against Old GM within the meaning of the Bankruptcy Code, of which New GM accepted the transfer of Old GM's assets free and clear to pursuant to Section 363 and consistent with the Sale Order.
The Court next turns to Appellant's argument that he did not receive adequate notice of the bar date and sale. To comport with due process, a known creditor, whose identity can be ascertained through the exercise of reasonable diligence, is entitled to actual notice, whereas an unknown creditor is entitled to only constructive notice. See Elliott,
Courts have expressed concern that a lack of notice could preclude the discharge of a claim where the claimant cannot yet be identified because she has not yet had any contact with the debtor and may never incur any harm from the debtor's actions except in the future through "[s]heer fortuity," Chateaugay I,
Citing to authority holding that incarcerated prisoners may be entitled to reasonable actual notice of forfeiture proceedings against them, Appellant also argues that, as an incarcerated prisoner, he was entitled to actual notice. See e.g., Armendariz-Mata v. U.S. Dep't of Justice,
Accordingly, the Court finds that Appellant was an unknown creditor and that he received adequate constructive notice of the sale and bar date through publication notice.
Denial of Application to File a Late Proof of Claim Against Old GM
Appellant next argues that the bankruptcy court erred in denying his motion to file a post-bar-date proof of claim. The bankruptcy court's decision to deny Appellant's motion to allow a post-bar-date filing of his proof of claim against Old GM is reviewed for abuse of discretion. In re Enron Corp.,
Pursuant to Federal Rule of Bankruptcy Procedure 9006(b)(1), a bankruptcy court may permit a party to file a late proof of claim if his failure to meet the deadline was attributable to excusable neglect. Courts are "permitted, where appropriate, to accept late filings caused by inadvertence, mistake, or carelessness, as well as by intervening circumstance beyond the party's control." Pioneer Inv. Servs. v. Brunswick Assocs. Ltd. P'ship,
Consistent with precedent, the bankruptcy court focused on the reason for delay as the primary factor in its evaluation of Appellant's request. See Bankruptcy Decision at 775, 778-79 (citing In re Lehman Bros. Holdings, Inc.,
Appellant argues that: (1) his failure to timely file a proof of claim was not based on an error of law because he could not bring his Section 1983 suit prior to the bar date; (2) his failure to file was excusable because, as of the bar date, he was incarcerated and concentrating on pursuing his freedom from a wrongful conviction; and (3) it is inequitable to prohibit him from pursuing his claim against Old GM, by not granting him the opportunity to file a post-bar-date proof of claim, if he is precluded from pursuing the claim against New GM by the Sale Order.
Appellant's first argument, that his failure to file a proof of claim against Old GM was not based on a mistake of law, is grounded in his theory that his Section 1983 action did not qualify as a bankruptcy claim until he could file the civil complaint, after the successful termination of his criminal case. As previously explained, Appellant's understanding of the scope of the term "claim" in the bankruptcy context is simply incorrect as a matter of law. Appellant's expectation of recovering through civil action was a contingent claim for which he could have timely filed a proof of claim with the bankruptcy court notwithstanding his mistaken legal conclusion to the contrary. Appellant's failure to timely file his proof of claim thus was indeed based on a mistake of law and the bankruptcy court did not err in finding the mistake insufficient to excuse his failure to comply with the published bar date.
Appellant's contention that he should be excused from compliance with the published deadline to file a proof of claim against GM's bankruptcy estate while he was imprisoned is also unavailing.
Appellant's appeal to equitable concerns is also insufficient to support a determination that the bankruptcy court abused its discretion. Appellant is aggrieved that he is now barred from seeking recourse against both Old and New GM for their alleged role in his arrest and subsequent prosecution. Appellant's predicament is the result of the operation of a bankruptcy system that both affords opportunities to assert timely claims against debtors and permits the sale of assets free and clear of *717such claims. Appellant was eligible to avail himself of the claim procedure, but failed to do so in compliance with the law. While Appellant has thus forfeited his ability to seek redress against both entities, he is in the same position as any other claimant who was allegedly harmed by GM's tortious or unlawful conduct, whether serious or trivial, and did not assert his or her claim in a timely fashion. The record shows no inequitable treatment that would render the denial of Appellant's late claim filing application abusive of the bankruptcy court's discretion.
Accordingly, the Court concludes that the bankruptcy court did not abuse its discretion in denying Appellant's motion to file a post-bar-date notice of claim.
CONCLUSION
For the foregoing reasons, the Bankruptcy Decision is affirmed and Appellant's appeal is dismissed. The Clerk of Court is respectfully directed to enter judgment affirming the bankruptcy courts' October 18, 2017, Memorandum Opinion and Order and close this case.
SO ORDERED.
Although the parties have not proffered a specific date on which Appellant became aware of the existence of these reports, Appellant does not contest that he was aware of them prior to Old GM's filing of its bankruptcy petition. See Gillispie v. Timmerman-Cooper,
Appellant argues that, because GUC originally argued before the bankruptcy court that Appellant's Section 1983 action was not a bankruptcy claim, GUC should be judicially estopped from asserting on appeal that Appellant's civil case is such a claim. The doctrine of judicial estoppel is generally only appropriate when the party offering an inconsistent argument was initially successful in advancing its prior contention. See New Hampshire v. Maine,
The Second Circuit has also characterized the analysis in Chateaugay I generally as finding that a contingent claim exists when such a "right to payment is contingent on future events ... [and] the claim ... result[s] from pre-petition conduct fairly giving rise to that contingent claim." In re Motors Liquidation Co.,
Because a Section 1983 action functions to protect an individual's constitutional rights, it "creates a species of tort liability." Memphis Community School Dist. v. Stachura,
The other decisions cited by Appellant are similarly inapposite, mostly addressing situations in which the legal relationship giving rise to the liability was created by a statute enacted after the filing of the bankruptcy petition. See e.g., In re Duplan Corp.,
Appellant argues that the Austin decision can be read to hold that a malicious prosecution cause of action does not constitute a bankruptcy claim until it accrues under state law.
Appellant does not challenge the bankruptcy court's determination that, to the extent Appellant was a traditional unknown creditor, the publication notice provided was constitutionally sufficient. See Bankruptcy Decision at 778.
See supra note 7.
The Bankruptcy Decision acknowledged this argument, but did not specifically address it. See
Reference
- Full Case Name
- IN RE: MOTORS LIQUIDATION COMPANY, formerly known as General Motors Corporation, Debtor. Roger Dean Gillispie v. Wilmington Trust Company, as Trustee for and Administrator of the Motors Liquidation Company General Unsecured Creditors Trust and General Motors LLC
- Cited By
- 7 cases
- Status
- Published