In re: J. A. Jones, Incorporated

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
 In Re: J. A. JONES, INCORPORATED,
Debtor.
ZURICH AMERICAN INSURANCE
COMPANY, No. 06-1834 Creditor-Appellant,
v.
LAURA TESSLER, Administrator for
the Estate of Laura Dunnagan,
Creditor-Appellee. 
Appeal from the United States District Court
for the Western District of North Carolina, at Charlotte.
Graham C. Mullen, Senior District Judge.
(3:06-cv-00006; BK-03-33532)
Argued: March 13, 2007
Decided: June 26, 2007
Before WILKINSON and KING, Circuit Judges, and
T. S. ELLIS, III, Senior United States District Judge
for the Eastern District of Virginia, sitting by designation.
Affirmed by published opinion. Senior Judge Ellis wrote the opinion,
in which Judge King joined. Judge Wilkinson wrote a concurring
opinion.

-- 1 of 16 --

COUNSEL
ARGUED: Albert G. Bixler, ECKERT, SEAMANS, CHERIN &
MELLOTT, L.L.C., Philadelphia, Pennsylvania, for Appellant. J.
Dennis Bailey, CARRUTHERS & BAILEY, P.A., Winston-Salem,
North Carolina, for Appellee. ON BRIEF: Karen Lee Turner,
ECKERT, SEAMANS, CHERIN & MELLOTT, L.L.C., Philadel-
phia, Pennsylvania; A. Cotten Wright, GRIER, FURR & CRISP,
P.A., Charlotte, North Carolina, for Appellant. Joseph T. Carruthers,
CARRUTHERS & BAILEY, P.A., Winston-Salem, North Carolina,
for Appellee.
OPINION
ELLIS, Senior District Judge:
This bankruptcy appeal presents the question whether a wrongful
death claimant who had not yet filed suit, but whose identity as a
potential claimant was known to the debtor, was a "known creditor"
of the debtor, and thus entitled to specific notice of the bankruptcy
proceeding and applicable filing dates. Both the bankruptcy court and
district court answered this question in the affirmative. We affirm
because the claimant’s identity and potential claim were either actu-
ally known or reasonably ascertainable to the debtor.
I.
The pertinent facts, which were found by the bankruptcy court, are
fully supported by the record and essentially undisputed by the par-
ties. Appellee, Laura Tessler, is the administrator of the estate of her
deceased daughter, Laura Elizabeth Dunnagan (the "Dunnagan
Estate"). Dunnagan died on January 22, 2003, as a result of injuries
sustained in an automobile accident that occurred on November 1,
2002, in a construction zone on Interstate Highway 77 in Charlotte,
North Carolina, where Rea Construction Company ("Rea") — one of
the debtors in this case — served as the general contractor (the "Dun-
nagan Accident").
2 IN RE: J. A. JONES, INC.

-- 2 of 16 --

The Dunnagan Accident involved nine vehicles, some of which
were engulfed in flames, including the vehicle driven by Dunnagan.
One of the three occupants in Dunnagan’s vehicle — Stephen Coffey
— was evacuated from the scene by helicopter and transported to the
University of North Carolina ("UNC") Hospital in Chapel Hill, where
he died that evening as a result of the serious injuries and burns suf-
fered in the Dunnagan Accident. Dunnagan likewise suffered exten-
sive burns over 60% of her body and was transported to the burn unit
at UNC Hospital. After spending 83 days undergoing treatment in the
burn unit, Dunnagan, too, ultimately succumbed to her serious inju-
ries and died on January 22, 2003.
Rea, the general contractor for the $77 million I-77 construction
project, was aware of the Dunnagan Accident shortly after it occurred.
Specifically, Kipp Cheek, the Rea project manager assigned to the
construction project, was out of town on November 1, 2002, but was
called by another Rea employee who informed him of the Dunnagan
Accident on the day it occurred. Steven Hubbard, the Safety and Loss
Control Manager for Rea, was also promptly notified of the Dunna-
gan Accident and traveled with another member of the Rea Safety
Department to the accident site on the evening of November 1, 2002,
after the scene had been cleared by law enforcement.
Shortly after the Dunnagan Accident, Rea reported the incident to
its liability insurer, Zurich American Insurance Company ("Zurich")
— the appellant in this case — in accordance with a policy provision
requiring Rea as the insured to report to Zurich "an ‘occurrence’ or
an offense which may result in a claim." Joint Appendix ("J.A.") at
584. Rea also provided notice to Zurich of four or five additional
vehicle accidents that had occurred in the I-77 construction zone in
the week preceding the Dunnagan Accident. Zurich promptly
assigned each of the reported accidents a claim number and referred
the matters to its Major Claims Unit. Tamara Woolard, the Zurich
claims representative assigned to handle the Rea accident file, hired
multiple accident reconstruction experts to investigate the various
vehicle accidents that had occurred in the I-77 construction zone,
including the Dunnagan Accident. Woolard also retained legal coun-
sel to represent Zurich in these matters and to create a legal privilege
to shield the investigation and its results from discovery in the event
3 IN RE: J. A. JONES, INC.

-- 3 of 16 --

of any future litigation arising out of any of the reported I-77 acci-
dents.
Cheek, the Rea project manager, was personally involved on behalf
of Rea in investigating the reported I-77 accidents, including the Dun-
nagan Accident, and in assisting the investigation conducted by
Zurich’s counsel. To this end, Cheek and others in his office and in
the Rea Claims Department obtained copies of various documents rel-
evant to the I-77 accidents, including, in particular, the Dunnagan
Accident. Among the documents Rea assembled were accident
reports prepared by the State Highway Patrol disclosing Dunnagan’s
name, address and date of birth; newspaper articles regarding the I-77
accidents; press releases regarding the I-77 construction project; pho-
tographs; roadway diagrams; project diaries; project supervisor dia-
ries; and other documents concerning Rea’s potential liability for the
I-77 construction zone accidents, including specifically the Dunnagan
Accident. Cheek also prepared a timeline of critical events pertaining
to the I-77 accidents. A copy of this timeline, together with approxi-
mately 250 pages of assembled relevant documents, was sent by
Cheek to the Rea Claims Department, as well as to Zurich.
There was also extensive coverage of the I-77 construction zone
accidents in a local newspaper, The Charlotte Observer, including
several articles containing quotes from Cheek regarding the I-77 con-
struction project as well as a description of certain remedial measures
taken by Rea to reduce the risk of future vehicle accidents in the con-
struction zone.1 Cheek was familiar with, and read these articles
because he served as Rea’s designated media contact person with
respect to the I-77 construction project and Rea sought to stay abreast
of any stories or news reports concerning the ongoing project. One
newspaper article, in particular, contained a photograph of Dunnagan
and reported the details of the Dunnagan Accident, as well Dunna-
gan’s death on January 22, 2003. Cheek cut this article out of the
1The original posted speed limit for the roads in the I-77 construction
zone was 65 miles per hour. Rea had apparently recommended a reduc-
tion in this speed limit to the North Carolina Department of Transporta-
tion (DOT). Although the speed limit had not been reduced as of the date
of the Dunnagan Accident, the DOT eventually reduced the speed limit
to 55 miles per hour in the days following the Dunnagan Accident.
4 IN RE: J. A. JONES, INC.

-- 4 of 16 --

newspaper and kept it in his office in a location where it could readily
be observed as a continuing reminder of the importance of safety in
Rea’s work.
Cheek knew there was a possibility that Rea could be sued as a
result of the I-77 construction zone accidents, including the Dunnagan
Accident. Although he personally believed that the construction zone
was safe for the driving public and that Rea had done nothing wrong
with respect to the I-77 accidents, he nonetheless understood that Rea
could still be sued. Indeed, Cheek testified that he "anticipated" a law-
suit in this instance, particularly given that two fatalities were
involved. J.A. at 585. Cheek therefore discussed the possibility of liti-
gation arising out of the I-77 construction zone accidents with mem-
bers of the Rea Claims Department.
Hubbard — Rea’s Safety and Loss Control Manager — also did
not personally believe that Rea was responsible for any of the acci-
dents in the I-77 construction zone, including the Dunnagan Accident.
Yet, he, too, was aware of the possibility that Rea might be sued as
a result of the I-77 accidents. He also acknowledged that the likeli-
hood of a lawsuit was greater where one or more deaths resulted, as
occurred in the Dunnagan Accident.
Like Cheek and Hubbard, Woolard — the Zurich claims represen-
tative — did not believe that Rea would ultimately be held liable for
any of the I-77 construction zone accidents, including the Dunnagan
Accident. She based this conclusion on the internal investigation con-
ducted by Zurich and its retained counsel and accident reconstruction
experts. Woolard nonetheless kept the claim files pertaining to this
series of accidents open until March 31, 2004. She did so, she said,
because she expected activity on these files, such as a letter of repre-
sentation advising Zurich of a claim against Rea. J.A. at 586.
Approximately one year after the Dunnagan Accident, between
September 25 and November 12, 2003, J.A. Jones, Inc. and its various
subsidiaries, including Rea, filed voluntary petitions for relief under
Chapter 11 of the United States Bankruptcy Code.2 The bankruptcy
2At the time the bankruptcy petitions were filed, Cheek was still
employed by Rea. Cheek was subsequently employed by Rea Contract-
5 IN RE: J. A. JONES, INC.

-- 5 of 16 --

court fixed February 2, 2004, as the last day for creditors to file any
pre-petition claims they sought to assert against the debtors’ estate
(the "Bar Date"). Notice of the bankruptcy filing and the claims Bar
Date was served on certain known creditors of the debtors, but not on
the Dunnagan Estate. For the benefit of unknown creditors of the
debtors, notice of the bankruptcy filing and the claims Bar Date was
also published in one national and one local newspaper, specifically
The Wall Street Journal and The Charlotte Observer.
On June 28, 2004, the bankruptcy court approved the debtors’ Sec-
ond Amended and Restated Joint Chapter 11 Plan of Liquidation (the
"Plan"). Notice of the Plan confirmation hearing, scheduled for
August 18, 2004, as well as the deadline for filing any objections to
confirmation of the proposed liquidation Plan, was again mailed to
certain known creditors of the debtors, but not to the Dunnagan
Estate. And again, notice of the scheduled confirmation hearing and
objections filing deadline was also published in The Wall Street Jour-
nal and The Charlotte Observer for the benefit of unknown creditors
of the debtors. Eventually, on August 19, 2004, the day after the
scheduled confirmation hearing, the bankruptcy court confirmed the
debtors’ liquidation Plan, specifically the debtors’ Third Amended
and Restated Joint Chapter 11 Plan of Liquidation.
Neither appellee Tessler nor counsel for the Dunnagan Estate saw
the notices published in The Wall Street Journal and The Charlotte
Observer pertaining to the debtors’ bankruptcy proceedings at the
time of publication. Nor did they have actual knowledge of the debt-
ors’ bankruptcy case or applicable filing deadlines until late October
2004, well after expiration of the Bar Date for filing pre-petition
ing, a separate entity that later acquired Rea by purchasing all of its
assets. When Cheek left Rea and commenced employment with Rea
Contracting, he took with him a copy of his file pertaining to the I-77
construction zone accidents. And, when Cheek ultimately left Rea Con-
tracting in April 2004, he again took a copy of the accident file with him,
and left a copy at Rea Contracting. In this regard, Cheek testified that he
kept a copy of the file for himself in case he needed any of the informa-
tion in the event Rea was later sued. The I-77 construction zone accident
file was the only file Cheek copied and took with him when he left his
employment with Rea Contracting.
6 IN RE: J. A. JONES, INC.

-- 6 of 16 --

claims against the debtors and confirmation of the debtors’ liquidation
Plan. Thus, on December 9, 2004, Tessler, as administrator for the
Dunnagan Estate, filed a motion in the bankruptcy court seeking an
extension of the Bar Date to allow for the late filing of a pre-petition
claim against Rea, as well as an order declaring that she was not
bound by the terms of the confirmed liquidation Plan, on the ground
that the Dunnagan Estate was a known creditor of Rea that did not
receive actual notice of the debtors’ bankruptcy proceedings and
applicable filing and hearing dates. On December 29, 2004, Zurich
opposed Tessler’s motion and a series of hearings on the motion then
ensued. In the course of the initial hearing on January 5, 2005, the
bankruptcy court, with Zurich’s consent, granted Tessler relief from
the automatic stay for the limited purpose of allowing Tessler to initi-
ate a wrongful death action against Rea in state court prior to expira-
tion of the applicable North Carolina statute of limitations.3 J.A. at
276. Additional hearings on Tessler’s motion for an extension of the
Bar Date were held on February 24 and October 25, 2005, and final
arguments were heard on November 9, 2005. Thereafter, on Decem-
ber 20, 2005, the bankruptcy court issued a final order granting Tess-
ler’s motion. J.A. at 583-88. Specifically, the bankruptcy court’s
December 20, 2005 Order (i) authorized the late filing of a pre-
petition claim by Tessler against Rea on the ground that the Dunna-
gan Estate was a known creditor of Rea who did not receive actual
notice of the filing of the debtors’ bankruptcy petition, the Bar Date,
the confirmation hearing date or the deadline for filing objections to
confirmation of the liquidation Plan, and thus was not bound by the
terms of the confirmed liquidation Plan, (ii) granted additional relief
from the automatic stay to allow the Dunnagan Estate to pursue the
previously-filed wrongful death action against Rea in state court, and
(iii) declined to consider Zurich’s potential financial obligations under
the terms of its liability policies with Rea with respect to the pending
state wrongful death action. Zurich promptly appealed the December
20, 2005 Order to the district court, which subsequently affirmed on
June 20, 2006. J.A. at 728-733. The instant appeal by Zurich fol-
lowed.
3The statute of limitations applicable to wrongful death actions filed in
North Carolina is two years. See N.C. Gen. Stat. Ann. § 1-53(4) (2007).
7 IN RE: J. A. JONES, INC.

-- 7 of 16 --

II.
We review "the judgment of a district court sitting in review of a
bankruptcy court de novo, applying the same standards of review that
were applied in the district court." In re Litton, 330 F.3d 636, 642 (4th
Cir. 2003) (citing In re Biondo, 180 F.3d 126, 130 (4th Cir. 1999)).
Thus, the bankruptcy court’s findings of fact are reviewed for clear
error, and conclusions of law are reviewed de novo. See Rule 8013,
Fed. R. Bankr. P.; In re Kielisch, 258 F.3d 315, 319 (4th Cir. 2001).
Mixed questions of law and fact are also reviewed de novo. See In re
Litton, 330 F.3d at 642 (citation omitted).
III.
Under the Bankruptcy Code, a debtor is generally discharged from
any debt that arose prior to the bankruptcy court’s confirmation of the
debtor’s proposed liquidation or reorganization plan. See 11 U.S.C.
§ 1141(d). Yet, before a pre-petition or pre-confirmation claim can be
discharged under the applicable provisions of the Bankruptcy Code,
a debtor’s creditors must be afforded notice of the debtor’s bank-
ruptcy case, as well as the deadline for asserting any pre-petition
claims against the debtor, so as to provide the creditors an adequate
opportunity to assert any claims they may have against the debtor’s
estate. See Chemetron Corp. v. Jones, 72 F.3d 341, 346 (3d Cir.
1995). The Supreme Court made clear in Mullane v. Central Hanover
Bank & Trust Co., 339 U.S. 306 (1950) that
[a]n elementary and fundamental requirement of due pro-
cess in any proceeding which is to be accorded finality is
notice reasonably calculated, under all the circumstances, to
apprise interested parties of the pendency of the action and
afford them an opportunity to present their objections.
Id. at 314 (citations omitted). In other words, a claim asserted by a
creditor against a debtor’s estate cannot constitutionally be discharged
in accordance with the Bankruptcy Code unless the debtor provides
constitutionally adequate notice to the creditor of the debtor’s bank-
8 IN RE: J. A. JONES, INC.

-- 8 of 16 --

ruptcy proceeding, as well as the applicable filing deadlines and hear-
ing dates.4
The type of notice that is reasonable or adequate for purposes of
satisfying the due process requirement in this context depends on
whether a particular creditor is known or unknown to the debtor. In
this regard, to achieve a constitutionally permissible discharge of a
known creditor’s claim against a debtor, actual notice of the bank-
ruptcy filing and applicable bar date is required.5 By contrast, where
a creditor is unknown to the debtor, constructive notice — typically
in the form of publication — is generally sufficient to pass constitu-
tional muster.6
An unknown creditor, i.e., one who is not entitled to actual notice
of the debtor’s bankruptcy filing, is a claimant whose identity or
claim is wholly conjectural or "whose interests or whereabouts could
not with due diligence be ascertained" by the debtor.7 Known credi-
4See Chemetron, 72 F.3d at 346 n. 1 (noting that "[a]lthough Mullane
involved the notice due beneficiaries on judicial settlement of accounts
by the trustee of a common trust fund, subsequent courts have interpreted
the case to set the standard for notice required under the Due Process
Clause in Chapter 11 bar date cases") (citing In re Pettibone Corp., 162
B.R. 791, 806 (Bankr. N.D. Ill. 1994); In re R.H. Macy & Co., 161 B.R.
355, 359 (Bankr. S.D.N.Y. 1993)).
5See Chemetron, 72 F.3d at 346 (citing City of New York v. N.Y., New
Haven & Hartford R.R. Co., 344 U.S. 293, 296 (1953)).
6Indeed, constructive notice can be satisfied through publication
because "in the case of persons missing or unknown, employment of an
indirect and even a probably futile means of notification is all that the sit-
uation permits and creates no constitutional bar to a final decree foreclos-
ing their rights." Mullane, 339 U.S. at 317 (citations omitted); see also
Tulsa Professional Collection Servs., Inc. v. Pope, 485 U.S. 478, 490
(1988) ("For creditors who are not ‘reasonably ascertainable,’ publica-
tion notice can suffice.")
7Mullane, 339 U.S. at 317 (stating that the category of "persons miss-
ing or unknown" includes individuals "whose interests or whereabouts
could not with due diligence be ascertained" and noting that it is reason-
able to dispense with actual notice to claimants "whose interests are
either conjectural or future or, although they could be discovered upon
9 IN RE: J. A. JONES, INC.

-- 9 of 16 --

tors, in contrast, include claimants whose identities are actually
known to the debtor, as well as claimants whose identities are "rea-
sonably ascertainable" to the debtor. Tulsa, 485 U.S. at 490; see also
Chemetron, 72 F.3d at 346. And, in this regard, the Supreme Court
has made clear that a creditor is "reasonably ascertainable" if the
debtor can uncover the identity of that creditor through "reasonably
diligent efforts." Mennonite Bd. of Missions v. Adams, 462 U.S. 791,
798 n. 4 (1983). In this regard, reasonable diligence by the debtor in
attempting to ascertain the identity of its creditors does not require
"impracticable and extended searches . . . in the name of due process."
Mullane, 339 U.S. at 317. Put differently, "what is required is not a
vast, open-ended investigation." Chemetron, 72 F.3d at 347. Instead,
[t]he requisite search . . . focuses on the debtor’s own books
and records. Efforts beyond a careful examination of these
documents are generally not required. Only those claimants
who are identifiable through a diligent search are ‘reason-
ably ascertainable’ and hence ‘known’ creditors.
Id.
It is important to note that there is no bright-line rule to be applied
in determining whether a particular creditor is known or unknown to
a debtor for constitutional notice purposes. Rather, the known creditor
analysis must properly focus on the totality of the circumstances in
each case.8 Indeed, as one bankruptcy court correctly summarized,
[r]easonable diligence in ferreting out known creditors will,
investigation, do not in due course of business come to [the] knowledge
[of the debtor]"); Tulsa, 485 U.S. at 490 (stating that "[n]or is everyone
who may conceivably have a claim properly considered a creditor enti-
tled to actual notice . . . [as] [i]t is reasonable to dispense with actual
notice to those with mere ‘conjectural’ claims").
8While the bankruptcy court’s known creditor analysis is reviewed de
novo, it is nonetheless appropriate to give substantial consideration to the
bankruptcy court’s conclusions in this regard given that court’s signifi-
cant experience and expertise in these matters, which routinely arise in
the administration of bankruptcy estates.
10 IN RE: J. A. JONES, INC.

-- 10 of 16 --

of course, vary in different contexts and may depend on the
nature of the property interest held by the debtor. Applying
Mullane’s "reasonable under the circumstances" standard,
due process requires a reasonable search for contingent or
unmatured claims so that ascertainable creditors can receive
adequate notice of the bar date. What is reasonable depends
on the particular facts of each case. A debtor need not be
omnipotent or clairvoyant. A debtor is obligated, however,
to undertake more than a cursory review of its records and
files to ascertain its known creditors.
In re Drexel Burnham Lambert Group Inc., 151 B.R. 674, 681
(Bankr. S.D.N.Y. 1993). Thus, stated succinctly, a known creditor or
claim arises from facts that would alert a reasonable debtor, based on
a careful examination of its own books and records, to the possibility
that a claim might reasonably be filed against it by a particular indi-
vidual or entity.9
These principles, applied here, compel the conclusion that the
bankruptcy court, and thereafter the district court, correctly deter-
mined that the Dunnagan Estate was a known creditor of Rea at the
time of the bankruptcy filing. Indeed, a de novo review of the detailed
findings of fact made by the bankruptcy court — all of which are
fully supported by the record, and thus not clearly erroneous — con-
firms that Rea either actually knew or with "reasonably diligent
efforts" could have ascertained the identity of the Dunnagan Estate as
a creditor. See Mennonite, 462 U.S. at 798 n. 4. The Dunnagan Estate
was therefore entitled to actual notice of the debtors’ bankruptcy fil-
ing, as well as the applicable filing and hearing dates. It follows that,
because the Dunnagan Estate was not provided actual notice, the
bankruptcy court was correct in allowing Tessler to assert a pre-
petition claim against Rea on behalf of the Dunnagan Estate beyond
expiration of the originally-scheduled Bar Date and confirmation of
the debtors’ liquidation Plan.
9See In re Crystal Oil Co., 158 F.3d 291, 297 (5th Cir. 1998) (holding
that "in order for a claim to be reasonably ascertainable, the debtor must
have in his possession, at the very least, some specific information that
reasonably suggests both the claim for which the debtor may be liable
and the entity to whom he would be liable").
11 IN RE: J. A. JONES, INC.

-- 11 of 16 --

A plethora of facts and circumstances confirm this conclusion. To
begin with, the Dunnagan Accident, which was extensive and tragic,
resulting in numerous injuries to the occupants of nine separate vehi-
cles and the untimely deaths of two young individuals, including
Dunnagan, was understandably well-publicized in local newspapers.
Cheek was not only familiar with these newspapers articles, he per-
sonally contributed to the articles. Cheek also discussed details of the
Dunnagan Accident with individuals from the Rea Claims Depart-
ment. Especially telling is that Rea reported the Dunnagan Accident
to its liability insurer, Zurich, as "an ‘occurrence’ or an offense which
may result in a claim." J.A. at 584.
Also telling was Zurich’s response to this notice, a response fully
known to Rea. Thus, Rea knew that after receiving notice of the Dun-
nagan Accident, Zurich opened a claims file on the Dunnagan Acci-
dent and assigned it to a claims representative, who, in turn, retained
multiple accident reconstruction experts to investigate the I-77 acci-
dents, including the Dunnagan Accident, and also retained legal coun-
sel to protect the results of this investigation from discovery in the
event of any future litigation. In the circumstances, it is hardly sur-
prising that Cheek (Rea) and Woolard (Zurich) testified that they
expected a lawsuit and Hubbard (Rea) likewise acknowledged that the
possibility of a lawsuit from an accident was greater where, as here,
one or more deaths resulted.
In the weeks following the Dunnagan Accident, Cheek prepared a
timeline of critical events and assembled more than 250 pages of rele-
vant documents pertaining to the I-77 construction zone accidents.
Among the documents was a State Highway Patrol accident report
specifically disclosing Dunnagan’s name, address and date of birth.
Sensitive to the potential for a claim against Rea, Cheek sent a com-
plete copy of these documents to the Rea Claims Department, as well
as to Zurich. He left a copy of the entire I-77 construction zone acci-
dent file with Rea when he ultimately left Rea’s employment, but also
retained a separate copy of the file in the event of future litigation.
In sum, the record facts point convincingly to the conclusion that
Rea was in possession of more than ample information and docu-
ments identifying the Dunnagan Estate as a known creditor of Rea
under the Bankruptcy Code. "[R]easonably diligent efforts" by
12 IN RE: J. A. JONES, INC.

-- 12 of 16 --

responsible Rea personnel would certainly have disclosed this. Tulsa,
485 U.S. at 490; Mennonite, 462 U.S. at 798 n. 4. It follows that the
Dunnagan Estate, as a known creditor, was entitled to specific notice
of Rea’s bankruptcy filing, as well as the applicable hearing and filing
dates.
Zurich essentially advances three arguments to avoid this conclu-
sion, none of which is persuasive. First, Zurich contends that based
on its investigation, Rea and Zurich dispute whether Rea would ulti-
mately be liable to the Dunnagan Estate. This is irrelevant to the
known creditor analysis because a disputed claim is nonetheless suffi-
cient to meet the definition of "claim" under Section 101(5) of the
Bankruptcy Code.10 Thus, a disputed claim, if known, must be listed
as a known claim in the appropriate schedule accompanying a debt-
or’s initial petition for bankruptcy relief.11
Second, Zurich points to the fact that the Dunnagan Estate, either
through Tessler or through counsel, had not yet communicated with
Rea or filed a claim against Rea at the time of the debtors’ bankruptcy
filing. Yet, this fact alone does not alter the conclusion reached here.
To be sure, while the lack of prior notice from a creditor might be a
relevant factor in the totality of the circumstances analysis in some
cases, it is here overwhelmed by compelling evidence showing that
Rea had actual knowledge of the identity of the Dunnagan Estate as
a creditor, or certainly with "reasonably diligent efforts" could have
ascertained this fact from a review of its own records. Tulsa, 485 U.S.
at 490; Mennonite, 462 U.S. at 798 n. 4. And, while a creditor’s
notice of a claim would certainly aid a debtor in identifying a known
creditor, settled and sensible authority provides that such notice is not
necessary and that the debtor must make its own determination based
10Under Section 101 of the Bankruptcy Code, the term "claim" is
defined broadly to include, inter alia, "right to payment, whether or not
such right is reduced to judgment, liquidated, unliquidated, fixed, contin-
gent, matured, unmatured, disputed, undisputed, legal, equitable,
secured, or unsecured . . . ." 11 U.S.C. § 101(5)(a) (emphasis added).
11Bankruptcy debtors are required to prepare and submit a list or
schedule of creditors with an initial bankruptcy petition so that appropri-
ate notice can be provided to those creditors. 11 U.S.C. § 521.
13 IN RE: J. A. JONES, INC.

-- 13 of 16 --

on a reasonably diligent effort in reviewing its own records. See Men-
nonite, 462 U.S. at 798 n. 4.
Finally, Zurich mistakenly argues that the bankruptcy and district
courts, in concluding that the Dunnagan Estate was a known creditor
of Rea, improperly "confuse[d] a debtor’s awareness of an accident
with knowledge that such an accident would present a claim in the
bankruptcy case." Appellant’s Br. at 15-16 (emphasis in original).
Contrary to Zurich’s argument, it is pellucidly clear that the bank-
ruptcy and district courts’ determination that the Dunnagan Estate
was a known creditor of Rea rested on far more than the mere aware-
ness of the vehicle accident resulting in Dunnagan’s death. Rather,
both courts relied on a compelling set of circumstances pointing per-
suasively to the conclusion that the Dunnagan Estate would likely file
a claim against Rea as a result of the Dunnagan Accident. Nor does
this conclusion impose an unreasonable burden on debtors to identify
and provide actual notice to wholly speculative or conjectural credi-
tors under the applicable Bankruptcy Code provisions, as Zurich con-
tends. To the contrary, the result reached here requires no more than
that mandated by Supreme Court precedent, namely "reasonably dili-
gent efforts" on the part of the debtor to ascertain the identity of its
creditors. Mennonite, 462 U.S. at 798 n. 4; Chemetron, 72 F.3d at
347.
For the foregoing reasons, we affirm the district court’s decision
affirming the bankruptcy court’s finding that the Dunnagan Estate
was a known creditor of Rea at the time of the bankruptcy filing, and
thus entitled to specific notice of the bankruptcy petition and appro-
priate filing and hearing dates.
IV.
Zurich also contends the bankruptcy court erred in failing to
address the effect of the Dunnagan Estate’s status as a known creditor
on Zurich’s financial obligations given the complex settlement agree-
ment reached between Zurich and the debtors in the course of the
bankruptcy proceedings. Specifically, this settlement agreement —
which was ultimately incorporated in, and made a part of, the con-
firmed liquidation Plan — resolved numerous disputes concerning
amounts owed to Zurich or due from Zurich under the debtors’
14 IN RE: J. A. JONES, INC.

-- 14 of 16 --

respective insurance policies, and the manner in which claims covered
by the policies were to be handled in the future. J.A. at 56.
The short answer to Zurich’s argument in this regard is that the
Dunnagan Estate — as a known creditor of Rea who was not provided
with actual notice of the bankruptcy filing — is not bound by the
terms of the confirmed liquidation Plan, including the Zurich settle-
ment agreement incorporated therein.12 Moreover, the question of
whether, and to what extent, Zurich might ultimately be liable to the
Dunnagan Estate as a result of the wrongful death action filed against
Rea is entirely premature given that Rea’s liability has not yet been
established. In the circumstances, therefore, the district court was cor-
rect in affirming the bankruptcy court’s discretionary decision to
decline to address Zurich’s potential settlement agreement obligations
in light of the Dunnagan Estate’s status as a known creditor of Rea.
V.
For the foregoing reasons, the judgment of the district court,
affirming the judgment of the bankruptcy court, is affirmed.
AFFIRMED
WILKINSON, Circuit Judge, concurring:
I am pleased to concur with the majority in affirming the district
court, and agree with those facts the majority mentions as supporting
the need for actual notice in this case. Because other facts in the
record could support the conclusion that the Dunnagan estate was not
a known creditor, however, I write to emphasize what I regard as the
deciding factor in this case: The systemic value in supporting a bank-
ruptcy court’s determination in an area where bankruptcy courts have
significant expertise, which involves a somewhat ministerial matter,
12See In re Carematrix Corp., 306 B.R. 478, 486 (Bankr. D. Del. 2004)
(recognizing that "when a creditor does not receive adequate notice, the
creditor is not bound by the confirmation order") (citations omitted); In
re Kewanee Boiler Corp., 297 B.R. 720, 730 (Bankr. N.D. Ill. 2003)
(providing that "[a] creditor’s claim cannot be subjected to a confirmed
plan that it had no opportunity to dispute").
15 IN RE: J. A. JONES, INC.

-- 15 of 16 --

and where the inefficiency of incurring two appeals on close totality
of the circumstances questions is apparent.
As the majority notes, the determination of whether a creditor is
known or unknown is fact-intensive: there is "no bright-line rule," and
the determination hinges upon "the totality of the circumstances" and
the "particular facts of each case." Maj. Op. at 10-11 (internal citation
omitted). Moreover, as the majority notes, it is "appropriate to give
substantial consideration to the bankruptcy court’s conclusions" in
determining whether a party is a known creditor "given that court’s
significant experience and expertise in these matters, which routinely
arise in the administration of bankruptcy proceedings." Maj. Op. at 10
n.8.
I agree that the facts the majority describes support the need for
actual notice. See Maj. Op. at 11-12. And yet the case is hardly open
and shut, given that no litigation was filed against the debtor prior to
the claims-bar date; that the estate and its attorneys never mentioned
to the debtor that the estate might file suit; that there was no commu-
nication between the estate and the debtor of any sort; and that there
are few if any cases holding a party to be a known creditor when the
creditor had no pre-existing relationship with the debtor through con-
tract, correspondence, or course of dealing. Counsel for the decedent
was hired in November of 2002, and counsel or the estate might have
been expected to communicate with Rea by the claims-bar date in
February of 2004. Moreover, an accident report indicated Rea was not
at fault because its construction site was separated from the flow of
traffic by barriers.
In other words, the case for general or actual notice can be argued
either way. In this sort of circumstance, it makes all the sense in the
world to back up a bankruptcy court’s determination rather than
encourage the laborious process of two lengthy and expensive
appeals. I therefore agree that the judgment below should be affirmed.
16 IN RE: J. A. JONES, INC.

-- 16 of 16 --