Greater Southeast Community Hospital Cor and Doctors Community Healthcare Corporation

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
GREATER SOUTHEAST COMMUNITY
HOSPITAL CORPORATION I, et
al.,
Debtors.
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Case No. 02-02250
(Chapter 11)
(Jointly Administered)
DECISION REGARDING MOTION OF
LINDA HAINES TO ALLOW LATE FILING OF CLAIM
The court will grant the Motion to Allow Late Filing of
Claim (Docket Entry No. 2429) filed by Linda Haines as the
personal representative of the estate of Beatrice Phillips. The
background in this matter is set forth in the Procedural Order
dated February 17, 2005, reported at ___ B.R. ___.
I
At today's hearing, the parties agreed that the court should
first address whether the notice the debtors sent failed to
satisfy due process and the procedural requirements in the case,
specifically, whether the notice was defective in light of
Maldonado v. Ramirez, 757 F.2d 48 (3d Cir. 1985).
In Maldonado there was no showing (as there has been in this
The decision below is signed as a decision of
the court.
Signed: March 09, 2005.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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1 Additionally, Maldonado involved the bankruptcy case of
an individual debtor, such that any actual notice of the case in
time to file a proof of claim would, under § 523(a)(3), subject
the claim to discharge. In contrast, this is a corporate chapter
11 bankruptcy case in which specific notice of the bar date (not
just notice of the bankruptcy case) is required. However, that
difference does not render Maldonado irrelevant. Maldonado
stands for the proposition that when an attorney receives a
notice of a bankruptcy case in one client's civil action against
an individual debtor, the notice affects only that client under §
523(a)(3) and not other clients of the attorney. It logically
follows that under Maldonado notice in a corporate bankruptcy
case of the bar date to one client care of an attorney would not
be notice to the attorney's other clients.
2
case) that the attorney who received notice was representing the
creditor at the time of the notice. Beyond that, however, and of
relevance here, the notice in Maldonado was addressed to the
attorney in his capacity of representing another client. Thus,
as an alternative holding, the court of appeals stated:
[A]n attorney given notice of the bankruptcy on
behalf of a particular client is not called upon to
review all of his or her files to ascertain whether any
other client may also have a claim against the
bankrupt. Notice sent to an authorized attorney or
agent must at least signify the client for whom it is
intended so that the attorney can know whom to advise
to assert a claim in the bankruptcy.
Maldonado, 757 F.2d at 51. Even if, as the debtors urge, this is
viewed as dictum, it is persuasive.
There is a distinctive difference between Maldonado and this
case, but it does not alter the outcome. Here the notice was not
addressed to a particular attorney or to any client care of the
law firm.1 The debtors argue that Haines' law firm was thus not
misled into thinking that a particular client other than Haines
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2 The notice was not limited to tort claims (the type of
claim Haines holds) but extended to all prepetition claims
against the debtors. The law firm might well have speculated
that it was receiving notice because it might be the beneficiary
of an order, in a client's case against the debtor, directing
that an award of fees or costs be paid directly to the law firm.
3 The court need not address whether failure to address the
notice to the specific attorney representing Haines would make
the notice inadequate.
3
was involved, and argue that the three attorneys within Haines'
law firm could have readily addressed whether any of those
attorneys had a client who had a claim against one of the
debtors. The court rejects the debtors' arguments. The
arguments assume that whoever initially received the notice would
have recognized that it might deal with claims not of the law
firm (to whom it was addressed) but of a client (or clients) of
the law firm.2 Further, even if it had dawned on the law firm
that the notice potentially dealt with claims of a client or
clients of the firm against one of the debtors, and inquiry were
made of the three attorneys, a mistake could readily have
occurred in addressing the question of whether any clients had a
claim against the debtors.
The debtors, not Haines, should bear the risk that the
notice's failure to identify Haines as the creditor holding a
claim might lead to the law firm's failing to realize or discover
that the notice pertained to her claim. The debtor readily could
have addressed the notice to Haines care of the law firm.3
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4
Failure to so address the notice resulted in notice that was not
reasonably calculated, under all the circumstances, to put Haines
on notice. See Mullane v. Central Hanover Bank & Trust Co., 339
U.S. 306, 15 (1950) (“[W]hen notice is a person's due, process
which is a mere gesture is not due process. The means employed
must be such as one desirous of actually informing the [person
entitled to notice] might reasonably adopt to accomplish it.”).
Use of a notice addressed only to the law firm, and not
mentioning Haines, is not a means one desirous of actually
notifying Haines would reasonably have adopted.
II
The debtors advised the court at the hearing that the
debtors do not wish to pursue the issue of whether Haines'
attorney in the Superior Court action had actual knowledge of the
bar date applicable to Haines. Nor did the debtors advance any
estoppel argument at the hearing. Thus, as discussed in the
Procedural Order, the court must hold that Haines is entitled to
file a proof of claim. An order has been signed consistent with
this holding.
[Signed and dated above.]
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5	O:\JUDGEFIL\Due Process\Greater Southeast Community Hospital Corp. I (Decsn re Motion to Late File Claim).wpd
Copies to:
Andrew M. Troop
Weil, Gotshal & Manges LLP
100 Federal Street
34th Floor
Boston, MA 02110
Deryck A. Palmer
Weil, Gotshal & Manges LLP
767 Fifth Ave.
New York, NY 10153
Holly E. Loiseau
Peter D. Isakoff
Cleveland Lawrence III
Douglas Southard
1501 K Street NW Suite 100
Washington, DC 20005
Ted A. Berkowitz
Patrick Collins
Farrell Fritz, PC
EAB Plaza
Uniondale, NY 11556-0120
Sam J. Alberts
White & Case LLP
601 Thirteenth Street, N.W. Suite 600
Washington, DC 20005
Barry J. Nace
Gabriel A. Assaad
Paulson & Nace
1814 N Street, NW
Washington, DC 20036
Office of United States Trustee
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