Alberts, Trustee v. Potomac Electric Power Company

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
GREATER SOUTHEAST COMMUNITY
HOSPITAL CORP. I, et al.,
Debtors.
____________________________
SAM J. ALBERTS, TRUSTEE FOR
THE DCHC LIQUIDATING TRUST,
Plaintiff,
v.
POTOMAC ELECTRIC POWER
COMPANY,
Defendant.
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Case No. 02-02250
(Chapter 11)
(Jointly Administered)
Adversary Proceeding No.
04-10450
SUPPLEMENTAL OPINION RE DISMISSAL
This supplements the court's oral ruling of April 19, 2005,
at the hearing on the motion of the defendant Potomac Electric
Power Company (“PEPCO”) to dismiss the plaintiff Alberts' Amended
Complaint.
The Supplemental Opinion below is hereby signed.
Dated: May 24, 2005.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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I
The court ruled that the Amended Complaint would not relate
back under F.R. Civ. P. 15(c)(2). Accordingly, any claims for
which the statute of limitations had expired prior to the filing
of the Amended Complaint were untimely.
Supplementing that conclusion, the court notes that the
decision in O'Loughlin v. National R.R. Passenger Corp., 928 F.2d
24 (1st Cir. 1991), addressed efforts similar to Alberts' efforts
here to have the amended complaint relate back based on evidence
extrinsic to the original complaint. In O'Loughlin, the amended
complaint would have replaced the original claim pled (regarding
injuries stemming from an accident identified as occurring on one
date) with a new claim (regarding injuries stemming from an
accident on another date). The plaintiff O'Loughlin had reported
to the defendant railroad company injuries arising from accidents
occurring on both dates. In denying relation back, the court of
appeals observed that the original complaint provided no hint
that O'Loughlin was attempting to recover on the accident that
had occurred on a different date. The court of appeals held:
Rule 15(c) confines inquiry to the fact situation “set
forth or attempted to be set forth” in the original
complaint. If the original complaint . . . specifies
an entirely different factual situation from the
amendment, it cannot be said even “to attempt” to set
forth the latter.
O'Loughlin, 928 F.2d at 27. The court of appeals rejected
O'Loughlin's argument that correspondence between the parties
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prior to the date of the original complaint established that the
defendant was aware of an additional claim, stating "[i]t is the
complaint itself which must provide notice," and rejecting the
attempt to use the correspondence because “[e]xtrinsic evidence
would be used not just to amplify but to contradict the original
complaint on the only point that provides notice of the
occurrence on which the complaint is based--the date.” Finally,
the court of appeals rejected O'Loughlin's reliance on evidence
of counsel's intent to have drafted a complaint suing on the
other accident, stating:
[W]e think these extrinsic materials are not a proper
basis for a finding that O'Loughlin “attempted” to set
forth the June 8 train collision as the basis of his
original complaint, within the meaning of Rule 15(c).
While Rule 15(c) reflects the liberalization of
pleading requirements in the Federal Rules of Civil
Procedure, we do not think that the rule was intended
to allow the question of relation back to turn solely
on proof of subjective intent in drafting pleadings.
Rather, we think that the “attempt” language of Rule
15(c) was intended to allow corrections where the
details of allegations in the pleading are inaccurately
set forth.
O'Loughlin, 928 F.2d at 27 n.6 (emphasis added).
Here, Alberts' original complaint sought to avoid $39,226.53
in payments to PEPCO under 11 U.S.C. §§ 547, 548, and 549, and
included an exhibit A which showed the payments by check date,
check number, invoices paid, and check amount, the invoices
having been to Hadley Memorial Hospital (a hospital run by one of
the debtors in the jointly administered bankruptcy cases). The
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amended complaint similarly sought to avoid $387,500 in payments,
and included an exhibit A which showed payments based on
completely different check dates, check numbers, invoices paid,
and check amounts, with the invoices having been to Greater
Southeast Community Hospital (a hospital run by another debtor in
the jointly administered bankruptcy cases). Based on an
objective test, it is plain that Alberts' attempted amendment of
the complaint does not assert a claim that “arose out of the
conduct, transaction, or occurrence set forth or attempted to be
set forth in the original pleading” as required by Rule 15(c)(2).
Similar to O'Loughlin, the original complaint gave no hint that
Alberts was attempting to recover on payments to PEPCO that
related to a different hospital than Alberts identified in the
original complaint, and that were based on different checks and
amounts than pled in the original complaint. Under such
decisions as Peltz v. CTC Direct, Inc. (In re MBC Greenhouse,
Co.), 307 B.R. 787 (Bankr. D. Del. 2004); and New Bedford
Capacitor, Inc. v. Sexton Can Co. (In re New Bedford Capacitor,
Inc.), 301 B.R. 375, 380 (Bankr. D. Mass. 2003), an attempt to
pursue different transfers does not satisfy the Rule 15(c)(2)
relation back test.
Alberts relies on the disclosure statement that accompanied
the proposed plan which was eventually confirmed in the case as
having put PEPCO on notice that payments on the Greater Southeast
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account would be pursued. However, under O'Loughlin, it is the
complaint itself which must give notice, and extrinsic evidence
is not permitted when it would contradict and not merely amplify
the original complaint.
Alberts further relies on evidence that his attorneys
intended to pursue the transfers that were made to both Greater
Southeast and Hadley. However, under O'Loughlin, the term
“attempted” in Rule 15(c)(2) is not to be applied based on the
attorneys' subjective intent. Rather, the question of what was
attempted to be pled is determined by a test of what did the
original complaint itself objectively give notice was attempted
to be pled.
Finally, Alberts points to a complaint served on PEPCO in
another adversary proceeding which was identical to the original
complaint in this adversary proceeding and urges that this was
sufficient to alert PEPCO that different transfers must have been
the goal of this second adversary proceeding. However, PEPCO
could readily and reasonably have concluded that Alberts simply
filed the same complaint twice by accident. As in O'Loughlin,
the complaint itself gave no hint that different transfers were
being pursued.
II
At the hearing on the motion to dismiss, Alberts conceded
that all of the transfers except possibly one were made more than
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two years prior to the filing of the amended complaint, and thus
would be time-barred by the statute of limitations if the court's
ruling regarding relation-back were correct. Alberts has now
acknowledged that the date of the transfer whose transfer date
was in question was November 7, 2002, more than two years prior
to the filing of the Amended Complaint. Accordingly, the claim
regarding that transfer is barred by the statute of limitations
as well.
III
The parties agreed at the hearing on the motion to dismiss
that the court could dismiss without prejudice the claim asserted
under 11 U.S.C. § 502(d). Accordingly, the court will dismiss
with prejudice all claims other than the § 502(d) claim. The
court will dismiss the § 502(d) claim without prejudice: Alberts
will remain free to object to any of PEPCO's proofs of claim on
the basis of § 502(d). A judgment follows.
[Signed and dated above.]
S. Martin Teel, Jr.
United States Bankruptcy Judge
Copies to: All counsel of record.
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