Opinion
Case No. 01-61119-DHA
August 6, 2003
MEMORANDUM OPINION AND ORDER
This matter is before the Court on Linda Stasiewicz's Motion to Allow Late Filed Request For Payment of Administrative Expense. Stasiewicz specifically alleges that actions of an AMF representative led her to believe it was unnecessary to file a proof of claim in support of her personal injury claim against the debtor, and thus AMF should be estopped from objecting to her late request for payment. This is a core proceeding over which this Court has jurisdiction under 28 U.S.C. § 157 (b)(2) and 1334(b) and 11 U.S.C. § 727. Venue is proper pursuant to 28 U.S.C. § 1408 and 1409.
FINDINGS OF FACT
The facts of the present matter are undisputed. On July 2, 2001, AMF Bowling Worldwide, Inc. and its affiliates filed for relief under Chapter 11 of the United States Bankruptcy Code. On October 18, 2001, Stasiewicz suffered injuries while bowling at the Friendly Hills Bowling Lanes, a facility owned and operated by AMF. As a result of her injuries, Stasiewicz underwent cervical fusion surgery on January 21, 2002.
On October 22, 2001, Stasiewicz presented to AMF a claim for personal injuries and lost wages, and shortly thereafter retained counsel to represent her on account of her injuries. On February 6, 2002, Stasiewicz's counsel, Mitchell S. McKay, Esq., contacted Gregg A. Barkley, an employee and claims adjuster for AMF, and inquired as to the effect the pending bankruptcy of AMF had on his client's claim for compensation for her injuries. McKay reveals in his deposition that Barkley responded to his inquiry in the negative, saying that "the Stasiewicz matter was not covered at all by the AMF bankruptcy." Deposition of Mitchell S. McKay, p. 20, lines 20-21.
On September 16, 2002, Stasiewicz, by counsel, filed a negligence complaint against AMF in the Los Angeles County Superior Court, styledLinda Stasiewicz v. AMF Bowling Centers, Inc., Case No. VC038075.
On February 1, 2002, this Court entered its order confirming the debtors' Plan, and set April 22, 2002 as the Administrative Claim Bar Date for any claims arising after July 2, 2001.
CONCLUSIONS OF LAW
Stasiewicz's claim against AMF is properly classified as an Administrative Expense claim. Stasiewicz suffered her personal injuries in the California bowling alley after AMF had filed for bankruptcy protection, but before their Plan had been confirmed. Claims that fall into this narrow time frame are properly classified as Administrative Expenses. Reading v. Brown. Trustee in Bankruptcy. Et Al., 391 U.S. 471 (1968).
Stasiewicz failed to file her proof of claim before the established administrative claim bar date of April 22, 2002, and were there no other factors involved, her claim would be time barred. However, the present facts reveal an interesting scenario. Had Gregg Barkley, AMP's claims representative not given McKay erroneous information, then there would be no question that Stasiewicz's claim should be disallowed. Quite the opposite, McKay contacted Barkley, and Barkley informed McKay that his client's claim would not be affected by the pending AMF bankruptcy. McKay is not admitted to practice in the Federal Bankruptcy Courts. He does not hold himself out to be a bankruptcy lawyer, and this Court finds no reason why McKay would have information that would contradict what he learned from Barkley, a representative of AMP.
During his representation of Stasiewicz, McKay also represented another claimant against AMF in a separate and distinct action. McKay received all proper procedural notices, including notification of the administrative bar date, from AMF regarding his other client. McKay was aware that AMP was in bankruptcy, and should have been aware of the administrative claims bar date. It is logical to conclude that, but for Barkley's representation that the bankruptcy proceedings did not affect Stasiewicz, McKay would have advised Stasiewicz to take action before the administrative claims bar date had passed.
Debtors argue that McKay violated the rules of ethics by contacting Berkley directly. Debtors claim that the proper course of action would have been to contact counsel for AMF. We do not agree that McKay breached the rules of ethics when he contacted an AMP claims adjuster in order to discuss a claim against AMF, and he had no reason to contact debtor's bankruptcy counsel in initiating a personal injury claim against AMF. McKay acted properly and logically in preliminary discussions about his client's claim. Were the debtors to prevail with their argument, anyone with a claim against AMF would be reluctant to contact an AMP claims adjuster who initiated the contact with the potential claimant.
This Court believes that the doctrine of equitable estoppel prevents AMF from contesting the timeliness of the Stasiewicz claim. Equitable estoppel ""is the consequence worked by operation of law which enjoins one whose action or inaction has induced reliance by another from benefiting from a change in his position at the expense of the other.'"Food Lion. Inc. v. S.L. Nusbaum Ins. Agency Inc., 202 F.3d 223, 228 (4th Cir. 2000), quoting Employers Commercial Union Ins. Co of America v. Great American Ins. Co., 214 Va. 410, S.E.2d 560, 562 (1973).
Stasiewicz, by counsel, relied on the representation of AMP, by its employee Barkley, that the pending bankruptcy would not affect her claim. Stasiewicz did not file a proof of claim by the date established, indicating that her counsel took Barkley at his word that she was not affected by the bankruptcy proceedings. The essential elements of equitable estoppel have been met.
Bankruptcy Rule 9006(b)(1) gives this Court the authority to allow Stasiewicz's claim to proceed if she missed the established administrative claim bar date because of excusable neglect. This Court cannot find a better reason for excusable neglect than the reliance on an opposite party's misrepresentation. There is no indication of bad faith on Stasiewicz's part, and her reliance on AMP's representation, although erroneous, should not prevent her from pursuing her claim against AMP. To allow AMF to benefit from dispensing incorrect information would not be in the best interests of justice.
CONCLUSION
This Court finds Stasiewicz's Motion to Allow Late Filed Request for Payment of Administrative expense to be persuasive. Stasiewicz's late filed request is allowed, and her motion must be GRANTED.
IT IS SO ORDERED.