Opinion
No. 84 Civ. 3508 (JFK).
July 10, 1985.
Shalle Stephen Fine, Coral Gables, Florida, attorney for appellant.
Joel Fass, Colodny, Fass Talenfeld, North Miami, Florida, attorney for appellant.
Harris D. Leinwand, New York, New York, attorney for debtor-appellee.
Notice — Due Process — Notice Mailed to Creditor's Attorney. — Notice must be reasonably calculated to inform a party of the pendency of an action in order to satisfy the requirement of due process. A notice which was sent by the bankruptcy court to a foreign corporation's domestic attorney listing the bar date for filing objections to discharge was sufficient to satisfy due process standards, and the creditor was bound by the bar date.
See Bankruptcy Rule 9006 at ¶ 21,456.
Notice — Time — Presumption of Receipt upon Mailing. — Bankruptcy Rule 9006(e) provides that notice by mail is complete upon mailing. A creditor's argument that it did not receive notice of the bar date for filing objections to discharge, when it was undisputed that the Bankruptcy Clerk mailed notice to the creditor and no notices were returned as undeliverable, was without merit.
See Bankruptcy Rule 9006 at ¶ 21,456.
Discharge of Debts — Notice — Bar Date to Filing Objections. — A creditor who has actual knowledge of the debtor's bankruptcy is bound by the bar date for filing an objection to discharge of a debt. The debtor notified the creditor's lead counsel by telephone that he intended to file for bankruptcy, and sent a letter to the creditor's co-counsel informing him that he had filed for bankruptcy. "[A]ny reasonable party in the creditor's position would have inquired into the Bar Date," and the creditor "cannot now be heard to argue that it was not afforded adequate notice of the Bar Date."
See Sec. 523(a)(3) at ¶ 9229.
Oberon Investments, N.V. ("Oberon"), a Netherlands Antilles Corporation, appeals from a Memorandum and Order of the Bankruptcy Court (Galgay, B.J.), dated March 21, 1984, dismissing Oberon's complaint for an order declaring nondischargeable the debt allegedly owed to it by debtor-appellee Leonard Treister ("Treister"). In re Treister, 38 B.R. 228 (Bkrtcy. S.D.N.Y. 1984). Oberon's complaint was dismissed because it was not filed before the date, set by the Bankruptcy Court, as the last day for filing of complaints objecting to the dischargeability of Treister's debts ("Bar Date"). Although Oberon admits that its complaint was filed subsequent to the Bar Date, Oberon contends that it did not receive notice of the Bar Date and thus cannot be bound by it. For the reasons stated below, the Court affirms the decision of the Bankruptcy Court.
BACKGROUND
Sometime prior to May 13, 1983, Oberon filed a lawsuit against Treister in state court in Dade County, Florida, seeking $800,000.00 in damages in connection with Treister's representation of Oberon in a Miami real estate deal. On May 13, 1983, Treister filed a voluntary petition for relief, pursuant to Chapter 7 of the Bankruptcy Code.
In accord with Bankruptcy Court procedures, Treister submitted a matrix of creditors to the Bankruptcy Court. The matrix included the listing of "Oberon Investments, N.V., a Netherlands Antilles corporation, c/o Daniel Mones, Attorney, Heller Building, 4500 Biscayne Boulevard, Miami, Florida 33137," with a brief description of the case pending in the Florida state court. It is undisputed that the listed address was, and remains, Mones' proper business address. On June 9, 1983, the Bankruptcy Court mailed to all listed creditors a notice stating that September 16, 1983 would be the Bar Date for filing objections to discharge and complaints as to the discharge of any particular debt. The Bankruptcy Court's file contains a certificate of mailing prepared by the Bankruptcy Clerk.
Oberon filed a complaint, objecting to the dischargeability of Treister's debt, on November 2, 1983, over six weeks after the Bar Date. Based on Oberon's failure to file its complaint prior to the Bar Date, the Bankruptcy Court dismissed Oberon's claims. In re Treister, 38 B.R. at 230; see 11 U.S.C. § 523(c); Bankruptcy Rule 4007(c). Oberon, however, contends it should not be bound by the Bar Date because it never received adequate notice thereof. Oberon maintains that (i) notice should have been sent to Mones' co-counsel, Shalle Stephen Fine, or to Mones c/o Fine, because Fine was more active in representing Oberon in the underlying dispute with Treister, and (ii) Oberon never received notice of Treister's bankruptcy action.
DISCUSSION
There is little doubt that the Bankruptcy Court has not only the authority, but the obligation, to establish and enforce Bar Dates. Otherwise, bankruptcy proceedings would be interminable, thus contravening the Bankruptcy Code's policy of offering the bankrupt a "fresh start" and treating the bankrupt's rightful creditors with fairness and expedition. The Bankruptcy Code's notice provisions protect creditors from having their claims cut-off without the requisite warning. It is undisputed that Oberon filed its complaint subsequent to the Bar Date. Thus, the only issue on appeal is whether, through notice mailed by the Bankruptcy Court or otherwise, Oberon had knowledge, or could reasonably be expected to gain knowledge, of the Bar Date.
1. Notice Mailed to Improper Address
Oberon contends that Treister, on the matrix submitted to the Bankruptcy Court, should have listed Fine, rather than Mones, as the recipient of notice for Oberon. Although Fine and Mones were named as co-counsel by Oberon in Oberon's state court action against Treister, Oberon maintains that Treister knew Fine was lead counsel and bore primary responsibility for protecting Oberon's interests.
Mones' name was listed first on Oberon's state court complaint, though Fine's address was listed.
Due process requires notice to be reasonably calculated to inform a party of the pendency of an action. See Mullane v. Central Hanover Bank Trust Co., 339 U.S. 306, 314 (1950). That requirement was satisfied in the instant case. Notice was mailed to Mones, one of Oberon's Florida counsel, at Mones' business address. Indeed, the Bankruptcy Court found that "[a]s co-counsel to Oberon in Oberon's Florida suit against Treister, Mones demonstrated an intimate knowledge of the facts of the underlying dispute with Treister. While perhaps not lead counsel to Oberon in that dispute, Mones certainly could have appreciated the significance of the September 16 bar date to Oberon's claim against Treister." 38 B.R. at 230. Therefore, notice of the Bar Date, mailed to one of Oberon's lawyers at his correct business address, was sufficient to bring the matter in question to Oberon's attention.
Bankruptcy Rule 8013 provides that a Bankruptcy Court's findings of fact, such as those quoted above, "shall not be set aside unless clearly erroneous." This Court finds no clear error by the Bankruptcy Court.
2. Notice Not Received
The Bankruptcy Clerk's certification of mailing notwithstanding, Oberon asserts, based on Mones' testimony, that it never received notice of the Bar Date. Mones claims that he did not receive the clerk's letter prior to the Bar Date.
First, the issue of whether notice was ever received is arguably irrelevant. Bankruptcy Rule 9006(e) provides that "notice by mail is complete upon mailing," thus whether a creditor actually receives notice need not be addressed. In re Richard Johnson Seats, 1 B.C.D. 320, 321 (Bkrtcy. E.D. Va. 1974); see North American Car Corp. v. Peerless Weighing Vending Machine Corp., 143 F.2d 938, 941 (2d Cir. 1944); In re Majors, 19 B.R. 275, 278 (Bkrtcy. M.D. Tenn. 1982); In re Torres, 15 B.R. 794, 796 (Bkrtcy. E.D.N.Y. 1981). Since it is undisputed that the Bankruptcy Clerk mailed notice of the Bar Date to all creditors, including Oberon, and there is no evidence that any notices were returned as undeliverable, the notice requirement of Bankruptcy Rule 9006(e) was satisfied.
Even if Bankruptcy Rule 9006(e) merely creates a rebuttable presumption that notice mailed has been properly received. Legille v. Dann, 544 F.2d 1, 4-5 (D.C. Cir. 1976), Oberon cannot overcome the presumption by making the bare assertion that notice was never received. E.g., In re Farris, 43 B.R. 726, 728 (Bkrtcy N.D. Ill. 1984); Majors. 19 B.R. at 278; Torres, 15 B.R. at 797. The Bankruptcy Court failed to find "any credible evidence" to support Oberon's assertion of nonreceipt. 38 B.R. at 230. Since this finding is not clearly erroneous, this Court is bound by it. See supra note 2. Thus, Oberon's argument that notice of the Bar Date was ineffective because it was never actually received is without merit.
3. Knowledge
Under 11 U.S.C. § 523(a)(3)(B), a discharge order is valid against any creditor that is mailed notice from the Bankruptcy Clerk or that has actual knowledge of the case. Even if the Bankruptcy Clerk did not mail notice to Oberon, the evidence indicates that Oberon had notice of Treister's bankruptcy petition from other sources. First, Treister's lawyer, Harris D. Leinwand, sent a letter, dated August 31, 1983, two and one-half weeks prior to the Bar Date, to Fine, Oberon's lead counsel, advising Fine that Treister had filed the bankruptcy action, that the Florida action was stayed under the Bankruptcy Code, and inviting Fine to file a proof of claim with the Bankruptcy Court. (Appellant's Brief. Exh. B). Second, Treister claims, and Oberon does not dispute, that he telephoned Mones prior to filing the bankruptcy petition to apprise Mones of his intention to file a petition. (Appellee's Brief at 9).
Having been notified of the pendency of Treister's bankruptcy action, any reasonable party in Oberon's position would have inquired into the Bar Date. Prompt inquiry would have apprised Oberon of the Bar Date in ample time to file a proof of claim. Having failed to make inquiry that a reasonable party would have made under the circumstances. Oberon cannot now be heard to argue that it was not afforded adequate notice of the Bar Date. Oberon had constructive knowledge of the Bar Date, and thus was bound by it.