Borsdorf v. Fairchild Aircraft Corp. (In Re Fairchild Aircraft Corp.)

128 B.R. 976, 1991 Bankr. LEXIS 924, 1991 WL 126382
CourtUnited States Bankruptcy Court, W.D. Texas
DecidedJune 27, 1991
Docket19-30219
StatusPublished
Cited by12 cases

This text of 128 B.R. 976 (Borsdorf v. Fairchild Aircraft Corp. (In Re Fairchild Aircraft Corp.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Borsdorf v. Fairchild Aircraft Corp. (In Re Fairchild Aircraft Corp.), 128 B.R. 976, 1991 Bankr. LEXIS 924, 1991 WL 126382 (Tex. 1991).

Opinion

MEMORANDUM DECISION

LEIF M. CLARK, Bankruptcy Judge.

CAME ON for hearing the Motion of Fairchild Aircraft Corporation (“Fairchild”) or (“Defendant”) to Dismiss the Claims of Plaintiffs Christa Borsdorf, Individually and as Personal Representative of the Estate of Ralph Borsdorf, and Johanna Bors-dorf (“Plaintiffs”). The pleading actually filed in the state court action was entitled “Defendant’s Plea to the Jurisdiction, Motion to Dismiss and Original Answer Subject Thereto.” In that pleading, Defendant made the following pleas: 1) a denial that the state court had subject matter jurisdiction; 2) a motion to dismiss for forum non conveniens; 1 3) an affirmative defense of discharge in bankruptcy; and 4) a general denial as permitted by the Texas Rules of Civil Procedure. The state court action was removed to this Court by the Fiscal Agent appointed under the confirmed plan in the Fairchild bankruptcy, Ms. Bettina Whyte.

This Court, at a status hearing on the removed action, set a hearing on the Defendant’s state court Motion to Dismiss, stating that it would treat the motion as though it had been filed in federal court as a motion to dismiss pursuant to Fed. R.Civ.P. 12(b)(1) and 12(b)(6).

ANALYSIS

I. Factual Background

On or about February 8, 1988, Mr. Ralph Borsdorf 2 was killed when a Fairchild Me-troliner III aircraft crashed near Kettwig, West Germany. On January 31, 1990, his wife and mother, both residents of Germany, filed suit against Fairchild Aircraft Corporation d/b/a Fairchild and Swearingen Aviation Corporation d/b/a Swearingen for wrongful death and survival claims in Be-xar County, Texas. On February 1, 1990, Fairchild filed bankruptcy. 3 On February 15, 1990, this Court approved the appointment of Ms. Bettina M. Whyte as Chapter 11 Trustee who served in that capacity through confirmation in late September of 1990. After the partial sale of estate assets and liabilities to Fairchild Acquisition under the confirmed plan, the proceeds from that sale and the remaining assets and liabilities were transferred into a liquidating trust over which Ms. Whyte now presides as Fiscal Agent.

Neither the schedules and statements of affairs filed by the Debtor nor the amendments filed some months later by the Trustee list any claim by either these Plaintiffs or Mr. James L. Branton (Branton & Hall, P.C.), their counsel at that time. None of the creditor lists filed by the Debt- or, and none of the service lists filed by Debtor or the Trustee or their attorneys contained Mr. Branton’s or the Plaintiffs’ names and addresses. The Trustee has no record of service by the Debtor or the Trustee upon the Plaintiffs or Mr. Branton of the motion to establish the bar date to file proof of claim, the order setting a bar date, the notice of hearing on the original or the first amended disclosure statement, the notice of hearing on confirmation of the amended plan, or the solicitation package containing ballots for acceptance or rejection of the amended plan. The Plaintiffs thus have not received notice of relevant motions, orders or hearings as specified by the Bankruptcy Code and Rules. At least the debtor and its bankruptcy counsel were aware of the claim against the estate, however, as Plaintiffs’ counsel received a letter from the law firm then representing Fair- *980 child on February 12, 1990, informing Plaintiffs of the bankruptcy filing, the case number, the court and its location, and advising them that their lawsuit was thus stayed by the automatic stay.

On June 22, 1990, Mr. Tom Davis, counsel for nineteen other German claimants against Fairchild arising out of the same aircraft accident in Germany, notified these Plaintiffs that the other nineteen cases had been removed by Fairchild to federal court. On June 28, 1990, Plaintiffs’ attorney discussed the removal with Ms. Mina Clark, bankruptcy counsel for the nineteen other German claimants. In a letter dated July 2, 1990, Mr. Branton told Ms. Clark of Plaintiffs’ decision not to seek to lift the automatic stay, fearing that Fairchild would then remove his lawsuit as well.

In a letter dated July 9, 1990, Ms. Clark told Mr. Branton that “you have to do what you determine is in your clients’ best interests.” By this same letter, Ms. Clark transmitted Fairchild’s first Disclosure Statement and the Trustee’s proposed Plan of Reorganization. The Disclosure Statement contained information regarding the balloting and voting deadline for the Plan and specifically cautioned that creditors of Fairchild would be entitled to vote on the Plan only if they “... filed a proof of claim on or before the last date set by the Bankruptcy Court ..., which in this case is August 2, 1990.” The Disclosure Statement further provided:

CREDITORS ARE URGED TO REVIEW IN FULL THE PLAN AND THE DISCLOSURE STATEMENT TOGETHER WITH ALL EXHIBITS ATTACHED HERETO PRIOR TO VOTING ON THE PLAN AND ARE URGED TO CONSULT LEGAL COUNSEL TO INSURE COMPLETE UNDERSTANDING OF THE PLAN AND THE DISCLOSURE STATEMENT. THIS DISCLOSURE STATEMENT IS INTENDED FOR THE SOLE USE OF CREDITORS OF THE DEBTOR TO ENABLE SUCH CREDITORS TO MAKE AN INFORMED DECISION ABOUT THE PLAN.

The Disclosure Statement also stated that all general unsecured tort claims would be satisfied from any insurance proceeds which may become payable on behalf of Fairchild, but only when each such general unsecured tort claim became an “Allowed Claim,” defined as any claim or interest “proof of which is filed with the Bankruptcy Court on or before August 2, 1990 or for a particular Claim, within such other time as the Bankruptcy Court shall have set for such claims if different than August 2, 1990 — ” The bar date for all unsecured claims was August 2, 1990.

Plaintiffs received the Disclosure Statement and the proposed Plan more than twenty days prior to the bar date. This Disclosure Statement and Plan had not yet been approved, nor had the plan yet been confirmed, but the same provisions appeared in the versions of the Disclosure Statement and the Plan which were eventually approved or confirmed. The First Amended Disclosure Statement retained the bar date of August 2, 1990. The First Amended Plan of Reorganization retained the definition of “Allowed Claim” as one in which a proof of claim was filed on or before August 2, 1990.

Plaintiffs admit that they did not file a proof of claim at any time during the bankruptcy. In fact, Plaintiffs made no inquiries regarding the Fairchild bankruptcy prior to December, 1990, over three months after the plan was confirmed. The only action taken by Plaintiffs to pursue their claims against the Fairchild bankruptcy estate was to employ Plunkett, Gibson & Allen to contest the possible dismissal of this cause of action by this court. Plaintiffs did not actually enter an appearance in the bankruptcy case until February 25, 1991, at the status hearing on removal. Plaintiffs did not file a request for service of notice or pleadings in the bankruptcy case prior to March 22,1991.

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128 B.R. 976, 1991 Bankr. LEXIS 924, 1991 WL 126382, Counsel Stack Legal Research, https://law.counselstack.com/opinion/borsdorf-v-fairchild-aircraft-corp-in-re-fairchild-aircraft-corp-txwb-1991.