Christopher v. Diamond Benefits

• Court: Court of Appeals for the Fifth Circuit
• Decided: May 31, 1996
• Docket: 95-10960
• Status: Unpublished

Opinion

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

____________________

No. 95-10960 Summary Calendar ____________________

In The Matter of: CHARLES SIMPSON CHRISTOPHER,

Debtor.

CHARLES SIMPSON CHRISTOPHER,

Appellant,

versus

DIAMOND BENEFITS LIFE INSURANCE CO.,

Appellee.

_______________________________________________________________

Appeal from the United States District Court for the Northern District of Texas (5:93-CV-156-C) _______________________________________________________________

May 8, 1996

Before JOLLY, JONES, and STEWART, Circuit Judges.

PER CURIAM:*

At issue in this appeal is the bankruptcy court's ruling that

the debtor, Charles S. Christopher, failed to give constitutionally

adequate notice of his Chapter 11 bankruptcy filing in the Northern

District of Texas to a known creditor, Diamond Benefits Life

* Pursuant to Local Rule 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in Local Rule 47.5.4. Insurance Company ("Diamond Benefits"). The district court

affirmed. So do we.

Our court is by now quite familiar with the factual background

of Christopher's bankruptcy and the ensuing adversary proceedings,

which we need not repeat in detail. See Matter of Christopher, 35

F.3d 232 (5th Cir. 1994); Matter of Christopher, 35 F.3d 567 (5th

Cir. 1994); Matter of Christopher, 28 F.3d 512 (1994). For the

purposes of this opinion, we merely note that Christopher does not

dispute that he was intimately aware of Diamond Benefits's creditor

status. In fact, Christopher was an investor in the group that

acquired Diamond Benefits, and Christopher served as a director and

chairman of Diamond Benefits. Christopher concedes in his reply

brief that "[a]nalytically ... we are in the posture in which

Debtor Christopher admits claimant Diamond Benefits is unscheduled

and received no notice."1

1 Christopher further conceded during his cross-examination at trial:

COUNSEL: ... [Y]ou're aware that Diamond Benefits was placed in receivership by the State of Arizona in December of 1989?

CHRISTOPHER: Yes, sir.

COUNSEL: And you do not claim, sir, do you, that at any time subsequent to the time a receiver was appointed for Diamond Benefits that you gave any kind of notice verbal, written or otherwise to the receiver of the fact that you were in bankruptcy?

CHRISTOPHER: No, I don't.

-2- Notwithstanding this admission, Christopher first argues on

appeal that Diamond Benefits received actual notice of

Christopher's bankruptcy because a front page newspaper article in

the Arizona Republic, which appeared over a Thanksgiving holiday

weekend, mentioned the fact that Christopher had filed bankruptcy

in Texas. According to Christopher, this article should have been

read by the Special Deputy Receiver of Diamond Benefits (the

"Receiver"), who subscribed to the newspaper and was mentioned by

name in the article. The Receiver, however, testified in a

deposition that he did not recall the particular newspaper article.

The Receiver reaffirmed his deposition testimony at trial.

The law is clear in our circuit: due process requires notice

that is (1) reasonably calculated to reach all interested parties;

(2) reasonably conveys all of the required information; and (3)

permits a reasonable amount of time for response. E.g., In re

Eagle Bus Mfg. Inc., 62 F.3d 730 (5th Cir. 1995). We hold that

Christopher's reliance on the Receiver's chance reading of a

holiday weekend feature story, which just happened to appear--

through no calculated effort on the part of Christopher--in an

Arizona newspaper, falls short of satisfying the Constitution's due

process requirements and the law of this circuit.

Christopher also alleges on appeal that he gave actual notice

of his bankruptcy to no less than seven co-directors, officers or

attorneys of Diamond Benefits before the insurance company went

into receivership. Christopher asserts that the knowledge of these

-3- former associates should now be imputed to the Receiver. However,

Christopher glosses over the fact that, by order of the Superior

Court of Arizona, Diamond Benefits was placed into receivership,

and Christopher's former co-directors and associates were ousted.

We affirm the bankruptcy court's ruling that the alleged notice to

members of the company's former management, under whose direction

Diamond Benefits was driven to insolvency, cannot be imputed to a

newly appointed Receiver charged with investigating the prior

mismanagement. Based on the evidence presented in this record, the

bankruptcy court's factual finding that Christopher's former

business associates acted with interests adverse to those of the

Receiver is not clearly erroneous;2 hence, as a matter of law, the

knowledge of the company's former management is not attributable to

the Receiver. See, e.g., FDIC v. O'Melveny & Meyers, 969 F.2d 744,

750 (9th Cir. 1991) (knowledge acquired by the agent who is acting

adversely to its principal will not be attributed to the

2 Christopher claims that he gave notice of his bankruptcy filing to an associate, William Spartin, who joined Diamond Benefits as Christopher's administrative assistant and later became a member of the company's board of directors. Christopher argues that Spartin can be distinguished from the other members of Diamond Benefits's ousted management because Spartin was a "non- conspirator" and a "loyal agent" of the company. However, the record reveals that the Receiver sued Spartin as a co-defendant with Christopher and other former directors and officers of Diamond Benefits in the United States District Court for the District of Arizona on grounds of wrongful conversion, breach of statutory and fiduciary duties, and RICO violations. Notwithstanding the fact that Spartin was eventually dismissed from the Arizona litigation, the bankruptcy court did not clearly err in finding that Christopher's former associates at Diamond Benefits, including Spartin, had interests adverse to those of the Receiver.

-4- principal); FDIC v. Lott, 460 F.2d 82, 88 (5th Cir. 1972)

(knowledge possessed by bank officer acting in his own interest is

deemed adverse and is not imputable to the bank); Odom v. Ins. Co.

of the State of Pa., 441 S.W.2d 584, 591 (Tex.App.--Austin 1969),

aff'd, 455 S.W.2d 195 (Tex. 1970).

Accordingly, the district court's judgment is

A F F I R M E D.

-5-