In re Commonwealth Aluminum Supply, Inc.

110 B.R. 778, 1989 Bankr. LEXIS 2398, 20 Bankr. Ct. Dec. (CRR) 93, 1989 WL 167862
CourtDistrict Court, E.D. Virginia
DecidedOctober 20, 1989
DocketBankruptcy No. 88-00318-AT
StatusPublished

This text of 110 B.R. 778 (In re Commonwealth Aluminum Supply, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Commonwealth Aluminum Supply, Inc., 110 B.R. 778, 1989 Bankr. LEXIS 2398, 20 Bankr. Ct. Dec. (CRR) 93, 1989 WL 167862 (E.D. Va. 1989).

Opinion

MEMORANDUM OPINION

DOUGLAS O. TICE, Jr., Bankruptcy Judge.

This matter is before the Court on the motion of Golansky Construction Inc., pursuant to Rule 3003(c)(3) of the Rules of Bankruptcy Procedure, to file a proof of claim after the bar date for filing claims. The debtor opposes the motion.

A hearing on the motion was held on August 3, 1989, at which time the Court took evidence and heard argument. Subsequently, counsel for both parties submitted briefs.

For the reasons and upon the conditions stated in this opinion, the motion will be granted to the extent that the movant may file a proof of claim which amends the claim of Golansky Companies, Inc.

Facts

In July 1987, the debtor Commonwealth Aluminum Supply, Inc. (“Commonwealth”), a roofing and sheet metal contractor, submitted a bid to Golansky Companies, Inc. (“Golansky Companies”), to construct a new roof at Culpeper Mall, Culpeper, Virginia. By letter dated September 22, 1987, Golansky Companies advised Commonwealth in writing that it had been selected to perform the job. This letter was signed by John W. Grastorf (“Grastorf”) as director of construction for Golansky Companies. Grastorf was the project manager for the Culpeper Mall job; he was later replaced by C. Bernard Durden (“Durden”).

By a printed transmittal form under the letterhead of Golansky Companies dated October 12,1987, and signed by Grastorf, a fully executed copy of the construction contract was sent to Commonwealth. The contract, which was dated October 1, 1987, stated the names of the contracting parties as Golansky Construction, Inc. (“Golansky Construction”), as contractor and Commonwealth Aluminum Roofing as subcontractor.1

Golansky Companies and Golansky Construction were related but separate corporations. The capital stock of both corporations was owned by Shel Golansky, who was also president of both. The fact that these were separate corporations was never discussed by the representatives of either Golansky entity with Commonwealth’s management.

During the period of Commonwealth’s performance of the construction contract, correspondence it received from Golansky Construction came on the printed letter[780]*780head of Golansky Companies and was signed by Grastorf or later by his replacement Durden. In some but not all instances the correspondence contained a typed signature block in the name of Golansky Construction.

Commonwealth commenced to perform the roof contract and worked on the project for some time. It remitted invoices to Go-lansky Companies, and received interim payments by checks drawn on the account of Golansky Construction. Eventually, Commonwealth stopped work and withdrew from the job site.

On February 22, 1988, Commonwealth filed its reorganization petition under chapter 11 of the Bankruptcy Code and since that time has operated as debtor in possession.

The debtor’s bankruptcy petition and schedules did not reflect any indebtedness owed either to Golansky Construction or Golansky Companies. Consequently, neither of these entities has received notices issued by the Clerk of the Bankruptcy Court during the pendency of the chapter 11 case.

Pursuant to Bankruptcy Rule 3003(c)(3) and the Section 341 meeting notice of the Clerk of the Bankruptcy Court dated March 9, 1988, the last date for filing claims against the debtor was set at June 30, 1988 (90 days after the § 341 meeting scheduled for April 1, 1988).

Although the debtor’s schedules did not list any indebtedness to either Golansky entity, shortly after -the filing of the petition a representative of the debtor contacted the Golansky project manager, Durden, and advised him of the filing. Subsequently, debtor’s counsel had contact with counsel for Golansky Companies concerning the debtor's rejection of the contract of October 1, 1987.

On April 28, 1988, the debtor’s counsel filed a motion to reject “any executory contract with Golansky Companies, Inc.”. The memorandum which accompanied the motion stated that the debtor had on October 1, 1987, entered a contract with Golan-sky Companies for roofing repair at Cul-peper Mall. On June 15, 1988, an order was entered by this Court granting the motion and rejecting the contract. The order’s endorsement indicated the consent of counsel for Golansky Companies.

Prior to June 30, 1988, an unsecured proof of claim was filed in the name of Golansky Companies in the amount of $234,758.49. Attached to the claim was a copy of the construction contract of October 1, 1987, between the debtor and Golan-sky Construction.

Subsequently, beginning in the fall of 1988 the present counsel of Golansky Construction became involved and undertook discovery concerning indebtedness arising out of the debtor’s failure to complete the Culpeper roof contract.

On May 10, 1989, Golansky Construction’s counsel filed for the company the motion under Rule 3003(c)(3) requesting the Court to extend the time for Golansky Construction to file a claim. On June 2, 1989, debtor’s counsel filed its objection to this motion. Also, on May 15, 1989, debtor’s counsel filed an objection to the proof of claim previously filed by Golansky Companies.

Discussion and Conclusions

Counsel for Golansky Construction bases his motion to permit late filing of the claim on the concept of excusable neglect. This in turn is based upon counsel’s argument that there was confusion as to the proper Golansky claimant because of the two different corporations. Alternatively, the counsel asks the Court to allow Golansky Construction to file its claim as an amendment to the timely filed claim of Golansky Companies.

The facts in summary here reveal that the debtor did not schedule any indebtedness arising out of its executory roofing contract with Golansky Construction, and therefore neither Golansky Construction nor Golansky Companies received notices coming out of the bankruptcy case, including notice of the final date for filing claims. However, shortly after the case was filed, both Golansky corporations received notice of the bankruptcy filing when a representa[781]*781tive of the debtor contacted the project manager who was an employee of both Golansky Construction and Golansky Companies. Moreover, discussions were held between debtor’s counsel and counsel for Golansky Companies, which led to a consent order for the debtor’s rejection of the executory construction contract of October 1, 1987, and to the timely filed proof of claim on behalf of Golansky Companies.

It appears that until recently neither debtor’s management nor its counsel were aware of the separate Golansky corporations. Golansky Construction’s argument that the debtor’s representatives are responsible for the confusion over the appropriate Golansky corporation creditor is patently without merit. The operators of the two Golansky corporations (which apparently had the same management) had every opportunity to clear up the confusion as soon as they learned of the debtor’s bankruptcy petition, and their inept handling of the matter is beyond the Court’s comprehension. Although the Court’s criticism does not apply to present counsel of Golan-sky Construction, it is still not clear to the Court why it was necessary for counsel to depose the debtor in order to determine who was the proper claimant for damages arising out of the rejection of the contract.

EXCUSABLE NEGLECT.

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110 B.R. 778, 1989 Bankr. LEXIS 2398, 20 Bankr. Ct. Dec. (CRR) 93, 1989 WL 167862, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-commonwealth-aluminum-supply-inc-vaed-1989.