In Re White Motor Corp.

65 B.R. 383, 1986 U.S. Dist. LEXIS 23458
CourtDistrict Court, N.D. Ohio
DecidedJune 30, 1986
DocketCiv. A. C82-3209
StatusPublished
Cited by6 cases

This text of 65 B.R. 383 (In Re White Motor Corp.) is published on Counsel Stack Legal Research, covering District Court, N.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re White Motor Corp., 65 B.R. 383, 1986 U.S. Dist. LEXIS 23458 (N.D. Ohio 1986).

Opinion

MEMORANDUM AND ORDER

ANN ALDRICH, District Judge.

Patrick T. Reid appeals from an order entered by the bankruptcy court on June 20, 1985 granting summary judgment in favor of the Disposition Assets Trustee (“the DAT”) for White Motor Corporation (“WMC”) on a claim filed by Reid on behalf of a class of former WMC employees. Reid also appeals from an order entered by the bankruptcy court on September 11, 1985, denying three post-judgment motions. Pending before the Court is the DAT’s motion to dismiss for lack of jurisdiction and motion to dismiss for failure to demonstrate abuse of discretion. For the reasons set forth below, the DAT's motions are granted and the appeals are dismised.

The District Court’s appellate jurisdiction rests on 28 U.S.C. § 158, 1 as enacted by the *385 Bankruptcy Amendments and Federal Judgeship Act of 1984, Pub.L. No. 98-353, 98 Stat. 333.

I.

The facts which are pertinent to ruling on the DAT’s motion are succinctly and adequately set forth in the bankruptcy court’s June 20, 1985 order. In re White Motor Corp., No. B80-3361 (Bankr.N.D. Ohio June 20, 1985)(“June 20 order”). The parties have not objected to the bankruptcy court’s findings of fact, which in their entirety state:

1. On September 4, 1980, WMC filed a voluntary petition under Chapter 11 of the Bankruptcy Code. (11 U.S.C. § 1101 et seq.) On November 18, 1983, a modified plan of reorganization was confirmed. Under the plan the DAT, John T. Grigsby, Jr., is successor in interest to WMC for the purpose of objecting to claims.
2. On September 3, 1981 claim No. 188 was filed for $1,743,233.05 and subsequently amended to $3,097,791.99.
3. Patrick T. Reid, an attorney, filed claim No. 188 as agent for a class of former WMC employees. The claim which asserts1- rights to severance pay arises from a class action filed against WMC on February 21, 1977 in Michigan State Court. In the case of Burch v. WMC, Case No. 77-19932-CK, Reid filed a class action alleging the same liability as asserted herein. That action certified by the State Court was eventually dismissed.
4. Reid is not a member of the class for which he filed the claim.
5. Appended to claim No. 188 is a list of names and amounts, the significance of which is unexplained. Presumably the list consists of members of the class on whose behalf the claim was filed. It is unclear, however, whether those listed are actual or potential members of the State Court class action.
6. August 30, 1983 was the bar date for filing claims in the WMC case.
7. On September 20, 1983, the DAT filed objection to claim No. 188 asserting it was the subject of a contested lawsuit and should be expunged. On November 6, 1984, the DAT filed the motion for summary judgment [on his objection to claim No. 188].

A.

In support of his motion for summary judgment filed pursuant to Bankruptcy Rule 7056 2 , the DAT argued that (1) Reid’s class claim could not be used to circumvent the requirement of Bankruptcy Rule 3003(c)(2) 3 that individual proofs of claim be filed; (2) Reid had not moved, pursuant to Bankruptcy Rule 9014, 4 for application *386 of Bankruptcy Rule 7023, 5 which governs the procedure for filing a class proof of claim; (3) even if Bankruptcy Rule 7023 was applicable, Reid had not satisfied that rule’s procedural requirements since he was not a member of the class, he had not sought certification as soon as practicable after filing the claim, a class action would not better protect individual interests, and because a class action was not necessary to accommodate the claims of individual class members; and (4) the claims bar date prevented class members from filing late individual claims, even though the class action was timely filed.

Reid argued in opposition that the class had already been certified in the Michigan state court action and that the DAT was therefore estopped from contesting the class certification in bankruptcy court. Reid also contended that the DAT had not been prejudiced by the delay in seeking class certification and that recertification was unnecessary, inappropriate and inefficient. In an apparent effort to create a genuine issue of material fact, Reid submitted an affidavit stating that he was the attorney appointed by the Michigan state court to represent former employees of WMC in a certified class action.

On June 20, 1985, the bankruptcy court entered its order granting the DAT’s motion for summary judgment. In a concise opinion, the court held that:

No section of the Code authorizes filing a class claim. A proof of claim must be “executed by the creditor or the creditor’s authorized agent....” Bankruptcy Rule 3001(b). Bankruptcy Rule 7023, which governs class actions is applicable to contested claims only on court order under Bankruptcy Rule 9014. Class actions, therefore, are not directly available as a procedural mechanism for filing claims. While Rule 9014 authorizes the court to apply Rule 7023, as a general rule courts deem class actions inappropriate to claim proceedings.
Because the courts generally disfavor these actions and Reid failed to timely request authorization prior to filing the class claim, this Court declines to order Bankruptcy Rule 7023 applicable to the Reid claim.
The certification of the class action in the State Court is not binding on this Court and is not determinative of the propriety of a class proceeding on claims. Moreover, since Reid is not a WMC creditor and the claim cannot be maintained on behalf of the class, there exists no genuine issue of material fact regarding the impropriety of the claim. Further, Reid does not assert that he was authorized by individual creditors to file claims on their behalf. Summary judgment on the DAT’s objection to claim is, therefore, appropriate.
The parties dispute whether individual class members should be permitted to file late claims for the liability asserted in the class claim. As a rule a class action cannot be maintained to circumvent the requirement of filing individual claims. Individual class members who failed to file claims are now barred by the Court’s order of August 1,1983. Extending the bar date for cause is within the sound discretion of the court. There is no basis, however, for extension of the bar date in this case. Adequate notice was given and Reid has failed to establish grounds for such extension. Moreover, Reid has failed to distinguish which individuals are to be included within the scope of the requested extension. Extension of the bar date is, therefore, denied.

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Cite This Page — Counsel Stack

Bluebook (online)
65 B.R. 383, 1986 U.S. Dist. LEXIS 23458, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-white-motor-corp-ohnd-1986.