Reid v. White Motor Corp.

105 B.R. 1462
CourtCourt of Appeals for the Sixth Circuit
DecidedSeptember 28, 1989
DocketNo. 87-4066
StatusPublished

This text of 105 B.R. 1462 (Reid v. White Motor Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Reid v. White Motor Corp., 105 B.R. 1462 (6th Cir. 1989).

Opinions

KRUPANSKY, Circuit Judge.

Plaintiff-appellant, Patrick T. Reid (Reid), has appealed from the district court’s grant of summary judgment in favor of defendant-appellee, John Grigsby, Jr., Trustee for White Motor Corporation (Trustee).1 Reid initiated this action by filing a class proof of claim on behalf of former employees of White Motor Corporation (WMC) in bankruptcy proceedings which had been commenced by WMC. The record disclosed the following facts.

On August 16, 1971, WMC sold its Diamond Reo Truck Division to Diamond Reo Trucks, Inc. (Diamond Reo). All employees of WMC’s Diamond Reo Truck Division were retained by Diamond Reo following the sale. Subsequently, on February 21, 1977, Reid, a Michigan attorney, filed an action on behalf of his client, Jerry A. Burch (Burch), seeking class certification in the Michigan Circuit Court for the County of Ingham against WMC on behalf of former WMC salaried employees in which Burch and the putative class members sought severance pay arising out of WMC’s sale of Diamond Reo Truck Division to Diamond Reo. Burch v. White Motor Corp., Case No. 77-19932 CK (Mich.Circuit Ct., Ingham County 1977). On August 5, 1977, the Michigan circuit court certified the case as a class action (hereinafter referred to as the Burch class).

On September 4, 1980, WMC filed a voluntary petition for reorganization pursuant to Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Ohio. As a result of the bankruptcy proceedings, the automatic stay provisions of Bankruptcy Code Section 362 enjoined all pending legal actions against WMC including the Burch lawsuit which was eventually dismissed by the Michigan circuit court on July 12, 1983 for failure to prosecute.

On September 3, 1981, Reid, as the purported agent of the Burch class, filed a general unsecured proof of claim (claim no. 188) in WMC’s bankruptcy proceeding asserting entitlement to severance pay in the amount of $1,743,233, which was subsequently amended to $3,097,791. Apart from his unilateral assertion of fiduciary status, Reid provided no confirmation of his agency or authority to act on behalf of the members of the Burch class in the WMC bankruptcy proceeding. Appended as “Attachment A” but not incorporated by reference into the proof of claim filed by Reid was a list of unidentified names, juxtaposed by dollar amounts. The named individuals were not identified as former employees of the Diamond Reo Truck Division of WMC or as members of the Burch class. Additionally, Reid failed to petition the bankruptcy court, pursuant to bankruptcy to bankruptcy rule 9014, to invoke bankruptcy rule 7023, which mandated the procedure to be implemented in processing class proofs of claim in all bankruptcy proceedings. Individual proofs of claim were never filed by the individuals named in Appendix A of Reid’s filed proof of claim.

After the bar date of August 30, 1983, fixed by the bankruptcy court for filing proofs of claim, the Trustee, on September 30, 1983, filed an objection to Reid’s proof of claim and thereafter, on November 6, 1984, filed a motion for summary judgment. In his motion for summary judgment, the Trustee asserted that:

1. A class proof of claim is inconsistent with the bankruptcy rule 3002 man[1464]*1464dating the filing of individual proofs of claim;

2. Fed.R.Civ.P. 23 is not automatically invoked and may be implemented only by authority of the bankruptcy court upon a petitioner’s duly filed motion;

3. Fed.R.Civ.P. 23 could not be applied to Reid’s pending claim as a matter of law because (a) he was not a member of the class or duly authorized representative; (b) he failed to satisfy the procedural requirements of Bankruptcy Rules 9014 and 7023; and (c) the class claim was not adjudged superior to the claim process provided by the Bankruptcy Rules; and

4. The absent class members were barred from filing individual claims over one year after the claims bar date had passed.

Reid opposed the motion for summary judgment and argued that because the class had already been certified in the Michigan circuit court, the Trustee was collaterally estopped from contesting the class certification in the bankruptcy court. Additionally, Reid submitted an affidavit attesting that he was the attorney appointed by the Michigan circuit court to represent the purported class of former employees of WMC’s Diamond Reo Truck Division.

On June 20, 1985, the bankruptcy court granted summary judgment in favor of the Trustee. The bankruptcy court decided that (1) class proofs of claim cannot be used to circumvent the requirement of Bankruptcy Rule 3003 mandating the filing of individual proofs of claim; (2) class proofs of claim are disfavored in bankruptcy; (3) Reid did not comply nor did he attempt to comply with proper procedures to certify the class in this bankruptcy proceeding mandated by Bankruptcy Rule 9014; (4) Reid was not a creditor, and thus, could not maintain the proof of claim which he filed in his own right; (5) Reid had failed to prove that he was authorized to act on behalf of the putative class; and (6) Reid had failed to show cause why the bar deadline for filing proofs of claim should be extended to permit the filing of individual proofs of claim.

Although the bankruptcy court filed its. memorandum opinion on June 20, 1985, it failed to file a separate entry of judgment as required by Bankruptcy Rule 9021, the counterpart to Fed.R.Civ.P. 58. To date, no separate entry of judgment complying with Bankruptcy Rule 9021 has been filed in the bankruptcy court.

On July 22, 1985, thirty-two days after the bankruptcy court granted summary judgment, Reid filed the following three motions: (1) a motion for reconsideration; (2) a motion, pursuant to Rule 9014, to apply Rule 7023 to the contested proceeding; and (3) a motion to consider claim no. 188, the claim Reid filed, as properly filed by individuals of the Burch class, and/or an amendment of the filed claim or motion to permit the filing of late individual proofs of claim. The bankruptcy court, on September 11, 1985, denied Reid’s motion for reconsideration because it “merely reiterate[d] the arguments previously presented in opposition to the motion for summary judgment and fails to substantiate the relief sought.” The bankruptcy court further concluded that neither the application of Bankruptcy Rule 7023, nor an amendment of the claim, would be effective because Reid’s proof of claim had been disallowed. Finally, the bankruptcy court noted that Reid had presented no viable reason to extend the bar date in order to permit the members of the Burch class to file individual proofs of claim.

On September 20, 1985, Reid appealed the bankruptcy court’s June 20, 1985 order of summary judgment and the September 11, 1985 order denying his three post-judgment motions. On June 30, 1986, the district court affirmed the bankruptcy court’s decision in all respects. In Re White Motor Corp., 65 B.R. 383 (N.D.Ohio 1986). The district court dismissed Reid’s appeal from the June 20,1985 order granting summary judgment as untimely filed.

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105 B.R. 1462, Counsel Stack Legal Research, https://law.counselstack.com/opinion/reid-v-white-motor-corp-ca6-1989.