United States District Court for the District of Columbia
August 3, 2004.
In Re US OFFICE PRODUCTS CO. SECURITIES LITIGATION. EDWARD C. DULWORTH, et al., Plaintiffs,
US OFFICE PRODUCTS CO., et al., Defendants.
The opinion of the court was delivered by: RICARDO URBINA, District Judge
GRANTING THE DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
This case comes before the court on the defendants' motion for
summary judgment. Pursuant to a bankruptcy court order, the
plaintiffs creditors of the bankrupt defendant were required
to file proofs of claim with the bankruptcy court to preserve
their claims against the defendants' estate. The defendants
assert that the plaintiffs failed to file proper proofs of claim
in the bankruptcy proceedings. As a threshold matter, the court
concludes that it has jurisdiction to adjudicate the defendants'
motion for summary judgment. The court further holds that the
plaintiffs did not file adequate proofs of claim for three
reasons: first, five of the plaintiffs did not individually file
proofs of claim at all; second, the other five plaintiffs filed
proofs of claim unrelated to the subject of this litigation;
third, the Dulworth Family Limited Partnership ("the
Partnership") could not file proofs of claim on behalf of the
plaintiffs. Accordingly, because the plaintiffs failed to
preserve their allegations through valid proofs of claim filed
with the bankruptcy court, the court grants the defendants' motion for
In February 1995, U.S. Office Products Company ("USOP") held
its initial public offering and subsequently grew by either
purchasing or merging with small companies. Defs.' Mem. in Supp.
of Mot. for Summ. J. ("Defs.' Mot.") at 3. One such company was
Dulworth Office Furniture Company ("DOF"). Id. In October 1997,
USOP merged with DOF (collectively, "the defendants"), a company
formerly owned by members of the Dulworth family. Id.
On September 3, 1999, ten parties Jack Dulworth, Joseph
Dulworth, Chan Milton, Edward Dulworth, Thomas Dulworth, Mary
Dulworth, Jack Dulworth Trust, Joseph Dulworth Trust, Thomas
Dulworth Trust, and Chan Milton Trust (collectively, "the
plaintiffs") filed an initial Verified Complaint ("Initial
Compl.") in Kentucky state court, asserting claims of common law
fraud, defamation, and breach of contract. Id. at 4; Defs.'
Mot. for J. on the Pleadings at 2. The plaintiffs named as
defendants both USOP, a Delaware corporation, and DOF, a Kentucky
corporation which was by then a wholly-owned subsidiary of USOP.
Defs.' Mot. for J. on the Pleadings at 2. In this Initial
Complaint, however, the plaintiffs only asserted claims against
USOP. Defs.' Mot. at 4. The defendants then removed the case to
federal court in Kentucky, and the district court denied the
plaintiffs' motion to remand, holding that the plaintiffs had
fraudulently joined DOF to defeat diversity. Id.
On January 17, 2000, the plaintiffs filed an Amended and
Substitute Verified Complaint ("Am. Compl."), which listed claims
against DOF and new claims against USOP. The complaint listed eight counts in total: two for common law and securities
fraud arising out of the merger between USOP and DOF, and six
counts based on defamation, invasion of privacy, failure to
return pledged assets, breach of contract, a declaration of
rights regarding non-competition agreements, and punitive
damages, allegedly arising from events occurring in 1998 or 1999.
Am. Compl. at 2. Because the plaintiffs brought the new
securities fraud claim against USOP under the Securities Act of
1933 and thus provided an independent basis for federal
jurisdiction, the Kentucky District Court again denied the
plaintiffs' renewed motion to remand Id. at 4. The case was
then transferred to this court. Id.
On May 26, 2000, the Partnership filed a separate lawsuit in
Kentucky state court against the defendants based on claims of
fraud, breach of contract, and promissory estoppel. Dulworth
Family Ltd. P'ship v. Dulworth Office Furniture Co., No.
00CI03437 (Jefferson Ky. Cir. Ct. May 26, 2000) ("State Compl.").
The Partnership includes Edward Dulworth, Mary Dulworth, Jack
Dulworth, Joseph Dulworth, and Chan Milton, who are also
plaintiffs in the instant suit. Defs.' Statement of Undisputed
Facts ("Defs.' Statement") ¶ 7. The other five plaintiffs in this
suit Thomas Dulworth, Jack Dulworth Trust, Joseph Dulworth
Trust, Thomas Dulworth Trust, and Chan Milton Trust are not in
the Partnership. Id.
On March 5, 2001, the defendants filed for Chapter 11
Bankruptcy in the United States Bankruptcy Court for the District
of Delaware ("the Bankruptcy Court"). Id. ¶ 1. The next day,
the defendants notified the plaintiffs of their bankruptcy
filings. Id. On May 10, 2001, the Bankruptcy Court set a July
16, 2001 deadline for persons with claims against the defendants
to file proofs of claim against the bankruptcy estate.*fn1
Id. ¶ 2. Subsequently, the Bankruptcy Court extended the
deadline to September 17, 2001 ("the Bar Date"). Id. In both of
these orders, the Bankruptcy Court stated that all "creditors
. . . must file proofs of claim" or be "forever barred, estopped
and enjoined from asserting claims." Bankr. Ct. Order dated May
10, 2001; Bankr. Ct. Order dated Aug. 6, 2001. The defendants
notified all of the plaintiffs of the Bar Date, provided
instructions for filing proofs of claim, and informed them of the
relevant deadlines. Defs.' Statement ¶ 3.
On December 13, 2001, and while the federal and state cases
were pending, the Bankruptcy Court entered an Order, that
confirmed USOP's Joint Liquidating Plan of Reorganization
(collectively, "the Plan and Order"). Bankr. Ct. Order dated Dec.
13, 2001; First Am. Plan of Reorganization dated Nov. 5, 2001.
The reorganization plan stated specifically that holders of
"Class 7 Insured Litigation Claims" had the right to prosecute
against USOP for any claims covered by liability insurance. First
Am. Plan of Reorganization dated Nov. 5, 2001 at 19-20. The
plaintiffs in this case contend that six of their eight counts
(excluding defamation and invasion of privacy) are "Class 7
Insured Litigation Claims" as defined by the reorganization plan,
because they have "claim[s] against a debtor that are the subject
of litigation pending in a court of competent jurisdiction."
Id. at 9-10. In addition, for a holder of a claim to proceed
against the defendants' estate, that holder's claim must be
"Allowed" by the Bankruptcy Court. Id. at 3. As specified by
the reorganization plan, one means by which a creditor's claim
becomes "allowed" comes into play when that creditor files a
proof of claim with the Bankruptcy Court by the Bar Date. Id. The Bankruptcy Court's confirmation order
states, in part, that Class 7 Insured Litigation Claims are
"deemed to have accepted the [reorganization] plan." Bankr. Ct.
Order dated Dec. 13, 2001 at 4. Therefore, as holders of Class 7
Insured Litigation Claims who accepted the reorganization plan,
the plaintiffs had to file timely proofs of claim with the
Bankruptcy Court in order for their claims to be "allowed."
Bankr. Ct. Order dated May 10, 2001; Bankr. Ct. Order dated Aug.
6, 2001. In addition, the Plan and Order stated that all matters
arising out of, and related to the Chapter 11 Cases were referred
to the Bankruptcy Court's jurisdiction. Bankr. Ct. Order dated
Dec. 13, 2001; First Am. Plan of Reorganization dated Nov. 5,
Five of the plaintiffs Jack Dulworth, Joseph Dulworth, Chan
Milton, Edward Dulworth, and Thomas Dulworth timely filed ten
proofs of claim, concerning accrued vacation pay in the amounts
of $5,000 or $9,999. Defs.' Statement ¶ 4. The other five
plaintiffs Mary Dulworth, Jack Dulworth Trust, Joseph Dulworth
Trust, Thomas Dulworth Trust, and Chan Milton Trust did not
file individual proofs of claim. Id. ¶ 5.
The Partnership, a named party in the state suit but not in
this suit, timely filed two proofs of claim with the Bankruptcy
Court. Id. ¶ 8. The first addressed rent, insurance paid and
maintenance in the amount of $13,834.97. Id. The second
pertained to two leases dated October 17, 1997 as well as a claim
for "Fraud, as a Plaintiff in the `Multi-District' fraud
litigation." Id. The partnership physically attached the
Partnership's Kentucky state court complaint to the second proof
of claim. Id.
The case was stayed due to the bankruptcy proceedings.
Subsequently, the plaintiffs filed a motion for summary judgment.
The court now turns to that motion. III. ANALYSIS
A. Legal Standard for Summary Judgment
Bankruptcy Rule 7056, which governs summary judgment in
bankruptcy proceedings, incorporates Rule 56 of the Federal Rules
of Civil Procedure. FED. R. BANKR. P. 7056; United States v.
Spicer, 57 F.3d 1152, 1159 (D.C. Cir. 1995). Summary judgment is
appropriate when "the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment
as a matter of law." FED. R. CIV. P. 56(c); see also Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986); Diamond v. Atwood,
43 F.3d 1538, 1540 (D.C. Cir. 1995). To determine which facts are
"material," a court must look to the substantive law on which
each claim rests. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986). A "genuine issue" is one whose resolution could
establish an element of a claim or defense and, therefore, affect
the outcome of the action. Celotex, 477 U.S. at 322;
Anderson, 477 U.S. at 248.
In ruling on a motion for summary judgment, the court must draw
all justifiable inferences in the nonmoving party's favor and
accept the nonmoving party's evidence as true. Anderson, 477
U.S. at 255. A nonmoving party, however, must establish more than
"the mere existence of a scintilla of evidence" in support of its
position. Id. at 252. To prevail on a motion for summary
judgment, the moving party must show that the nonmoving party
"fail[ed] to make a showing sufficient to establish the existence
of an element essential to that party's case, and on which that
party will bear the burden of proof at trial." Celotex, 477
U.S. at 322. By pointing to the absence of evidence proffered by
the nonmoving party, a moving party may succeed on summary
judgment. Id. In addition, the nonmoving party may not rely solely on
allegations or conclusory statements. Greene v. Dalton,
164 F.3d 671, 675 (D.C. Cir. 1999); Harding v. Gray, 9 F.3d 150,
154 (D.C. Cir. 1993). Rather, the nonmoving party must present
specific facts that would enable a reasonable jury to find in its
favor. Greene, 164 F.3d at 675. If the evidence "is merely
colorable, or is not significantly probative, summary judgment
may be granted." Anderson, 477 U.S. at 249-50 (internal
B. The Court has Jurisdiction to Adjudicate this Matter
As a threshold matter, the plaintiffs argue that this court
lacks jurisdiction to consider the defendants' motion for summary
judgment, and that the Bankruptcy Court instead possesses
exclusive jurisdiction over this proceeding. Pls.' Opp'n to
Defs.' Mot. for Summ. J. ("Pls.' Opp'n") at 2-3. The court
"Federal courts are courts of limited jurisdiction. They
possess only that power authorized by Constitution and statute."
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377
(1994); see also In re Madison Guar. Sav. & Loan Ass'n,
173 F.3d 866, 868 (D.C. Cir. 1999). Specifically, the determination
of whether a bankruptcy court has jurisdiction over a matter
involves a two-part analysis: First, federal jurisdiction over
the bankruptcy case or proceeding must exist pursuant to
28 U.S.C. § 1334, which is a broad grant of jurisdiction. In re
Majestic Energy Corp., 835 F.2d 87, 90 (5th Cir. 1988); Abbey
v. Modern Afr. One, 305 B.R. 594, 600-01 (D.D.C. 2004). Second,
whether a bankruptcy court rather than a district court can
adjudicate a matter is determined pursuant to 28 U.S.C. § 157.
First, 28 U.S.C. § 1334(b) provides that "the district courts
shall have original but not exclusive jurisdiction of all civil
proceedings arising under title 11 [Bankruptcy], or arising in or related to cases under title 11." Second, if the federal courts
have jurisdiction under 28 U.S.C. § 1334(b), a bankruptcy court,
instead of the district court, can adjudicate a matter if the
"district court . . . provide[d] that any or all cases under
title 11 and any or all proceedings arising under title 11 or
arising in or related to a case under title 11 shall be referred
to the bankruptcy judges for the district." 28 U.S.C. § 157(a).
If a referral is present, then a bankruptcy court "may hear and
determine all cases under title 11 and all core proceedings
arising under title 11, or arising in a case under title 11
. . . and may enter appropriate orders and judgments . . ."
28 U.S.C. § 157(b)(1) (emphasis added); Abbey, 305 B.R. at 601.
Claims "arising in" a case under title 11 are limited to
"administrative matters that arise only in bankruptcy cases and
have no existence outside of the bankruptcy proceeding."
Atkinson v. Kestell, 954 F. Supp. 14, 16 (D.D.C. 1997) (quoting
In re Pettibone Corp., 135 B.R. 847, 851 (Bankr. N.D. Ill.
1992)). A claim "arises under" title 11 if the claim is made
pursuant to a provision of title 11. In re Franklin Computer
Corp., 60 B.R. 795, 799 (Bankr. E.D. Pa. 1986). In contrast, "a
bankruptcy judge may hear [but not determine] a proceeding that
is not a core proceeding but that is otherwise related to a
case under title 11." 28 U.S.C. § 157(c)(1) (emphasis added). For
claims "related to" a case under title 11, the test is "whether
the outcome of that proceeding could conceivably have any effect
on the estate being administered in bankruptcy." Atkinson,
954 F. Supp. at 16 (quoting Pacor, Inc. v. Higgins, 743 F.2d 984
(3d. Cir. 1984)). One of the core proceedings listed, is
"allowance or disallowance of claims against the estate . . ."
18 U.S.C. § 157(b)(2).
Though not specifically stated by the plaintiffs, it appears
they contend that the "allowance or disallowance of claims"
against the defendants' estate is a core-proceeding under
18 U.S.C. § 157(b)(2) and has been referred to the Bankruptcy
Court's jurisdiction under 28 U.S.C. § 157(a). Pls.' Opp'n at 2-3. The plaintiffs point to the
Plan and Order from the Bankruptcy Court as conferring
jurisdiction to the Bankruptcy Court. Id. at 2. The
reorganization plan does state that "the Bankruptcy Court shall
have exclusive jurisdiction of all matters arising out of, and
related to, the Chapter 11 Cases and the Plan, including, among
other things . . . to allow or disallow any Claim . . . [and] to
hear and determine disputes arising in connection with the
interpretation, implementation or enforcement of the Plan." First
Am. Plan of Reorganization dated Nov. 5, 2001 at 45. Similarly,
the confirmation order states that the Bankruptcy Court "will
retain jurisdiction of all matters arising out of, or related to,
the Chapter 11 case." Bankr. Ct. Order dated Dec. 13, 2001 at 21.
While the plaintiffs are correct as to the Plan and Order's
substance, they are incorrect as to its application. The
plaintiffs filed their Initial Complaint on September 3, 1999,
and their Amended Complaint on January 17, 2000, over a year
before the Bankruptcy Court issued the Plan and Order. Defs.'
Mot. at 4; see generally Bankr. Ct. Order dated Dec. 13, 2001,
First Am. Plan of Reorganization dated Nov. 5, 2001. Essentially,
they assert that the Plan and Order somehow divested this court
of jurisdiction over matters related to complaints filed prior to
the Plan and Order's very existence. The language in the Plan and
Order, however, does not support this proposition. In fact, case
law supports the contrary.
"The existence of federal jurisdiction ordinarily depends on
the facts as they exist when the complaint is filed."
Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 830
(1989). As a general rule, "if jurisdiction exists at the time an
action is commenced, such jurisdiction may not be divested by
subsequent events." Freeport-McMoran Inc. v. K.N. Energy, Inc.,
498 U.S. 426, 428 (1991). Although the D.C. Circuit has not
analyzed this rule as applied to bankruptcy situations, several other circuits have. Their conclusions have
been uniform and unambiguous: district courts cannot be divested
of jurisdiction by virtue of subsequent bankruptcies even if
subsequent bankruptcy plans grant bankruptcy courts jurisdiction
over the matters in question. Olick v. Parker & Parsley
Petroleum Co., 145 F.3d 513, 515 (2d Cir. 1998) (holding that
"the district court was not divested of jurisdiction by reason of
[the plaintiff's] bankruptcy"); Celotex Corp. v. Rapid Am.
Corp., 124 F.3d 619, 626 (4th Cir. 1997) (stating that a
bankruptcy plan could not divest the district court of subject
matter jurisdiction); Mar. Elec. Co., Inc. v. United Jersey
Bank, No. 90-6057, 1992 U.S. App. LEXIS 5144, at *11 (3d Cir.
1992) (holding that a defendant's bankruptcy did not divest a
district court of its original subject matter jurisdiction under
28 U.S.C. § 1334(b)); Combined Broad., Inc. v. Urban Telecomms.
Corp., No. 91-2254, 1992 U.S. App. LEXIS 18595, at *5 (4th Cir.
Aug. 11, 1992) (rejecting a defendant's argument that "the
bankruptcy court's reservation of jurisdiction in the bankruptcy
plan effectively divested the district court of jurisdiction");
In re Worldcom, Inc. Sec. Litig., 294 B.R. 553, 557 (S.D.N.Y.
2003) (noting that allowing a bankruptcy court to divest a
district court of jurisdiction "would create perverse incentives
for the parties to engage in delay and gamesmanship in both the
bankruptcy reorganization and the related litigation").
When the plaintiffs filed their Initial and Amended Complaints
on September 3, 1999 and January 17, 2000, respectively, the
defendants' bankruptcy had not yet occurred. Thus, at these
points, only the district court had subject matter jurisdiction.
See Atkinson, 954 F. Supp. at 16 (holding that "without the
existence of an estate in bankruptcy, there is nothing for
plaintiff[s'] current action to be related to or to arise in" and
thus a bankruptcy court does not have jurisdiction). Because this
jurisdiction could not be divested by the Plan and Order's
referral clause pursuant to 28 U.S.C. § 157, this court retains
jurisdiction over this matter.
Furthermore, even if the plaintiffs had filed their complaint
after the Plan and Order's referral, this court still could have
exercised original jurisdiction. Specifically, district courts
are free to "withdraw, in whole or in part, any case or
proceeding referred" to a bankruptcy court. 28 U.S.C. § 157(d).
Thus, an order of reference, like that found in the
reorganization plan, does not necessarily preclude a district
court from 28 U.S.C. § 1334 jurisdiction. Carlton v. Baww,
Inc., 751 F.2d 781, 788 (5th Cir. 1985) (holding that "a
referral from the district court to a bankruptcy judge does not
forever divest the district court of original subject matter
The plaintiffs incorrectly rely on the proposition that "once
the district court has referred the matter to the bankruptcy
court, `both courts cannot concurrently preside over the same
aspects of [a] case.'" Pls.' Opp'n at 3 (quoting Ben Franklin
Retail Stores, Inc. v. Jackson Nat'l Life Ins. Co., 231 B.R. 717,
720 (N.D. Ill. 1999)). This argument is mistaken. This court
and the Bankruptcy Court are not presiding over "the same aspects
of [a] case," because the Bankruptcy Court, while engaged in the
administration of the defendants' estate, is not concurrently
adjudicating the present matter concerning the adequacy of the
plaintiffs' proofs of claim. In contrast, district courts and
bankruptcy courts have concurrent power, as in this case, to
adjudicate different matters between the same parties. See
Combined Broad., 1992 U.S. App. LEXIS 18595, at *5 (stating that
"a federal district court with jurisdiction over a bankruptcy
case exercises a jurisdiction merely concurrent with that of all
other courts which properly may entertain other matters involving
the same parties"). Accordingly, the court holds that it has
proper jurisdiction to entertain the defendants' motion for
summary judgment. C. The Court Grants the Defendants' Motion for Summary Judgment
The Federal Rules of Bankruptcy Procedure provide guidelines
that all creditors, such as the plaintiffs in this case, must
follow in order to advance claims against a company in
bankruptcy. In a Chapter 11 case such as this one, "any creditor
or equity security holder whose claim or interest is . . .
scheduled as disputed, contingent, or unliquidated shall file a
proof of claim." FED. R. BANKR. P. 3003(c)(2). Specifically, "a
proof of claim is a written statement setting forth a creditor's
claim" that "conform[s] substantially to the appropriate Official
Form." Id. at 3001(a). The relevant proof of claim form for
creditors is Form 10, Official Bankruptcy Forms, which requires,
inter alia, the creditor's name and address, a short
description of the basis for the claim, the date the debt was
incurred and the amount of the claim. Bankr. Form 10. A creditor
is defined as "any person, corporation, or other entity to whom
the debtor owed a debt on the date that the bankruptcy case was
filed." Advisory Comm. Notes to Bankr. Form 10 at 3 (citing
11 U.S.C. § 101). In addition, the time frame in which creditors may
file proofs of claim is up to the discretion of the bankruptcy
court. FED. R. BANKR. P. 3003(c)(3). Any creditor who fails to
file a proof of claim cannot be considered a creditor for the
purpose of distribution of the estate. Id. at 3003(c)(2).
11 U.S.C. § 105(a) provides this court with the power to issue
orders and enforce compliance with the provisions of the Federal
Rules of Bankruptcy Procedure as well as the orders of the
In this case, the Bankruptcy Court set a September 17, 2001 Bar
Date pursuant to Rule 3003(c)(3) for creditors to file proofs of
claim. Bankr. Ct. Order dated Aug. 6, 2001 at 1. Because the
plaintiffs in this case are the relevant creditors and their
claims are disputed and unliquidated, the plaintiffs were
required to file formal proofs of claim that conformed substantially to the Bankruptcy Court's Official Form before the
Bar Date in order to preserve their claims. Id. at 2; FED. R.
BANKR. P. 3003(c)(2). The defendants assert, and this court
agrees, that the plaintiffs did not follow the foregoing
procedures. First, five of the plaintiffs Mary Dulworth and the
four Trust plaintiffs failed to file any individual proofs of
claim by the Bar Date. Defs.' Mot. at 7. Second, the remaining
five plaintiffs' proofs of claim concerning accrued vacation pay
are invalid. Because vacation pay was not "the subject of
litigation pending in a court of competent jurisdiction," these
proofs of claim could not preserve the "Class 7 Insured
Litigation Claims" that are the basis of the plaintiffs' Amended
Complaint. Id. at 8; First Am. Plan of Reorganization dated
Nov. 5, 2001 at 9-10. Third, the proofs of claim filed by the
Partnership could not preserve the claims of the individual
plaintiffs both included in or excluded from the Partnership,
because the Partnership was not the creditor. Id. at 9-10. The
court will address each of these conclusions in turn.
1. The Plaintiffs Mary Dulworth, Jack Dulworth Trust, Joseph
Dulworth Trust, Thomas Dulworth Trust, and Chan Milton Trust
Concede That They Filed No Individual Proofs of Claim
First, the defendants argue that five of the plaintiffs failed
to file individual proofs of claim, Defs.' Mot. at 7, and the
plaintiffs offer no counterargument. See generally Pls.' Opp'n.
This Circuit has held that when a plaintiff's opposition
addresses only some of the arguments raised in a defendant's
dispositive motion, a court may treat those arguments that the
plaintiff failed to oppose as conceded. Fed. Deposit Ins. Corp.
v. Bender, 127 F.3d 58, 67-68 (D.C. Cir. 1997); Stephenson v.
Cox, 223 F. Supp.2d 119, 120 (D.D.C. 2002). Because the
plaintiffs failed to contest the argument that neither Mary
Dulworth nor the four Trust plaintiffs filed individual proofs of
claim, the court treats it as conceded. But, contrary to the
defendants' assertion that Mary Dulworth and the Trust plaintiffs are precluded "as a matter
of law" from seeking relief, Defs.' Mot. at 7, the matter is not
fully resolved just because these plaintiffs did not oppose every
argument advanced by the defendants. See Burke v. Gould,
286 F.3d 513
, 518 (D.C. Cir. 2002) (quoting Robbins v. Reagan,
780 F.2d 37, 52 n. 23 (D.C. Cir. 1985)) (holding that "in view of the
severity of dismissal of a potentially meritorious claim, 
treating an issue as conceded for failure to respond fully to a
motion for summary judgment should only be applied to egregious
conduct") (internal citation omitted). Mary Dulworth and the
Trust plaintiffs also rely on the alternative argument that the
Partnership can file proofs of claim on behalf of all the
plaintiffs. Pls.' Opp'n at 3-6. The court addresses this argument
below in section 3.
2. The Plaintiffs Jack Dulworth, Joseph Dulworth, Edward
Dulworth, Thomas Dulworth, and Chan Milton Concede That Their
Individual Proofs of Claim Pertaining to Accrued Vacation Pay are
Second, the defendants assert that the ten proofs of claim
filed by five of the plaintiffs Jack Dulworth, Joseph Dulworth,
Chan Milton, Edward Dulworth, and Thomas Dulworth regarding
accrued vacation pay do not constitute valid proofs of claim
under the Plan and Order. Defs.' Mot. at 8. Pursuant to the Plan
and Order, the plaintiffs' claims were Class 7 Insured Litigation
Claims, meaning that they were "the subject of litigation pending
in a court of competent jurisdiction" at the time the Plan was
consummated. First Am. Plan of Reorganization dated Nov. 5, 2001
at 9-10. Vacation pay, however, was not "the subject of
litigation pending in a court of competent jurisdiction." See
generally, Am.Compl. Therefore these proofs of claim cannot
preserve the plaintiffs' allegations. Furthermore, the plaintiffs
do not address this contention in their opposition. See
generally Pls.' Opp'n. Consequently, the court concludes that
the five plaintiffs who filed proofs of claim regarding accrued
vacation pay cannot preserve any of their claims on this basis. Bender, 127
F.3d at 67-68; Stephenson, 223 F. Supp.2d at 120.
3. The Court Concludes That the Partnership Cannot File Proofs of
Claim on Behalf of the Plaintiffs
Because the Partnership is not a named plaintiff in the federal
action and thus not the relevant creditor, its proofs of claim
preserve neither the claims made by the plaintiffs excluded from
the Partnership nor those of the plaintiffs included in the
Partnership. The Bankruptcy Court's Official Form clearly
requests the "name of creditor" who is filing a proof of claim.
FED. R. BANKR. P. 10. The Partnership is not the relevant
"creditor" in this litigation and thus this proof of claim failed
to "conform substantially" to the Official Form as required.
Id. at 3001(a). Accordingly, the court holds that the
Partnership's proof of claim was invalid.
Moreover, even if the Partnership were the relevant creditor in
this case, the proofs of claim filed by the Partnership cannot
cover those plaintiffs not in the Partnership. The defendants
point out and the plaintiffs necessarily must concede that of the
ten plaintiffs, only five Edward Dulworth, Mary Dulworth, Jack
Dulworth, Joseph Dulworth, and Chan Milton are actually in the
Partnership. Defs.' Statement at 4; see generally Pls.' Opp'n.
Contrary to the plaintiffs' assertion, the defendants' knowledge
of the Partnership's membership through their familiarity with
the State Complaint actually indicates that the defendants could
not reasonably expect that the five individuals not in the
Partnership would be covered by these proofs of claim. Therefore,
no reasonable trier of fact could find that the parties not in
the Partnership Thomas Dulworth, Jack Dulworth Trust, Joseph
Dulworth Trust, Thomas Dulworth Trust, and Chan Milton Trust
"conformed substantially" to the Bankruptcy Court's Official Form
and thus preserved their ability to hold the defendants liable. See In re
Dow Corning Corp., No. 97-1177, 1998 U.S. App. LEXIS 7119, at *
13 (6th Cir. Apr. 6, 1998) (holding that "the decision to
continue the pursuit of claims against a debtor in bankruptcy is
one all creditors must make") (emphasis added). Accordingly,
the non-partners Thomas Dulworth, Jack Dulworth Trust, Joseph
Dulworth Trust, Thomas Dulworth Trust, and Chan Milton Trust
did not file valid proofs of claim.
In addition, the Partnership's proofs of claim cannot apply
individually to the five partners in the Partnership. While the
defendants point to case law indicating that partnerships are
distinct entities from their partners, see Defs.' Reply at 5,
the court is persuaded more by the language of the Bar Date
Orders themselves. First, both of the Orders provide in pertinent
Pursuant to section 105(a) of title 11 of the United
States Code and Federal Rule of Bankruptcy Procedure
3003(c)(3), all persons and entities, including,
without limitation, individuals, partnerships,
corporations, estates, and trusts holding or
wishing to assert pre-petition claims . . . against
or interests in one or more of the Debtors are
required to file, with respect to each of the Debtors
against which a Claim is asserted, a separate,
completed and executed proof of claim or proof of
interest (conforming substantially to Official
Bankruptcy Form 10).
Bankr. Ct. Order dated May 10, 2001; Bankr. Ct. Order dated Aug.
6, 2001 (emphasis added). Not only did the orders themselves
clearly differentiate between partnerships, individuals, and
trusts, but they expressly required separate proofs of claim for
each creditor as well. Additionally, the Partnership's State
Complaint refers to the Dulworths, Chan Milton, the Dulworth
Trusts, and the Partnership as separate entities. See generally
State Compl. Thus, the plaintiffs' proofs of claim that were
filed by the partnership failed to "conform substantially" to the
This Circuit has allowed an entity other than the specific
creditor to file a proof of claim on behalf of the creditor only where the two parties are
"one and the same." In re Buckingham Super Mkts., Inc.,
631 F.2d 763, 766 (D.C. Cir. 1980). The Buckingham court allowed a
co-partnership to file bankruptcy proofs of claim on behalf of
the individual plaintiffs because the individuals traded solely
under the co-partnership's name and submitted the exact deeds and
rent collections in question to demonstrate that the plaintiffs
as individuals were the real parties in interest. Id. at
764-66. In this case, however, there is no evidence, aside from
the plaintiffs' bald assertion, to show that the Partnership and
the plaintiffs are "one and the same." Pls.' Opp'n at 4. The
State Complaint, which the plaintiff cites, actually treats the
plaintiffs and the Partnership as separate entities. Thus, the
Partnership could not file a proof of claim on behalf of the
partners, because they are not "one and the same."
The plaintiffs, in fact, do not specifically contest the
argument that they did not "conform substantially" to the
Bankruptcy Court's Official Form. See generally Pls.' Opp'n.
Instead, they place sole reliance on the argument that the
doctrine of informal proofs of claim preserves their claims.
Id. at 3-6. Their reliance is misplaced.
Although this Circuit has not expressly adopted the doctrine of
informal proofs of claim, the principle has been in existence for
almost a century, see Hutchinson v. Otis, 190 U.S. 552, 555
(1903); J.B. Orcutt Co. v. Green, 204 U.S. 96, 102 (1907), and
is still very much alive in other circuits. See, e.g., In re
M.J. Waterman & Assocs., Inc., 227 F.3d 604, 605-12 (6th Cir.
2000); In re A.H. Robins Co., Inc., 862 F.2d 1092, 1095-96 (4th
Cir. 1988); In re Anderson-Walker Indus., Inc., 798 F.2d 1285,
1285-88 (9th Cir. 1986); In re Int'l Horizons, Inc.,
751 F.2d 1213, 1217-18 (11th Cir. 1985); Fausett v. Murner, 402 F.2d 961, 962 (5th Cir. 1968); In re Gibraltor
Amusements Ltd., 315 F.2d 210 (2d Cir. 1963).
In determining what qualifies as an informal proof of claim,
courts have used two similar tests. Under the first test, a
document must "state an explicit demand showing the nature and
amount of the claim against the estate, and evidence an intent to
hold the debtor liable." United States v. Inslaw, Inc.,
113 B.R. 802, 812 (D.D.C. 1989) (quoting In re Anderson-Walker
Indus., 798 F.2d at 1287); accord In re Franciscan Vineyards,
Inc., 597 F.2d 181, 183 (9th Cir. 1979). Furthermore, it must be
apparent that "the creditor intends to seek recovery from the
estate." Inslaw, 113 B.R. at 812 (emphasis added). The second
test utilizes a five-pronged analysis and holds that the proof of
claim: (1) must be in writing; (2) must contain a demand by the
creditor on the debtor's estate; (3) must express an intent to
hold the debtor liable for the debt; (4) must be filed with the
Bankruptcy Court; and (5) based on the facts of the case, it
would be equitable to allow the amendment. In re Reliance
Equities, Inc., 966 F.2d 1338, 1345 (10th Cir. 1992) (emphasis
added); In re Waterman, 227 F.3d at 609. Courts have
consistently held that "mere notice of a claim to a debtor and
the debtor's knowledge of a claim is not enough to constitute an
informal proof of claim." Inslaw, 113 B.R. at 812; accord In
re A.H. Robins, 862 F.2d at 1095.
The purpose behind the doctrine of informal proof of claim is
"to alleviate problems with form over substance; that is,
equitably preventing the potentially devastating effect of the
failure of a creditor . . . when, in fact, pleadings filed by the
party asserting the claim . . . puts all parties on sufficient
notice that a claim is asserted by a particular creditor." In re Waterman, 227 F.3d at 609
(emphasis added). Because this is a doctrine of equity, however,
"creditors who ignore the formalistic requirements of the Code do
so at their own peril." Id.
The plaintiffs assert that this doctrine renders the
Partnership's proofs of claim sufficient to cover not only the
plaintiffs in the Partnership, but also those not in the
Partnership. The plaintiffs support this contention on the
grounds that their claims "arose out of the same overarching fact
pattern" as the Partnership's claims in the Kentucky state
lawsuit. Pls.' Opp'n at 4. Thus, because of the "inextricably
intertwined and relatively inseparable representative
relationship" between the Dulworth Trusts, the Dulworths as
individuals, and the Partnership, the Partnership's proofs of
claims are adequate to cover both the plaintiffs who are partners
and those who are not. Id.
The doctrine of informal proofs of claim helps neither case.
The principle applies most often to situations where a creditor
files a formal proof of claim past the relevant bar date. Then,
if the creditor can show the court that he made an informal proof
of claim before the bar date, the "late proof of claim may be
treated as a perfecting amendment of the informal claim."
Wilkens v. Simon Bros., Inc., 731 F.2d 462, 464 (7th Cir.
1984); see also Aer-Aerotron, Inc. v. Tex. Dep't of Transp.,
104 F.3d 677, 679 n. 2 (4th Cir. 1997) (stating that "much of the
caselaw on the subject of informal proof of claims has arisen in
the context of late claims"); In re Franciscan Vineyards, 597
F.2d at 182 (quoting In re Patterson-MacDonald Shipbuilding
Co., 293 F. 190, 191 (9th Cir. 1923)) (stating that the doctrine
of informal proofs of claim is a "rule of liberality in
amendments"); In re Judy Wood Publ'g Corp., 289 B.R. 319, 320
(Bankr. E.D. Va. 2002) (stating that "if an informal proof of claim is established by the evidence then the
court must decide if amendment to the informal proof of claim is
equitable"); In re Houbigant, Inc., 190 B.R. 185, 187 (Bankr.
S.D.N.Y. 1996) (concluding that the informal proof of claim
doctrine is designed to "alleviate the harsh results of strict
enforcement of the bar date"). In fact, one of the elements of
the five-pronged test noted supra holds that a court should
weigh the equities in deciding whether "to allow the amendment."
In re Reliance Equities, 966 F.2d at 1345.
In this case, the plaintiffs have neither filed a late proof of
claim nor sought an amendment to the proofs of claim filed by the
Partnership. Rather, the plaintiffs invoke the informal proof of
claim doctrine as standing for the proposition that erroneous or
vague proofs of claim should somehow be excused, even where no
amendment has been sought. The plaintiffs maintain that the
Partnership's proofs of claim demonstrated a mere "form over
substance" problem. Pls.' Opp'n at 4 (quoting In re Waterman,
227 F.3d at 609). Importantly, the full "form over substance"
rule of In re Waterman, which the plaintiffs omit, provides
that an informal proof of claim must "put all parties on
sufficient notice that a claim is asserted by a particular
creditor." 227 F.3d at 609 (emphasis added). Thus, the
Partnership's proofs of claim could have only put the defendants
on notice that the Partnership, and not the individual Dulworths
and Dulworth Trusts, was asserting a claim. Id.
Finally, the plaintiffs inaccurately apply Agassi v. Planet
Hollywood Int'l, Inc., 269 B.R. 543, 548-52 (D. Del. 2001), for
the proposition that creditors need not file individual proofs of
claim. In Agassi, which the court limited to "the circumstances
of th[at] case," the court held that, because the athletes as
individuals and their service companies were not distinct
entities, the service companies could file proofs of claim on
behalf of the athletes. Id. at 549. The defendants had even
acknowledged that the service companies existed for the sole
purpose of protecting the athletes from liabilities. Id. In
this case, however, the Partnership exists for numerous reasons
other than to represent the plaintiffs in potential suits.
Moreover, the instant suit concerns partnerships, not the
relationship between athletes and their service companies nor an
analogous relationship. Thus, Agassi does not persuade the
court to consider the Partnership's filing as a filing by each of
the individual creditors. Accordingly, the court grants the
defendant's motion for summary judgment. Celotex, 477 U.S. at
322; Anderson, 477 U.S. at 248.
For all these reasons, the court grants the defendants' motion
for summary judgment. An order directing the parties in a manner
consistent with this Memorandum Opinion is separately and
contemporaneously issued this 3rd day of August, 2004.