Jones v. Chemetron Corp. ( 2000 )

Opinions of the United
2000 Decisions States Court of Appeals
for the Third Circuit
5-9-2000
Jones, et al. v. Chemtron Corp.
Precedential or Non-Precedential:
Docket 99-3500
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Filed May 9, 2000
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 99-3500
PHYLLIS JASKEY JONES; PAMELA JO SWANSINGER;
SANDRA JASKEY HUJARSKI; PATRICIA HUJARSKI;
JANICE JASKEY BUTVIN; FRANK BUTVIN; ROBERT
BUTVIN; BRIAN BUTVIN; SUSAN BUTVIN; WALTER
ANIELSKI; ARLENE VANS; YVONNE VANS BEKOSCKE;
ANTHONY VANS; GREGORY VANS; CAROL SCHULTZ;
MARY SCHAFFER; BRITTANY CULL; AMANDA
SCHAFFER; IVAN SCHAFFER; STEPHANIE SCHAFFER;
THERESA HUJARSKI ROSS,
Appellants
v.
CHEMETRON CORPORATION
Appeal from the United States District Court
For the Western District of Pennsylvania
D.C. No.: 98-cv-01776
District Judge: Honorable Donald J. Lee
Argued: January 25, 2000
Before: GREENBERG, ROTH, and ROSENN,
Circuit Judges.
(Filed May 9, 2000)
Deborah J. Papushak, Esquire
(argued)
William Mitchell, Esquire
Armstrong, Mitchell, Damiani &
Zaccagnini
1725 The Midland Building
101 Prospect Avenue, West
Cleveland, OH 44115-1091
Counsel for Appellants
Micah D. Green, Esquire (argued)
Richard Gurbst, Esquire
Adam R. Fox, Esquire
Squire, Sanders & Dempsey L.L.P.
4900 Key Tower
127 Public Square
Cleveland, OH 44114-1304
Counsel for Appellee
OPINION OF THE COURT
ROSENN, Circuit Judge.
This appeal marks the second time this litigation has
come before this court. It arises out of a bankruptcy
proceeding that began when Chemetron Corporationfiled a
Chapter 11 bankruptcy petition in the United States
Bankruptcy Court for the Western District of Pennsylvania
in early 1988. The bankruptcy court confirmed
Chemetron's bankruptcy reorganization plan on July 12,
1990. On March 2, 1992, Phyllis Jaskey Jones and
fourteen other persons filed a state law tort action in the
Court of Common Pleas of Cuyahoga County, Ohio ("the
Cleveland Action") seeking monetary damages and other
relief for injuries allegedly sustained from exposure to
radioactive and other toxic and hazardous substances
Chemetron deposited at the Bert Avenue dump, a site
located in their residential neighborhood of Newburgh
Heights, Ohio. The suit was later amended to name a total
of twenty-one plaintiffs. Chemetron moved to dismiss that
action on the ground that the bankruptcy court had
2
retained jurisdiction over the issues presented when it
confirmed the reorganization plan.
The parties agreed to stay the Cleveland Action, and the
plaintiffs filed a motion in the bankruptcy court to allow
their late-filed claims, or alternatively for an adversarial
proceeding to determine that their claims had not been
discharged by the bankruptcy confirmation order. At the
time they filed their motion, the plaintiffs were scattered
across Ohio and as far away as Texas. In support of their
motion to permit late-filing, the plaintiffs argued that they
had not been provided with sufficient notice of the
bankruptcy proceeding, and that they were unaware that
their illnesses were the result of Chemetron's conduct at
the time Chemetron filed for bankruptcy. In support of their
request for a determination of nondischargeability, the
plaintiffs contended that their claims had accrued after the
confirmation of Chemetron's bankruptcy reorganization
plan.
The bankruptcy court agreed that the plaintiffs had
received inadequate notice, and permitted the latefiling. In
re Allegheny Int'l, Inc. (Jones v. Chemetron Corp.), 158 B.R.
356 (Bankr. W.D. Pa. 1993). The United States District
Court reversed. 170 B.R. 83 (W.D. Pa. 1994). The appeal
came to this court, which ruled that the plaintiffs had
received sufficient notice of the bankruptcy proceeding. We
remanded to the bankruptcy court, however, to determine
whether the plaintiffs should still be permitted tofile their
claims based on excusable neglect pursuant to Bankruptcy
Rule 9006(1). Chemetron Corp. v. Jones, 72 F.3d 341 (3d
Cir. 1995), cert. denied, 517 U.S. 1137 (1996) [hereinafter
Chemetron I].
On remand, the bankruptcy court held, by opinion and
order dated September 14, 1998, that the plaintiffs had
failed to demonstrate excusable neglect. Turning to their
motion for an adversarial proceeding, the court held that
the plaintiffs' claims had accrued prior to the bar date and
to the 1990 confirmation of Chemetron's reorganization
plan; they therefore were discharged by the court's
confirmation order. The district court affirmed by
3
memorandum opinion dated May 18, 1999. This timely
appeal followed.1 We affirm in part and reverse in part.
I.
The underlying facts are set forth in this court's prior
opinion in this case, and need only be summarized here.
Beginning in 1965, appellee Chemetron Corporation
("Chemetron") owned and operated a manufacturing facility
on Harvard Avenue in Cuyahoga Heights, Ohio, as well as
a nearby landfill on Bert Avenue in Newburgh Heights,
Ohio. From 1965 to 1972, Chemetron employed a
manufacturing process at the Harvard Avenue facility that
utilized depleted uranium. After Chemetron ceased to use
this process, it demolished a portion of its Harvard Avenue
facility and placed a quantity of rubble from the demolition
in the Bert Avenue landfill.2 This rubble was apparently
contaminated due to radiation exposure.
Between 1980 and 1988, Chemetron was involved in
periodic clean-up efforts at both the Harvard Avenue and
Bert Avenue sites at the direction of the Nuclear Regulatory
Commission ("NRC"), with some involvement by the federal
and Ohio Environmental Protection Agencies. The presence
of hazardous materials at the Bert Avenue dump and these
efforts to clean up the area received considerable local
attention beginning shortly after its discovery in 1980. The
local press reported on these cleanup efforts for the next
decade. Town meetings were held in which environmental
officials explained the situation to area residents. A
community watchdog group formed that distributed a
questionnaire to everyone in the neighborhood requesting
information about contact with the dump and medical
conditions suffered. The mayor's office sent out a newsletter
in 1980 noting concern about the contamination. As early
_________________________________________________________________
1. The bankruptcy court had subject matter jurisdiction pursuant to 28
U.S.C. S 157. The district court had appellate jurisdiction pursuant to 28
U.S.C. S 158(a). This court has appellate jurisdiction pursuant to 28
U.S.C. S 158(d).
2. Later in 1975, Chemetron sold both sites to McGean Chemical
Company. McGean Chemical Co. subsequently merged with Rohco, Inc.,
to become McGean-Rohco, Inc., the current owner of both sites.
4
as 1980, another resident in the area filed a lawsuit against
Chemetron charging that the presence of hazardous
materials at the Bert Avenue dump was responsible for her
daughter's health problems.
For the next decade, cleanup efforts persisted, but as this
court noted in its earlier decision in this case, these efforts
were of "dubious" efficacy. Chemetron I , 72 F.3d at 344. By
1990, local attention swelled again, recognizing that the
contamination danger persisted. Although press accounts
were at times ambiguous concerning the severity of the
danger presented by the Bert Avenue dump, some articles
reported that several families in the neighborhood were
suffering adverse health effects.
On February 20, 1988, Chemetron filed a petition for
reorganization under Chapter 11 of the Bankruptcy Code.
Following Bankruptcy Rule 3003(c)(3), the bankruptcy
court issued a bar date order, fixing the claims bar date at
May 31, 1988. Under bankruptcy law, the bar date is the
last day on which existing claims can be filed against the
debtor. The bar date order required that actual notice be
provided to all persons known to have claims against the
debtors. The order required notice to all other claimants by
publication in the national editions of the New York Times
and Wall Street Journal. Chemetron complied with the
order and, in addition, voluntarily published notice in seven
other newspapers in areas where it was doing business at
the time of the filing. On July 12, 1990, the bankruptcy
court confirmed Chemetron's reorganization plan.
Nevertheless, Jones and the other plaintiffs assert in
affidavits that they were unaware of the degree of risk
posed to their health and safety by the contaminated site
until after reading about a 1991 federal lawsuitfiled
against Chemetron in Cleveland by other local residents.
Only then, the plaintiffs assert, did they contact lawyers,
who proceeded to gather their medical records, have these
records analyzed by physicians, and subsequently report to
the plaintiffs that their health problems resulted from the
contamination.
In March 1992, almost four years after the claims bar
date and twelve years after the first newspaper articles
5
reported on contamination at the sites, Phyllis Jones and
ultimately twenty other individuals brought suit against
Chemetron, McGean Chemical Co., and McGean-Rohco,
Inc., in the Court of Common Pleas of Cuyahoga County,
Ohio. The gravamen of the complaint alleged injury from
exposure to toxic chemicals as a result of time spent living
in or visiting the Bert Avenue area.
Of the twenty-one plaintiffs, one, Ivan Schaffer, was born
on August 27, 1992, more than two years after the
bankruptcy court confirmed Chemetron's plan of
reorganization.
II.
We first discuss the plaintiffs' claim that the bankruptcy
court erred in concluding that they failed to demonstrate
excusable neglect. Next, we address their argument that the
bankruptcy court erred in finding that their claims arose
prior to the confirmation of Chemetron's bankruptcy
reorganization plan. Finally, we revisit the issue of notice
with regard to one of the plaintiffs.
A.
On remand from this court's decision in Chemetron I, the
plaintiffs argued that the bankruptcy court should permit
them to file their claims late because their failure to file
prior to the May 31, 1998 bar date was attributable to
excusable neglect.3 The district court affirmed the
bankruptcy court's ruling that the plaintiffs failed to
demonstrate excusable neglect under the test enunciated in
Pioneer Investment Services Co. v. Brunswick Associates
Limited Partnership, 507 U.S. 380, 395 (1993). 4 It
_________________________________________________________________
3. Federal Rule of Bankruptcy Procedure 9006(b)(1) provides:
[W]hen an act is required or allowed to be done at or within a
specified period by these rules or by a notice given thereunder or
by
order of court, the court for cause shown may at any time in its
discretion . . . on motion made after the expiration of the
specified
period permit the act to be done where the failure to act was the
result of excusable neglect.
4. Under this test, to show "excusable neglect" sufficient to waive the
requirement that all bankruptcy claims be filed by the bar date, a
6
concluded that to allow the plaintiffs to proceed with claims
potentially amounting to $36 million four years after
Chemetron's bankruptcy petition was filed and two years
after its reorganization plan was confirmed "would cause
disruption to the bankruptcy process that has already
taken place," and therefore would cause extreme prejudice
to the debtor." (Bankr. Op. at 7). It further noted that "the
length of delay in this case was significant," and that the
plaintiffs did not contest this. (Bankr. Op. at 8). The court
also concluded that there is no evidence of bad faith on the
part of the plaintiffs. (Bankr. Op. at 15). Finally, the court
rejected the plaintiffs' arguments (1) that Chemetron's
prepetition actions contributed to their delay infiling their
claim, by Chemetron's misrepresentation of the danger
present at the Bert Avenue dump to the relevant
government agencies and to the public (Bankr. Op. at 9); (2)
that the investigating agencies failed to adequately
investigate or independently follow up with Chemetron's
clean-up efforts; and (3) that newspaper accounts
inaccurately reported the extent of the contamination, and
failed to warn the community that residents could suffer
physical harm from the exposure.
The bankruptcy court made the following pertinent
findings:
[Chemetron's cleanup] efforts were not satisfactory
according to reports by the NRC. However, in the
summer and early fall of 1980, several newspaper
articles were published in the Cleveland Plain Dealer
and Cleveland Press regarding the contamination and
the concerns expressed by the residents of the area.
Specifically, articles appeared in the Cleveland Plain
Dealer on 7/9/80, 9/5/80, 9/10/80, 9/12/80,
11/21/80 and 11/21/80. The Cleveland Press also had
an article on July 8, 1980. In particular, one article
_________________________________________________________________
bankruptcy court must make an equitable inquiry into the totality of the
relevant circumstances. Relevant circumstances to be considered include
(1) the danger of prejudice to the debtor, (2) the length of the delay and
its potential impact on judicial proceedings, (3) the reason for the
delay,
including whether it was within the reasonable control of the movant,
and (4) whether the movant acted in good faith. Id.
7
reported on a town meeting held in September of 1980
to address residents concerns about the levels of
radiation in the area. The article indicated that six
members of the Nuclear Regulatory Commission as well
as approximately 80 people from the community were
in attendance. The residents were informed that while
levels of radiation were present on the Chemetron and
McGean properties, the levels were not high enough to
cause harm.
In addition to the potential dangers being reported in
the newspapers, members of the community organized
and formed the Concerned Citizens of Newburgh
Heights. This association prepared and distributed a
community health survey which stated that the citizens
were working to remove the danger of hazardous waste
from the community.
Several investigative and administrative agencies
were involved in the assessment and cleanup efforts in
conjunction with the NRC including the U.S.
Environmental Protection Agency ("EPA"), the Ohio
Environmental Protection Agency and the Ohio Health
Department. A Congresswoman made inquiry and
follow up inquiry to the federal EPA in the fall of 1980
into 1981. There was awareness of the site and
attention focused on it by at least 1980. This level of
awareness and inquiry does not support plaintiffs
contention that misrepresentations by Chemetron
hindered them from learning the necessary
information.
(Bankr. Op. at 11-12). Based on these findings, the court
further found "that the toxic site was well known in the
community." (Bankr. Op. at 12).
Moreover, the court found that even assuming
Chemetron did mislead or provide inadequate information
regarding the contamination to the community, the
plaintiffs failed to adequately investigate the situation
themselves, a factor wholly within their control. Specifically,
the court noted that "[n]ot one of [the plaintiffs'] affidavits
indicates what efforts had been made through the course of
plaintiffs' medical history to determine the cause of their
8
injuries until they learned of the class action suitfiled by
the other residents . . . [,] despite the fact that certain
affidavits state that the families had serious health
problems." (Bankr. Op. at 14). Moreover, the court noted
that "nothing in the record[ ] . . . suggest[s] that plaintiffs
sought information from Chemetron which may have
assisted them in their determination which was denied."
(Bankr. Op. at 14-15).
We must accept the bankruptcy court's factual
determinations unless clearly erroneous. See Fed. R.
Bankr. P. 8013. Our review of issues of pure law, or mixed
questions of law and fact, is plenary. See Mellon Bank, N.A.
v. Metro Communications, Inc., 945 F.2d 635, 642 (3d Cir.
1991), cert. denied, 503 U.S. 937 (1992). We review the
bankruptcy court's ultimate determination regarding the
existence of excusable neglect for abuse of discretion. See
In re Vertientes, Ltd., 845 F.2d 57, 59 (3d Cir. 1988).
On appeal, the plaintiffs contend that the bankruptcy
court imposed an "unreasonable burden" on them because
they had no way of knowing that they had a claim against
Chemetron prior to the 1988 bar date, and therefore the
delay was beyond their control. The burden of proving
excusable neglect lies with the late-claimant. See In re
Trump Taj Mahal Assoc., 156 B.R. 928, 936 (Bankr. D.N.J.
1993), aff 'd, Civ. A. No. 93-3571, 1993 WL 534494, at *5
(D.N.J. Dec. 13, 1993).5 Moreover, "[i]gnorance of one's own
claim does not constitute excusable neglect." In re Best
Prods. Co., Inc., 140 B.R. 353, 359 (Bankr. S.D.N.Y. 1992),
cited with approval in In re Trans World Airlines, Inc., 96
F.3d 687, 690 (3d Cir. 1996).
We conclude that the determinations of the bankruptcy
court that contamination generally was known in the
community in the early 1980's, and that some residents
publicly expressed concern about the health effects of these
toxins in press accounts and at public meetings, are
_________________________________________________________________
5. The plaintiffs, relying on cases involving motions for summary
judgment, suggest that the bankruptcy court should have viewed the
facts in a light more favorable to them. This case does not involve
summary judgment, however, and therefore the bankruptcy court
properly placed the burden on the plaintiffs.
9
supported by the record. Moreover, as discussed in greater
detail in Part II.B. below, the record supports the court's
observation that the plaintiffs introduced no evidence to
show what measures they took to specifically investigate
the cause of their medical problems. Therefore, these
findings are not clearly erroneous.6
Accordingly, the bankruptcy court committed no abuse of
its discretion in holding that the plaintiffs have failed to
sustain their burden of proving excusable neglect. The
prejudice to the "fresh start" to which Chemetron was
entitled as a result of the Chapter 11 reorganization, the
delay of four years after the bar date and two years after
the confirmation date before the plaintiffs brought their
claim, and their failure to specifically investigate the cause
of their illnesses, even though the danger from the Bert
Avenue dump generally was known in the community,
combine to defeat their request that they be permitted to
file late claims.
B.
The plaintiffs also filed a motion for an adversarial
proceeding requesting a determination by the bankruptcy
court that even absent excusable neglect, their claims arose
after the confirmation of Chemetron's bankruptcy
reorganization plan. Therefore, their Cleveland Action was
unaffected by the earlier bankruptcy proceeding.
The parties dispute the correct standard for determining
when the plaintiffs' claims arose. Chemetron contends that
the question of when the plaintiffs' claims arose is not
governed by state law dictating when a cause of action
_________________________________________________________________
6. The plaintiffs make an additional argument that the bankruptcy court
should have concluded that their failure to file claims prior to the bar
date was excusable because they are insufficiently sophisticated to know
that they might have claims against Chemetron. (Appellants' Br. at 31-
32). However, the plaintiffs' degree of sophistication is an issue that is
relevant to the adequacy of the notice of bankruptcy proceedings they
received, In re Grand Union Co., 204 B.R. 864, 872, 880 (Bankr. D. Del.
1997), not to the issue of excusable neglect. The adequacy of notice in
this case was (with one exception, discussed infra at note 14)
conclusively decided by this court in Chemetron I.
10
accrues, but rather by a federal common law of
bankruptcy. Although significant authority supporting this
proposition exists in other circuits, this circuit has held the
reverse. In Matter of Frenville Co., Inc., 744 F.2d 332 (3d
Cir. 1984), cert. denied, 469 U.S. 1160 (1985), this court
held that in most circumstances a "claim" arises for
bankruptcy purposes at the same time the underlying state
law cause of action accrues. Id. at 337. We are cognizant of
the criticism the Frenville decision has engendered,7 but it
remains the law of this circuit. See Matter of Penn Central
Transp. Co., 71 F.3d 1113, 1114-15 (3d Cir. 1995) (applying
rule of Frenville), cert. denied, 517 U.S. 1221 (1996); In re
Bryer, 216 B.R. 755, 759 (Bankr. E.D. Pa. 1998) (same).
Accordingly, this court must look to Ohio tort law to
determine when the plaintiffs' claims accrued.
The Ohio Supreme Court has held that where an injury
is latent, the "discovery rule" dictates that a cause of action
based on that injury accrues, for statute of limitations
purposes, when the injury is manifest and when the injured
party knows or has reason to know the cause of the injury.
Liddell v. SCA Servs. of Ohio, Inc., 635 N.E.2d 1233, 1237-
39 (Ohio 1994); O'Stricker v. Jim Walter Corp. , 447 N.E.2d
727, 732 (Ohio 1983). That court, however, has never
addressed whether knowledge of causation is required even
where an injury is manifest, i.e., where the plaintiff is
aware of actual physical harm. Ohio law is not particularly
clear on this issue.
Nevertheless, several Ohio courts have held that some
_________________________________________________________________
7. See, e.g., Epstein v. Official Comm. of Unsecured Creditors of Estate
of
Piper Aircraft Corp., 58 F.3d 1573, 1576 n.2 (11th Cir. 1995); Grady v.
A.H. Robins Co., Inc., 839 F.2d 198, 201-02 (4th Cir.), cert. dismissed
sub nom. Joynes v. A.H. Robins Co, Inc., 487 U.S. 1260 (1988); In re
Black, 70 B.R. 645, 648-51 (Bankr. D. Utah 1986); Acevedo v. Van Dorn
Plastic Machinery Co., 68 B.R. 495, 497-98 (Bankr. E.D.N.Y.1986); In re
Johns-Manville Corp., 57 B.R. 680, 688-90 (Bankr. S.D.N.Y. 1986); In re
Edge, 60 B.R. 690, 701-05 & n.13 (Bankr. M.D. Tenn. 1986); In re
Yanks, 49 B.R. 56, 57-59 (Bankr. S.D. Fla. 1985); In re Baldwin-United
Corp., 48 B.R. 901, 903 (Bankr. S.D. Ohio 1985); Ralph R. Mabey &
Annette W. Jarvis, In re Frenville: A Critique by the Nat'l Bankruptcy
Conference's Comm. on Claims & Distributions, 42 Bus. Law. 697, 703-14
(1987).
11
knowledge of the relationship between the putative
plaintiff 's injury and the illegal conduct responsible for that
injury is required for a cause of action to accrue (although
they disagree about the required degree of knowledge
regarding how proximately the injury resulted from the
defendant's conduct). Barker v. A.H. Robins Co. , No. 84AP-
297, 1985 WL 9826 (Ohio Ct. App. Jan. 17, 1985), an
unpublished decision of the Court of Appeals of Ohio, is
most directly on point. There, the plaintiff brought an
action to recover damages for an infection requiring
removal of her left ovary, resulting from her use of
defendant's intra-uterine device. The trial court dismissed
the complaint on statute of limitations grounds.
Interpreting Ohio precedent, the Court of Appeals held that
application of the "discovery rule" in all cases of bodily
injury requires a determination as to when the plaintiff
knew or should have known of the "causal relationship"
between the defendant's actions and her injuries. Id. at *5-
6. In so holding, the court expressly rejected the notion that
the knowledge of causation required by cases like O'Stricker
was limited to situations in which the plaintiff 's injuries
were latent. Id.8
Apparently assuming without deciding that such a rule
applied, the bankruptcy court found that the plaintiffs had
_________________________________________________________________
8. Ohio statutes also provide for application of the discovery rule to
various torts. Most relevant here is Ohio Revised Code S 2305.10, which
states:
(A) . . . [A]n action . . . for bodily injury . . . shall be
brought within
two years after the cause of action accrues. Except as provided in
divisions (B)(1) to (4) of this section, a cause of action accrues
under
this division when the injury . . . occurs.
(B)(1) For purposes of division (A) of this section, a cause of
action
for bodily injury . . . that is caused by exposure to hazardous or
toxic chemicals . . . accrues upon the date on which the plaintiff
is
informed by competent medical authority that the plaintiff has an
injury that is related to the exposure, or upon the date on which
by
the exercise of reasonable diligence the plaintiff should have
known
that the plaintiff has an injury that is related to the exposure,
whichever date occurs first.
Ohio Rev. Code Ann. S 2305.10 (emphasis added).
12
failed to present evidence to show that they satisfied their
duty to investigate the cause of their manifest injuries.
Specifically, the court noted that the record amply
demonstrated that other residents in the Newburgh Heights
community were aware of the existence of harmful
substances at the Bert Avenue dump prior to 1990. (Bankr.
Op. at 21-23). The bankruptcy court also found it
significant that one neighborhood resident, Barbara Looby,
had made inquiry into a connection between medical
conditions and exposure to toxins present at the dump as
early as 1980. (Bankr. Op. at 22). The court found that
there was no reason
that competent medical authority was unable to make
the appropriate diagnosis. There is nothing to suggest
that the medical community at the time did not have
the knowledge or necessary scientific evidence to
determine medical conditions resulting from toxic
exposure.
(Bankr. Op. at 22). Accordingly, the bankruptcy court
determined that had the plaintiffs undertaken a reasonable
investigation of the cause of their manifest injuries, they
would have discovered this potential cause, and their
causes of action would have arisen prior to thefiling of
Chemetron's bankruptcy petition. Consequently, the court
held their claims were discharged by the 1990 confirmation
order.
On appeal, the plaintiffs contend that the bankruptcy
court's factual findings were clearly erroneous. Specifically,
they contend that the court erred in finding that they failed
to investigate the cause of their injuries. In support of this
contention, however, the plaintiffs primarily argue that
notwithstanding press accounts, community meetings and
newsletters from the mayor's office, they personally were
unaware of the danger posed by the dump. Moreover, they
claim that Chemetron contributed to their obliviousness
because it knew what chemicals were present at the dump,
but lied to the community about it.
As the bankruptcy court observed, the Ohio Supreme
Court has superimposed on the "discovery rule" a
"reasonable investigation" requirement, which essentially
13
acts to end the tolling of the statute of limitations prior to
actual discovery of the nature and cause of a putative
plaintiff 's injury at the time he or she should have
discovered this information through the exercise of
reasonable diligence. See Flowers v. Walker, 589 N.E.2d
1284, 1288-89 (Ohio 1992);9 see also Ohio Rev. Code Ann.
S 2305.10 (cause of action may accrue "upon the date on
which by exercise of reasonable diligence the plaintiff
should have known that the plaintiff has an injury that is
related to the exposure"). Even the U.S. Supreme Court has
recognized the importance of a policy requiring prospective
plaintiffs to "initiate a prompt inquiry" regarding a
negligence cause of action. United States v. Kubrick, 444
U.S. 111, 118, 122 (1979) (addressing accrual of claim
under Federal Tort Claims Act); see also Zeleznik v. United
States, 770 F.2d 20, 22-23 (3d Cir. 1985), cert. denied, 475
U.S. 1108 (1986). Accordingly, we now turn to an analysis
of whether the plaintiffs satisfied this diligence requirement.
In their brief to this court and at oral argument, the
plaintiffs have made reference to their repeated visits to
their treating physicians.10 Notwithstanding these
_________________________________________________________________
9. Flowers was a medical malpractice case, which was governed by a one
year statute of limitations. The court noted that in Ohio, the "discovery
rule" had been judicially imposed in determining when such actions
accrue. Id. at 1287. The court then held that "[a] plaintiff need not have
discovered all the relevant facts necessary to file a claim in order to
trigger the statute of limitations. . . . Rather, the `cognizable event'
itself
puts the plaintiff on notice to investigate the facts and circumstances
relevant to her claim in order to pursue her remedies." Id. at 1287-88.
The court further held "the identity of the practitioner who committed
the alleged malpractice is one of the facts that the plaintiff must
investigate, and discover, once she has reason to believe that she is a
victim of medical malpractice." Id. at 1288. There is no reason to believe
the Ohio Supreme Court would not impose a similar diligence
requirement in a toxic tort case such as this. See also supra note 8
(quoting Ohio Rev. Stat. Ann. S 2305.10).
10. The plaintiffs assert that the bankruptcy court "placed an
unreasonable burden upon [them] to have greater knowledge than their
physicians or the regulatory agencies which were involved in
investigating the site." (Appellants' Br. at 27, 32). They contend:
[T]he Appellants in this case had no reason to question their
physicians about the possibility that their illnesses might have
been
14
assertions, however, there is no evidence at all on this
record that thirteen of the twenty-one plaintiffs even visited
doctors to determine the cause of their medical problems.
Seventeen of the plaintiffs in this case submitted
affidavits in support of their filings in the bankruptcy court.
Four of these affidavits imply, without stating directly, that
the affiants had been to see doctors about their health
problems. These affidavits include the following language:
During the process of gathering medical information
[for evaluation for this lawsuit], and in the normal
course of my continuing treatment for various medical
problems, I informed my treating physicians and
nurses of the investigations our attorneys were
conducting relating to the radioactive substances and
chemicals. While none of those physicians made any
statements to me as to the relationships between my
medical problems and these substances and chemicals,
they were all extremely interested.
_________________________________________________________________
caused by their exposure to radiation and hazardous substances at
the Toxic Sites. When Appellants finally acquired the suspicion
that
their illnesses were caused by such exposure, their treating
physicians still did not express an opinion that linked their
illnesses
to the exposure.
* * *
The fact is -- these Appellants knew what their doctors told them,
and were reasonable in relying upon those statements until they
were told otherwise by competent medical authority.
(Appellants' Br. at 42 (emphasis in original)). Finally, they state:
Even when Appellants' treating physicians were asked about a
connection between their exposure to Toxic Sites and their
injuries,
their treating physicians did not identify a connection.
* * *
The Appellants in this proceeding have regularly seen physicians
for
treatment of their injuries, but were never advised by their
physicians of a causal connection between their exposure to the
Toxic Sites and their illnesses.
(Appellants' Br. at 47).
15
(Appendix at B-496 (affidavit of Phyllis Jones), B-509
(affidavit of Janice Jaskey Butvin), B-525 (affidavit of Arlene
Vans), B-538 (affidavit of Sandra Jaskey Hujarski)). One
additional affidavit states "for years my daughters and I
had been suffering from numerous health problems for
which our doctors had been unable to find a cause."
(Appendix at B-499 (affidavit of Mary Schaffer 11). These
affidavits, which at most indicate that only seven of the
plaintiffs even went to see a physician about their medical
problems,12 constitute the only evidence offered by the
plaintiffs of efforts they took to determine the cause of their
injuries. However, this vague evidence does not indicate
when these seven plaintiffs first made attempts to see
physicians or what other efforts they made to determine the
cause of their injuries in a timely manner.
Accordingly, with regard to twenty of the twenty-one
plaintiffs, the bankruptcy court's finding that these
plaintiffs failed to diligently investigate the cause of their
injuries is not clearly erroneous. Its holding that these
plaintiffs' claims were discharged by the 1990 confirmation
order is therefore affirmed.
C.
We note, however, that one of the plaintiffs, Ivan
Schaffer, was not born until August 27, 1992, more than
two years after the bankruptcy court confirmed
Chemetron's plan of reorganization. We believe his situation
merits separate discussion.
Under Chapter 11 of the Bankruptcy Code, "the
confirmation of a plan . . . discharges the debtor from any
debt that arose before the date of such confirmation." 11
U.S.C. S 1141(d)(1)(A). Thus, in most circumstances,
"confirmation of the debtor's reorganization plan discharges
all prior claims against the debtor." Chemetron I, 72 F.3d at
_________________________________________________________________
11. Mary Schaffer's daughters are Amanda and Stephanie Schaffer, both
plaintiffs to this action.
12. These are Phyllis Jones, Janice Jaskey Butvin, Arlene Vans, Sandra
Jaskey Hujarski, Mary Schaffer, Amanda Schaffer and Stephanie
Schaffer.
16
346.13 However, if a potential claimant lacks sufficient
notice of a bankruptcy proceeding, due process
considerations dictate that his or her claim cannot be
discharged by a confirmation order. In re Trans World
Airlines, Inc., 96 F.3d 687, 689-90 (3d Cir. 1996);
Chemetron I, 72 F.3d at 346; In re Harbor Tank Storage Co.,
385 F.2d 111, 115-16 (3d Cir. 1967).
Such due process considerations are often addressed by
the appointment of a representative to receive notice for
and represent the interests of a group of unknown
creditors. See, e.g., Hatch v. Riggs Nat'l Bank, 361 F.2d
559, 566 (D.C. Cir. 1966); In re Piper Aircraft Corp., 168
B.R. 434, 436, 440 & n.12 (S.D. Fla. 1994), aff 'd, 58 F.3d
1573 (11th Cir. 1995). In In re Amatex, 755 F.2d 1034 (3d
Cir. 1985), this court held that a representative could be
appointed to represent the interests of future unknown
asbestos claimants in bankruptcy reorganization
proceedings because such claimants are "sufficiently
affected by the reorganization proceedings" as to require
some voice in them and therefore qualify as "parties in
interest" under 11 U.S.C. S 1109(b). Id. at 1041-43. Accord
In re Forty-Eight Insulations, Inc., 58 B.R. 476, 477 (Bankr.
N.D. Ill. 1986); In re UNR Indus., Inc., 46 B.R. 671, 675
(Bankr. N.D. Ill. 1985); In re Johns-Manville Corp., 36 B.R.
743, 747-49 (Bankr. S.D.N.Y. 1984). The Amatex court did
not decide whether future claimants are "creditors" who
possess "claims" that may be discharged by a bankruptcy
confirmation order. Id. at 1043. We need not reach this
issue, however, because in the instant case there exists a
more fundamental problem. Ivan Schaffer cannot be
deemed to have received adequate notice of Chemetron's
_________________________________________________________________
13. See also Epstein v. Official Comm. of Unsecured Creditors of Estate of
Piper Aircraft Corp., 58 F.3d 1573, 1576, 1577 (11th Cir. 1995); In re
Christopher, 28 F.3d 512, 515 (5th Cir. 1994); In re Waterman S.S. Corp.,
157 B.R. 220, 221 (S.D.N.Y. 1993); In re The Charter Co., 113 B.R. 725,
728 (M.D. Fla. 1990); In re Eagle-Picher Indus., Inc., 216 B.R. 611, 615
(Bankr. S.D. Ohio 1997); In re Nevada Emergency Servs., Inc., 39 B.R.
859, 861, 862 n.4 (Bankr. D. Nev. 1984).
17
Chapter 11 bankruptcy proceeding, because no effort was
made to address his potential claims in that proceeding.14
Where no action is taken to address the interests of
unborn future claimants in a Chapter 11 bankruptcy
reorganization proceeding, the reorganized former debtor
cannot later avoid liability to such claimants by arguing
that their claims were discharged in bankruptcy. Under
fundamental notions of procedural due process, a claimant
who has no appropriate notice of a bankruptcy
reorganization cannot have his claim extinguished in a
settlement pursuant thereto. See, e.g. , Mullane v. Central
Hanover Bank & Trust Co., 339 U.S. 306, 314-19 (1950);
Chemetron I, 72 F.3d at 346; In re Savage Indus., Inc., 43
F.3d 714, 721 (1st Cir. 1994). Here, Ivan Schaffer had no
notice of or participation in the Chemetron reorganization
plan. No effort was made during the course of the
bankruptcy proceeding to have a representative appointed
to receive notice for and represent the interests of future
claimants. Therefore, whatever claim Ivan Schaffer may
now have was not subject to the bankruptcy court's bar
date order, Conway v. White Trucks, 885 F.2d 90, 97 (3d
Cir. 1989), and was not discharged by that court's
confirmation order.
Chemetron contends that as a future claimant, Ivan
Schaffer had sufficient notice of the bankruptcy proceeding
because his mother, also a plaintiff to this action, had
notice of the proceeding and was qualified to act as
guardian for her unborn children. Although we do not
dispute that a parent can represent the interests of her
minor children, because of the imponderables involved, we
do not believe the law imposes a duty upon a parent to take
action to protect a potential claim of a child not yet
conceived or born. Nor do we believe that in a Chapter 11
reorganization, a bankruptcy court is obligated sua sponte
to appoint a representative to deal with future interests if
_________________________________________________________________
14. In Chemetron I, we held that the plaintiffs had received sufficient
notice of the bankruptcy proceedings. However, it is apparent from the
face of that decision that this court did not consider the specific
question
of whether sufficient notice was provided to unborn future claimant Ivan
Schaffer. Therefore, that decision does not bind us as to this issue.
18
no request is made. See Locks v. United States Trustee, 157
B.R. 89, 95-99 (W.D. Pa. 1993); cf. In re Chicago, Rock
Island & Pac. R.R. Co., 788 F.2d 1280, 1282 (7th Cir. 1986)
(holding the Fed. R. Civ. P. 17(c) does not impose on federal
courts duty to appoint guardians for all potential litigants
who cannot represent themselves).15 Such a duty would
impose an enormous and unreasonable responsibility of
prescience on the courts. Accordingly, we hold that the
potential claim of an unborn child not represented in
bankruptcy reorganization proceedings is not discharged by
a confirmation order.
III.
Conclusion
For the foregoing reasons, the judgment of the district
court will be affirmed except as to plaintiff Ivan Schaffer. As
to Ivan Schaffer, the May 18, 1999 order of the district
court will be reversed and the case remanded with
instructions to direct the bankruptcy court to issue a
declaration that his potential claim was not discharged by
the July 12, 1990 confirmation order. Each side to bear its
own costs.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
_________________________________________________________________
15. We do not address whether such appointment is mandatory in
bankruptcy liquidation proceedings. Compare Forty-Eight Insulations, 58
B.R. at 477 (appointing futures representative in liquidation proceeding
because after debtor-entity dissolves, future claimants will have no
recourse) with Locks, 157 B.R. at 96 (appointment of futures
representative in liquidation proceeding unnecessary).
19