Siemens Energy & Automation Inc. v. Good

In the
United States Court of Appeals
For the Seventh Circuit
____________
Nos. 03-3019, 03-3042 & 03-3149
IN RE: HEARTLAND STEEL, INC.,
Debtor,
SIEMENS ENERGY & AUTOMATION INC., BASCON,
INC., and VOEST-ALPINE INDUSTRIES, INC.,
Appellants,
v.
MARGARET M. GOOD, Liquidating Agent for
Heartland Steel, Inc. Liquidation Trust,
Appellee.
____________
Appeals from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. 1:02-cv-01252-LJM-WTL—Larry J. McKinney, Chief Judge.
____________
ARGUED MARCH 29, 2004—DECIDED NOVEMBER 22, 2004
____________
Before CUDAHY, ROVNER, and WOOD, Circuit Judges.
ROVNER, Circuit Judge. The facts of the underlying
bankruptcy action in this matter are complex, but only the
most basic facts are necessary for purposes of this appeal of
a deadline dispute. In resolution of Chapter 11 bankruptcy
proceedings filed by debtor Heartland Steel, Inc., the
2 Nos. 03-3019, 03-3042 & 03-3149
bankruptcy court below issued an order (“confirmation
order”) confirming the liquidation plan (“plan”) of the debtor.
According to the terms of the plan, a liquidating agent— the
subsequently appointed Margaret M. Good—would be
responsible for among other things, filing objections to
claims made by creditors. Three of those claims were filed
by Siemens Energy & Automation, Inc., Bascon Inc., and
Voest-Alpine Industries, Inc.—all of whom had perfected
statutory mechanic’s liens against the debtor’s steel mill
facility. (Collectively, we will refer to the claimants as
“mechanic’s lien claimants”). The liquidating agent filed
objections to all three of these claims. The sole issue pre-
sented in this appeal is whether the liquidating agent’s
objections were timely filed.
The answer to that question hinges on Section 10.1 of the
plan which prescribes the time limit for filing objections to
claims and states as follows:1
Time Limit for Objections to Claims.
Objections to Claims . . . shall be filed by the
Liquidation Trustee (subject to the approval of the
Steering Committee) with the Court and served on each
holder of each of the Claims to which objections are
made not later than ninety (90) days after the Effective
Date, or within such time period as may be fixed by the
Court.
(R. at 3, Doc. No. 414, p.27). Both parties agree that the
plan became effective on Monday, December 10, 2001. The
ninetieth day after the effective date, therefore, fell on
Sunday, March 10, 2002. The liquidating agent mailed her
objections to the mechanic’s lien claimants and to the bank-
1
The plan uses the term Liquidation Trustee rather than liq-
uidating agent.
Nos. 03-3019, 03-3042 & 03-3149 3
ruptcy court on Thursday, March 7, 2002, and the court
received and filed those objections on Monday, March 11,
2002—the ninety-first day after the effective date, but the
first business day after the Sunday deadline.
The liquidating agent argues that she timely filed her
objections first and foremost because Federal Bankruptcy
Rule 9006(a) automatically extended the Sunday filing to
the next business day. Rule 9006 (a) states:
In computing any period of time prescribed or allowed
by these rules or by the Federal Rules of Civil Proce-
dure made applicable by these rules, by the local rules,
by order of court, or by any applicable statute, . . . [t]he
last day of the period so computed shall be included,
unless it is a Saturday, a Sunday, or a legal holiday . . .
in which event the period runs until the end of the next
day which is not one of the aforementioned days.
Fed. R. Bank. 9006(a). The March 10 deadline, she argues,
was prescribed and allowed by the bankruptcy court’s con-
firmation order and thus squarely fell within 9006(a)’s co-
verage.
Alternatively, the liquidating agent argues that Section
7.15 of the plan which automatically extends all Saturday,
Sunday, and bank holiday “transaction” deadlines to the
next “business day” applies to the claim objection filing
deadline in this case. Section 7.15 reads as follows:
Transactions on Business Days.
If the Distribution Date, or any other date on which
a transaction may occur under the Plan, shall occur on
a day that is not a Business Day, the transaction con-
templated by the Plan to occur on such day shall in-
stead incur on the next succeeding Business Day.
(R. at 3, Doc. No. 414, p.26). “Business Days” are defined in
the plan as “any day except Saturday, Sunday, or any day
4 Nos. 03-3019, 03-3042 & 03-3149
on which commercial banks in the State of Indiana are
authorized by law to be closed.” Id. at p.3.
The mechanic’s lien claimants, on the other hand, assert
that a confirmed plan of reorganization is akin to a private
contract between two parties, and as such the deadlines are
not subject to 9006(a) or other procedural rules of the court,
but rather should be read as written. In other words, the
ninetieth day means the ninetieth day; no automatic ex-
tensions apply. To the extent there is any ambiguity, they
argue, the terms should be interpreted according to Indiana
contract law, which they maintain does not automatically
extend Sunday filing dates to Monday. Finally, they deny
that Section 7.15’s reference to “transactions” applies to
court filings such as the claim objection filing at issue here.
The bankruptcy court held that Bankruptcy Rule 9006(a)
did not apply to the filing of objections to claims in this case
“because the deadline for filing objections to claims is set
forth in the Plan, which is an agreement between the
Debtor and its pre-confirmation creditors, and not a ‘period
of time prescribed or allowed’” by the court. (R. at 3, Doc.
557, p.8). It also held that the filing of an objection to a
claim is not a “transaction” to which Section 7.15 of the plan
applies. Id. at p.10. The district court reversed the bank-
ruptcy court’s holding regarding the reach of Bankruptcy
Rule 9006(a), reasoning that a plan is neither pure contract
or court order, and although it can be interpreted like a
contract, “the filing deadlines contained therein are subject
to the same rules of procedure as other filing deadlines.” In
re Heartland Steel, No. IP 02-1252-C-M/F, 2003 WL
21508233, at *4 (S.D. Ind. June 26, 2003) (R. at 27, p.7-8).
Consequently, the district court found that the liquidating
agent timely filed the claim objections and that it need not,
therefore, consider the liquidating agent’s argument regard-
ing Section 7.15 of the plan and the definition of a “transac-
tion.” We agree with the district court and affirm.
Nos. 03-3019, 03-3042 & 03-3149 5
This court, like the district court, reviews the bankruptcy
court’s findings of fact for clear error and its legal conclu-
sions de novo. In re Midway Airlines, 383 F.3d 663, 668 (7th
Cir. 2004).
As noted above, the mechanic’s lien claimants reason that
a confirmed plan of reorganization is akin to a private
contract between two parties, and since the parties nego-
tiated about and agreed to the deadlines contained therein,
they must be held to the plain terms of that agreement.
Accordingly, objections filed after the 90th day—a require-
ment set by the clear language of the plan—are not timely
filed. Rule 9006(a), they argue, simply does not apply to a
private contract such as a plan of liquidation. The liquidat-
ing agent, on the other hand, urges us to view the plan as
a creature more akin to a consent decree—that is, a docu-
ment that contains time limits prescribed by an order of a
court, and therefore is subject to the deadline lengthening
rule of 9006(a). The argument, it seems at first glance, boils
down to a classification question: private contract versus
court order.
Each party can find support for its proposition. In Ernst
& Young LLP v. Baker O’Neal Holdings, Inc., 304 F.3d 753,
755 (7th Cir. 2002), we stated that “[a] confirmed plan of
reorganization is in effect a contract between the parties
and the terms of the plan describe their rights and obliga-
tions.” But in In re Harvey, 213 F.3d 318, 321 (7th Cir.
2000), we pointed out that a confirmed plan is analogous to
a consent decree and like other court orders (but unlike
private contracts), is given preclusive effect. The appellants
ask us to view the plan and confirmation order as distinct
and separate entities and to regard the latter but not the
former as a court order subject to the provisions of 9006(a).
When a court enters the confirmation order, however, it is
passing judgment on the plan itself, giving effect to every
provision of that plan and, in essence, incorporating by
reference the entirety of the plan into the judgment. Cf. In
6 Nos. 03-3019, 03-3042 & 03-3149
re Matter of Weber, 25 F.3d 413, 416 (7th Cir. 1994) (noting
that by confirming a plan, a reorganization court passes
judgment on the terms of that plan).2 In essence then, all of
the provisions of the plan are “prescribed or allowed” by the
confirmation order of the court, thus meeting the prerequi-
site of Bankruptcy Rule 9006(a).
The conclusions of Ernst and Young and In re Harvey are
not necessarily incompatible. The broad rule of contract
interpretation asserted in Ernst and Young is uncontrover-
sial and practical: when faced with ambiguous language in
a document drafted by private parties (that is, a document
that looks like a contract), one should apply the ordinary
rules of contract construction. In this case, however, the
plan language is not ambiguous. Both parties agree that the
objections were to be filed within ninety days of the ef-
fective date of the plan. The parties also would agree that,
had that same deadline language been included in the
bankruptcy court’s confirmation order rather than in the
2
But see In re Ampace Corp., 279 B.R. 145, 152 (Bankr. D. Del.
2002) (finding that plan was not incorporated by reference into the
confirmation order where the only reference the order made to the
plan was to note that a copy of the plan was attached.) The
district court below disagreed with the Ampace court’s conclusion
on this point, as do we. In any case, we do not think Ampace is an
otherwise helpful case in answering whether Bankruptcy Rule
9006(a) extends the Sunday deadline of a confirmation plan to
Monday. Ampace did not address the automatic extension of
9006(a), but instead confronted the tensions between Bankruptcy
Rule 9006(b)—allowing a court to enlarge a period of time with or
without motion and notice—and 11 U.S.C. § 1127(b) which allows
modification of a plan only after notice and a hearing. Id. at 151.
The liquidating trustee in that case had asked the court for a
series of extensions totaling nearly eight months—a modification
that the court considered substantive and material enough to
constitute a modification under § 1127(b) and thus not subject to
the terms of 9006(b).
Nos. 03-3019, 03-3042 & 03-3149 7
liquidation plan, Rule 9006(a) would have undoubtedly
applied and extended the Sunday deadline to the next busi-
ness day. The question then is not what rules of interpreta-
tion to apply to ambiguous language in a plan, but rather the
overlay, if any, between rules of court procedure and
liquidation plans. Specifically, the question is whether the
bankruptcy rules which extend deadlines for court ordered
prescriptions of time apply to confirmed bankruptcy plans.
Cases that discuss resolution of ambiguous plan language,
therefore, are not helpful to resolution of the peculiar ques-
tion posed in this case. Neither is it necessary to classify the
document at issue here as pure contract or pure court order.
What is important, it seems, is to determine the purpose
and effect of the deadline language at issue. Since the
controverted deadline language in the plan indicates the
time for filing documents with the court, the reasonable
interpretation would be to look to the procedural rules of
the court. After all, these rules have been set by the court
in part for its convenience in receiving filings.
Furthermore, we agree with the cogent reasoning of the
district court judge who concluded that, “[w]ithout the
Bankruptcy Court’s confirmation order, there would be no
period of time to compute. It is the confirmation order that
gives effect to all terms, substantive and procedural, in the
Plan, and thus prescribes or allows them.” In re Heartland
Steel, 2003 WL 21508233, at *4 (R. at 27, p.7) (emphasis in
original). And once a plan is confirmed, as the district court
reminds us, it may be modified only when the court con-
firms the modification. 11 U.S.C. § 1127(b). In contrast, a
court’s approval is not needed for a private contract. In
short, a plan is not simply a private contract subject only to
rules of contract interpretation (though indeed it may be
contract-like for some purposes). It is an agreement whose
every provision has been approved and therefore activated
by court order. We decline, therefore, to rely solely on
Indiana contract law to resolve the dispute in this case, and
8 Nos. 03-3019, 03-3042 & 03-3149
consequently, we need not determine whether Indiana
contract law would automatically extend the Sunday filing
deadline to the following Monday.
By holding that Bankruptcy Rule 9006(a) applies to
extend the deadlines in Section 10.1 of this particular liq-
uidation plan, we do not mean to imply that two or more
parties could never draft language to avoid the automatic
rollover provision created by Rule 9006(a). They simply
have not done so in this case. The mechanic’s lien claimants
point to Section 13.11 of the plan as evidence that they did
indeed intend for Indiana contract law rather than the
procedural rules of the bankruptcy court to apply. Section
13.11 of the plan, however, begs rather than answers the
underlying question in this appeal. Section 13.11 states:
“Except to the extent that the Bankruptcy Code is applica-
ble, the rights and obligations arising under this Plan shall
be governed by, and construed and enforced in accordance
with the laws of the State of Indiana.” (R. at 3, Doc. No.
414, p.37). The problem for the mechanic’s lien claimants is
that the bankruptcy code is indeed applicable to the dead-
line for filing claims objections. The Federal Rule of Bank-
ruptcy Procedure extending the deadline to Monday
therefore will apply and not the laws of the State of Indi-
ana.
Finally, the mechanic’s lien claimants also argue that the
liquidating agent could have filed her objections on Sunday
pursuant to a rule from the Procedural Guide for the United
States Bankruptcy Court for the Southern District of
Indiana which states:
When exigent circumstances exist and counsel needs to
file paper outside of normal working hours, advance
contact should be made with the Bankruptcy Clerk’s
Office during normal business hours to arrange after
hours filings . . . . In any event, reasonable efforts will
be made to accommodate extraordinary needs of this
nature.
Nos. 03-3019, 03-3042 & 03-3149 9
Procedural Guide of the U.S. Bank. Ct. S. Dist. Ind. at 3.
Neither the liquidating agent nor the mechanic’s lien claim-
ants could point to any exigent circumstances or extraordi-
nary needs that would have justified a Sunday filing.3 Nor
can we identify any. And of course the court makes no
guarantees that such a filing can be accommodated even in
the face of such needs. Id. In any event, the liquidating
agent had no need to test the bounds of the bankruptcy
court’s accommodations, as Rule 9006(a) did indeed afford
her the right to file a timely objection on Monday.
Because we conclude that Federal Bankruptcy Rule
9006(a) extended the Sunday deadline to Monday, we need
not determine whether Section 7.15 of the plan would have
done the same. We conclude that the liquidating agent
timely filed her objections to the mechanic’s lien claimants’
claims.
AFFIRMED
3
The liquidating agent explains only that “a secretary had mailed
the objections from Indianapolis to the Terre Haute Division” on
Thursday March 7. Brief of Appellee at 2 n.3.
10 Nos. 03-3019, 03-3042 & 03-3149
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—11-22-04