United States District Court, E.D. Michigan, Southern Division
In Re: Settlement Facility Dow Corning Trust, Charlene Patton, Claimant.
OPINION AND ORDER REGARDING LATE CLAIM REQUEST AND
ORDER DISMISSING ACTION
Page Hood Chief Judge.
Charlene Patton seeks to submit a late claim before the
Settlement Facility-Dow Corning Trust (“SF-DCT”)
pursuant to the Amended Joint Plan of Reorganization
(“Plan”) in the Dow Corning Corporation
(“Dow Corning”) bankruptcy action.
December 12, 2007, the Court entered an Agreed Order Allowing
Certain Late Claimants Limited Rights to Participate in the
Plan's Settlement Facility (“Late Claim Agreed
Order”) which addressed the issue of claimants seeking
to submit a late claim before the SF-DCT. (Case No. 00-00005,
Doc. No. 606) The deadline for filing a Proof of Claim in the
bankruptcy action was January 15, 1997 (or February 14, 1997
for foreign claimants) and for filing a Notice of Intent to
participate before the SF-DCT was August 30, 2004. (1/30/2014
Stipulation and Order to Show Cause, Doc. No. 2, p. 1, n. 1)
The Claimants Advisory Committee (“CAC”) and Dow
Corning agreed that late claim requests dated after June 1,
2007 or received by the Court after June 5, 2007 are
presumptively without merit. (Case No. 00-00005, Doc. No.
606, Late Claim Agreed Order, ¶ 15) The CAC and Dow
Corning agreed that any claimant filing a late claim request
would be required to show excusable neglect as to why the
late claim request was submitted after June 1, 2007 or
received by the Court after June 5, 2007. (Id.)
Dow Corning and the CAC reviewed Claimant's late request,
the Court entered the January 30, 2014 Stipulation and Order
to Show Legal Support and Cause Why Request to File a Late
Claim in the Dow Corning Settlement Facility Should not be
Dismissed. (Doc. No. 2) Dow Corning and the CAC agree that
the SF-DCT records show Claimant did not timely file a Proof
of Claim during the bankruptcy proceeding, did not timely
submit a Notice of Intent to participate before the SF-DCT,
or otherwise submit a request to participate in the Dow
Corning bankruptcy case prior to June 2007. Claimant
submitted a response to the Show Cause Order. The Court
addresses the Claimant's reasons below.
8.7 Amended Plan of Reorganization states that this Court
retains jurisdiction to resolve controversies and disputes
regarding the interpretation and implementation of the Plan
and the Plan Documents, including the Settlement and Fund
Distribution Agreement (“SFA”), and, to enter
orders regarding the Plan and Plan Documents. (Plan,
§§ 8.7.3, 8.7.4, 8.7.5) The Plan provides for the
establishment of the SF-DCT, which is governed by the SFA.
(Plan, § 1.131) The SF-DCT was established to resolve
Settling Personal Injury Claims in accordance with the Plan.
(Plan, § 2.01) The SFA and Annex A to the SFA establish
the exclusive criteria by which such claims are evaluated,
liquidated, allowed and paid. (SFA, § 5.01) Resolution
of the claims are governed by the SFA and corresponding
claims resolution procedures in Annex A. (SFA, § 4.01)
the provisions of a confirmed plan bind the debtor and any
creditor. 11 U.S.C. § 1141(a); In re Adkins,
425 F.3d 296, 302 (6th Cir. 2005). Section 1127(b) is the
sole means for modification of a confirmed plan which
provides that the proponent of a plan or the reorganized
debtor may modify such plan at any time after confirmation of
such plan and before substantial consummation of the plan. 11
U.S.C. § 1127(b). “In interpreting a confirmed
plan courts use contract principles, since the plan is
effectively a new contract between the debtor and its
creditors.” In re Dow Corning Corporation, 456
F.3d 668, 676 (6th Cir. 2006); 11 U.S.C. § 1141(a).
“An agreed order, like a consent decree, is in the
nature of a contract, and the interpretation of its terms
presents a question of contract interpretation.”
City of Covington v. Covington Landing, Ltd.
P'ship, 71 F.3d 1221, 1227 (6th Cir. 1995). A court
construing an order consistent with the parties'
agreement does not exceed its power. Id. at 1228.
Supreme Court in addressing a late claim filed beyond the
deadline set forth in Bankr. R. 3003 used the
“excusable neglect” standard under Fed.R.Civ.P.
Rule 60(b)(1) to determine whether the Bankruptcy Court had
the authority to enlarge time limitations under Bankr. R.
9006(b), which is patterned after Fed.R.Civ.P. 6(b). The
Supreme Court approved the following factors that a court may
consider in finding excusable neglect: 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. Pioneer Inv. Servs. Co. v. Brunswick Assocs.
Ltd. P'ship, 507 U.S. 380, 395 (1993). The Supreme
Court disapproved the allowance of a late claim based on the
omissions of an attorney. Id. at 396. The Supreme
Court noted that “clients must be held accountable for
the acts and omissions of their attorneys.”
Id. at 396. A client, having chosen a particular
attorney to represent him in a proceeding, cannot
“avoid the consequences of the acts or omissions of
this freely selected agent, ” and that “[a]ny
other notion would be wholly inconsistent with our system of
representative litigation, in which each party is deemed
bound by the acts of his lawyer-agent and is considered to
have notice of all facts, notice of which can be charged upon
the attorney.” Id. at 397. In assessing a
claim of excusable neglect, “the proper focus is upon
whether the neglect of [the parties] and their
counsel was excusable.” Id. (emphasis in
original). An attorney or pro se litigant's
failure to timely meet a deadline because of
“[i]nadvertence, ignorance of the rules, or mistakes
construing the rules do not usually constitute
‘excusable neglect.'” Id. at 392;
Rose v. Dole, 945 F.2d 1331, 1335 (6th Cir. 1991).
Equitable tolling, although applied sparingly, has been
allowed where a claimant has actively pursued judicial
remedies by filing a defective pleading during the statutory
period or where the complainant has been induced or tricked
by an adversary's misconduct into allowing the filing
deadline to pass. Irwin v. Dep't of Veterans
Affairs, 489 U.S. 89, 96 (1990). Courts have been less
forgiving in receiving late filings where the claimant failed
to exercise due diligence in preserving his or her legal
the prejudice to the debtor (here, reorganized debtor)
factor, the Court finds that allowing this one claim
to proceed against the SF-DCT would not greatly prejudice the
assets under the Plan. However, the history of this
bankruptcy action and the post-confirmation bankruptcy
proceeding, show that numerous claimants have sought to
participate in the settlement program before the SF-DCT. The
settlement fund is a capped fund over a limited time period.
Allowing this one claim would result in disparate treatment
of other claimants who timely submitted their claims before
the SF-DCT. If the Court were to allow late claimants to
proceed, this would result in substantial costs in terms of
claim payments and administrative expenses. The funds to be
used to pay out these claims and the administrative costs
involved in processing these claims would significantly
impact the funds available to the SF-DCT and to the claimants
who timely filed their claims. The SF-DCT and Dow Corning
would be prejudiced if this and other claims are allowed to
proceed before the SF-DCT. This factor weighs in the
reorganized debtor's favor.
the delay and potential impact on the proceedings factor,
again, allowing one claim to go forward may not
further delay the administration of the Plan since claims are
currently being considered by the SF-DCT. However, allowing
this claim, along with other claims would further delay the
administration of the Plan. Reviewing late claimants'
medical records relating to their claims requires significant
time by the claim reviewers and would impact review of timely
claims currently before the SF-DCT. This factor weighs in the
reorganized debtor's favor.
the reason for the delay factor, Claimant asserts that she
was negligent in failing to register with the breast implant
litigation settlement, MDL-926. (Doc. No. 1) Claimant
received breast implants in April 1983. (Doc. No. 4, Pg ID
16) Claimant's implants were removed in February 2012 due
to rupture. (Doc. No. 1, Pg ID 1) Id. Claimant
submitted copies of letters from the Dalkon Shield Claimants
Trust and the MDL-926 Breast Implant Litigation. (Doc. No. 4,
Pg ID 12-13) She claims that she did not respond to the
notices because her husband was murdered in June 1989.
Claimant and her sons were in distress with trying to
comprehend what had happened. The trial and all that went
along with the trial lasted a very long time. Claimant
asserts that the trial was never settled to her satisfaction.
Id. at Pg ID 11.
Court has held that a prior registration in the MDL-926
settlement or confusion as to whether the prior filing before
the MDL-926 settlement constitutes a timely filing in this
case, is not sufficient to establish a timely Proof of Claim
or Notice of Intent to participate in the Dow Corning
bankruptcy action. (1/30/2014 Stipulation and Order to Show
Cause, p. 4)
any claim that Claimant did not discover her implants were
ruptured until after the deadlines had passed, the Plan
requires “Unmanifested Claims” to be submitted in
the bankruptcy action. (Plan, § 1.18) An
“Unmanifested Claim” is defined as a
“Personal Injury Claim of a Claimant who, as of the
Effective Date, has not suffered any injury alleged to have
been caused, in whole or in party, by a product of the
Debtor.” (Plan, § 1.176) The Court has ruled that
discovering a condition relating to a Dow Corning product