Settlement Facility Dow Corning Trust
Filing
8
OPINION and ORDER Regarding Late Claim Request and Order Dismissing Action. Signed by District Judge Denise Page Hood. (JOwe)
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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
In Re:
Settlement Facility Dow Corning Trust,
Case No. 14-10326
Susan Girardin,
Honorable Denise Page Hood
Claimant.
___________________________________________/
OPINION AND ORDER REGARDING LATE CLAIM REQUEST
AND
ORDER DISMISSING ACTION
I.
BACKGROUND
Claimant Susan Girardin 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.
On 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. 4, 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.)
After 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. 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.
II.
ANALYSIS
Section 8.7 Amended Plan of Reorganization states that this Court retains
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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 SFDCT 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)
Generally, 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
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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.
The 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
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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 rights. Id.
Addressing 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
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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.
As to 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.
Regarding the reason for the delay factor, in response to the Court’s Order to
Show Cause, Claimant had a Dow Corning implant surgery in 1988. (Doc. No. 1, Pg
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ID 1) The medical record of the surgery submitted by Claimant indicates the surgery
date was April 18, 1989 and that she was implanted by with two Dow Corning silastic
II double lumen implants. (Doc. No. 1, Pg ID 3) Subsequent consultations with her
doctor in 1991 to 1993 indicate that her implants were intact and that mammograms
indicated calcifications but that they were benign. (Doc. No. 1, Pg ID 4-6) Claimant
began experiencing pain in her breast in 2012. An MRI in May 2012 showed
bilateral ruptures of the implants. On October 19, 2012, the implants were removed
and replaced with Mentor adjustable saline implants. (Doc. No. 1, Pg ID 10-12) In
November 2012, Claimant’s doctor indicated Claimant most likely had an infection
of the left implant site and that the removal of the left implant would be likely. (Doc.
No. 1, Pg ID 18) The left implant was removed on November 15, 2012. (Doc. No.
Pg ID 20-21) The right implant was removed on March 11, 2013. (Doc. No. 1, Pg ID
1)
Claimant asserts that in the 1990's, she was asked to join a class action suit, but
according to a lawyer’s advise, she would need to submit medical claims. Because
Claimant was not ill or had problems with the implants, she did not submit a claim
at that time. Claimant believes she was misinformed by the request to join the class
action suit. (Doc. No. 1, Pg ID 1) Claimant seeks $5,000 for the first surgery
removing the old and ruptured implants and $15,000 for missing four weeks of work
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after two more surgeries. Claimant feels she has “justifiable cause ... not for old
implants rupturing, but for the difficulty and mess created from the one implant and
subsequent infection, surgeries, and missed work.” (Doc. No. 1, Pg ID 2) Claimant
indicates that she has heart problems and had open heart surgery on March 11, 2014.
Claimant states that when she moved back home to Vermont from Hawaii, the
forwarded mail was very late. Claimant did not indicate the date of the move.
Claimant consulted with two lawyers who read the informational package and both
claimed that since Claimant had no medical problems relating to the implants, she
could not make a claim. Claimant believes she is a victim of extraordinary
circumstances and Dow Corning should be liable. (Doc. No. 6, Pg ID 43) It appears
that Claimant is asserting that because of her unmanifested claims, she could not file
a claim based on her consultation with two lawyers.
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 after the deadline to file a Proof of Claim or Notice of Intent to participate
does not constitute excusable neglect. (1/30/14 Stipulation and Order to Show Cause,
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p. 4) Regarding Claimant’s assertion that based on the advice of two lawyers, she did
not file a claim because at that time she had no problems with the implants. As noted
above, 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.’” Pioneer, 507 U.S. at 392.
Reviewing Claimant’s reasons for the delay in submitting a claim, the Court
finds that this factor weighs in favor of the reorganized debtor.
Having an
unmanifested claim or failure to meet a deadline because of a mistake in construing
the rules do not constitute excusable neglect. The reason for the delay factor weighs
in favor of the reorganized debtor.
There has been no showing of bad faith by the Claimant and this factor weighs
in her favor.
Weighing the factors noted above, the Court finds Claimant has not shown
excusable neglect as to why her late claim should be allowed to be submitted before
the SF-DCT.
III.
CONCLUSION
Accordingly, for the reasons set forth above,
IT IS ORDERED that Claimant Susan Girardin’s request to submit a late claim
(Doc. No. 1) is DENIED.
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IT IS FURTHER ORDERED that this matter is DISMISSED with prejudice.
S/Denise Page Hood
Denise Page Hood
Chief Judge
Dated: March 31, 2017
CERTIFICATE OF SERVICE/MAILING
I certify that a copy of this document was served on March 31, 2017, by electronic
or ordinary mail to all parties in interest.
S/Julie Owens
Deputy Clerk
(313) 234-5090
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