On Appeal from the United States District Court for the Western District of Pennsylvania (D.C. Civil Action No. 93-cv-01582)
Before: SCIRICA, ROTH and SAROKIN, Circuit Judges
In this appeal, we consider whether a group of former residents and occasional visitors to a neighborhood containing a toxic site were "known" creditors entitled to actual written notice of the debtor's bankruptcy filing and bar claims date. We hold that the members of this group were not known creditors and that therefore publication notice satisfied the requirements of due process. However, we also conclude that the district court failed to adequately consider whether the group's late filing was due to "excusable neglect" and that the district court improperly reached the issue of whether their claims had been discharged. Accordingly, we will affirm the district court's finding that notice was sufficient but reverse its findings on excusable neglect and discharge.
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 manufactured an antimony oxide catalyst at the Harvard Avenue facility in a process that utilized depleted uranium. After catalyst production ceased in 1972, a portion of the Harvard Avenue facility was demolished. In 1975, Chemetron placed a quantity of rubble from the Harvard Avenue demolition in the Bert Avenue landfill. 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.
Beginning in 1980, potential problems at the sites received significant attention from major newspapers in the Cleveland area. On July 8, 1980, the Cleveland Press reported on radiation levels at a site "near Harvard Avenue" in Newburgh Heights. On July 9, 1980, the Cleveland Plain Dealer published a similar article. Related articles appeared in The Plain Dealer on September 5 and September 12. On September 23, 1990, The Plain Dealer ran a front-page article on "Cuyahoga County's only known radioactive dump." App. at 289-95. The September 23 article quoted Phyllis Jones, the lead plaintiff in this case, discussing problems at the sites. Id. at 295.
Between 1980 and 1988, Chemetron was involved in periodic clean-up efforts at both sites at the direction of Nuclear Regulatory Commission. The efficacy of these efforts remains dubious.
On February 20, 1988, Chemetron and other debtors filed a joint petition for reorganization under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the Western District of Pennsylvania. Following Bankruptcy Rule 3003(c)(3), the bankruptcy court issued a bar date order, fixing the bar claims date at May 31, 1988. Stated simply, under bankruptcy law, the bar claims date is the last day on which existing claims can be filed against the debtor. See discussion Part III, infra.
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. It is undisputed that the debtors complied with the order and, in addition, voluntarily published notice in seven other newspapers in areas where they were doing business at the time of the filing. On July 12, 1990, the bankruptcy court confirmed Chemetron's reorganization plan.
On March 2, 1992, almost four years after the bar claims date, twelve years after the first newspaper articles detailing problems at the sites, and two years after her comments in The Plain Dealer's front page article, Phyllis Jones and fourteen other individuals brought suit against Chemetron, McGean Chemical Co., and McGean-Rohco, Inc., in the Court of Common Pleas of Cuyahoga County, Ohio. The suit was later amended to name a total of twenty-one plaintiffs. The gravamen of the complaint alleged injury from exposure to toxic chemicals as a result of time spent in the Bert Avenue area.
Plaintiffs' ties to the Bert Avenue area centered around visits to or occupancy of two houses in the vicinity. Only two members of the group actually occupied the properties during the period from 1965-1975 when Chemetron owned the sites. The other members of the group visited the properties periodically, ranging from "several times per week," App. at 8, to "weekly," App. at 14, to "monthly," App. at 16, to "occasional" visits, App. at 9. The record indicates that the visits stopped in 1985, three years prior to Chemetron's bankruptcy petition. None of the plaintiffs currently resides near either site. Sixteen of the plaintiffs still reside in Ohio. Five of the plaintiffs live in Texas.
In the state court action, Chemetron moved to dismiss the suit, arguing that any such claim had been discharged in bankruptcy. The plaintiffs responded by seeking permission from the bankruptcy court to file late claims. By separate motion, plaintiffs sought a declaration from the bankruptcy court that their claims had not been discharged by the reorganization plan. This second motion was converted to an adversary proceeding.
On August 2, 1993, the bankruptcy court granted the motion to file late claims, finding that plaintiffs were known creditors entitled to actual notice of the bankruptcy proceeding and bar claims date. The bankruptcy court also, sua sponte, permitted the plaintiffs to proceed against Chemetron in the Ohio lawsuit and dismissed without prejudice the adversary proceeding.
Chemetron appealed to the district court, which reversed the grant of the motion to file late claims. The district court held that plaintiffs were not known creditors and that publication notice was sufficient. The district court then concluded, without explanation, that plaintiffs' "claims were dischargeable and were discharged." Chemetron v. Jones (In re Allegheny Int'l), 170 B.R. 83, 90 (W.D. Pa. 1994). This appeal followed.
Jurisdiction in this appeal is proper pursuant to 28 U.S.C. 158(d). We review the bankruptcy court's findings of fact for clear error, the same standard of review used by the district court. See Universal Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 101-02 (3d Cir. 1981). When reviewing mixed questions of law and fact, we exercise plenary review over the bankruptcy court's choice, interpretation, and application of the underlying rule of law. See ...