Pg 1 of 101 JOSEPH R. VIOLA, P.C. BY: JOSEPH R. VIOLA, ESQUIRE PA Atty. Reg. No. 35362 150 South Independence Mall West Philadelphia, PA 19106-3410 Tel. (215) 253-7491 Fax: (215) 238-9795 E-mail: jrviola@comcast.net HEARING DATE: TIME: UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK IN RE: : Chapter 11 : METRO AFFILIATES, INC., et al., 1 : Case No. 13-13591 (SHL) : Debtors. : (Jointly Administered) : NOTICE OF MOTION FOR LEAVE TO FILE LATE CLAIM PLEASE TAKE NOTICE that upon this notice of motion and the accompanying 1 This case is Jointly Administered. The main case is Metro Affiliates, Inc., 13-13591 (SHL). The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal taxpayer identification number, are: 180 Jamaica Corp. (7630); Amboy Bus Co., Inc. (2369); Atlantic Escorts, Inc. (8870); Atlantic Express Coachways, Inc. (2867); Atlantic Express New England, Inc. (4060); Atlantic Express of California, Inc. (5595); Atlantic Express of Illinois, Inc. (5759); Atlantic Express of LA, Inc. (1639); Atlantic Express of Missouri, Inc. (3116); Atlantic Express of New Jersey, Inc. (8504); Atlantic Express of Pennsylvania, Inc. (0330); Atlantic Express Transportation Corp. (4567); Atlantic Queens Bus Corp. (0276); Atlantic Paratrans of NYC, Inc. (1114); Atlantic Paratrans, Inc. (3789); Atlantic Transit, Corp. (7142); Atlantic-Hudson, Inc. (5121); Block 7932, Inc. (3439); Brookfield Transit, Inc. (8247); Courtesy Bus Co., lnc. (5239); Fiore Bus Service, Inc. (1233); Groom Transportation, Inc. (7208); G.V.D. Leasing, Inc. (0595); James McCarty Limo Services, Inc. (8592); Jersey Business Land Co. Inc. (3850); K. Corr, Inc. (4233); Merit Transportation Corp. (8248); Metro Affiliates, Inc. (0142); Metropolitan Escort Service, Inc. (9197); Midway Leasing, Inc. (7793); R. Fiore Bus Service, Inc. (3609); Raybern Bus Service, Inc. (9412); Raybern Capital Corp. (6990); Raybern Equity Corp. (3830); Robert L. McCarthy & Son, Inc. (4617); Staten Island Bus, Inc. (6818); Temporary Transit Service, Inc. (0973); Atlantic Express of Upstate New York Inc. (1570); Transcomm, Inc. (4493); and Winsale, Inc. (2710). The location of the Debtors' corporate headquarters and the Debtors' service address is: 7 North Street, Staten Island, NY 10302. Claimants seeks to file proofs of claim as to Debtor Atlantic Express of Pennsylvania, Inc., at Docket No. 13-13601.
Pg 2 of 101 memorandum of law, Pierre Michaud and Fabie Michaud, by their attorney, Joseph R. Viola, will move this Court before the Honorable Sean H. Lane, United States Bankruptcy Judge, at Courtroom 701 of the Alexander Hamilton Custom House, One Bowling Green, New York, New York 10004, on the day of, 2014, at M, or as soon thereafter as counsel may be heard, for an order pursuant to Federal Rule of Bankruptcy Procedure 3003(c)(3) extending for cause shown the time for Pierre Michaud and Fabie Michaud to file their Proofs of Claim against the Debtors and allowing such claims against the Debtors as if Pierre Michaud and Fabie Michaud had timely filed their claims, or, in the alternative, extending the time for filing pursuant to Federal Rule of Bankruptcy Procedure 9006(b)(1) on the ground that Pierre Michaud s and Fabie Michaud s untimeliness is by reason of "excusable neglect," together with such other and further relief as the Court may find just, proper and equitable. PLEASE TAKE FURTHER NOTICE, that responses, if any, must (i) be made in writing; (ii) conform to the Federal Rules of Bankruptcy Procedure and the Local Bankruptcy Rules; (iii) set forth the basis for the response and state with specificity the reason or reasons why the requested relief should not be granted; and (iv) be filed with the Clerk of the Bankruptcy Court, United States Bankruptcy Court for the Southern District of New York, One Bowling Green, New York, New York 10004, and served upon counsel for Pierre Michaud and Fabie Michaud, Joseph R. Viola, so as to be received no later than 5:00 P.M. on, 2014. DATED: May 23, 2014 JOSEPH R. VIOLA, P.C. Respectfully submitted, JOSEPH R. VIOLA, P.C. /S/ Joseph R. Viola JOSEPH R. VIOLA, ESQUIRE Counsel for Pierre and Fabie Michaud
Pg 3 of 101 BY: JOSEPH R. VIOLA, ESQUIRE PA Atty. Reg. No. 35362 150 South Independence Mall West Philadelphia, PA 19106-3410 Tel. (215) 253-7491 Fax: (215) 238-9795 E-mail: jrviola@comcast.net UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK IN RE: : Chapter 11 : METRO AFFILIATES, INC., et al., : Case No. 13-13591 (SHL) : Debtors. : (Jointly Administered) : MOTION OF PIERRE MICHAUD AND FABIE MICHAUD FOR LEAVE TO FILE UNTIMELY PROOFS OF CLAIM Pierre Michaud and Fabie Michaud, by their attorney, Joseph R. Viola, respectfully submit this Memorandum of Law in support of their Motion for an Order, pursuant to Federal Rules of Bankruptcy Procedure 3003(c)(3) and/or 9006(b)(1), extending the time for Pierre Michaud and Fabie Michaud to file their Proofs of Claim, and allowing such claim against the Debtors as if Pierre Michaud and Fabie Michaud had filed their Claims before the Bar Date. STATEMENT OF FACTS A. Creditors Personal Injury Claim Against Atlantic Express of Pennsylvania, Inc. 1. Pierre Michaud, a resident of the Commonwealth of Pennsylvania residing with his wife, Fabie Michaud, at 544 Anchor Street, Philadelphia, Pennsylvania 19120, sustained serious personal injuries and damages on May 6, 2013 on East Ashdale Street near its intersection with D Street in the City of Philadelphia when the taxicab he was operating was rearended by a bus owned and operated by Atlantic Express of Pennsylvania, Inc. and insured, according to the Police Accident Report by National Union Fire Insurance Company of -2-
Pg 4 of 101 Pennsylvania, Policy No. 4882321. 2. The Michauds received written communications from Ms. Jean Singer of Chartis Claims, Inc. Property/Casualty Division dated May 24, 2013 acknowledging their claims (Nos. 684-430176-001 and 684-430176-002, respectively) and requesting that they execute medical authorizations for the release of information concerning their medical treatment. Copies of the Chartis Claims, Inc. dated May 24, 2013 are attached hereto as Exhibits A and B. 3. Pierre and Fabie Michaud retained Brett W. Batoff, Esquire, of Philadelphia to represent them in connection with their claims against Atlantic Express of Pennsylvania, Inc. 4. Having ascertained that the Michauds claims were being handled by Ms. Singer on behalf of AIG Insurance Company, Attorney Batoff forwarded a letter of representation to Ms. Singer on June 12, 2013 requesting that he be contacted by a claims representative and requesting that all correspondence be directed to his attention. A copy of the letter of representation is attached hereto as C. 5. Attorney Batoff thereafter received a letter from Ms. Singer on Chartis Insurance letterhead dated July 8, 2013 regarding Pierre Michaud s claim as well as four letters from Ms. Singer on AIG Property/Casualty Division letterhead dated July 2, July 3, August 20 and September 9, 2013 regarding Fabie Michaud s claim. Copies of Ms. Singer s letters are attached hereto and collectively marked as Exhibit D. 6. Attorney Batoff received no further written communication from Chartis or AIG. 7. In January of 2014, Attorney Batoff learned that an Order Staying and Enjoining All Litigation had been issued by the Superior Court for the District of Columbia in connection with the liquidation of Ocean Risk Retention Group, Inc., the insurance carrier which insured the taxicab Pierre Michaud was operating at the time of the accident. 8. Attorney Batoff filed timely proofs of claim with the Special Deputy Liquidator -3-
Pg 5 of 101 to preserve Pierre Michaud s claim for first party medical benefits. A copy of Attorney Batoff s January 29, 2014 communication with the Special Deputy Liquidator is attached hereto as Exhibit E. B. Debtors' Bankruptcy and the Bar Date Order 9. On November 4, 2013 (the "Petition Date"), 40 separate entities, including Atlantic Express of Pennsylvania, Inc., filed voluntary petitions for relief under Chapter 11, Title 11 of the United States Code, 11 U.S.C. 1101 et seq., as amended (the "Bankruptcy Code"), in the United States Bankruptcy Court for the Souther District of New York, requesting joint administration under the case number and Judge assigned to the Chapter 11 case of Metro Affiliates, Inc., No. 13-13591 (SHL). 10. The Schedule of Assets and Liabilities for Atlantic Express of Pennsylvania. Inc. (Case No. 13-13601)(Doc. 383 Pg 49-50 of 55), Schedule F- Creditors Holding Unsecured Nonpriority Claims, lists Pierre Michaud and Fabie Michaud, both at 544 Anchor Street, Philadelphia, PA 19120, as creditors with Contingent, Unliquidated and Disputed claims with a $0.00 dollar amount; Attorney Batoff was not listed as a Creditor Notice Name, whereas the attorneys for 10 other claimants on Schedule F were so listed. A copy of Atlantic Express of Pennsylvania, Inc. s Schedule F is attached hereto as Exhibit F. 11. Attorney Batoff was never notified by Chartis or AIG that Atlantic Express of Pennsylvania, Inc. had filed a petition under Chapter 11. 12. On March 17, 2014, Bankruptcy Judge Sean H. Lane entered an Order (A) Setting Bar Dates for Filing Proofs of Claim, (B) Approving the Form and Manner for Filing Proofs of Claim and (C) Approving Notice Thereof (Doc 979), setting the General Bar Date of April 21, 2014. The Order and Exhibits are attached hereto as Exhibit G. 13. On March 24, 2014, Kurtzman Carson Consultants LLC ( KCC ), Debtors -4-
Pg 6 of 101 claims and noticing agent, filed an Affidavit of Service (Doc 1010) indicating that employees of KCC served by First Class Mail on March 20, 2014 on the creditors identified on Exhibit A to the Affidavit a Proof of Claim Form (Exhibit B), Notice of Deadlines for Filing Proofs of Claims Against Debtors (Exhibit C), and Notice of Deadlines for Filing Proofs of Administrative Claim Against Debtors (Exhibit D); pages 229 of 263 and 237 of 263 of Exhibit A indicate that Pierre and Fabie Michaud were served at 544 Anchor Street, Philadelphia, PA 19120, and that Attorney Batoff was not served or noticed, despite the fact that, even on the two pages on which the names of the Michauds appear, a total of 25 lawyers or law firms are listed. A copy of the Affidavit of Service including complete Exhibits B, C and D and the pages of Exhibit A containing the listings for the Michauds is attached hereto as Exhibit H. 14. Although Movants have no specific recollection of this KCC mailing, they do receive a considerable amount of mail relating to the accident, primarily medical billings and communications from collection agencies, and would periodically drop off any documents received in the mail with Attorney Batoff s office staff for insertion into their case file in accordance with standing client instructions. 15. As reflected in an Affidavit of Service filed on May 7, 2014 (Doc 1200), KCC served on behalf of the Debtors on that date, inter alia, a Ballot for Accepting or Rejecting the Joint Plan of Liquidation for Metro Affiliates, Inc. and its Affiliated Debtors Proposed by the Debtors and the Official Committee of Unsecured Creditors Class 6 Insured Claims, and a CD-ROM containing the First Amended Disclosure Statement Pursuant to Section 1125 of the Bankruptcy Code; the Plan; and the Disclosure Statement Order. The mailing, including the CD- ROM, was sent to the Michauds at 544 Anchor Street, Philadelphia, PA 19120; once again Attorney Batoff was not served or noticed. The Affidavit of Service and the pages of Exhibit L thereto containing the listing of the Michauds is attached hereto as Exhibit I. -5-
Pg 7 of 101 16. Because the second KCC mailings contained Ballots requiring a vote and CD s which appeared to be important, Movants visited Attorney Batoff s office and brought the mailings to his attention, thereby alerting Attorney Batoff to the Metro Affiliates, Inc. Chapter 11 proceedings and, after consulting PACER, the existence of the Claim Bar Order. 17. In reviewing Movants file for prior bankruptcy-related documents, Attorney Batoff located what appear to be parts of the initial KCC mailing including a Proof of Claim form for Pierre Michaud, but no Claim Bar Orders. ARGUMENT THE MICHAUDS CLAIMS SHOULD BE ALLOWED 18. Section 502 of the Bankruptcy Code provides that a proof of claim is not timely filed unless it is permitted under specified conditions in Chapter 7 or 11under the Federal Rules of Bankruptcy Procedure. See 11 U.S.C. 502(b)(9). 19. In Chapter 11 cases, a proof of claim is filed pursuant to Bankruptcy Rule 3003(c), which provides in relevant part: (2) Who Must File. Any creditor or equity security holder whose claim or interest is not scheduled or scheduled as disputed, contingent, or unliquidated shall file a proof of claim or interest within the time prescribed by subdivision (c)(3) of this rule; any creditor who fails to do so shall not be treated as a creditor with respect to such claim for the purposes of voting and distribution. (3) Time For Filing. The court shall fix and for cause shown may extend the time within which proofs of claim or interest may be filed. Not withstanding the expiration of such time, a proof of claim may be filed to the extent and under the conditions stated in Rule 3002(c)(2), (c)(3), and (c)(4). Fed. R. Bankr. P. 3003(c). 20. Any creditor whose claim is not scheduled or is listed as disputed, contingent or unliquidated is required to file a proof of claim before a bar date established by the bankruptcy court. See Rule 3003(c). 21. One who fails to file a timely proof of claim shall not be treated as a creditor -6-
Pg 8 of 101 with respect to such claim for the purpose of voting and distribution. See Rule 3003(c) (2). 22. Therefore, holders of disputed, contingent or unliquidated claims, such as the claimants in this case, who fail to timely file a proof of claim, are not entitled to participate in the debtor's reorganization and are not entitled to receive a distribution and their claim is discharged. See 11 U.S.C. 502(a)(5); 1141(d); Rule 3003(c)(2). 23. The claims bar date therefore operates as a federally created statute of limitations after which the claimant loses all of his or her right to bring an action against the debtor. See Berger v. Trans World Airlines, Inc. (In re Trans World Airlines, Inc.), 96 F.3d 687, 690 (3d Cir.1996) (Bar date means drop-dead date that bars all prepetition claimants who received the required notice). 24. Relief from the effect of the claims bar date may be sought pursuant to Federal Rule of Bankruptcy Procedure 3003(c)(3), which authorizes the Court to extend for cause shown the time for filing a Proofs of Claim against the Debtor. 25. Relief from the effect of the claims bar date may also be sought pursuant to Federal Rule of Bankruptcy Procedure 9006(b)(1) on the ground that the untimeliness was the result of "excusable neglect. 26. Inadequate notice of the claims bar date is a defect which precludes discharge of a claim in bankruptcy. See Chemetron Corp. v. Jones, 72 F.3d 341, 346 (3d Cir.1995). 27. A claimant, who is not apprised with reasonable notice of the bar date, is not bound by the legal effects of the confirmation of the plan and should be allowed to file a late proof of claim. See Greyhound Lines, Inc. v. Rogers (Eagle Bus. Mfg., Inc.), 62 F.3d 730, 735 (5th Cir.1995); Spring Valley Farms, Inc. v. Crow (In re Spring Valley Farms, Inc.), 863 F.2d 832, 834 35 (11th Cir.1989); Atlantic Richfield Co. v. Sharon Steel Corp. (In re Sharon Steel Corp.), 110 B.R. 205, 207 08 (Bankr.W.D.Pa.1990) (holding that courts have traditionally -7-
Pg 9 of 101 allowed creditors to file late proofs of claims notwithstanding their failure to timely file the claims where they were not provided with reasonable notice of bar date). 28. Whether a creditor received adequate notice of a bar date depends upon the facts and circumstances of a given case. See Oppenheim, Appel, Dixon & Co. v. Bullock (In re Robintech, Inc.), 863 F.2d 393, 396 (5th Cir.), cert. denied, 493 U.S. 811 (1989). 29. Due process requires notice that is reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950). In other words, the notice must be such that it would reasonably inform the interested parties that the matter is pending and would reasonably allow the parties to choose for [themselves] whether to appear or default, acquiesce or contest. Mullane, 339 U.S. at 314. 30. In this case, Atlantic Express, through its insurance claims representatives, was aware not only of the Michauds claims but also of their representation by counsel who expressly requested that all communications be directed to his attention, and did, in fact, communicated in writing with the Michauds counsel, for many months before the Chapter 11 petition was filed. 31. As known creditors, the Michauds were entitled to actual written notice of a debtor's bankruptcy filing and bar claims date. Chemetron Corp. v. Jones, 72 F.3d 341, 346 (3d Cir. 1995), citing City of New York v. New York, N.H. & H.R. Co., 344 U.S. 293, 296 (1953). 32. The issue before this Court, therefore, is whether Atlantic Express of Pennsylvania, Inc., as one of the 40 debtors covered by the Metro Affiliates, Inc., jointly administered Chapter 11 proceeding, having acquired, through its insurance claims adjusters prior to filing under Chapter 11, specific knowledge of the Michauds' representation by counsel in pursuing their personal injury claims against it, and thereafter engaged through its agent in -8-
Pg 10 of 101 pre-petition communications with the Michauds attorney acknowledging that representation and exploring possible resolutions of the claims, had a duty to furnish the Michauds attorney with the bar date notice. 33. The Fifth Amendment mandates that no person shall be deprived of property without due process of law. Although [m]any controversies have raged about the cryptic and abstract words of the Due Process Clause, as the Supreme Court observed, there can be no doubt that at a minimum they require that deprivation of life, liberty or property by adjudication be preceded by notice and opportunity for hearing appropriate to the nature of the case. In re Grand Union Company ( the Grand Union case ), 204 B.R. 864, 871 (Bankr. D. Del. 1997), quoting Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 313 (1950). 34. The property right at issue is the Michauds right, assuming, but for the late filing, they have allowable claims, to participate in the distribution scheme under the Metro Affiliates, Inc. plan of reorganization. 35. In the Grand Union case, the facts of which are virtually identical to the facts of this case, the distinguished Bankruptcy Judge Peter J. Walsh held that, under the circumstances of that case, the direct mailing of the bar date notice to a claimant represented by counsel did not satisfy the due process requirement of adequate notice. 36. Judge Walsh concluded that, even assuming that the bar date notice was timely received by the claimant, the debtor s direct mailing of the notice to the claimant was not reasonably calculated... to apprise the movants of the claims bar date and of its significance, and held that mailing of the bar date notice to a personal injury claimant whose exclusive representation by counsel is specifically known by the debtor is... inadequate. Grand Union, 204 B.R. at 872. 37. Judge Walsh reasoned as follows: -9-
Pg 11 of 101 It is reasonable to expect that the movants, unsophisticated claimants, upon receipt of the bar date notice, paid no attention to the notice since they could have easily believed that the same notice would have been sent to and received by their counsel. Here, we have three lay-persons who allegedly sustained personal injuries on the premises of Grand Union. Subsequently, the claimants retained counsel to pursue their legal remedies against Grand Union. The sole purpose of their retentions was to obtain full legal guidance in effectively resolving their claims. Counsel were fully empowered to, and expected to, be communicating with Grand Union, or its agent, Scott Wetzel, on behalf of the claimants. It was counsels' task to negotiate with Grand Union, or its agent, for an agreeable resolution and to institute an action if no resolution would have been forthcoming. Upon their retention, counsel did what they were hired to do. They timely contacted Scott Wetzel, Grand Union's agent, informed it of their representation and established a line of communication with Grand Union. From the first letters to Scott Wetzel and up until the commencement of Grand Union's Chapter 11 case, there had been active communications between Scott Wetzel and the movants' attorneys, exchanging numerous written correspondences and attempting to resolve the claims short of litigation. Equally important, during that period, there was no communication between the individual claimants and Grand Union, or its agent, Scott Wetzel. Had there been no bankruptcy filing by Grand Union, Scott Wetzel would have been continuously and exclusively communicating with the movants' attorneys for an amicable conclusion. If no resolution would have been reached, presumably the movants' attorneys would have commenced personal injury actions against Grand Union in state courts. 8 Either way, once counsel's representation was known to Scott Wetzel, there would have been no reason for either Grand Union or Scott Wetzel to initiate a direct communication with the claimants. Likewise, there would have been no reason for the claimants to expect any communication from Grand Union or Scott Wetzel. Here, however, Grand Union did file a Chapter 11 petition. Grand Union did communicate directly with the claimants when it sent notices regarding its bankruptcy case to them, including the bar date notice. The commencement of bankruptcy case, however, did not change the claimants' justifiable expectation that Grand Union would be communicating with the claimants' lawyers. For them, it was safe to believe that any notice they received, such as the bar date notice, would have been sent to and received by their counsel simultaneously since Grand Union was expected (indeed, instructed) to be communicating with their counsel. Consequently, the movants were entitled to pay little or no attention to the bar date notice sent to them by Grand Union. Even if we assume that they read the bar date notice, the movants would have been hard pressed to determine what action, if any, should be taken with regard to the notice. The bar date notice, a four page, over 1,000 word document, couched with legalese, is a complex legal document, and clearly is not easily -10-
Pg 12 of 101 comprehensible by a lay-person. Moreover, it is not easily determinable from the notice itself whether the notice applies to these claimants. The title of the notice states that it only applies to certain claims. The notice specifies numerous exceptions, in which case no action was required at all. Most notably, one of the nine exceptions enumerated in the notice applies to: [c]laims listed in the Debtor's schedules of liabilities filed with [this] Court (the Schedules ) or any amendments thereto which are not therein listed as contingent, unliquidated or disputed and which are not disputed by the holders thereof as to amount or classification. (Doc. # 1017, Ex. A, (xi)) (emphasis original). I believe this exception is incomprehensible by a lay-person without the assistance of someone who possesses, or has the ability to possess, a working knowledge of the Bankruptcy Code. Moreover, it requires the claimants to go to the offices of Grand Union's attorneys to check the schedules filed by Grand Union in order to determine whether their claims are listed as contingent, unliquidated or disputed and whether the amount and classification listed in the schedules are agreeable to the claimants. The movants are lay-persons, and unlike commercial creditors, presumably had never been involved in a commercial bankruptcy proceeding. It is unreasonable to suggest that these movants, who presumably had never seen a bar date notice before, would fully appreciate the meaning and legal significance of the notice and react accordingly. It is equally unreasonable to expect that they would travel to the offices of Grand Union's counsel, check the schedules, see whether their claims are correctly listed, and determine what action, if any, needs to be followed. I would think that an experienced non-bankruptcy lawyer receiving such a bar date notice would take the easy course of action by simply filing a proof of claim and not worry about figuring out the distinctions made in the notice. In this regard, I note that Jason's attorney, a general practitioner, testified that she did not even know what a bankruptcy bar date notice was. (Tr. 105) Furthermore, the movants could have concluded that they were exempted from filing since they reasonably could have believed that their claims were undisputed, liquidated and not contingent. Here we have three individual claimants, who were previously informed by their counsel that Grand Union, through its agent Scott Wetzel, had acknowledged their personal injury claims. As far as they were informed by their counsel, (1) Grand Union had agreed to try to resolve their claims, (2) there was no immediate concern to bring an action against Grand Union since Grand Union would prefer an out-of-court settlement, and, (3) in any event, they had more than enough time to sue Grand Union since the applicable state statute of limitations had not run. Where Grand Union knew -11-
Pg 13 of 101 of their claims and agreed to try to resolve their claims, the movants could have fairly believed that their claims were undisputed, liquidated and not contingent. In summary, assuming the bar date notice was timely received by the movants, it was highly unlikely that the movants would have paid any attention to the notice. Even if they read the notice, without understanding its exigent nature, it was unreasonable to expect them to react properly. Moreover, where it was reasonable for the movants to expect that the same notice would have been sent to their counsel as well, it was reasonable for them to not act on it. These difficulties could have been easily obviated by Grand Union. Grand Union, through its agent Scott Wetzel, had specific knowledge (a) that these three claimants were represented by counsel and (b) that these three claimants desired that Grand Union or its agent deal with their claims through the identified counsel. During the pre-petition period, Grand Union honored the claimants' requests by (a) having all communications regarding the claims only between its agent, Scott Wetzel, and the attorneys representing the claimants and (b) having no communications between itself, or its agent, and the claimants regarding their claims. However, after the filing of the petition, Grand Union proceeded to communicate with the claimants and not with the lawyers, including the critical communication of the bar date notice. Once the bar date had passed and Grand Union's records reflected that these claimants failed to file proofs of claims, Grand Union then caused Scott Wetzel to advise the claimants that their claims had been discharged. But, ironically, while Grand Union had sent the bar date notice to the claimants, it had Scott Wetzel notify all the claimants' counsel of the discharge of the claims. Thus, the record shows that Grand Union could have easily sent the bar date notice to the movants' counsel as it communicated, through Scott Wetzel, in pre-petition and post-confirmation periods. Given the import of the bar date notice, it would be grossly unfair and inequitable to leave the movants' counsel uninformed on such a matter when their representation was clearly known to Grand Union. At the same time, it would be equally improper to incumber these claimants with grave responsibilities of reading, understanding and conveying the message to their counsel. Under the circumstances here, sending the bar date notice to the claimants amounted to a trap for the unwary. Sending the notice to the claimants, in and of itself, was not reasonably calculated to apprise the claimant of the bar date. The bar date notice directly sent to the claimants could not have reasonably apprised them of their rights and obligations in this bankruptcy case. In order to provide the claimants with adequate notice of the bar date, Grand Union should have notified their counsel directly. This could have been effected by Grand Union listing the claimants by the names and addresses of their attorneys on its list of creditors. Absent a bar date notice sent to their counsel, I conclude that the movants did not receive adequate notice of the bar date so as to permit them to file their proofs of claims in a timely manner. -12-
Pg 14 of 101 Grand Union, 204 B.R. at 872-874. 38. In response to the debtor s argument that Bankruptcy Rule 2002(g) requires a debtor to send all notices to a creditor's agent only where the debtor is directed to do so in a filed request, Judge Walsh concluded that Rule 2002(g) should be broadly construed to encompass the situation in which an attorney representing a personal injury claimant, in a pre-petition written notice, has requested the debtor or its claims adjuster to communicate with the attorney exclusively regarding the claim. Grand Union, 204 B.R. at 874. 39. Judge Walsh further reasoned that, because Rule 2002(g) provides that the mailing will otherwise be to the address shown in the list of creditors or the schedule whichever is filed later, the debtor s knowledge that the claimants were represented by counsel and its pre-petition communications exclusively conducted with the claimants' counsel gave rise to a duty to address the claim bar order to claimants counsel. Grand Union, 204 B.R. at 874-875. 40. Judge Walsh also found that the debtor s conduct in sending the bar date notice directly to the claimants violated the spirit, if not the letter, of Rule 4.2 of the Model Rules of Professional Conduct, which precludes lawyers from making direct contact with persons represented by counsel because the bar date order is fairly viewed as a communication from the debtor s counsel within the proscription of Rule 4.2. 41. Judge Walsh acknowledged that there was one reported bankruptcy court decision that appeared to be squarely in opposition with his conclusion, namely In re R.H. Macy & Co., 161 B.R. 355 (Bankr.S.D.N.Y.1993), but declined to follow it. 42. In reality, the R.H. Macy case is clearly distinguishably both from the Grand Union case and the instant case. In R.H. Macy, the claimant who argued that his attorney should have been served with the proof of claim package also asserted that he had moved and never received the package himself. The Court concluded that the claimant had failed to rebut the -13-
Pg 15 of 101 presumption of receipt of properly addressed mail. Indeed, Grand Union, Judge Walsh reached a similar conclusion as to other claimants who denied notice. It was only the claimant who acknowledge service who obtained a favorable ruling. Similarly, in the instant case, the Michauds acknowledge receipt of the mailed documents it is the inadequacy under the circumstances of the notice given that drives their argument. One factual detail that further distinguishes the instant case from R.H. Macy and renders the factual scenario even more compelling than that in Grand Union is the fact that Attorney Batoff was never advised by the debtor s insurer with whom he was communicating that a Chapter 11 petition was even filed. Had such notice been given, Attorney Batoff would have been able to access the PACER system for information concerning relevant filing dates. 43. It also bears mention that Judge Walsh in Grand Union, having decided the case on inadequate notice grounds, did not reach the issue of whether late filing should be permitted on the ground of excusable neglect. 44. An analysis of the facts presented under the "excusable neglect" standard announced in Pioneer Investment Services v. Brunswick Associates Limited Partnership, 507 U.S. 380 (1993), lends further support to the Michauds request that they be permitted a late filing. 45. Bankruptcy Rule 3003(c) is read in conjunction with Bankruptcy Rule 9006(b)(1), which provides an exception to the requirement under Rule 3003(c) that a proof of claim should be filed before the claims bar date: [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. Fed. R. Bankr. P. 9006(b)(1). 46. -14-
Pg 16 of 101 47. In Pioneer Investment Services, a Chapter 11 case, a creditor sought an extension of the claims bar date under Rule 9006(b)(1) after the bar date had lapsed. The Court held that Congress intended Rule 9006(b)(1) to be a "flexible" rule, and defined neglect broadly, permitting courts "to accept late filings caused by inadvertence, mistake, or carelessness, as well as by intervening circumstances beyond the party's control." Id. at 388. After determining that "neglect" is not limited to situations where the failure to timely file was beyond the control of the filer, the majority held that an equitable evaluation must be made to determine whether the neglect was "excusable." Id. at 394-95. The Court then determined that the following non-exhaustive list of factors should be considered in each case to determine whether the neglect is "excusable": [a] [b] [c] [d] the reason for the delay, including whether it was within the reasonable control of the movant; the danger of prejudice to the debtor; the length of the delay and its potential impact on judicial proceedings; and whether the movant acted in good faith. Id. at 395. 48. Applying these standards, Courts in this District routinely permit late-filed Claims that accrued after the Claims Bar Date, or in situations where the Claimant was unaware that its claim had accrued until after the bar date. For example, in the Enron bankruptcy, Judge Gonzales permitted a multi-million dollar claim filed five months after the bar date, noting that the claimant "was not even aware that it had a claim until after the bar date, and that the facts here are sufficiently unique that... allowing [the claimant]'s late proofs of claim against the Debtors would [not] create "floodgate concerns."' In re Enron Corp., 419 F.3d 115, 132 (2d Cir. 2005) (quoting In re Enron Corp., No. 01-16034 (AJG), order at 12-14 (Bankr. S.D.N.Y. Sept. 23, 2003)). -15-
Pg 17 of 101 35. In the instant case, with respect to the Pioneer factors, (a) the reason for the delay is that Movants apparently received the mass mailing but were not made aware of any need to take prompt action to protect their claims, and therefore had no control over the timing of the eventual filing; (b) there is no danger of prejudice to the debtor, given the fact that there appears to be applicable insurance coverage, albeit with self-insured retentions, and Movants claims are unsecured nonpriority claims; (c) the length of the delay in filing is approximately one month and could have had no significant impact on these proceedings; and (d) Movants have acted in good faith by securing counsel to pursue their claims, resulting in almost immediate notice to the Debtor of their prepetition claims and their inclusion in Schedule F. Each of the Pioneer factors, therefore, weighs in favor of permitting Movants' claims. CONCLUSION For the foregoing reasons, the Government's motion should be granted, the Michauds Claims should be allowed, and the Debtors' objections, if any, should be denied. DATED: May 23, 2014 Respectfully submitted, JOSEPH R. VIOLA, P.C. /S/ Joseph R. Viola JOSEPH R. VIOLA, ESQUIRE Counsel for Pierre and Fabie Michaud -16-
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Pg 99 of 101 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK IN RE: : Chapter 11 : METRO AFFILIATES, INC., et al., 1 : Case No. 13-13591 (SHL) : Debtors. : (Jointly Administered) : ORDER PURSUANT TO FEDERAL BANKRUPTCY RULE 3003(C)(3) EXTENDING FOR CAUSE SHOWN THE TIME FOR PIERRE MICHAUD AND FABIE MICHAUD TO FILE PROOFS OF CLAIM AGAINST DEBTORS Upon the Motion of Pierre Michaud and Fabie Michaud for an Order pursuant to Federal Rule of Bankruptcy Procedure 3003(c)(3) extending for cause shown the time for Pierre Michaud and Fabie Michaud to file their Proofs of Claim against the Debtors and allowing such claims against the Debtors as if Pierre Michaud and Fabie Michaud had timely filed their claims, or, in the alternative, extending the time for filing pursuant to Federal Rule of Bankruptcy 1 This case is Jointly Administered. The main case is Metro Affiliates, Inc., 13-13591 (SHL). The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal taxpayer identification number, are: 180 Jamaica Corp. (7630); Amboy Bus Co., Inc. (2369); Atlantic Escorts, Inc. (8870); Atlantic Express Coachways, Inc. (2867); Atlantic Express New England, Inc. (4060); Atlantic Express of California, Inc. (5595); Atlantic Express of Illinois, Inc. (5759); Atlantic Express of LA, Inc. (1639); Atlantic Express of Missouri, Inc. (3116); Atlantic Express of New Jersey, Inc. (8504); Atlantic Express of Pennsylvania, Inc. (0330); Atlantic Express Transportation Corp. (4567); Atlantic Queens Bus Corp. (0276); Atlantic Paratrans of NYC, Inc. (1114); Atlantic Paratrans, Inc. (3789); Atlantic Transit, Corp. (7142); Atlantic-Hudson, Inc. (5121); Block 7932, Inc. (3439); Brookfield Transit, Inc. (8247); Courtesy Bus Co., lnc. (5239); Fiore Bus Service, Inc. (1233); Groom Transportation, Inc. (7208); G.V.D. Leasing, Inc. (0595); James McCarty Limo Services, Inc. (8592); Jersey Business Land Co. Inc. (3850); K. Corr, Inc. (4233); Merit Transportation Corp. (8248); Metro Affiliates, Inc. (0142); Metropolitan Escort Service, Inc. (9197); Midway Leasing, Inc. (7793); R. Fiore Bus Service, Inc. (3609); Raybern Bus Service, Inc. (9412); Raybern Capital Corp. (6990); Raybern Equity Corp. (3830); Robert L. McCarthy & Son, Inc. (4617); Staten Island Bus, Inc. (6818); Temporary Transit Service, Inc. (0973); Atlantic Express of Upstate New York Inc. (1570); Transcomm, Inc. (4493); and Winsale, Inc. (2710). The location of the Debtors' corporate headquarters and the Debtors' service address is: 7 North Street, Staten Island, NY 10302. Claimants seek to file proofs of claim as to Debtor Atlantic Express of Pennsylvania, Inc., at Docket No. 13-13601.
Pg 100 of 101 Procedure 9006(b)(1) on the ground that Pierre Michaud s and Fabie Michaud s untimeliness is by reason of "excusable neglect," it appearing that due and proper notice of the Motion was provided; and it appearing that no other or further notice need be provided; and the Court having determined that there is just cause for the relief granted herein; and upon the record of the hearing before the Court, and consideration of any response to the Motion; and after due deliberation and sufficient cause appearing therefor, it is HEREBY ORDERED that 1. The Motion is GRANTED to the extent set forth herein. 2. The Proofs of Claim submitted to the Debtors Claims and Noticing Agent Kurtzman Carson Consultants on or about May 23, 2014 shall be DEEMED TIMELY FILED for all purposes relating to this jointly administered Chapter 11 proceeding. New York, New York Dated:, 2014 HONORABLE SEAN H. LANE UNITED STATES BANKRUPTCY JUDGE
Pg 101 of 101 CERTIFICATION OF SERVICE The undersigned hereby certifies that this 23 rd day of May, 2014, I caused a true and correct copy of the within Motion of Pierre Michaud and Fabie Michaud For Leave to File Untimely Proofs of Claim to be served upon the Debtor, counsel for the Debtor and the United States Trustee via Federal Express Overnight Delivery addressed as follows: DATED: May 23, 2014 Metro Affiliates, Inc., et al. 7 North Street Staten Island, NY 10302 Attn: Nathan Schlenker Akin Gump Strauss Hauer & Feld LLP One Bryant Park New York, NY 10036 Attn: Lisa G. Beckerman Rachel Ehrlich Albanese Office of the United States Trustee 201 Varick Street, Suite 1006 New York, NY 10014 Attn: Michael Driscoll William E. Curtin JOSEPH R. VIOLA, P.C. /S/ Joseph R. Viola JOSEPH R. VIOLA, ESQUIRE Counsel for Pierre and Fabie Michaud -17-