Dorrion

August 24, 2023

Nathan Ochsner, Clerk

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

UNITED REFINING § CIVIL ACTION NO

COMPANY, § 4:21-cv-00355

Debtor, §

§

§

vs. § JUDGE CHARLES ESKRIDGE

§

§

ROBERT W. DORRION, §

Appellant. §

OPINION AND ORDER

AFFIRMING BANKRUPTCY COURT

Appellant Robert W. Dorrion is executor of the estate

of Gerald W. Dorrion. He appeals from an order of the

United States Bankruptcy Court determining that a

wrongful-death claim he brought against Appellee United

Refining Company was discharged in bankruptcy.

The decision of the bankruptcy court is affirmed but

subject to limited remand for consideration whether an

argument by Appellant was forfeited for failure to raise it

before the bankruptcy court—and if not, to decide that

issue as noted below.

1. Background

Gerald W. Dorrion worked for United Refining

Company from 1960 to 1963 and was allegedly exposed to

asbestos at one of its petroleum refineries in Pennsylvania.

He will be referred to here as the Decedent because,

unfortunately, he was diagnosed with mesothelioma—an

aggressive form of cancer caused by asbestos exposure—in

2016 and died the following year.

Robert W. Dorrion served as executor of the Decedent’s

estate and will be referred to here as such. His familial

relationship with the Decedent, if any, isn’t clear from the

record. Regardless, in 2018, the Executor brought a

wrongful-death action against United Refining in

Pennsylvania state court.

In 1983, United Refining had filed for Chapter 11

bankruptcy in the Southern District of Texas. It submitted

its sixth amended reorganization plan in 1988. See Dkt 8-3.

As relevant to this appeal, the plan discharged “all Claims

arising before the Confirmation Date.” Id at 57. It thus

barred creditors from asserting claims against United

Refining “based upon any act or omission . . . that occurred

prior to the Confirmation Date.” Id at 58.

The bankruptcy court confirmed the plan by order in

1988. Dkt 8-4. That order likewise included language

discharging United Refining of debts that arose before

entry of the order. Dkt 8-4 at 9–10 ¶ 6. It stated further

that the United Refining estate was free of all claims of

creditors; any judgment of liability on a discharged claim

would be null and void; and any action to recover on a

prepetition debt was forever enjoined. Id at 10–11 ¶¶ 7–9.

It also provided that the plan bound all creditors,

regardless of whether they accepted the plan or whether

the plan impaired their claims. Id at 13 ¶ 19. And it stated

that United Refining “complied with the applicable notice

provisions of the Bankruptcy Code, the Bankruptcy Rules

and the Local Rules of Court, and notice of the hearing on

confirmation was reasonable and appropriate.” Id at 8 ¶ 1.

The bankruptcy case closed once the confirmed

reorganization plan was consummated. The official record

of the case was destroyed in the ordinary course of court

business in 2020.

United Refining initially defended itself in

Pennsylvania state court when the Executor asserted the

subject wrongful-death claim in May 2018. But it later

moved to reopen its bankruptcy case in July 2020. Dkt 2

at 11. The motion was granted. Id at 418. United Refining

then moved for the bankruptcy court to determine whether

the asbestos-related claim brought by the Executor was

discharged by the 1988 confirmation order. Id at 424. As

just noted, the materials available for review on this

motion were limited due to the destruction of the case-

related files. Only the plan, confirmation order, and a few

post-confirmation orders were (and are) available for

consideration. Unavailable are items such as the entries in

the docket, affidavits of service, the disclosure statement,

any schedule of assets and liabilities, or any evidence from

the Decedent himself about his notice of or knowledge

about the bankruptcy case. See id at 880.

On the briefing and available materials, the

bankruptcy court concluded that the claim was discharged.

Judge Christopher M. Lopez first determined that the

Executor had brought a prepetition claim within the

meaning of the Bankruptcy Code. Id at 882–86. He then

determined that the Bankruptcy Code and confirmation

order discharged the wrongful-death claim and enjoined

the Executor from further litigating the claim. Id at 886–

90. With reliance upon the confirmation order’s finding

that notice was adequate, Judge Lopez also concluded that

the Decedent had received adequate notice of the

bankruptcy case. Id at 887–89.

The Executor appealed. Id at 891.

2. Legal standard

Federal district courts have jurisdiction to hear

appeals from final judgments or orders of the bankruptcy

courts. 28 USC § 158(a)(1). A district court functions as an

appellate court when reviewing the decision of a

bankruptcy court as to a core proceeding, and so applies the

same standard of review as would a federal appellate court.

See In re Webb, 954 F2d 1102, 1103–04 (5th Cir 1992).

Findings of fact are thus reviewed for clear error, while

conclusions of law and mixed questions of fact and law are

reviewed de novo. In re Seven Seas Petroleum Inc, 522 F3d

575, 583 (5th Cir 2008); see also Fed R Bankr P 8013. But

matters within the discretion of a bankruptcy court are

reviewed only for abuse of discretion. In re Gandy, 299 F3d

489, 494 (5th Cir 2002).

A bankruptcy court abuses its discretion when it

applies an improper legal standard or bases its decision on

clearly erroneous findings of fact. In re Crager, 691 F3d

671, 675 (5th Cir 2012). And on review of purported abuse

of discretion, the district court “may affirm if there are any

grounds in the record to support the judgment, even if

those grounds were not relied upon” by the bankruptcy

court. In re Green Hills Development Co, 741 F3d 651, 656

n 17 (5th Cir 2014) (citations omitted).

3. Analysis

On appeal, the Executor argues that the bankruptcy

court erred by determining that (i) the claim now brought

against United Refining existed before the 1983

bankruptcy filing, (ii) the Decedent was given adequate

notice of the need to file a claim in the 1983 bankruptcy

case, and (iii) the claim was discharged by United

Refining’s reorganization plan. The Executor also argues

that the court abused its discretion by (iv) deciding to

reopen the long-closed bankruptcy case.

None of these is ultimately persuasive.

a. Existence of prepetition claim

The Executor dedicates the better part of his brief to

arguing that no cognizable claim existed as of 1983, when

United Refining filed its bankruptcy petition. Dkt 8 at 10–

26. It’s undisputed that the Decedent was exposed to

asbestos before the filing date. The primary question is

whether that’s enough for the claim that the Executor now

asserts to be considered a prepetition claim, even though

the Decedent’s mesothelioma manifested itself decades

later. If no claim existed prepetition, then neither the

Bankruptcy Code nor the confirmation order will have

discharged that claim, and it may proceed.

As a preliminary matter, the Executor suggests that

the law to be applied in determining whether the Decedent

had a prepetition claim is the law as it existed at the time

of the bankruptcy filing in 1983. See Dkt 8 at 10–11.

Neither the bankruptcy court nor United Refining directly

address this contention. There is some support for it in the

caselaw, which notes due-process concerns arising from

retroactive application of law. For example, see In re Placid

Oil Co, 753 F3d 151, 154 n 1 (5th Cir 2014), citing Wright

v Owens Corning, 679 F3d 101 (3d Cir 2012). But whether

new or old law applies, it’s clear that the Decedent had a

dischargeable, prepetition claim—especially since the

broad definition of claim in the Bankruptcy Code has

remained constant throughout.

Section 101(5) of the Bankruptcy Code defines a claim

as a “right to payment, whether or not such right is reduced

to judgment, liquidated, unliquidated, fixed, contingent,

matured, unmatured, disputed, undisputed, legal,

equitable, secured, or unsecured.” This same definition

existed as of the 1983 bankruptcy filing, although then

situated at Section 101(4).

The Code’s definition of claim is of its nature quite

broad, having replaced a much narrower one from the 1898

Bankruptcy Act, which the Code supplanted in 1978. See

In re Mooney Aircraft Inc, 730 F2d 367, 375 n 6 (5th Cir

1984); see also In re Johns-Manville Corp, 57 BR 680, 686–

88 (Bankr SDNY 1986) (noting that claim “must be

expansively defined”). Courts have since formulated tests

for determining whether certain tort claims meet the

definition of claim under the Bankruptcy Code. These

include (i) the accrual test, (ii) the fair-contemplation test,

(iii) the conduct test, and (iv) the prepetition-relationship

test. See In re Placid Oil Co, 463 BR 803, 814 (Bankr ND

Tex 2012) (describing these tests), affd, 753 F3d 151.

The Executor primarily argues that either the accrual

or the fair-contemplation test should apply, and that his

wrongful-death claim doesn’t qualify as a prepetition claim

under either. Dkt 8 at 21–26. But neither of these governs

in the Fifth Circuit—nor did they in the 1980s.

Under the accrual test, a claim accrues for bankruptcy

purposes when it accrues under applicable non-bankruptcy

law. The Executor argues that the subject wrongful-death

claim didn’t accrue under Pennsylvania law until the

Decedent received his mesothelioma diagnosis, meaning

further that the claim didn’t exist prepetition and thus

wasn’t discharged. Dkt 8 at 22. Even assuming that

accurately states the law as to accrual of claims in

Pennsylvania, the accrual test was adopted circuit-wide

only in the Third Circuit and has since been overturned as

in conflict with the Code’s broad definition of claim. See

Matter of M. Frenville Co Inc, 744 F2d 332 (3d Cir 1984),

overruled by In re Grossman’s Inc, 607 F3d 114 (3d Cir

2010). Regardless, decisions of the Third Circuit don’t bind

district courts in the Fifth Circuit.

Under the fair-contemplation test, for a claim to qualify

as a prepetition claim, it must have been within the “fair

contemplation” of the parties at the time of bankruptcy

filing. In re National Gypsum Co, 139 BR 397, 406–08

(ND Tex 1992). The Executor argues that none of the

available evidence suggests that either the Decedent or

United Refining fairly contemplated the potential for

future asbestos claims at the time of filing. See Dkt 8 at 12–

14. The Bankruptcy Court determined otherwise, relying

on the fact that the Decedent was a former employee of

United Refining, and the confirmed plan addressed many

environ-mental claims. See Dkt 2 at 885 n 7. But precise

application of the fair-contemplation test is beside the

point. For most pertinent here, the Fifth Circuit expressly

stated over twenty years ago that it has “not adopted” the

test. In re Crystal Oil Co, 158 F3d 291, 295–96 n 1 (5th Cir

1998). Argument by the Executor in favor of the fair-

contemplation test is of no avail. See Dkt 8 at 25 (citing

only Crystal Oil and several opinions from bankruptcy and

district courts issued before Crystal Oil).

Neither of the remaining two tests favors the

Executor’s position.

Under the conduct test, a bankruptcy claim arises

whenever the conduct prompting alleged liability occurs,

even if injury doesn’t manifest itself until after bankruptcy

filing. Grady v A.H. Robins Co Inc, 839 F2d 198, 201–03

(4th Cir 1988). Given that the relevant conduct—exposure

of the Decedent to asbestos—occurred before 1983,

application of this test would make the Executor’s a

prepetition claim. But this isn’t dispositive because the

Fifth Circuit follows (or has at least applied) a slightly

modified version of this test, discussed next.

Under the prepetition-relationship test, the conduct test

is narrowed somewhat by requiring “some prepetition

relationship, such as contact, exposure, impact, or privity,

between the debtor’s prepetition conduct and the

claimant.” Lemelle v Universal Manufacturing Group,

18 F3d 1268, 1277 (5th Cir 1994), quoting In re Piper

Aircraft Corp, 162 BR 619, 627 (Bankr SD Fla 1994). In

other words, “there must be evidence that would permit the

debtor to identify, during the course of the bankruptcy

proceedings, potential victims and thereby permit notice to

these potential victims of the pendency of the proceedings.”

Ibid.

Applying this test in Lemelle, the Fifth Circuit

determined that no relationship existed between the

parties prepetition and thus neither did a dischargeable

bankruptcy claim. The facts of record were key to this

holding—and quite distinct from those here. Two children

had died in 1985 after a mobile home manufactured in 1970

by a predecessor of defendant Universal Manufacturing

caught fire. The mother of the children brought a wrongful-

death suit related to the fire. Universal Manufacturing

then sought summary judgment on account of a 1982

bankruptcy filing by the predecessor corporation, arguing

that the mother’s claim was discharged in bankruptcy. Id

at 1271. The Fifth Circuit determined that a dischargeable

claim didn’t exist at the time of filing in part because “the

injury and the manifestation of that injury occurred

simultaneously,” several years after the bankruptcy

petition was filed. It further explained that there was no

evidence indicating “when [the mother] and her family

acquired th[e] mobile home or from whom they acquired it.”

Nor was there any evidence that the manufacturer “should

have even known of [the mother’s] and her family’s

existence.” They were “completely unknown and

unidentified” when the bankruptcy petition was filed. Id

at 1277.

Not so here. The Decedent was employed by United

Refining at one of its plants in the 1960s. He was exposed

to asbestos during such employment. Even the Executor

recognizes that United Refining was no doubt aware of the

dangers of asbestos exposure by the time of its 1983

bankruptcy filing, with asbestos-related lawsuits against it

and many others having been well underway by then. See

Dkt 8 at 27–28. By virtue of his employment, then, the

Decedent was neither unknown nor unidentifiable. And the

conduct at issue—exposure to asbestos by United

Refining—occurred prepetition. The Executor’s claim thus

existed prepetition, even though the Decedent’s injury

manifested itself post-petition.

Such a conclusion is also consistent with the definition

of claim in Section 101(5), which, as set out above, includes

a “right to payment” that can be “contingent.” This express

statutory definition governed in 1983 in the absence of any

interpretative guidance from the Fifth Circuit. And as the

bankruptcy court and many other courts have noted, the

term contingent as used in the definition of claim is quite

broad. See Dkt 2 at 885; see also Grady, 839 F2d at 202–

03; In re Phillips, 175 BR 901, 907 (ED Tex 1994); In re

Manville Forest Products Corp, 225 BR 862, 866–67 (SDNY

1998). For example, shortly after the Bankruptcy Code was

enacted, one authoritative legal dictionary defined

contingent this way: “Possible, but not assured; doubtful or

uncertain; conditioned upon the occurrence of some future

event which is itself uncertain, or questionable.”

Contingent, Black’s Law Dictionary (5th ed 1979). The

Executor’s present claim plainly meets that definition, as

it depended upon the future uncertain event of the

Decedent developing mesothelioma. The Fourth Circuit

reached a similar conclusion in Grady, concluding that a

claim regarding a Dalkon Shield installed prepetition that

failed post-petition was “undoubtedly ‘contingent,’” as it

“depend[ed] upon a future uncertain event, that event

being the manifestation of injury from use of the Dalkon

Shield.” 839 F2d at 202–03.

In perhaps his strongest argument against the above

conclusion, the Executor suggests that all four tests are

beside the point, given the definition of claim in the

confirmed plan:

“Claim” means any “claim,” as defined in

Section 101(4) of the Code, that (a) has

been asserted against the Debtors, or any

of them, and has not been withdrawn and

is not a Disallowed Claim, and (b) was,

except as otherwise provided in the Plan, in

existence on or as of the Filing Date.

Dkt 8-3 at 4. The argument is that this definition

drastically narrows the expansive definition of claim in the

Bankruptcy Code and should be afforded its textual

meaning. As thus applied, the Executor argues that even if

the Decedent had a claim “in existence on or as of the Filing

Date,” he hadn’t “asserted [it] against the Debtors” by that

time, and as a result, the present wrongful-death claim

didn’t meet the plan’s governing definition of claim. Dkt 8

at 23.

There’s a procedural problem with the argument. The

bankruptcy court doesn’t appear to have addressed it, and

indeed, there’s no clear indication that the Executor even

raised it. Typically, failure to brief an argument below

results in forfeiture of the argument on appeal. See In re

ValuePart Inc, 802 F Appx 143, 149 n 2 (2020); see also

Rollins v Home Depot USA, 8 F4th 393, 397 (5th Cir 2021).

But for its part, United Refining doesn’t argue in response

that the argument was forfeited. It instead responds only

on the merits, briefly contending that it’s impossible to

determine whether the Decedent “asserted” a claim at this

point because the bankruptcy record has been destroyed.

Dkt 9 at 22.

The Court declines to address the argument in this

posture. It’s at least a plausible contention, but it isn’t

adequately briefed and may well have been forfeited. More

appropriate is a limited remand for the bankruptcy court

to determine whether the Executor forfeited the argument

and, if he didn’t, to rule on that argument alone on

whatever briefing it deems necessary.

Subject to the limited remand just described, the

bankruptcy court didn’t err by determining that the claim

brought by the Executor existed prepetition.

b. Notice

The Executor argues that United Refining failed to

satisfy its notice obligations to the Decedent, and that the

bankruptcy court erred in concluding otherwise. Dkt 8

at 31–34.

Section 523(a)(3)(A) of the Bankruptcy Code provides

that, for a debt to be discharged that’s neither listed nor

scheduled in the restructuring plan, the creditor holding

the debt must have “had notice or actual knowledge of the

[bankruptcy] case in time for . . . timely filing” of a proof of

claim. And due process requires that “notice [be]

reasonably calculated, under all the circumstances, to

apprise interested parties of the pendency of the action.”

Mullane v Central Hanover Bank & Trust Co, 339 US 306,

314 (1950).

How much notice is required under the Due Process

Clause depends on whether a creditor is known or

unknown. Actual notice is required for known creditors;

constructive notice is sufficient for unknown ones. Placid

Oil, 752 F3d at 154–55. A creditor is known if he’s actually

known to the debtor or if his identity is “reasonably

ascertainable”—meaning that it can be discovered through

“reasonably diligent efforts.” Id at 154, quoting Tulsa

Professional Collection Services Inc v Pope, 485 US 478,

489–90 (1988).

The destruction in 2020 of the bulk of the underlying

bankruptcy record complicates the notice issue here. But

the bankruptcy court adequately explained that the only

evidence from the bankruptcy record concerning notice

favors United Refining. The confirmation order stated that

United Refining “complied with the applicable notice

provisions of the Bankruptcy Code, the Bankruptcy Rules

and the Local Rules of Court, and notice of the hearing on

confirmation was reasonable and appropriate.” Dkt 8-4 at 8

¶ 1. Such an order is binding on all parties and has res

judicata effect. See Eubanks v FDIC, 977 F2d 166, 170–71

(5th Cir 1992). The bankruptcy court was thus right to give

full weight to the factual finding contained within it. Dkt 2

at 889. And that finding indicates that the Decedent was

given appropriate notice, regardless of whether he was a

known or unknown creditor. Put another way, it indicates

that United Refining satisfied the bankruptcy court in the

1980s that it had provided such notice.

The Executor argues that he has submitted evidence

that contradicts the finding contained in the confirmation

order. Dkt 8 at 31–32. He cites the depositions of two co-

workers of the Decedent, each of whom said they never

received publication notice from United Refining. Dkt 2

at 815–18 (Lynn deposition), 844–45 (Hawks deposition).

Even assuming the credibility of their recollection in this

regard, this doesn’t establish whether the Decedent

himself received notice. And even if their views were

pertinent to understanding the Decedent’s own, both

employees indicated in their depositions that they did in

fact know of the bankruptcy, with one saying that he

learned of it by “word of mouth.” Id at 816, 844. The Fifth

Circuit holds in this regard that “a creditor’s actual

knowledge of a bankruptcy case renders a claim

dischargeable, even if the notice that the creditor received

was deficient.” Salard v Salard, 452 F Appx 588, 91

(5th Cir 2011) (citation omitted).

On the available record, the bankruptcy court didn’t

err by determining that the Decedent’s estate had

sufficient notice of the need to file a bankruptcy claim.

c. Discharge

The Executor largely reiterates points made elsewhere

in his brief to argue that his wrongful-death claim wasn’t

discharged by the confirmed plan or confirmation order,

and that the bankruptcy court erred by concluding

otherwise. Dkt 8 at 26–31.

The reorganization plan, confirmation order, and

relevant provisions of the Bankruptcy Code all provide that

dischargeable, prepetition debts are discharged, provided

that proper notice is given. See Dkts 8-3 at 57–58 & 8-4

at 9–11; 11 USC §§ 523(a)(3)(A), 1141(d)(1)(A). It has

already been determined that the asbestos claim at issue

was a dischargeable, prepetition claim and that proper

notice was given. The contention that the claim wasn’t

discharged is thus meritless.

The bankruptcy court didn’t err by concluding that the

plan and confirmation order discharged the claim now

asserted by the Executor.

d. Reopening of closed case

The Executor last argues that the bankruptcy court

abused its discretion by reopening United Refining’s

bankruptcy case. The merits of his other arguments so

clearly favor him, he says, that reopening the bankruptcy

case was futile. Dkt 8 at 34.

Section 350(b) of the Bankruptcy Code permits a

bankruptcy court to reopen a case “to administer assets, to

accord relief to the debtor or for other cause.” “The phrase

‘or other cause’ . . . is a broad term” that confers discretion

on a district court to reopen a case for good cause shown.

In re Case, 937 F2d 1014, 1018 (5th Cir 1991). And a

discharge order is appropriately enforced by the court that

issued it. See In re Crocker, 941 F3d 206, 213–17 (5th Cir

2019).

The conclusions as to the foregoing issues on appeal

demonstrate that it wasn’t futile for the bankruptcy court

to reopen United Refining’s bankruptcy case. In doing so,

the court appropriately determined, on the available

briefing, that the claims brought by the Executor in

Pennsylvania state court were discharged in 1988.

The bankruptcy court didn’t abuse its discretion by

reopening United Refining’s bankruptcy case.

4. Conclusion

On the briefing and record before it, the bankruptcy

court didn’t err by concluding that the wrongful-death

claim brought by Appellant Robert W. Dorrion existed

prepetition and was discharged in bankruptcy following

appropriate notice. Nor did it abuse its discretion by

reopening the bankruptcy case of Appellee United

Refining.

The judgment of the bankruptcy court is AFFIRMED

subject to a LIMITED REMAND for the bankruptcy court (i) to

determine whether the Executor forfeited his argument

concerning the plan’s definition of claim, and (ii) if he did

not, to resolve the argument on whatever further briefing,

if any, it deems appropriate.

SO ORDERED.

Signed on August 23, 2023, at Houston, Texas.

Che 2 Balcdy

Hon. Charles Eskridge

United States District Judge

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