Petition for Writ of Certiorari — Jones v. Chemetron Corp., 80 F.3d 1424 (1996) (No. 95-1447)

1 Supseme €ourt, U.S. 7

, 2 F | Ee E. D

96°144%* MAR 11 1996

CASE NO. ae CLERK =

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1995

PHYLLIS JASKEY JONES, PAMALA JO SWANSINGER,

SANDRA JASKEY HUJARSKI, PATRICIA HUJARSKI,

TERESA HUJARSKI ROSS, JANICE JASKEY BUTVIN,

FRANK BUTVIN, ROBERT BUTVIN, BRIAN BUTVIN,

SUSAN BUTVIN, WALTER ANIELSKI, ARLENE VANS,

YVONNE VANS BEKOSCKE, ANTHONY VANS,

GREGORY VANS, CAROL SCHULTZ, MARY SHAFFER,

BRITTANY CULL, STEPHANIE SCHAFFER,

Petitioners,

vs.

CHEMETRON CORPORATION,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT

OF APPEALS FOR THE THIRD CIRCUIT

William Mitchell, Esq., Counsel of Record

Deborah J. Papushak, Esq.

ARMSTRONG, MITCHELL & DAMIANI

1725 The Midland Building

101 Prospect Avenue, West

Cleveland, OH 44115-1091

(216)566-0064

Attorneys for Petitioners

25 0

QUESTIONS PRESENTED FOR REVIEW

Whether tort claimants who are injured as the result of

pre-petition exposure to radioactive and toxic material deposited

or emitted by a corporate debtor in a place and manner likely to

result in injury to human beings, even if those injuries have not

manifested as of the time of the filing of the bankruptcy petition,

are known creditors, entitled to notice of the pending bankruptcy

petition and claims bar date, before their claims can be

discharged.

Whether a corporate debtor who fails to advise the

Bankruptcy Court of a known class of potential tort claimants

and make provision for recognition of their claims may have

those claims discharged in the Bankruptcy proceeding.

What are the standards for determining whether

creditors are "ascertainable" from the debtor’s own records

where the creditors are potential tort claimants injured as the

result of pre-petition exposure to radioactive and toxic material

deposited or emitted by a corporate debtor in a place and

manner likely to result in injury to human beings.

PARTIES

The parties to this proceeding are listed in the caption.

Because this case arises from Chemetron’s Bankruptcy

proceeding, we have served all the parties to the Bankruptcy

Proceeding and the Bankruptcy Trustee, although they are not

specifically involved in this case.

ii

;

;

TABLE OF CONTENTS

Questions Presented for Review .............__.

List of Parties to the Proceedings in the Court Below

CO i ee ek eee e eee...

Constitutional Provisions, Treaties, Statutes, Rules and

Regulations Involved ................_._.

oe

a Certiorari should be granted to resolve

conflicts among the Circuit Courts in

defining a standard for determining

whether a creditor is "reasonably

ascertainable" and hence, "known" for

purposes of bankruptcy proceedings. . .

II. Certiorari should be granted to illustrate

the appropriate application of the

standards of due process set forth in

Vv. Vv &

Trust Co., 339 U.S. 306,70 S. Ct. 652,

94 L. Ed. 865 (1950), to bankruptcy

Pe

18

18

22

eee

TABLE OF CONTENTS - CONTINUED

Page

Il. Certiorari should be granted to construe

the duties of a debtor in bankruptcy with

respect to potential victims of its

ultrahazardous conduct. ........... 27

A. Opinion of the Third Circuit Court

of Appeals

Chemetron Corp. v. Jones, 72 F.

Oe ee eS oe a A-1

B. Judgment of the Bankruptcy

Court for the Western District of

Pennsylvania

In re: Allegheny Intl., Inc., 158

Bankr. 356 (Bankr., W.D. Pa.,

ee Fe ee a ee A-20

c. Judgment of the District Court

for the Western District of

Pennsylvania

In re: Allegheny Intl., Inc., 170

Bankr. 83 (W.D. Pa., 1994) ........ A-31 }

oe) dates

Coreitnonte GF BRINE Sc Sb wes 0S a AE ss 6 oes A-46

ethene ee ee

iV

TABLE OF AUTHORITIES

Page

CASES

r Fashi I ichi Employment

| 124 B. R. 436 (Bkrptcy. ,

S.D.N.Y. , 1991), 444 Pe eee reer s oe . 15, 28

re x ion, 755 F. 2d. 1034

(3d Cir. , EE ee 2], 28

In r nt ion Co.,

42 B.R. 657 D C. Pa., E.D. “ee 27, 28

In re Remington Corp., 836 F. 2d 825

(3rd Cir. ee ae 15, 28

In re Savage Inc., 43 F. 3d

714¢ Ist Cir. Sa Se 20-22, 27, 28

Matter of Park Nu ing Center Inc.,

766 F. 2d 261 (6th Cir., 1985) ee Pe a rere 24

Mullane v. Cen Hanover Bank & Trust Co.,

339 U.S. 306, 70 S. Ct. 652,

94 L. Ed. 865 Le . 16, 22-25

Pioneer Inv. Serv. Co. v. Brunswick Assocs.

hi eke tA F Be

113 S. Ce. 1489, 1491. -92 (1993). Bere ha set es. 4

heftel d Metals Co

839 F 2d 1383 (10th Cir. 1988) ee wate 19, 20

TABLE OF AUTHORITIES - CONTINUED

Page

CONSTITUTIONAL PROVISIONS

Fourteenth Amendment to the Constitution

OF Gap UE ae ee aes ro ee eo ees l

STATUTES

11 U.S.C. § SGI seis wees ee eee 2

11 U.S.C. § SERRE ce ee ee eek. wes 2

28 U.S.C. § EOE ie a ee re ee ee eas cc l

BOOKS

Poisoned Power, John Gofman, Arthur R. Tamplin,

Rodale Press, GRG., Bereste Wess 0 tes ccc eee 8

As OS Kn el

vi

CASE NO.

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1995

PHYLLIS JASKEY JONES, et al.,

Petitioners,

VS.

CHEMETRON CORPORATION,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT

OF APPEALS FOR THE THIRD CIRCUIT

Petitioners respectfully pray that a Writ of Certiorari issue

to review the judgment of the Third Circuit Court of Appeals

entered on December 18, 1995.

JURISDICTION

The judgment of the Third Circuit Court of Appeals was

entered on December 18, 1995. The jurisdiction of this Court is

invoked pursuant to 28 U.S.C. § 1254(1).

CONSTITUTIONAL

AND STATUTORY PROVISIONS INVOLVED

1. This case involves the first section of the Fourteenth

Amendment to the Constitution of the United States, which

provides:

All persons born or naturalized in the United States,

and subject to the jurisdiction thereof, are citizens of

the United States and of the State wherein they reside.

No state shall make or enforce any law which shall

abridge the privileges or immunities of citizens of the

United States; nor shall any State deprive any person

of life, liberty, or property, without due process of

law; nor deny to any person within its jurisdiction the

equal protection of the laws.

2. This case also involves the interpretation of two

bankruptcy code provisions:

The definition of "claim" as set forth in 11 U.S.C. §

101(A)(5): ". . . right to payment, whether or not

such right is reduced to judgment, liquidated, disputed,

undisputed, legal, equitable, secured or unsecured."

11 U.S.C. § 521(1): “The debtor shall (1) file a list of

creditors. . .."

STATEMENT OF THE CASE

Summary of Proceedings

Petitioners, Phyllis Jaskey Jones, et al., (hereafter

"Claimants") were injured by exposure to radioactive and other

toxic and hazardous substances emitted or deposited by

Chemetron and others at the McGean Chemical Company Dump

on Bert Avenue in Newburgh Heights, Ohio ("Bert Avenue

Dump") and the Harvard Avenue Plant ("Harvard Plant"). The

Bert Avenue Dump and Harvard Plant will be referred to

collectively as "Toxic Sites." Claimants did not learn the cause

of their illnesses until at least 1991. When they made that

determination they filed an action in the Court of Common Pleas

for Cuyahoga County, Ohio, entitled i

v. McGean-Rohco, Inc., et al., Case No. 227973 ("Cleveland

Action"). In the Cleveland Action, Claimants filed suit against

Chemetron and others seeking monetary damages and other

relief for their injuries. The Cleveland Action was filed in July

of 1992.

Chemetron had filed for reorganization in bankruptcy as a

subsidiary of Allegheny International, Inc. in Pittsburgh,

Pennsylvania on February 20, 1988. A claims bar date of

May 31, 1988 was set and ultimately, on July 12, 1990, the

Bankruptcy Court confirmed the plan of reorganization.

Chemetron moved to dismiss the Cleveland Action on the

grounds that only the Bankruptcy Court had jurisdiction over the

issues raised in the Cleveland Action. Although Chemetron

asserted the Bankruptcy Court’s jurisdiction in its motion to

dismiss the Cleveland Action, it took no Steps to invoke the

Bankruptcy Court’s jurisdiction to resolve the issues which

Chemetron claimed only the Bankruptcy Court could resolve.

Therefore, Claimants filed a Motion to Allow Late Filed

Claims and an adversary proceeding to declare their claims not

dischargeable to determine the status of their claims asserted in

the Cleveland action vis-a-vis this bankruptcy proceeding. The

primary basis for Claimants’ Motion to Allow Late Filed Claims

in the Bankruptcy Court was that they were not provided with

sufficient notice of the pending Bankruptcy proceeding and that

they were unaware that their illnesses were the result of

Chemetron’s unlawful conduct at the time Chemetron filed for

Bankruptcy. The primary basis for Claimants’ adversary

proceeding, in addition to the notice issue, is that their Claims

were post-petition claims and not discharged in the bankruptcy.

The Motion and Adversary Proceeding were submitted to

the Bankruptcy Court upon the Briefs of the parties and minimal

documentary evidence.

The Bankruptcy Court ruled that Claimants were "known

creditors” entitled to actual notice of the claims bar date and

granted their Motion to file Late Claims. The Bankruptcy Court

dismissed Claimants’ adversary proceeding without prejudice.

(A-29)

Chemetron appealed to the District Court which reversed

the Bankruptcy Court’s determination that Claimants were

"known creditors." The District Court ruled that Claimants

were unknown creditors and that publication notice was

sufficient. The District Court also ruled on Claimants’

adversary proceeding which was not before the Court, holding

that Claimants’ ciaims were “dischargeable and discharged."

Claimants appealed to the Third Circuit Court of Appeals

which affirmed the District Court’s holding that Claimants were

“unknown creditors" and that publication notice of Chemetron’s

bankruptcy and claims bar date was sufficient. The Third

Circuit reversed the District Court’s determination regarding the

issue of dischargeability in the adversary proceeding and

remanded the case back to the Bankruptcy Court for a

determination on Claimants’ adversary proceeding. The Third

Circuit also held that neither of the Courts below adequately

considered whether Claimants’ claims should be allowed on the

basis of excusable neglect under the standards set forth in

Pioneer Inv. Serv. Co. v. Brunswick Assocs. Ltd. Partnership,

U.S. ‘ , 113 S. Ct. 1489, 1491-92 (1993), and

remanded the matter back to the Bankruptcy Court on that issue

as well.

This petition concerns the Third Circuit’s final

determination that Claimants were not "known creditors," and

therefore, Chemetron was not required to list Claimants as

creditors or inform the Bankruptcy Court of their existence; and

that the publication notice was sufficient notice to Claimants.

Chemetron’s Tortious Conduct

Chemetron is a former owner of the Bert Avenue Dump

which was used by Chemetron during the 1960’s and 1970’s for

the disposal of industrial wastes resulting from its manufacturing

operations at the Harvard Plant. From 1965 to 1972,

Chemetron engaged in the production of a catalyst at the

Harvard Avenue Plant which used depleted uranium. (RA-110)'

During those years, Chemetron obtained numerous amendments

' "RA" refers to the Appellant’s Appendix which is part of

the Record in the Third Circuit Court of Appeals.

4

to its license permitting it to use increasing amounts of source

material. In 1965, Chemetron was authorized by the Atomic

nergy Commission (AEC) to use 30,000 pounds of depleted

anium. (RA-124) By 1971, Chemetron’s license was amended

ip allow it to use up to 600,000 pounds of uranium. (RA-151)

Even after Chemetron ceased production of the catalyst, it was

still permitted to maintain 750,000 pounds of uranium for

storage purposes. (RA-152)

During Chemetron’s ownership of the Toxic Sites and its

use of radioactive material, it was cited numerous times for

violations of regulations concerning the handling of radioactive

material. None of these incidents ever received any publicity.

During its ownership of the Toxic Sites, Chemetron’s Director

of Research was Dr. Charles E. Crompton, a former Atomic

Energy Commission employee. Public records from the AEC

and successor Nuclear Regulatory Commission (NRC) reveal

that the NRC dropped its investigation into one of the charges

against Chemetron because Dr. Crompton said that "in his

mind" Chemetron was in compliance. (RA-303,307) The NRC

also never followed through on its investigation into excessively

high film badge readings based upon Dr. Crompton’s stated

belief that the film badges were otherwise contaminated.

(RA-304)

There are other incidents of violations at the Toxic Sites

which were never pursued by the authorities. However,

Claimants have not had an opportunity in any Court to develop a

record of Chemetron’s culpability in this matter. The Cleveland

Action has been stayed and no evidence was taken in the

Bankruptcy Court in this matter. Claimants are prepared to

make that record once given the opportunity.

The Toxic Sites are located immediately adjacent to a

residential neighborhood. For many years, the Bert Avenue

Dump was used by local children as a playground. It had a

pond where the children swam and a swingset. Chemetron

knew this when it filed its petition for Bankruptcy. Chemetron

also knew, better than any regulatory agency, the type and

extent of pollution it created in the area of the Toxic Sites.

In 1980, after Chemetron had sold the Toxic Sites to

McGean Chemical Co. ("McGean"), a complaint was made to

the appropriate agencies which was acted upon and generated

media attention. Specifically, on May 13, 1980, the NRC was

contacted by a resident of the neighborhood surrounding the

Toxic Sites who was concerned about potential radioactive and

hazardous dumping at the Toxic Sites. Individual "A" stated

that he had obtained a chemical sampling of water from the Bert

Avenue Dump and found it to be contaminated with radiation;

that the ground in and around the dump site had turned a shade

of green; that he noticed deformed birds in the area and that

children who played in the vicinity of the dump had been

diagnosed with "antinuclear" bodies in their blood. (RA-224)

As a result of this contact, the NRC conducted an inspection of

the Toxic Sites. The NRC took samplings in the dump on

June 18, 1980 (RA-224, 235) and samplings of the surrounding

neighborhood during the period of September 2-17, 1980.

(RA-226,267). After its initial sampling in June of 1980, the

NRC issued "immediate action" letters to McGean and

Chemetron. (RA-249,250). McGean was ordered to repair the

fence surrounding the Bert Avenue Dump and establish a patrol

to assure that unauthorized persons did not enter the area. The

NRC also ordered McGean and Chemetron to perform, in

conjunction with each other, an assessment to determine the

source of radioactive materials disposed of at the dump site.

(RA-249,250) Chemetron’s immediate action letter advised

Chemetron of its duty to submit the results of the analysis to the

NRC. (RA-250) The letter also indicated that "further actions

will depend on the results of the assessment.” (RA-250)

McGean and Allegheny Ludlum Industries, Chemetron’s parent

corporation, hired NL [ndustries to obtain an analysis of

radioactivity in the area and sent NL Industries’ report to the

NRC on July 24, 1980. (RA-251).

The NRC issued a report in November, 1980, summarizing

its investigation and containing the results of the radioactive

sampling conducted by itself and NL Industries. (RA-220) The

NRC report concluded that Chemetron had hired contractors

who illegally deposited truck-loads of radioactive materials at the

Bert Avenue Dump in 1975. The NRC issued a Notice of

Violation to Chemetron which concluded that Chemetron had

failed to adequately evaluate the radioactive materials which it

deposited at the Bert Avenue Dump. (RA-226,251) This is the

first time that the NRC followed through “> any of its findings

of violations against Chemetron. This was not the first time that

Chemetron engaged in the hazardous activity which resulted in

injuries to Claimants.

The NRC report included results from its June, 1980

investigation. Readings of radioactivity from .5 to 18

mrad/hour’ were reported on various surfaces (RA-235). The

NRC report also noted soil contamination of up to 2,400

pCi/gram of soil.* (RA-225). The NRC guideline for release

for unrestricted use of an area contaminated by uranium-238 in

soil is 35 pCi/gram. (RA-225) The background level for soil

(i.e., the amount naturally occurring in the area) is less than 1.5

pCi/gram. (RA-179) The report also included the results of

samplings taken by the NRC in September of 1980 from the

dump and areas near the dump including the homes, yards and

garages of twelve nearby residents and four streets. (RA-267)

This survey uncovered actual pieces of uranium and

contaminated stones, metal and concrete, some of which

measured 21 mrad/hr. (RA-267)

The NL Industries report narrative stated that it found soil

contamination in one area of up to 8,000 pCi/gram of soil.

(RA-257) In the test results attached to the narrative report, the

specific sample that the narrative referred to indicated that the

actual reading was 8,513 pCi/gram of soil. (RA-258) Out of

* mrad/hour refers to millirads per hour. A RAD is a

radiation absorbed dosage. It is the unit for measuring the

amount of radioactive energy taken in by an object.

> pCi/gram refers to picocuries per gram. A curie measures

how much radioactivity is released by a substance.

twenty-two soil samples taken from the seven-acre dump site,

fifteen of those reported in Table I registered in excess of the

allowable limits of radioactivity. (RA-258). We do not know if

the remaining seven samples reported on Table I measured

within an allowable range because the equipment used by NL

Industries could only compute readings over forty pCi/gram.

(RA-254) One of the items tested for was alpha particles which

are very dangerous because alpha particles do not pass through

the human body, but remain there. They are the most

dangerous particles for inhalation. Poisoned Power, John

Gofman, Arthur R. Tamplin, Rodale Press, Inc., 1971, p. 60.

Alpha particles were found to be present and the results were

listed in the tables. However, mentions of this was

conspicuously absent in NL’s narrative.

The NL Industries report stated in its narrative that, "[t}he

surface GM [Geiger counter] survey revealed several areas with

detectable surface contamination." (RA-256) No mention was

made of the amounts of contamination found, but the levels were

shown in Figure 1 attached to the report. (RA-262) Surface GM

measurements are reported in terms of disintegrations per minute

(dpm). An acceptable level of surface GM is 15,000 dpm.

(RA-334) Figure 1 showed surface GM readings of 22,000

dpm, 40,000 dpm, 100,000 dpm, 150,000 dpm, 300,000 dpm

and 1,000,000 dpm. (RA-262) Those amounts were never

mentioned in the narrative portion of NL’s report and were

never mentioned by any media source reporting on the results of

radioactive testing.

On July 10, 1980, the United States Environmental

Protection Agency (USEPA) also conducted an investigation of

the site. (RA-76) The report stated there were potential hazards

to human health, contamination of water supply, contamination

of surface water, leaking containers and inadequate security.

(RA-87) Orange colored leachate was noted at the site.

(RA-74,81,89) The USEPA investigation did not include any

investigation of radioactivity. (RA-73) The investigative report

indicated that the site was very accessible to children and

adjacent to a residential area. (RA-73) The Ohio

Environmental Protection Agency (OEPA) had a meeting with

McGean Chemical in October of 1980 and made a summary of

the USEPA’s findings. The OEPA’s summary noted that the

USEPA had found trichlorethylene and other metals. It further

stated:

"The analytical data does not indicate an eminent

human health hazard. However, the data compiled

thus far is limited. Although there is no history of any

organic chemical wastes being disposed here, more

thorough organi is is n to determine the

pollution problems presented by this site. OEPA asked

McGean to consider having priority pollutant scans run

on a composite soil sample and the inlet and outlet of

Burk’s Branch." (RA-72)(Emphasis added)

McGean never conducted the testing and neither did

Chemetron after Chemetron was ordered to assume

responsibility for clean-up.

McGean was also asked to provide testing for the residents.

A memorandum from McGean indicates that McGean consulted

with the Cuyahoga County Board of Health who indicated that

no tests were available to tell if children were exposed to

radiation. (RA-282) The Memorandum indicated that children

had been riding trail bikes at the dump site. (RA-283).

In 1980, Mrs. Barbara Looby, a neighborhood resident,

became concerned when her daughter began experiencing

physical ailments which her doctor believed could be related to

exposure to toxic or radioactive substances at the dump.

(R-Looby Deposition, p. 4)) Her doctor had written in a letter

to a referring physician that he suspected the Toxic Sites may be

"another miniature Love Canal." (RA-90). Mrs. Looby’s

deposition from a related proceeding is part of the record in this

case. She testified that children played at the Bert Avenue

Dump and that, except for a street gate, the area had not

previously been fenced in. (RA-65,66)

The testing at this point in 1980 was minimal, but even that

minimal testing indicated that toxic and radioactive

contamination had occurred at the sites. The record contains a

sampling of the type of information that was provided to the

residents through the media.

On July 8, 1980, the Cleveland Press reported that radiation

readings of approximately 1 millirad per hour were observed at

the site and that a piece of concrete at the site had registered 5

mrad/hour. (RA-289) In fact, the concrete registered 18

mrad/hour. (RA-235)

On July 9, 1980, The Cleveland Plain Dealer reported the

same findings of 1 and 5 millirad per hour and included the

following quote:

"If you tied the chunk of concrete around your neck

and trotted around 6 to 10 hours, the radiation would

be equivalent to a chest x-ray... . A typical chest X

ray involves 20 to 50 millirads." (RA-290)

On September 4, 1980, a meeting was held at Newburgh

Heights Village Hall concerning the radioactive and hazardous

substances at the Toxic Sites. Contrary to the test results, the

paper reported that experts from the NRC said that the radiation

was not serious and that it was confined to the Dump.(RA-291)

Back in 1980, clean-ups were ordered by the NRC and the

EPA, (RA-110) which to this date have not been completed.

Despite the fact that at all times since 1980, the EPA and

NRC have ordered that-the site be cleaned up and that the site

be guarded until it is cleaned up, the USEPA told a local

resident in 1983 that "there is no serious radiation hazard to the

surrounding neighborhood.” (RA-281).

These were the reports which were provided to the

residents of the area. Chemetron received the actual reports

which revealed quite different findings than what was reported

in the media and at public meetings.

At all times, Chemetron has been aware of the dangers to

local residents caused by the substances it deposited at the Bert

Avenue Dump and the substances it had allowed to escape from

the Harvard Avenue Plant. Chemetron also knew from its own

experience and reports that the residents in the neighborhood

have been exposed over the years to large quantities of

radioactive and harmful substances.

10

Chemetron’s continued involvement with environmental

matters at the Toxic Sites was also the subject of a recent

Congressional Report from the United States General

Accounting Office (GAO). The report summarized the history

of the clean-up efforts at the Toxic Sites:

"Little progress has been made toward the cleanup of

the Bert Avenue and Harvard Avenue sites in the 21

years since Chemetron ceased operations using

radioactive materials. Two cleanup attempts made in

the 1980’s failed because of NRC’s inattention to the

radioactive material licensee’s cleanups, inadequate

efforts to characterize (identify) waste at the site, a

prolonged dispute between Chemetron and the current

owner of the sites over who should assume financial

responsibility for site cleanup, and Chemetron’s

financial problems and subsequent bankruptcy."

(RA-95)

Chemetron initiated a clean-up effort in 1984. This clean-

up attempt included shipping contaminated materials off site and

demolishing the Harvard Plant building where operations using

uranium had taken place. (RA-99) Chemetron had reported to

the NRC in 1985 that clean-up was complete, but confirmatory

testing by the NRC concluded that the ". . . radioactivity levels

in some areas were three times as high as Chemetron reported."

(RA-99) In fact, the Oak Ridge report referred to in the GAO

report indicated radioactivity levels as high as 231,100

pCi/gram, of soil. (RA-198)

When Allegheny International filed bankruptcy in 1988,

Chemetron informed the NRC that all of its assets were frozen

and that no progress would be made on the cleanup until the

Bankruptcy Court released money for the cleanup. (RA-101)

After Chemetron’s funds were released in 1989, a cleanup

attempt was begun by Chemetron using a method that was not

approved by the NRC. (RA-100) Chemetron dismissed the

cleaning contractor involved in this effort when "larger-than-

anticipated amounts of radioactive material were discovered."

(RA-100)

11

In 1990 Chemetron initiated a third cleanup attempt which

began with an effort to identify the hazardous substances at the

site. (RA-101) The NRC and OEPA found Chemetron’s

analysis of radioactive and hazardous substances at the site to be

inadequate. (RA-101) Ten years had passed since Chemetron

had been ordered to identify the radioactive and hazardous

substances at the site.

Increased levels of radiation as well as new areas of

contamination continue to be reported at the Toxic Sites. The

Cleveland Plain Dealer, on April 29, 1993, (RA-296) reported

that radioactive hot spots were located on the roof and air ducts

at an ALCOA plant located near the Harvard Plant. This

contamination is being attributed to Chemetron’s conduct when

it was in business at Harvard Avenme. The article’s report of

contamination on the ALCOA roof is supported by documents

from the NRC. (RA-142) The article quotes the NRC as saying

the contamination ". . . probably was not a threat to workers or

neighbors "but again, that something we have to look into.’"

(RA-2%%) The article also noted that Chemetron was still

avoiding its responsibility for the contamination and its clean-up.

It should appear suspicious to any reader of this history that

the reported contamination levels continued to grow even after

the Toxic Sites were not being used and even after loads of

contaminated materials had been removed from the sites. What

started out as a report of a couple of truckloads of contaminated

rubble illegally dumped in 1975, by 1993 was reported by

Chemetron as 1,300,000 cubic feet of contaminated soil. (RA-

150) Obviously, the original reports were wrong. How wrong

remains unknown. 7

The Congressional Report also makes it clear that the NRC

was not a vigilant watchdog and that both the NRC and EPA

were waiting for Chemetron to provide them with a final

analysis of the hazardous and radioactive materials at the Toxic

Sites.

By 1990, even the regulatory agencies admitted that they

had failed at the Toxic Sites. On August 13, 1990, Inside

N.R.C. (Vol. 13, No. 17, Pg. 5) (RA-144) included an article

12

concerning a report generated by 1989 Congressional hearings

led by Representative Mike Synar (D.-Okla.). The report

concerned the NRC’s policies for releasing contaminated sites

from licensing control. It had been discovered that several sites

which were released should not have been released and still

contained excessive amounts of radiation. (RA-144) The article

noted that the General Accounting Office charged the NRC with

“sloppy habits" and "ambiguous or incomplete" files. (RA-144)

The NRC admitted to these deficiencies. (RA-146) As a result

of the hearings, the NRC compiled a list of what it refers to as

"Synar Sites," which require special attention for clean-up

before release. The "Synar Sites" are divided into three

categories, with "Level A" sites being the worst. (RA-146) The

Toxic Sites at issue in this case were designated as “high

priority” Level A on the Synar Sites list. (RA-146-147)

The Claimants’ Injuries

Claimants’ injuries were caused by their exposure or their

parents’ exposure to radioactive and hazardous materials during

the time that they lived in the vicinity of the Toxic Sites.

(RA-6-20). Some of the Claimants are minors who were not

even born in 1980. (RA-6-20)

The effects of long-term exposure to radiation and

hazardous substances often take years to mature into identifiable

injuries. Only recently were claimants able to identify the

connection between their illnesses and their exposure to the

Toxic Sites. Despite the misinformation being provided to the

residents in the area of the Toxic Sites, Claimants finally

determined that their illnesses were caused by Chemetron’s

conduct.

In 1990, Phyllis Jaskey Jones was contacted by a reporter

for The Cleveland Plain Dealer concerning its investigation of

the Toxic Sites. After this contact, Ms. Jones undertook an

investigation and, in 1991, learned that her health problems

were caused by the hazardous wastes at the Toxic Sites. (RA-20)

At the same time Pamala Jo Swansinger, Sandra Hujarski,

Patricia Hujarski, Janice Jaskey Butvin, Frank Butvin, Robert

13

Butvin, Brian Butvin, Susan Butvin, Walter Anielski, Arlene

Vans, Yvonne Vans Bekoscke, Anthony Vans, Gregory Vans,

Carol Schultz and Theresa Hujarski Ross learned that their

injuries were also caused by the hazardous substances from the

Toxic Sites. (RA-20-21)

On March 17, 1992, while visiting her family in Cleveland,

Ohio, Mary Schaffer drove down East 29th Street to show her

family where she had lived as a child. On that day she saw, for

the first time, the fence erected around the Bert Avenue Dump

and a sign that warned of the hazardous radioactive waste

present at the dump. Mary Schaffer contacted an attorney and

as a result of information obtained following an investigation by

counsel and consultants, Mary Schaffer learned for the first time

in March of 1992 that exposure to “> radioactive and toxic

substances present at the Toxic Sites Avenue Plant were a direct

and proximate cause of the serious health problems suffered by

herself and her minor children, Brittany Cull, Stephanie

Schaffer, Amanda Schaffer and Ivan Schaffer. (RA-21)

As a result of this knowledge, Claimants filed the Cleveland

Action in July of 1992. Appropriate allegations concerning the

manner in which Claimants learned of their illnesses and their

relation to the exposure at the Toxic Sites are recited in their

Complaint in the Cleveland Action. Claimants are afflicted

with serious illnesses and injuries including physical deformities,

cancer and lupus. Three Claimants who grew up in this area

required hysterectomies before they were thirty-five years old.

Claimants are prepared to go forward in the Cleveland Action

and prove the facts surrounding the discovery of their illnesses

and prove that their injuries were caused by exposure to

radioactive and hazardous substances at the Toxic Sites.

Chemetron’s Bankruptcy Proceeding

Chemetron filed a voluntary Chapter 11 petition with the

Bankruptcy Court for the Western District of Pennsylvania on

February 20, 1988 as a subsidiary of Allegheny International,

Inc. It did not list persons exposed to hazardous substances at

the Toxic Sites on any of its schedules of debts despite its

od

knowledge of contamination of the area of the Toxic Sites and

despite its knowledge that the conditions it created at the Toxic

Sites continued to be in existence. Chemetron did list potential

cleanup costs at the Bert Avenue Dump site, but made no

mention of the potential harm it caused to residents. The

Bankruptcy Court fixed the bar date for claims at May 31, 1988.

No actual notice was given to persons in the vicinity of the

Toxic Sites of either the filing of the Bankruptcy Petition or of

the claims bar date, despite the fact that the area is small and

easily identifiable and despite the fact that Chemetron actually

knew the names and addresses of many of the residents in the

area. No constructive notice other than publication was

attempted. Notice by publication in the Cleveland area was

made in the national editions of The New York Times and Wall

Street Journal, using the caption of the bankruptcy case which is

headed with "Allegheny International, Inc." No notice by

publication of any kind was placed in The Plain Dealer, or the

Neighborhood News, both of which are newspapers in general

circulation in the area of the Toxic Sites. The Bankruptcy Court

approved this notice because it was never apprised of the fact

situation regarding the Toxic Sites. (A-26)

Claimants were unaware of Chemetron’s bankruptcy

proceeding until Chemetron filed its Motion to Dismiss in the

Cleveland Action. They received no notice of any kind

designed to apprise them of the pendency of the bankruptcy.

The Decisions Below

This section describes the decisions of the Courts below on

the issue of whether Claimants were "known creditors" entitled

to actual notice.

On July 2, 1993, the Bankruptcy Court granted Claimants’

Motion to Allow Late Filed Claims finding that the Claimants

were known creditors, and thus, entitled to actual notice of the

bankruptcy proceeding and the claims bar date. In reaching this

result, the Bankruptcy Court relied on In re Remington Rand

Corp., 836 F. 2d 825 (3rd Cir. 1988) and Brooks Fashion

Stores, Inc. v. Michigan Employment Security Comm., 124

15

B.R. 436 (Bkrptcy., S.D.N.Y., 1991), 444. The Bankruptcy

Court applied the following test to determine if Claimants were

"known creditors”:

". . .if at the time of filing it is reasonably foreseeable

to a debtor, who is or should be aware of the potential

consequences of its actions, that a party that is

foreseeable will most likely file a claim against the

debtor, that party is a *known’ creditor of the debtor.

Furthermore, the fact that a debtor does not know the

name and address of a creditor does not prevent that

creditor from being ’known.’"

Applying this standard, the Bankruptcy Court noted

Chemetron’s knowledge of the fact that the Bert Avenue Dump

was used by local children as a playground. The Bankruptcy

Court also relied upon Chemetron’s own statement in its brief

that:

"The early 1980’s stand out as a point beyond which

no reasonable person should have failed to suspect a

potential connection [between the Bert Avenue Dump

and local health problems] because of the blizzard of

media and individual attention focused upon the alleged

injuries supposedly caused by exposure to hazardous

substances from the Bert Avenue site. . . ." (A-24-25)

The Bankruptcy Court held:

". , ,at the time AI [Allegheny International, Inc.] filed

for Chapter 11 protection in 1988, it was reasonably

foreseeable that Chemetron would suffer claims from

the residents surrounding the Bert Avenue Dump.

Consequently, this court concludes that the Plaintiffs

were known creditors who were entitled to actual

notice." (A-25)

The Bankruptcy Court specially noted that when it approved

the notice order which was used in Chemetron’s bankruptcy

proceeding it was ". . . not apprised of Chemetron’s fact

situation. . .". (A-26)

Relying on Mullane v. Central Hanover Bank & Trust Co.,

339 U.S. 306, 70 S. Ct. 652, 94 L. Ed. 865 (1950)., the Court

16

eee

concluded that ". . . Notice by Publication in the New York

Times and Wall Street Journal was not ’reasonably calculated’ to

give notice to. . ." Claimants. (A-25-26) The Court went on to

suggest various alternative forms of notice which would have

been calculated to provide the Claimants with notice such as

publication in the local paper, a mailing to the homes in the area

of the Bert Avenue Dump or posting notices in the

neighborhood. (A-26) The Bankruptcy Court granted Claimants

relief from the automatic stay in order for them to proceed with

the Cleveland action. (A-29)

Chemetron appealed to the District Court, asserting

challe to the Bankruptcy Court’s decision granting

Cl ’ Motion to Allow Late Filed Claims. The District

Court reversed the Bankruptcy Court and determined that

Claimants were “unknown creditors." The District Court

criticized the foreseeability test, but did not substitute another

test. Instead, the District Court held that:

".. , absent some course of dealing or some

communication between a debtor and potential claimant

indicating the viability of a claim, a creditor is not

reasonably foreseeable. Appellees did not produce any

evidence which suggests a course of dealing between

Chemetron and Appellees or a similarly situated

resident during the relevant time period. . . . It is

uncontroverted that between 1980, when the NRC first

informed Chemetron of unpermitted disposition of

radioactive materials at the Bert Avenue Site, and

February, 1988, no one filed a claim or expressed an

intention to file a claim against Chemetron." (A-39)

Thus, according to the District Court, a tort claimant is not

foreseeable unless the tort claimant "filed a claim or expressed

an intention to file a claim against Chemetron."

The Third Circuit Court of Appeals rejected the

"foreseeablity test" applied by the Bankruptcy Court and held

that the appropriate test was the "reasonably ascertainable"

standard, which it described as follows:

17

"only those claimants who are identifiable through a

diligent search [of the debtor’s own books and records]

are ‘reasonably ascertainable’ and hence ’known’

creditors." (A-8)

The Third Circuit did not define "identifiable" but later

states "we are hard-pressed to conceive of any way the debtor

could identify, locate and provide actual notice to these

claimants." (A-9) The suggestion made by the Third Circuit

Court of Appeals by this statement is that the debtor must have

the names and addresses of individual claimants in order for

them to be ascertainable.

REASONS FOR GRANTING THE WRIT

3

Certiorari should be granted to resolve conflicts among the

Circuit Courts in defining a standard for determining

whether a creditor is "reasonably ascertainable" and hence,

"known" for purposes of bankruptcy proceedings.

In the decision below, the Third Circuit essentially held that

in order for a creditor to be "reasonably ascertainable", the

debtor, from an examination of its own books and records must

be able to identify, locate and provide actual notice to the

individual tort claimants. The decision suggests that the debtor

must have an actual name and address of a particular claimant

before the claimant can be considered a "known creditor".

In the Third Circuit’s decision, one judge dissented and

concluded that the "reasonably foreseeable" test should be used

to determine which persons are entitled to receive notice and the

"reasonably ascertainable" test should be used to determine what

kind of notice they receive. Explaining further, he stated:

"The ’reasonably foreseeable’ test has to do with

whether the debtor knew or should have known that a

claim would be brought; the ’reasonably ascertainable’

test has to do with the debtor’s ability to learn the

18

identity and location of the potential claimant or

claimants." (A-17)

The dissenting judge gave the following example:

"The manufacturer of a product which it knows to be

defective and who filed for bankruptcy should be under

an obligation to give actual notice of the proceedings to

known purchasers and users of its products, even if

they have made no claim. They may not have done so

because the injury had not yet manifested itself or they

otherwise were unaware of the risks of such injury.

Absent such requirement, if the harmful effects of the

product did not manifest themselves for some period of

time, consumers could be barred from relief for their

injuries." (A-17)

The opinion of the dissenting judge below is consistent with

the standard held applicable by the Tenth Circuit in Sheftelman

y. Standard Metals Corp., 839 F. 2d 1383 (10th Cir. 1988). At

issue in Sheftelman was whether the debtor in bankruptcy was

required to notify the purchasers of industrial revenue bonds

issued for the benefit of one of its subsidiaries. The Tenth

Circuit promptly reached the conclusion that notice was

required, stating:

"Notice must be given to ’all creditors’. . . . The term

‘all creditors’ has no qualifications or limitations. New

York v. New York, New Haven & Hartford Railroad

Co., 344 U.S. 293, 73 S. Ct. 299, 97 L. Ed. 333.

This notice must also be given to satisfy due process

requirements. Mullane v. Central Hanover Bank &

Trust Co., 339 U.S. 306, 70 S. Ct. 652, 94 L. Ed.

865. We are referring to actual notice to known

creditors, and these are creditors whose actual identity

is known and those within an identified group or

category as were the bondholders of the particular

bond issue here concerned and whose addresses are

‘reasonably ascertainable.’ Something by way of

constructive notice must also be given to those

bondholders in the same group whose identity and

19

whereabouts cannot be ascertained." (Emphasis by

underlining, added)

Thus, the Tenth Circuit holds that in order to be a known

creditor, it is only necessary that the creditor be in an

identifiable "class". The type of notice the known claimant

should receive depends on whether the name and address of the

person can be ascertained. Notably, in Sheftelman, the Court

concluded that names and addresses were known because there

was evidence that the indenture trustee had a list of most of the

names and addresses of the bondholders. The Tenth District did

not find that the bondholders were not ascertainable merely

because the list of names and addresses was not in the debtor’s

records. What was in the debtor’s records was knowledge of

the class and the names and addresses were someplace where the

debtor could get them.

The First Circuit Court of Appeals considered the type of

notice to be given to potential tort claimants in a bankruptcy

case in In re Savage Industries, Inc., 43 F. 3d 714( Ist Cir.

1994). In Savage, the debtor was a firearms manufacturer

which sold its assets to an Alaskan company. Alaska had a

successor products liability statute. The debtor made no effort

to notify potential tort claimants of its pending bankruptcy.

When the debtor was sued in state court, it sought and obtained

an injunction from the Bankruptcy Court to prevent the state

court action. The Bankruptcy Court’s action was reversed by

the District Court and the State Court action was allowed to

proceed. The Circuit Court affirmed because no notice had ever

been given to potential tort claimants. The First Circuit rejected

the debtor’s defense that notice was impossible because the

creditors were unknown and locating such creditors would have

been overly burdensome. The Court noted that even though the

names of all potential tort claimants were not known to the

debtor, the debtor did have in its records ". . . either the

identity or the whereabouts of large-volume firearms distributors

like Western Auto... ." Id., at 721.

20

The Court in Savage unambiguously determined that se

potential tort claimants were entitled to notice and, absent “sch

notice, their claims were not discharged:

"Notice is the cornerstone underpinning Bankruptcy

Code procedure. ... Under the Code, therefore, the

debtor in possession or trustee must ensure ’parties in

interest’ adequate notice and opportunity to be heard

before their interests may be adversely affected. . . .

*[N]Jotice. . . means . . . . such notice as is

appropriate in the particular circumstances... .’

Bankruptcy Code § 102(1) is founded in fundamental

notions of procedural due process [citations omitted]. .

. Since Taylor and Western Auto [the tort claimants],as

"parties in interest," were never afforded "appropriate"

notice of the chapter 11 proceeding, the chapter 11

plan, or the privately negotiated terms of the asset

transfer agreement, not only do their state-law based

successor liability claims against Arms survive the

chapter 11 proceeding but their claims against Debtor

Industries as well."

While the Court in Savage recognized that direct, actual

notice would probably not be possible for all of these claimants,

it was particularly influenced by the fact that the debtor had

never made any attempt to bring up the issue in the Bankruptcy

Court. In strong language, the Court stated:

"As it was never determined ’appropriate in the

particular circumstances’ for Debtor Industries and

Arms to dispense with all notice and opportunity to be

heard on the part of potential claimants like Taylor and

Western Auto, it would border on the bizarre to

conclude that the third-party complaint Western Auto

filed against Arms in Alaska state court threatened

disruption to any legitimate function served by the

Bankruptcy Code priority scheme which Debtor

Industries and Arms subverted in their private

negotiation of the asset transfer agreement.

Furthermore, it cannot seriously be questioned that the

21

central "notice and hearing’ requirement prescribed by

the Bankruptcy Code would be eviscerated were we to

presume as Arms belatedly suggests, that an entire

class of future product liability claimants was beyond

the purview of ’such notice . . . and such opportunity

for a hearing as [was] appropriate in the particular

circumstances. . . ." Id. at 722.

Thus, this summary of cases demonstrates that a conflict

exists among the circuit courts as to what test should be

employed in determining whether a creditor is "ascertainable"

and thus, "known" for purposes of bankruptcy. The issue is

likely to recur, particularly where the creditor is a tort claimant.

Il.

Certiorari should be granted to illustrate the appropriate

application of the standards of due process set forth in

Mullane y. Central Hanover Bank & Trust Co., 339 U.S.

306,70 S. Ct. 652, 94 L. Ed. 865 (1950), to bankruptcy

proceedings.

A significant aspect of the decision of the Court below. in

determining that Claimants were not known creditois entitled to

notice of Chemetron’s bankruptcy, was its determination that

providing a form of effective notice would be too burdensome.

This analysis is incorrect because it places the cart before the

horse. The first inquiry should be whether there exists a known

class of potential tort claimants entitled to ‘notice of the pending

bankruptcy proceeding. The second inquiry, after the first is

resolved and presented to the bankruptcy court, is what type of

notice would suffice. The Court in Savage, supra., employed an

analysis which did not confuse the two issues. First, the Court

concluded that an ascertainable class of claimants existed which

should have been brought to the attention of the Bankruptcy

Court. Second, the Savage Court held that Mullane should have

been employed to devise an appropriate form of notice for those

claimants.

22

The Bankruptcy Court in this case, likewise, first made the

determination that Claimants’ claims were foreseeable and their

existence should have been presented to the Bankruptcy Court

before a notice was devised. Second, the Bankruptcy Court

proposed a notice to service this class of foreseeable claimants.

The Bankruptcy Court had no difficulty in proposing several

alternatives for providing notice and noted that the suggested

alternatives were by no means considered to be exhaustive.

Both the Circuit Court and District Court below, as well as

other courts addressing this issue, appear to adopt the following

rationale: Actual notice means mailed notice to specific

individuals at a specific address. If that cannot be

accomplished, then the creditor is unknown and constructive

notice suffices. Constructive notice equals publication notice.

This rationale is wrong. The question of whether a creditor

is a known creditor is not determined by what kind of notice can

be accomplished.

More germane to this argument, Mullane stands for the

proposition that in o«der to be effective notice must be:

". . .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. The notice must be of such

nature as reasonably to convey the required

information, and it must afford a reasonable time for

those interested to make their appearance." Id., 313-

314 (U.S.)

"But when notice is a person’s due, process which is a

mere gesture is not due process. The means employed

must be such as one desirous of actually informing the

absentee might reasonably adopt to accomplish it."

Id., at 315 (U.S.)

The Circuit Court hung its hat on the following language

taken out of context from Mullane:

"Nor do we consider it unreasonable for the State to

dispense with more certain notice to those beneficiaries

whose interests are either conjectural or future or,

23

although they could be discovered upon investigation,

do not in due course of business come to knowledge

of the common trustee." Id., at 317 (U.S.)

The Mullane decision, taken as a whole, defies such a

wooden interpretation based upon one sentence of its decision.

Indeed, in the very next sentence, Mullane recognizes that a

more thorough search may be appropriate ". . . in another

situation under ordinary standards of diligence... ." Id.

In Matter of Park Nursing Center, Inc., 766 F. 2d 261 (6th

Cir., 1985), the Court construed Mullane as imposing a". . .

balancing procedure in which costs and efficiency considerations

are balanced against the probability that a procedure will

effectuate notice." Id., at 263. Even if the notice is

constructive, it should be designed to notify.

Chemetron would have incurred very little cost in notifying

every resident in Newburgh Heights and Cuyahoga Heights. It

is unlikely that the cost would have affected the ultimate

recovery of any other creditor. That cost would have been even

less if just the residents of streets near the Toxic Sites had been

notified. The cost to run additional ads in local papers is

minuscule. The Bankruptcy Court in its order also suggested

other methods of notice such as posting notices in the area

which would have imposed minimal burdens upon Chemetron.

In comparison with the costs of depriving numerous tort

claimants of their right to have their claims heard, the cost of

effective service in this case was minimal. Clearly, the

balancing test weighs in favor of providing adequate notice to

the claimants and the Bankruptcy Court’s determination in that

regard should be upheld.

No effective balancing test occurred when the original

notice order was issued because Chemetron failed to tell the

Bankruptcy Court of the dangers to human health it had created.

The rights of Claimants and others in the area of the Toxic Sites

were never considered.

The Bankruptcy Court recognized that Chemetron failed to

provide notice to Claimants who were known creditors and

correctly ruled that Claimants could file their late claims.

4

i

Clearly, the Mullane holding requires an examination of

each specific situation on its own facts. Under the facts of the

case at bar, Chemetron did not have to go any further than its

own records to discover that it had left harmful radioactive and

toxic substances in a residential neighborhood and specifically in

a dump that was used as a children’s playground for many

years. The area involved was a few streets of homes. As the

bankruptcy court concluded, some form of notice could have

been devised. None was attempted.

The notice in this case was not one designed to actually

inform, instead it was designed to create a hazard of forfeiture.

Notice was given in The Wall Street Journal and The New York

Times under a caption heading with Allegheny International,

Inc. In the greater Cleveland area (i.e., Cleveland and suburbs),

there are 1,416,017 residents. In northern Ohio, which

includes Akron and Canton, the total circulation of the New

York Times is 6,574 on weekdays and 8,876 on Sundays. The

Wall Street Journal keeps records of its circulation in the area of

Cleveland, Pittsburgh, Northern Ohio and Western Pennsylvania

and the total circulation for that area is 55,000. Counsel for

Claimants spoke to the circulations departments of these

newspapers and asked if circulation figures were available for

the area of Newburgh Heights and Cuyahoga Heights, which

would be the areas affected by the Toxic Sites. No records

were kept for this small area. Indeed, no records were kept for

Cleveland alone. Thus, we cannot ascertain how many of the

6,574 New York Times and 55,000 Wall Street Journals go to

residents of these areas. It is fairly common knowledge,

however, that these newspapers are not generally read by

residents in the area of the Toxic Sites, which is a working class

neighborhood.

No notice by publication was made in The Cleveland Plain

Dealer or the Neighborhood News, both of which are

newspapers in general circulation in the area of the Toxic Sites

and would have more likely been seen by those in the area. No

notice was made emphasizing that Chemetron was one of the

debtors. The notice provided in the Wall Street Journal and the

25

New_York Times was not calculated to give Claimants any

notice whatsoever.

Newburgh Heights and Cuyahoga Heights have a combined

total population of 3,700. Actual Notice to 3,700 individuals

would not have been unduly burdensome to Chemetron. Yet

that type of notice was not provided. Actual notice to the

residents on the few streets adjacent to the Toxic Sites would not

have been burdensome at all to Chemetron. Yet, no attempt

was made to notify those residents in the immediate vicinity of

the Toxic Sites. Had such notice been made Claimants would

have heard about it because they maintain contact with people in

the neighborhood. All of the claimants except Mary Schaffer

and her children still live in the Cleveland area. Mary

Schaffer’s family is still in the Cleveland area and would have

advised her of any notice they had seen or heard about. 3

The Bankruptcy Court specially noted that it was

Chemetron which proposed the notice order in this case and that

it did so without apprising the Court of the facts concerning the

Toxic Sites (A-26). Apparently, when Chemetron proposed the

notice order in its bankruptcy proceeding, it never told the

Bankruptcy Court that the Toxic Sites were located adjacent to a

residential area, that the area had not been adequately fenced

off, that warning signs were not posted until some time in the

1980’s and that Chemetron knew that children had played in the

contaminated rubble for years before the NRC ever conducted

the 1980 investigation of the site. Nor did Chemetron inform

the Court that their own records showed that large amounts of

radioactive particles were allowed to escape from the plant to

the neighboring residences between 1966 and 1975 where the

particles were inhalec or deposited on fruit trees and vegetable

gardens in the area.

The Bankruptcy Court’s discussion of alternatives for

adequate notice in this situation makes it apparent that had the

Bankruptcy Court been advised of this class of known claimants,

it would have devised some notice designed to advise them of

the pendency of the Bankruptcy proceeding.

26

There are numerous cases where bankruptcy debtors have

devised special notice for potential tort claimants when the

debtor is seeking relief from liability for those torts in its

bankruptcy proceeding. In those cases where a class of potential

claimants exists because of known hazardous conduct by the

debtor, special considerations are made in the bankruptcy

proceeding to insure that their interests are represented. See,

e.g., In re Amatex Corporation, 755 F. 2d. 1034 (3d Cir.,

1985); In re Penn Central Transportation Co., 42 B.R. 657

(D.C. Pa., E.D., 1984).

In Savage Industries, supra, the First Circuit held that the

debtor should have brought the class of potential claimants to the

attention of the Bankruptcy Court in order to devise a form of

notice.

The serious hazards to which Chemetron exposed the

residents of this small residential area adjacent to its Toxic Sites

demanded more than publication in the Wall Street Journal and

New York Times, and the Bankruptcy Court correctly found that

the notice given was inadequate.

In determining what notice is adequate, a court is required

to balance the interests of the creditors to be notified against the

interests of the debtor and other creditors in preserving funds to

use for the payment of claims. The decision of the Court below

was, admittedly, made without balancing their interests in the

consideration. (A-11)

Ill.

Certiorari should be granted to construe the duties of a

debtor in bankruptcy with respect to potential victims of its

ultrahazardous conduct.

A creditor is defined by Bankruptcy Code Section 101(10)

as "an entity that has a claim against the debtor that arose at the

time of or before the order for relief concerning the debtor."

Section 101(5)(A) 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,

27

unmatured, disputed, undisputed, legal, equitable, secured or

unsecured." In In re Remington Rand Corp., supra, the Court

reviewed this language at 829:

"By defining claim in these terms, Congress opted for

an expansive treatment, thereby eliminating the

*provability and allowability’ requirements of the

Bankruptcy Act of 1898. In re Johns-Manville Corp.,

57 B.R. 680,686 (Bankr. S.D.N.Y. 1986). Indeed

Congress unambiguously stated its intent to address all

possible legal obligations in defining a bankruptcy

claim:

The effect of the definition is a significant departure

from present law. . . . the definition is any right to

payment whether or not reduced to judgment,

liquidated, unliquidated, fixed, contingent, matured,

unmatured, disputed, undisputed, legal, equitable,

secured or unsecured. . . . By this broadest possible

definition and by use of the term throughout the title

11, . . ., the bill contemplates that all legal obligations

of the debtor, no matter how remote or contingent,

will be able to be dealt with in the bankruptcy case. It

permits the broadest possible relief in the bankruptcy

court." [citations omitted.]

In the context of bankruptcy proceedings, "claim" has been

construed to include classes of future claimants in many

situations. In re Amatex Corporation, supra., -(future asbestos

claimants); In re Penn Central Transportation Co., supra., -

(future CERCLA Claims); In re: Savage Industries, Supra. -

(future products liability claimants).

The question in this appeal is when must a future tort claim

be scheduled and future tort claimants notified as a condition to

the discharge of their claim in bankruptcy.

A debtor’s duty in fulfilling the requirements regarding the

listing of creditors is that it must ". . .in good faith file its

petition with as thorough a schedule of debts as possible."

Br we 78

28

The question in this case is how can Chemetron in good

faith file a schedule of debts without listing potential victims of

its ultrahazardous conduct. The resolution of this question does

not hinge upon an appellate court’s factual conclusion that

Chemetron relied upon statements made by the NRC that no

harm was posed by its conduct. That statement is as ludicrous

as one to the effect that an asbestos manufacturer has no

knowledge that people who inhaled asbestos fibers got sick

based upon a press release the asbestos manufacturer prepared

for the newspapers. ;

No evidence was ever taken on this issue. The Bankruptcy

Court correctly deemed it unnecessary. Chemetron, as a

handler of ultrahazardous materials and an owner of property

with knowledge of how that property was used should be

imputed with the knowledge of the hazards of its activities.

More importantly, if evidence on this issue was considered

necessary, the matter should have been remanded to the

Bankruptcy Court for a full evidentiary hearing. Claimants are

confident that if a full hearing on this issue was ever held,

Chemetron’s knowledge of the extent of contamination in the

area and its potential for harm would be firmly established.‘

For purposes of determining whether Chemetron may seek

a bankruptcy discharge of its liability to individuals who are

harmed by the natural and probable consequences of

Chemetron’s unlawful handling of ultrahazardous materials, we

think such a factual determination is unnecessary. If Chemetron

did not know how dangerous its conduct was, it should have

known.

* Because the District Court made this factual determination,

Claimants submitted other documentary evidence on appeal to

the Circuit Court showing that Chemetron had a long history of

violating nuclear regulations at the Toxic Sites and of providing

the NRC with incorrect information showing less than the actual

contamination at the sites.

29

A corporate debtor should not be able to manipulate the

bankruptcy process to avoid the consequences of its unlawful

conduct. The Bankruptcy Code was not enacted with that

purpose in mind. A debtor is not entitled to a "fresh start"

unless it has been fair and open to its creditors.

CONCLUSION

For all the reasons stated Claimants pray that this Court

grant a Writ of Certiorari to review the decision of the Third

Circuit Court of Appeals.

Respectfully submitted,

William Mitchell, Attorney of Record

Ohio Registration No. 0019501

ARMSTRONG, MITCHELL & DAMIANI

1725 The Midland Building

101 Prospect Avenue, West

Cleveland, Ohio 44115-1091

(216) 566-0064

Attorney for Petitioners

PL\15400561.02P

30

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Reported at: Chemetron Corp. v. Jones, 72 F. 3d 341 (3d Dir.

1995)

Filed December 18, 1995

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 94-3371

CHEMETRON CORPORATION

Vv.

PHYLLIS JASKEY JONES; PAMELA JO SWANSINGER:

SANDRA JASKEY HUJARSKI; PATRICIA HUJARSKI:

TERESA HUJARSKI ROSS; JANICE JASKEY BUTVIN:

FRANK BUTVIN; ROBERT BUTVIN; BRIAN BUTVIN;:

SUSAN BUTVIN; WALTER ANIELSKI; ARLENE VANS:

YVONNE VANS BEKOSCKE: ANTHONY VANS;

GREGORY VANS; CAROL SCHULTZ; MARY SHAFFER:

BRITTANY CULL; STEPHANIE SCHAFFER,

Appellants.

On Appeal from the United States District Court

for the Western District of Pennsylvania

(D.C. Civil Action No. 93-cv-01582)

Argued February 3, 1995

Before: SCIRICA, ROTH and SAROKIN, Circuit Judges

(Opinion Filed December 18, 1995)

William Mitchell, Esq. (Argued)

Deborah J. Papushak, Esq.

Armstrong, Mitchell & Damiani

1725 The Midland Building

101 Prospect Avenue, West

Cleveland, Ohio 44115-1091

Attorneys for Appellants

Dennis G. Terez Esq. (Argued)

Squire, Sanders & Dempsey

4900 Society Center

127 Public Square

Cleveland, Ohio 44114-1304

George L. Cass, Esq.

Buchanan, Ingersoll, Professional

Corporation

5800 USX Tower

600 Grant Street

Pittsburgh, PA 15219-2887

Attorneys for Appellee

OPINION OF THE COURT

ROTH, Circuit Judge:

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

A-2

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. /d 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

A-3

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 Ill, 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 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 Dealers’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 gravemen of the complaint alleged injury from exposure to

toxic chemicals as a result of time spent in the Bert Avenue

area.

Plaintiff's 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. 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.

A-4

iii

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.

II.

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 Mellon Bank,

N.A. v. Metro Communications. Inc. , 945

F.2d 635, 642 (3d Cir. 1991), cert. denied, 503 U.S.

937 (1992).

A-5

Ii.

The central issue before us is whether plaintiffs were

"known" or "unknown" claimants at the time of the bankruptcy

court’s order. If claimants were "known" creditors, then due

process entitled them to actual notice of the bankruptcy

proceedings. Absent such notice, their suit may proceed. If

claimants were "unknown" creditors, however, then notice by

publication was sufficient to satisfy the requirements of due

process and their claims are barred, absent some other basis for

relief. We hold that the claimants in the instant case were

"unknown" creditors.

Our inquiry is guided by one of the principal purposes

of bankruptcy law, to secure within a limited period the prompt

and effectual administration and settlement of the debtor’s estate.

Katchen v. Landy, 382 U.S. 323, 328 (1966). To this end,

Bankruptcy Rule 3003(c) requires that claimants against an estate

in bankruptcy under Chapter 11 file timely proofs of claim in

order to participate in a reorganization. Under Rule 3003(c)(3),

these proofs of claim must be filed prior to a bar date

established by the bankruptcy court. After the passage of the

bar claims date, a claimant cannot participate in the

reorganization unless she establishes sufficient grounds for the

failure to file a proof of claim. See In re Best Products Co.,

140 B.R. 353, 357 (Bankr. S.D.N.Y. 1992). Except for

narrow statutory exceptions not relevant here, confirmation of

the debtor’s reorganization plan discharges all prior claims

against the debtor. 11 U.S.C. § 1141. Charter Crude Oil Co.

v. Petroleos Mexicanos (Jn re Charter Co.), 125 B.R. 650, 654

(M.D. Fla. 1991).

Inadequate notice is a defect which precludes discharge

of a claim in bankruptcy. Due process requires notice that is

"reasonably calculated to reach all interested parties, reasonably

conveys all the required information, and permits a reasonable

time for a response." Greyhound Lines, Inc. v. Rogers (In re

Eagle Bus Mfg., Inc.), 62 F.3d 730, 735 (Sth Cir. 1995)

(citation omitted). For notice purposes, bankruptcy law divides

claimants into two types, "known" and "unknown." In re

Charter Co., 125 B.R. 650. 654 (M.D. Fla. 1991). Known

A-6

creditors must be provided with actual written notice of a

debtor’s bankruptcy filing and bar claims date. City of New

York v. New York, N. H. & H. R. Co., 344 U.S. 293, 296

(1953). For unknown claimants, notification by publication will

generally suffice. See In re Argonaut Fin. Serv., Inc., 164 B.R.

107, 112 (N.D. Cal. 1994); In re Thomas McKinnon Sec., Inc.,

130 B.R. 717, 719-20 (Bankr. S.D.N.Y. 1991).

As characterized by the Supreme Court, a "known"

creditor is one whose identity is either known or "reasonably

ascertainable by the debtor." Tulsa Professional Collection

Serv., Inc. v. Pope, 485 U.S. 478, 490 (1988). An unknown"

creditor is one whose "interests are either conjectural or future

or, although they could be discovered upon investigation, do not

in due course of business come to knowledge [of the debtor]."

Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306,

317 (1950).' ;

A creditor’s identity is "reasonably ascertainable" if that

creditor can be identified through "reasonably diligent efforts."

Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 798 n.4

(1983). Reasonable diligence does not require "impracticable

and extended searches . . . in the name of due process."

Mullane, 339 U.S. at 317. A debtor does not have a "duty to

search out each conceivable or possible creditor and urge that

person or entity to make a claim against it." Jn re Charter Co..

125 B.R. 650, 654 (M.D. Fla. 1991).

Precedent demonstrates that what is required is not a

vast, open-ended investigation. See Mullane, 339 U.S. at 317

‘Although Mullane involved the notice due beneficiaries on

judicial settlement of accounts by the trustee of a common trust fund,

subsequent courts have interpreted the case to set the standard for

notice required under the Due Process Clause in Chapter 11 bar date

cases. See In re Pettibone Corp., 162 B.R. 791, 806 (Bankr. N.D. Ill

1994); In re R.H. Macy & Co., 161 B.R 355. 359 (Bankr. S.D.N.Y.

1993).

("Nor do we consider it unreasonable for the State to dispense

with more certain notice, to those beneficiaries whose interests

are either conjectural or future or, although they could be

discovered upon investigation, do not in due course of business

come to knowledge of the common trustee."); See also Trump

Taj Mahal Assocs. v. O’Hara (In re Trump Taj Mahal Assocs.),

1993 U.S. Dist. LEXIS 17827 at *9 (D.N.J. Dec. 13, 1993)

(explaining that "those creditors who hold only conceivable,

conjectural or speculative claims" are unknown). The requisite

search instead focuses on the debtor’s own books and records.

Efforts beyond a careful examination of these documents are

generally not required.? Only those claimants who are

identifiable through a diligent search are "reasonably

ascertainable" and hence "known" creditors.

In the instant case, the bankruptcy court failed to apply

the "reasonably ascertainable" standard. It instead crafted a

"reasonably foreseeable" test from dictum in Jn re Brooks

Fashion Stores., Inc., 124 B.R. 436 (Bankr. S.D.N.Y. 1991).

In applying this test, the bankruptcy court found that

"Chemetron knew or should have known that it was reasonably

foreseeable that it could suffer claims from individuals living

near the Bert Avenue Dump. . . ." It therefore found that

claimants were known creditors.

Although some courts have held, regardless of the

circumstances, that the "reasonably ascertainable" standard requires

only an examination of the debtor’s books and records, without an

analysis of the specific facts of each case, see e.g., In Re Best

Products Co., 140 B.R 353. 358 (Bankr. S.D.N.Y. 1992); In re

Texaco, Inc., 182 B.R 937, 955 (Bankr. S.D.N.Y. 1995), we do not

construe it so narrowly. Situations may arise when creditors are

"reasonably ascertainable” although not identifiable through the

debtor’s books and records. See. e.g., Tulsa Professional Collection

Serv., Inc. v. Pope, 485 U.S. at 491 (hospital’s claim against deceased

patient’s estate possibly reasonably ascertainable). We need not

address this possibility precisely, because, as we discuss, plaintiffs’

claims in this case are so speculative that the identities of the plaintiffs

could not be ascertained with "reasonably diligent efforts." Mennonite,

462 U.S. at 798, n.4.

A-8

We hold that in substituting a broad "reasonably

foreseeable" test for the "reasonably ascertainable" standard, the

bankruptcy court applied an incorrect rule of law. This

constitutes clear error. The bankruptcy court’s expansive test

departed from the established rules of law and produced a result

in conflict with other decisions. See In re New York Trap Rock

Corp., 153 B.R. 642, 646 (Bankr. S.D.N.Y. 1993) (holding

government agency that failed to file claim for environmental

cleanup to be an "unknown creditor" even where debtor had

entered real estate contract with another agency of same

governmental entity); see also In re Trans World Airlines, Inc.,

182 B.R. 102, 106 (D. Del. 1995) (holding claim unknown

where plaintiffs had not filed suit until one year after bar claims

date); In re Texaco Inc., 182 B.R. 937, 954-55 (Bankr.

S.D.N.Y. 1995) (holding claim unknown where owners of

adjacent land filed environmental action after bar claims date);

In re Hunt, 146 B.R. 178, 182 (Bankr. .N.D. Tex. 1992)

(holding claims unknown where plaintiffs filed state court suit

and counterclaim after bar claims date). Even if we were

writing on a blank slate, we would reject the bankruptcy court’s

expansive standard. Put simply, such a test would place an

impossible burden on debtors.

A review of the facts in the case at bar reveals why the

bankruptcy court’s standard should not be followed. None of

the claimants involved currently resides near either site. The

claimants instead are scattered across Ohio and as far away as

Texas. We are hard-pressed to conceive of any way the debtor

could identify, locate, and provide actual notice to these

claimants.

It has been suggested that Chemetron could have

conducted a title search on all properties surrounding the sites to

determine all persons who might have lived in the area during

the twenty years between Chemetron’s operation of the sites and

the Chapter 11 proceeding. We decline to chart a

jurisprudential course through a Scylla of causational difficulties

and a Charybdis of practical concerns.

The causational difficulties are manifold and apparent.

Under the bankruptcy court’s rule, the debtor would have to

A-9

notify all reasonably foreseeable claimants, a determination that

would rise and fall on potentially attenuated and certainly

ambiguous causal nexi. At the most basic level, it remains

unclear in the instant case what geographic area might be

affected and hence how great an expanse the debtor’s title search

need cover. There is no indication whether a sufficient search

would address properties one mile from the sites or one hundred

miles away. The geographic area would presumably be affected

by the potential for contaminant migration by air, water, or

other carrier, further expanding the necessary notification area.

Nor is the temporal dimension any more defined. With

lingering contaminants and slow rates of decay, there would be

no reason to limit future debtors to searching only for those

exposed during their periods of ownership. And while we might

be urged to bring these determinations under Mullane’s

"reasonably calculated under the circumstances" umbrella, 339

U.S. at 314, we hesitate to thrust the judiciary into a domain

where decisions turn on rarely pellucid and often disputed

scientific studies, requiring different varieties of technical

expertise from case to case. In light of these problems of

causation, the bankruptcy court’s rule is unworkable.

We also anticipate grave practical difficulties with the

bankruptcy court’s broad notice requirement. Even if

Chemetron had been required to search all potentially relevant

title documents, its efforts would have come to no avail in this

case. The vast majority of the claimants involved here were not

property owners, but guests. No title search could reveal the

identity of claimants who merely visited houses in the vicinity of

the sites at some point in the distant past, and we decline to

impose any Orwellian monitoring requirements on Chemetron

and similarly situated corporations. Moreover, as demonstrated

by the claimants here, debtors also face the problem of

identifying all individuals whose parents might have lived in or

visited houses in the vicinity of the site. And the problems of

ascertaining, let alone notifying, all such persons implicate yet

again all the difficulties of causation previously discussed.

Such an investigation, which would be required by the

bankruptcy court’s finding that claimants are known creditors,

clearly contradicts both the caselaw cited above and common

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sense. Creditors cannot be required to provide actual notice to

anyone who potentially could have been affected by their

actions; such a requirement would completely vitiate the

important goal of prompt and effectual administration and

settlement of debtors’ estates. We reject the "reasonably

foreseeable" test and follow the "reasonably ascertainable"

standard.

In reaching this result, we are not unsympathetic to the

alleged injury suffered by the claimants in this case. We stress

that our holding addresses the burden placed on the bankruptcy

debtor to provide actual notice to potential claimants, not the

merits of a timely and properly filed tort suit. Where the debtor

has sought the protection of bankruptcy law, however,

procedural protections such as the bar claims date apply. These

provisions cannot be circumvented by forcing debtors to

anticipate speculative suits based on lengthy chains of causation.

Accordingly, the bankruptcy court erred in finding that the

claimants in this case were "known" creditors, and the district

court’s decision reversing the bankruptcy court on this finding

will therefore be affirmed.

IV.

Having held that claimants were "unknown" creditors,

we have little difficulty holding that the notice which Chemetron

published in the New York Times and the Wall Street Journal

was sufficient. It is well established that, in providing notice to

unknown creditors, constructive notice of the bar claims date by

publication satisfies the requirements of due process. New York,

344 U.S. at 296. Such notice must be "reasonably calculated,

under the circumstances, to apprise interested parties of the

pendency of the action and afford them an opportunity to present

their objections." Mullane, 339 U.S. at 314. We find that

Chemetron’s notice met this standard.

Claimants argue that, given Chemetron’s ongoing

difficulties in cleaning up the Cleveland area sites as well as

Chemetron’s knowledge of the hazardous materials deposited

there, Chemetron should have published notice in a Cleveland

area paper. This argument fails.

A-11

"It is impracticable . . . to expect a debtor to publish

notice in every newspaper a possible unknown creditor may

read." Best Products, 140 B.R. at 358. Publication in national

newspapers is regularly deemed sufficient notice to unknown

creditors, especially where supplemented, as here, with notice in

papers of general circulation in locations where the debtor is

conducting business. See, e.g., Brown v. Seaman Furniture

Co., 171 B.R. 26 (E.D. Pa. 1994) (holding publication in local

and national editions of the New York Times sufficient notice to

claimant in Pennsylvania); Jn re Chicago, Milwaukee, St. Paul

& Pacific R.R. Co., 112 B.R. 920 (N.D. Ill. 1990) (holding

publication notice in the Wall Street Journal adequate under

bankruptcy law); Wright v. Placid Oil Co., 107 B.R. 104 (N.D.

Tex. 1989) (holding publication in the Wall Street Journal

sufficient notice to unknown creditor injured in Louisiana).

Furthermore, claimants’ argument is undermined by the fact that

none of the claimants resided near the Cleveland sites at the time

of the publication notice. Even publication in a Cleveland

newspaper would not have reached the claimants currently

residing in Texas or any other potential claimants who had

moved away from Cleveland.

Because Chemetron’s publication notice was reasonably

designed to reach all interested parties, the district court’s

finding that the notice was sufficient to apprise unknown parties

of the claims bar date is affirmed.

iF

Although we find little merit in claimants’ notice

arguments, we believe their claim of "excusable neglect"

received inadequate consideration. Bankruptcy Rule 9006(b)(1)

empowers a bankruptcy court to permit a creditor to file a late

claim if the movant’s failure to comply with an earlier deadline

"was the result of excusable neglect." See Pioneer Inv. Serv.

Co. v. Brunswick Assocs. Ltd. Partnership, _U.S._, , 113%.

Ct. 1489, 1491-92 (1993). In the instant case, because

claimants are unknown creditors and Chemetron’s publication

notice was sufficient, claimants must show that their failure to

file in a timely manner was due to “excusable neglect;"

A-12

Reece ee ne N ee DIN eT eeN R C onT

otherwise, their claims arising pre-petition will be barred. See

Best Products, 140 B.R. at 359.

The determination whether a party’s neglect of a bar

date is "excusable" is essentially an equitable one, in which

courts are to take into account all relevant circumstances

surrounding a party’s failure to file. See Pioneer, 113 S. Ct. at

1498. The considerations to be weighed include:

the danger of prejudice to the debtor, the length

of the delay and its potential impact on judicial

proceedings, the reason for the delay, including

whether it was within the reasonable control of

the movant, and whether the movant acted in

good faith.

Id.’

The bankruptcy court, in considering whether claimants

should be permitted to file a late claim under the totality of the

circumstances, wrote:

This Court’s understanding of Jn re Remington

Rand is that acting promptly and diligently is but

one factor when a court is considering the

totality of the circumstances. The court finds

the [claimants], while not acting very promptly

or diligently, were not so sluggish as to

*As the district court properly noted, it is unsettled whether

"excusable neglect remains a viable defense for filing a late proof of

claim when the claimant is entitled to only publication notice."

Chemetron, 170 B.R. at 89 (citing Trump Taj Mahal Assoc. V. O’Hara

(In re Trump Taj Mahal Assocs.), 1993 U.S. Dist. LEXIS 17827 at

*18 n.7 (D.N.J. Dec. 13, 1993)).

Under Bankruptcy Rule 9006(b), which allows the bankruptcy

court to permit a late filing in cases of "excusable neglect," no

differentiation is made between known or unknown creditors.

Accordingly, claimants are not foreclosed from pursuing an "excusable

neglect" defense in the instant matter.

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outweigh the fact that Chemetron did not provide

reasonably calculated notice to alert [claimants]

of the bankruptcy proceedings and the claims

Bar Date. Therefore, the totality of the

circumstances dictate that [claimants] are entitled

to file a late claim.

Jones v. Chemetron Corp. (In re Allegheny Int’l, Inc.), Ch. 11

Case No. 88-00448 JLC, Adv. No. 92-2418, slip op. at 11

(Bankr. W.D. Pa. July 24, 1993). This analysis failed to

adequately consider the totality of the circumstances presented.

Not only was the bankruptcy court incorrect in its assumption

that claimants were known creditors entitled to actual notice, but

the court failed to make additional relevant factual findings,

including the danger of prejudice to the debtor, the length of the

delay and its potential impact on judicial proceedings, the reason

for the delay, and whether the movant acted in good faith.

On appeal, the district court undertook its own review of

the record to determine whether the totality of the circumstances

supported claimants’ filing of late claims. The district court

wrote:

We agree with the Bankruptcy Court that

[claimants] did not act promptly or diligently.

Their motion to file a late claim occurred more

than four years after the bar date, two years

after the Plan of Reorganization had been

confirmed and twelve years after media and

neighborhood attention first focused on the

hazardous substances at the Bert Avenue Site.

That [claimants] were allegedly unaware of their

claims does not constitute excusable neglect. To

permit [claimants] to file a iate claim would

prejudice Chemetron by denying a "fresh start"

to which it is entitled. We conclude that the

totality of the circumstances weighs heavily

against late filing of [claimants’] claims.

Chemetron, 170 B.R. at 89-90 (citations omitted).

‘

&

:

:

Although the totality of the circumstances analysis

conducted by the district court was more appropriate than that

conducted by the bankruptcy court, the district court’s analysis

also fell short of that required under Pioneer. The district court

failed to undertake a comprehensive analysis of how the

claimants’ late filing would prejudice Chemetron, and also failed

to consider the role that Chemetron might have played in

contributing to the delay. Accordingly, we remand this issue to

the bankruptcy court, with directions that the bankruptcy court

undertake a more comprehensive and thorough determination of

whether the totality of the circumstances support claimants’

defense of "excusable neglect."

VE.

Finally, we disagree with the district court’s treatment of

the discharge issue. In the final paragraph of its memorandum

and order, the district court concluded that the instant claims

“were dischargeable and were discharged." Chemetron, 170

B.R. at 90. The bankruptcy court, however, had declined to

reach the issue of discharge, deciding instead to dismiss

claimants’ adversary proceeding without prejudice. In fact, the

district court itself noted that "[t]he Bankruptcy Court reserved

ruling on the issue whether Appellants’ claims are discharged in

light of the permission to file the late claims." Jd. at 86. We

hold that the district court improperly reached the issue of

discharge.

Chemetron contends that the issue of discharge was

properly before the district court because Chemetron, in its

notice of appeal to the district court, expressly appealed from

the memorandum opinion and final order of the bankruptcy

court in both the Chapter 11 proceeding and "the related

Adversary Proceeding." This reference to the adversary

proceeding, however, was not sufficient to create jurisdiction in

the district court. Because the bankruptcy court reserved ruling

on the issue of discharge, the bankruptcy court’s dismissal

without prejudice was not a final appealable order under 28

U.S.C. § 158(d) and therefore was not properly before the

district court. Accordingly, we will vacate the district court’s

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ruling on discharge and remand t! issue to the bankruptcy

court.

Vil.

For these reasons, we will affirm the district court’s

rulings that claimants were unknown creditors and that

Chemetron’s publication notice was sufficient. We will vacate

and remand to the bankruptcy court the district court’s judgment

that claimants failed to demonstrate excusable neglect. We will

also vacate and remand to the bankruptcy court the district

court’s ruling on discharge.

SAROKIN, Circuit Judge, concurring in the judgment.

I concur with the majority’s judgment to affirm. I write

separately, however, because I disagree with the majority’s

analysis regarding the definition of a "known" creditor entitled

to actual notice under the law. The majority rejects the

"reasonably foreseeable" test in favor of the “reasonably

ascertainable" test. I believe that both are applicable.

I.

The "reasonably foreseeable" test determines which

persons are entitled to receive notice. The "reasonably

ascertainable" test determines the type of notice these persons

are entitled to receive. All reasonably foreseeable claimants are

entitled to receive some form of notice. Those who are

reasonably ascertainable are entitled to actual notice. Those

who are not are entitled to constructive notice - usually some

form of publication reasonably calculated to reach them.

The bankruptcy court adopted the following standard to

evaluate who qualifies as a known creditor in a bankruptcy

proceeding:

[I}f at the time of the filing it is reasonably foreseeable

to a debtor, who is or should be aware of the potential

consequences of its actions, that a party that is

foreseeable will most likely file a claim against the

debtor, that party is a "known" creditor of the debtor.

Furthermore, the fact that a debtor does not know the

name and address of a creditor does not prevent that

creditor from being "known."

In re Allegheny Iniernational, Inc., No. 88-00448,

typescript at 5-6 (Bankr. W.D. Pa. July 14, 1993). The

court’s standard would entitle a party whose claim was

"reasonably foreseeable" to actual notice irrespective of whether

or not that party’s name and address was readily ascertainable.

That result is not only illogical; it is contrary to Supreme Court

jurisprudence. Tulsa Professional Collection Serv., Inc. vs.

Pope, 485 U.S. 478, 490 (1988). I do not believe, however,

that in restoring the "ascertainable" test to its proper place, as

the majority does, we need go so far as to discard the

“reasonably foreseeable" standard entirely. These tests are not

mutually exclusive, or even at odds. They address separate

issues. The “reasonably foreseeable" test has to do with

whether the debtor knew or should have known that a claim

would be brought; the "reasonably ascertainable" test has to do

with the debtor’s ability to learn the identity and location of the

potential claimant or claimants.

The manufacturer oi a product which it knows to be

defective and who filed for bankruptcy should be under an

obligation to give actual notice of the proceedings to known

purchasers and users of its products, even if they have made no

claim. They may not have done so because the injury had not

yet manifested itself or they otherwise were unaware of the risks

of such injury. Absent such requirement, if the harmful effects

of the product did not manifest themselves for some period of

time, consumers could be barred from relief for their injuries.

A rule whereby individuals whose claims are reasonably

foreseeable are deemed "known" creditors if their identity and

location is reasonably ascertainable would go a long way toward

addressing these interests. Under such a rule, the following two

steps would be required as a prerequisite to mandating actual

notice to the tort claimants. First, the claims must be

reasonably foreseeable. If they are reasonable and foreseeable,

then actual notice must be given to those claimants who are

A-17

reasonably ascertainable. If there is a class or category of

foreseeable claimants whose identity and/or location cannot be

reasonably ascertained, then they are not "known creditors”

entitled to actual notice (although they should receive substituted

notice through reasonable means most likely to reach them).

Such a result strikes the proper balance between the various

purposes of bankruptcy law, which is concerned not merely with

affording a fresh start to those who warrant it, but also with

protecting the interests of creditors and claimants who may be

adversely affected by the bankruptcy proceeding.

This result is clearly supported by the case law. The

Mullane court was careful to limit its holding to the facts of that

case, noting that "certain notice" was unnecessary for

"beneficiaries whose interests are either conjectural or future . .

. in view of the character of the proceedings and the nature of

the interests here involved." Mullane v. Central Hanover Bank

& Trust Co., 339 U.S. 306, 317 (1950) (emphasis added).

Furthermore, a claimant’s interests are not "conjectural or

future" simply because a lawsuit has not been filed yet. These

interests exist from the time of the tortuous act, not just from

the time the claimant seeks to vindicate them in court.'

'The majority cites Trump Taj Mahal Assocs. v. O’Hara (In re

Trump Taj Mahal Assocs.), 1993 WL 534494 (D.N.J. Dec. 13, 1993),

for the proposition that "those creditors who hold only conceivable,

conjectural, or speculative claims" are unknown. See Majority

Opinion, at 7. Trump Taj Mahal is a memorandum opinion by a

district court, not reported in the relevant Reporter. As a district court

opinion, it is not binding upon us. As an unreported memorandum

opinion, it has no precedential value.

The Supreme Court, in Tulsa Professional Collection Serv.,

Inc. v. Pope. 485 U.S. 478 (1988) held that “it is reasonable to

dispense with actual notice to those with mere conjectural claims.” /d.

at 490 (emphasis added). The Random House College Dictionary

describes ’conjectural’ as "of the nature of or involving conjecture;

problematical.” Insofar as “problematical” suggests tha the event is

more likely than not not to occur, a claim that is "reasonably

foreseeable” is not "problematical."

A-18

na at 1 cio ac

SARE EOI EAE EISEN POTS RE RETIN, Ree IIIT FITS. He

bi FEL Sn Da, he 2

Il.

Under this rule, I would find that it was not reasonably

foreseeable that plaintiffs would file claims against Chemetron.

As the district court noted in its opinion, throughout the early

1980s both the Nuclear Regulatory Commission and the

Environmental Protection Agency time and again reassured both

Chemetron and locale residents that the radiations from the Bert

Avenue site presented no serious safety or health risk to the

surrounding neighborhood. Chemetron Corp. v. Jones, et al.,

No. 931582, typescript at 11 (W.D. Penn. June 11, 1994).

Therefore, "[i]f Chemetron gave any thought to the subject, it

was reasonable to assume that claims would not be filed because

of the assurances of these agencies that the Bert Avenue Site

posed no health risk to the neighborhood." /d. Therefore,

"there was no reason for Chemetron to assume in 1988 that

there would be claims from residents for ailments caused by

exposure to the contamination from the Sites. At most, any

future claim was speculative." /d. at 12. Under the facts of this

case, I entirely agree with the district court’s conclusion that

"Appellees were not foreseeable claimants and, accordingly,

were unknown creditors." /d. Since the claims were not

foreseeable there is no reason to address whether the claimants

were reasonably ascertainable.

Il.

For the reasons stated above, I concur with the

majority’s judgment, though not with its reasoning in this one

respect.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

A-19

Reported at: In re: Allegheny Intl., Inc., 158 Bankr. 356

(Bnkr., W.D. Pa., 1993)

iN THE UNITED STATES BANKRUPTCY COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

IN RE:

ALLEGHENY

INTERNATIONAL,

INC., SUNBEAM

CORPORATION,

SUNBEAM HOLDINGS,

INC., ALMET/

LAWNLITE,

INC. and

CHEMETRON

CORPORATION,

Case No. 88-00448 JLC

Adversary No. 92-2418

Motion No. WM-02

Filed Under Local

Bankr. Rule 9013.4 4 6(c)

Debtors.

Chapter 11

PHYLLIS JASKEY

JONES, et al.,

Plaintiffs,

vs.

CHEMETRON

CORPORATION,

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

Defendant. )

MEMORANDUM OPINION

The three matters before this court are: 1) a motion to

allow a late claim filed by Phyllis Jaskey Jones, et. al.

("Plaintiffs"), against Allegheny International, Inc., et al.,

("AI"); 2) an adversary complaint filed by the Plaintiffs

requesting the court declare their claims against Al were not

A-20

discharged; and 3) a counterclaim filed by Chemetron

Corporation ("Chemetron") against the Plaintiffs requesting,

among other things, this court enjoin the Plaintiffs from

pursuing their claims in state or federal court.

After careful consideration of the record, it is

determined that the motion is granted and the adversary

proceeding and counterclaim are dismissed without prejudice. In

addition, the Plaintiffs are granted relief from the automatic stay

sua sponte so that they can pursue to liquidation their action

against Al pending in the Court of Common Pleas for Cuyahoga

County, Ohio.

I. FACTS

From October 1965 through 1972, Chemetron

manufactured an antimony oxide catalyst at their Harvard

Avenue facility in Cuyahoga Heights, Ohio. This process

involved the creation of toxic waste which was dumped at the

McGean Chemical Company landfill located on Bert Avenue in

Newburgh Heights, Ohio ("Bert Avenue Dump").

Plaintiffs were residents of, or visitors to, the residential

neighborhood surrounding the Bert Avenue Dump. Plaintiffs

allege that they have been physically injured from repeated

exposure to toxic substances deposited by Chemetron at the Bert

Avenue Dump. The Plaintiffs now seek compensation for their

injuries from Chemetron.

Al and Chemetron filed a petition to reorganize under

Chapter 11 of the Bankruptcy Code on February 20, 1988. The

court ordered the claims Bar Date to be May 31, 1988. As

required by that court order, Chemetron and Al provided notice

of the May 31, 1988, Bar Date to all of their known creditors.

Notice of the Bar Date was also published in the national

editions of the New York Times and the Wall Street Journal.

The Plaintiffs in this case were not listed as creditors on the

Debtors’ schedules and were not personally served with notice

of the bankruptcy proceedings or of the claims Bar Date. On

July 12, 1990 this court confirmed Al’s proposed Plan of

Reorganization.

A-21

In July of 1992, the Plaintiffs sued defendants McGean-

Rohco, Inc., McGean Chemical Company, Inc., and Chemetron

in the Court of Common Pleas for Cuyahoga County, Ohio in a

case entitled Jaskey Jones, et al. v. McGean-Rohco, Inc., etc..

et. al., Case No. 227973. The Plaintiffs have since filed two

pleadings in this court: a motion to file a late claim and an

adversary complaint requesting the court determine their claims

were not discharged.

ll. DISCUSSION

The Plaintiffs argue that they were known claimants at

the time of the bankruptcy was filed and therefore, they should

have received actual notice of the bankruptcy proceedings and

the claims Bar Date. Because actual notice was not received,

the Plaintiffs maintain that their claims were not discharged and

they are entitled to file a late claim.

Chemetron asserts that the Plaintiffs were not known

creditors and hence were not entitled to actual notice of the

claims Bar Date or the bankruptcy proceedings. Moreover,

Chemetron believes that the Plaintiffs are not entitled to file a

late claim and that the Plaintiffs’ claims against it have been

discharged.

A. Motion to File Late Claims

l. "Known" vs. " wn" Clai

The primary issue in this case is whether the Plaintiffs

were known or unknown claimants. As a general rule, a known

creditor’s claim cannot be discharged in bankruptcy if that

creditor did not receive actual notice of the relevant bankruptcy

proceedings.”

"In re Unioil, 948 F.2d 678 (10th Cir. 1991); In re Remington

Rand Corp., 836 F.2d 825 (3rd Cir. 1988); Reliable Electric Co., Inc.

v. Olson Construction Company, 726 F.2d 620 (10th Cir. 1984).

A-22

Because the words "known" and "unknown" tend to be

labels of conclusion rather than analytical guidelines, it is

important to precisely define what criteria are used to distinguish

between "known" and "unknown" creditors. The criteria are

particularly crucial in this case where Chemetron’s actions may

possibly create a tort claim against Al. Furthermore, when

considering a standard or criteria for determining "known" and

"unknown", the court must address the question of how probable

must a potential suit against the debtor be before an "unknown"

claimant manifests into either a "known" claimant or a known

class of claimants. The Court of Appeals for the Third Circuit

has not addressed this question, therefore the court must look to

other districts and circuits for guidance.

This court adopts the view suggested by the Bankruptcy

Court for the Southern District of New York in its treatment of

In re Brooks Fashion Stores, Inc., 124 B.R. 436 (Bankr.

S.D.N.Y. 1991). In that case, the debtors brought an adversary

complaint against the Michigan Employment Security

Commission (MESC) seeking declaratory and injunctive relief

with respect to an unemployment tax delinquency claim asserted

post-confirmation by the MESC. The court decided that MESC

was not a known creditor of the debtor. However, the court

noted that "[i]f there was a history of MESC redetermining

Alberts’ taxes, whereby Alberts should have reasonably

foreseen’ the assessment, the outcome here might very well be

different." Id. at 444. [emphasis added].

This standard imposes on a company the responsibility

of knowing whether it is reasonably foreseeable that a party may

bring a lawsuit. Because the consequences of a company’s

actions may create or eliminate a lawsuit against the company,

the court interprets In re Brooks to impose a reasonable

affirmative duty on a debtor company to keep abreast of any

obvious and potentially detrimental consequences its actions may

*Foresight is defined as "heedful thought for the future;

reasonable anticipation of result of certain acts or omissions."

Blacks Law Dictionary 649 (6th ed. 1990).

A-23

have. This standard requires debtor companies to remain

knowledgeable of the plain effects their hazardous activities

might have on other parties and thus, discourages willful

disregard of one’s injurious acts in keeping with public policy.

Accordingly, this court adopts the following standard: if

at the time of filing it is reasonably foreseeable to a debtor, who

is or should be aware of the potential consequences of its

actions, that a party that is foreseeable will most likely file a

claim against the debtor, that party is a "known" creditor of the

| debtor. Furthermore, the fact that a debtor does not know the

name and address of a creditor does not prevent that creditor

from being "known."

In adopting this standard, reasonableness is the rule.

This standard does not require a debtor company to spend a lot

of time trying to predict the future rather than running a

business. The burden imposed upon a debtor company is only

to know the likely and obvious consequences of its actions.

r 3 Chemetron’s " ility"

Reasonable foreseeability does not create a strict liability

result. A negligible amount of pollution will not permit a late

claim to be filed after the Bar Date. The question is not

whether Chemetron polluted the site. Chemetron admits that it

did. The question is whether Chemetron could have reasonably

foreseen that it would incur legal liability because of its

pollution. Considering the magnitude of the pollution and the

specific and relevant circumstances of the case, it was

reasonable to foresee this type of claim.

Chemetron knew or should have known that it was

reasonably foreseeable that it could suffer claims from

individuals living near the Bert Avenue Dump. As Chemetron

itself stated:

The early 1980’s stand out as a point beyond which no

reasonable person should have failed to suspect a

potential connection [between the Bert Avenue Dump

and local health problems] because of the blizzard of

A-24

ee

media and individual attention focused upon the alleged

injuries supposedly caused by exposure to hazardous

substances from the Bert Avenue site. In 1980, for

example, the Nuclear Regulatory Commission (NRC)

investigated the site and issued a public report stating

that radioactive contamination at the site was great

enough to warrant a remediation effort. [emphasis

supplied]

Chemetron’s Preliminary Statement at 8.

in addition, there is sworn evidence that the dump site

was unfenced for a pertinent period of time. Further, that site

actually contained swings on which the local children played and

was used as a park. (Looby Depo. of November 6, 1991 at 15)

This court holds that at the time AI filed for Chapter 11

protection in 1988, it was reasonably foreseeable that Chemetron

would suffer claims from the residents surrounding the Bert

Avenue Dump. Consequently, this court concludes that the

Plaintiffs were known creditors.

3. Actual Notice

The form of actual notice required under Due Process is

dependent on the facts of each case.

An elementary and fundamental

requirement of due process in any proceeding

which is to be accorded finality is notice

r l er all the

circumstances, to apprise interested parties of the

pendency of the action and afford them an

opportunity to present their objections. [emphasis

added]

Mullane v. Central Hanover Trust Company, 339 U.S. 306, 314

(1950).

Notice by publication in the national editions of the New

York Times and the Wall Street Journal, was not "reasonably

A-25

calculated" to give notice to these Plaintiffs. The fact that such

national newspaper notice was the only notice required by a

court order is not material. The court was not apprised of

Chemetron’s fact situation when the court issued its order. It is

the debtor’s duty to propose the actual notice. Further, notice

by publication was intended to alert "unknown" claimants, not

"known" claimants such as the Plaintiffs.

In the interest of clarifying what is expected of debtors,

the court suggests as an example that one form of notice that

would have been reasonably calculated under these

circumstances would have been for Chemetron to place

advertisements in a local newspaper that circulates among the

potential claimants. Chemetron could have also engaged in a

mailing to the houses surrounding the Bert Avenue Dump or

post notices in the neighborhood surrounding the dump. This

list is intended to be suggestive, not exhaustive.

The court does not demand useless Herculean efforts on

the part of debtors to notify a reasonably foreseeable claimant

known only by the site of an event and not by name. However,

Chemetron knew the specific location of the toxic event and

because of the possible mechanism of injury, it was reasonable

to expect the Plaintiffs to be located in the neighborhood

surrounding the Bert Avenue Dump. Chemetron should have

used that knowledge to formulate a strategy to create a notice

reasonably calculated to apprise those potential claimants of the

bankruptcy proceedings.‘

‘The court cautions against extending its holding which

defines when local notice is required.

"In the Mullane case... the Court thoroughly canvassed

the problem-of sufficiency of notice under the Due Process

Clause, pointing out the reasons behind the basic constitutional

rule, as well as the practical consideration which make it

impossible to draw a standard set of specifications as to what is

constitutionally adequate notice, to be mechanically applied in

every situation." Schroeder v. City of New York, 371 U.S.

215, 279 (1962) (summarizing Mullane v. Central Hanover

Trust Company, 339 U.S. 306 (1950)).

A-26

hisiaeiaiaa iii

Chemetron contends that because the last of the Plaintiffs

to reside near the Bert Avenue Dump left the area in 1985, local

notification as the court suggests would not have been effective.

Although this is also true, this argument is unpersuasive. Actual

notice is designed to in good faith satisfy Due Process

considerations even though the notice may not be successful and

reach the intended recipient in some instances.

The Supreme Court has thus established

a balancing procedure in which costs and

efficiency considerations are balanced against the

probability that a procedure will effectuate

notice.

What is needed in bankruptcy

proceedings is a form of notice which is likely to

achieve actual notice in a large volume of cases

but is not overly expensive or time consuming.

Matter of Park Nursing Center, Inc., 766 F.2d 261, 263 (6th

Cir. 1985) (discussing llane v. Central Hanover Trust

Company, 339 U.S. 306 (1950)).

Actual notice is not presumed to be impossible when a

debtor does not know a creditor’s name and address. Of course,

having a name and address makes actual notice easier, however,

the test is whether the debtor’s attempted notice was reasonably

calculated to provide notice, not whether the notice was actually

received.

Locale specific notice need not be flawless. Locale

specific notice is one method that is reasonably calculated to

reach reasonably foreseeable claimants in similar fact situations

without imposing an undue expense or burden on the debtor.

The possibility is not foreclosed that there are other methods of

notice that would satisfy the Mullane due process requirements

for this fact situation.

The case at bar, while not unique, is somewhat atypical

in its facts and as a result, this court’s holding is fact specific.

A-27

In light of the above, Chemetron’s contention that locale

specific notice would not have been effective because all of the

Plaintiffs had moved away from the Bert Avenue area is not

controlling. The important conclusion is that Chemetron did not

undertake any notice that was reasonably calculated to notify

these unique Plaintiffs of the bankruptcy proceedings and the

claims Bar Date, even though their potential injuries were

foreseeable.

4. May the Plaintiffs File a Late Clai

Having determined already that the Plaintiffs were

known creditors and that Chemetron did not to give the

Plaintiffs actual notice, the issue of whether the Plaintiffs are

entitled to file a late proof of claim. The court in In re

Remington Rand Corporation, 836 F.2d 825 (3rd. Cir. 1988)

considered the totality of the circumstances when it had to

decide whether a creditor had acted promptly and diligently in

filing a late proof of claim.

Remington acknowledges that it failed to

provide the government, a known creditor, with

proper [actual] notice of the Bar Date for claims

under the plan. Accordingly, the government

was entitled to request permission to file a late

proof of claim [citations omitted]. Upon receipt

of such a request, however, the bankruptcy court

must examine the totality of the circumstances

before allowing a late filing.

In re Remington Rand Corporation, 836 F.2d at 833.

The issue presented now is whether the totality of the

circumstances favors allowing the Plaintiffs to file a late proof of

claim. This court’s understanding of In re Remington Rand is

that acting promptly and diligently is but one factor when a

court is considering the totality of the circumstances. The court

finds that the Plaintiffs, while not acting very promptly or

diligently, were not so sluggish as to outweigh the fact that

Chemetron did not provide reasonably calculated notice to alert

the Plaintiffs of the bankruptcy proceedings and the claims Bar

A-28

Date. Therefore, the totality of the circumstances dictate that

the Plaintiffs are entitled to file a late claim.

B. Adv: i rclai

The amount of the Plaintiffs’ claims, if any, against

Chemetron has not been determined. Consequently, the court

will not address the issue of whether the claim is or is not

discharged because the court has permitted a late claim to be

filed. Therefore, the Plaintiffs’ adversary complaint and

Chemetron’s counterclaim are dismissed without prejudice.

Il. NCLUSION

The Plaintiffs’ motion to file a late claim is granted.

This court expresses no opinion or judgment on the validity of

Plaintiffs’ claim that the Bert Avenue Dump caused or

aggravated Plaintiffs’ alleged injuries. In addition, the

Plaintiffs’ adversary complaint to declare that Plaintiffs’ claims

are not discharged and Chemetron’s counterclaim are dismissed

without prejudice.

Finally, the court grants the Plaintiffs relief from the

automatic stay sua sponte. 11 U.S.C. § 362. The Plaintiffs

may pursue their Cuyahoga County, Ohio action entitled Jaskey

Jones, et al. v. McGean-Rohco, Inc., et al., Case No. 227973 to

liquidation, but not collection, against the Chemetron.

An appropriate Order is attached.

Dated this day of July, 1993,

at Pittsburgh, Pennsylvania.

¥ Joseph L. Cosetti

> U.S. Bankruptcy Judge

A-29

os: William Mitchell, Esq.

Attorney for Plaintiffs

1725 The Midland Building

Cleveland, Ohio 44115-1091

Thomas L. Anastos, Esq.

Baker & Hostetler

Attorneys for McGean-Rohco, Inc.

3200 National City Center

Cleveland, Ohio 44114.

A-30

Reported at: In re: Allegheny Intl, Inc., 170 Bankr. 83 (W.D.

Pa., 1994)

IN THE UNITED STATES DISTRICT COURT FOR THE

WESTERN DISTRICT OF PENNSYLVANIA

In re:

ALLEGHENY

INTERNATIONAL,

INC., SUNBEAM

CORPORATION,

SUNBEAM HOLDINGS,

INC., ALMET/

LAWNLITE,

INC., AND

CHEMETRON

CORPORATION,

Bankruptcy No. 88-448

Chapter 11

Civil Action No. 93-1582

Debtors.

CHEMETRON

CORPORATION,

Appellant,

vs.

PHYLLIS JASKEY

JONES, et al.,

lll i i a a ae a a ae a ee

Appellees.

M D RDER

BARRON P. McCUNE, Senior District Judge

June __14 , 1994.

We consider the appeal of appellant Chemetron

Corporation of the Bankruptcy Court’s Memorandum Opinion

A-31

and Final Order ( "Order") entered August 2, 1993 in the

underlying Chapter 11 reorganization proceeding and Adversary

Proceeding No. 92-2418. By the Order appellee Phyllis Jaskey

Jones and eighteen other appellees were permitted to file late

claims against Chemetron. Appellees’ late claims arise from

their allegations against Chemetron and two other defendants

(not parties to this appeal) for personal injuries allegedly caused

by exposure to radioactive and toxic contamination at two

industrial sites, one in Newburgh Heights and one in Cuyahoga

Heights, Ohio.

This appeal is pursuant to Bankruptcy Rule 8001 (a) Our

jurisdiction is pursuant to 28

U.S.C. § 158(a).

BACKGROUND

PROCEDURAL HISTORY

Allegheny International, Chemetron and other debtors

(collectively "Debtors") filed a petition to reorganize under

Chapter 11 of the Bankruptcy Code on February 20, 1988. The

Bankruptcy Court ordered the claims bar date to be May 31,

1988. As required by that order, notice of the bar date was

provided to creditors listed on Debtors’ schedules of liabilities

and certain holders of securities. Debtors were ordered to

publish the same notice in the national editions of the New York

Times and Wall Street Journal.' Appellees were not listed on the

Debtors’ schedules and were not personally served with notice

'The Debtors voluntarily published notice in seven other

newspapers in areas the Debtors had ongoing business at the

time of filing. According to Chemetron, notice was not

published in any Cleveland area newspaper because Chemetron

sold the manufacturing facility at Harvard Avenue and the Bert

Avenue Site in 1975 and was not engaged in manufacturing

activities in that area at the time it filed for Chapter 11

protection.

A-32

of the bar date or the bankruptcy proceedings. On July 12,

1990, the Bankruptcy Court confirmed the Debtors’ proposed

Plan of Reorganization.

On March 2, 1992, Appellees sued Chemetron and two

other companies, McGean-Rohco, Inc. and McGean Chemica!

Company, Inc., in the Court of Common Pleas in Cleveland,

Ohio for injuries they allegedly sustained as the result of

exposure to hazardous and radioactive material deposited at the

Bert Avenue Site in Newburgh Heights, Ohio by Chemetron. In

response to the complaint, Chemetron moved to dismiss the

claims as to Chemetron in light of the confirmation of the Plan

of Reorganization. Appellees then filed a motion with the

Bankruptcy Court seeking permission to file late claims and a

separate motion to declare that their claims were not discharged.

Chemetron answered the adversary proceeding and

counterclaimed, seeking a declaratory judgment against

Appellees that their claims against Chemetron were discharged

as a result of the reorganization.

On August 2, 1993, the Bankruptcy Court granted

Appellees’ motion for permission to file late claims against

Chemetron and sua sponte permitted appellees to proceed with

their litigation against Chemetron in the Ohio lawsuit. The

adversary proceeding and Chemetron’s counterclaim were

dismissed without prejudice. The Bankruptcy Court reserved

ruling on the issue whether Appellees’ claims are discharged in

light of the permission to file the late claims. This appeal

followed.

The Bankruptcy Court held that Appellees were known

creditors of Chemetron in February, 1988 when Chemetron filed

for Chapter 11 reorganization. As known creditors, the

Bankruptcy Court held that Chemetron was required to serve on

them actual notice of the bar date, not notice by publication.

Lastly, the Bankruptcy Court concluded that the totality of the

circumstances weighed in favor of allowing Appellees to file late

claims.

A-33

FACTUAL BACKGROUND

Appellees’ Amended Complaint states that in 1965

McGean Chemical Company sold to Chemetron its stock in a

manufacturing facility on Harvard Avenue located in Cuyahoga

Heights, Ohio, and the Bert Avenue Site, located approximately

1/2 mile from the manufacturing facility. Chemetron owned and

operated the Harvard Avenue plant and the Bert Avenue Site

from 1965 until 1975 when Chemetron sold both sites to

McGean. Subsequently, McGean merged with Rohco, Inc. to

become McGean-Rohco, the current owner of the sites at issue.

During its period of ownership, Chemetron manufactured an

antimony oxide catalyst at the Harvard Avenue facility. The

process required the use of depleted uranium. In 1974

Chemetron dismantled its catalyst production equipment. In

1975 Chemetron disposed of radioactive material from the

Harvard Avenue facility at its Bert Avenue Site. In 1980 the

Nuclear Regulatory Commission informed Chemetron that

decontamination of the Bert Avenue Site was required.

Appellees are former residents of Newburgh Heights and

Cuyahoga Heights who allegedly visited or lived in the vicinity

of the Bert Avenue Site from as early as the 1930s to 1985.?

Appellees allege that the operation and use of the Harvard

Avenue plant and Bert Avenue Site by Chemetron, McGean

Chemical Company and McGean Rohco caused Appellees to be

exposed to radioactive and hazardous substances. The exposure

allegedly caused a variety of medical problems and increased

their risk of future medical problems and cancer. Appellees

contend that they first became aware that the alleged exposure to

Appellees allegedly frequently visited or lived in two

homes located in Newburgh Heights. According to the

Amended Complaint, the residence located at 3969 E. 29th

Street was sold in 1981 with one Appellee continuing to reside

in the house as a tenant until 1985. Appellees associated with

that home allegedly visited either weekly or several times a

week until 1985. The other house, located at 1989 East 29th

Street, was sold in 1965.

A-34

the substances caused their medical problems in either October

1991 or March 1992.

The parties have filed briefs. We heard oral argument

on February 25, 1994.

DISCUSSION

We review the Bankruptcy Court’s findings of fact under

the clearly erroneous standard. Fed. R. Bankr. P. 8013.

Conclusions of law are subject to de novo, review. Mellon

Bank, N.A. v. Metro Communications, Inc., 945 F.2d 635, 642

(3rd Cir 1991), cert. denied, U.S. _, 117 L. Ed 2d 620, 112

S. Ct. 1476 (1992). However, where there are mixed questions

of law and fact, we undertake "’[de novo] review of the trial

court’s choice and interpretation of legal precepts and its

application of those precepts to historical facts.’" Id. quoting

Universal Minerals, Inc. vs. C. A. Hughes & Co. , 669 F. 2d

98, 101-02 (3d Cir. 1981); see also, Kilbarr Corp. v. General

ices Administration, (In re Remington Rand Corp.), 836

F.2d 825, 828 (3d Cir. 1988). Since the issues here are mixed

questions of law and fact, we shall review this appeal de novo.

Under Bankruptcy Rule 3003(c)(3) the Bankruptcy Court

is required to set a bar date for filing proofs of claim. The bar

date is strictly construed to further the objective of finality in

bankruptcy proceedings. Charter Crude Oil Co. v. Petroleos

Mexicanos (In re Charter Co.), 125 B.R. 650, 654 (M.D. Fla.

1991). Confirmation of the debtor’s Plan of Reorganization

discharges the debtor from claims which arose prior to the

confirmation date. Id.; 11 U.S.C. § 1141.

Due process requires that actual written notice of a

debtor’s bankruptcy filing and bar date be provided to known

creditors. New York v. New York, N.H. & H.R. Co., 344

U.S. 293, 296 (1953). Where the names, addresses and

interests of potential parties are unknown, notification by

publication satisfies the requirements of due process. Id. A

"known" creditor is one whose identification as such is either

known or ‘reasonably ascertainable by the debtor." Tulsa

Professional Collection Services, Inc. v. Pope, 485 U.S. 478,

A-35

se

490 (1988). An "unknown" creditor is one whose identification

is not "reasonably ascertainable" and whose claim is merely

"conceivable, conjectural or speculative." Mullane v. Central

Hanover Bank & Trust Co., 339 U.S. 306, 317 (1950). The

principal argument raised by Chemetron in this appeal is that the

standard applied by the Bankruptcy Court that Appellees’ claims

were reasonably foreseeable making Appellees known creditors

conflicts with governing bankruptcy law.

The standard adopted by the Bankruptcy Court was: "if

at the time of filing it is reasonably foreseeable to a debtor who

is or should be aware of the potential consequences of its

actions, that a party that is foreseeable will most likely file a

claim against the debtor, that party is a known, creditor of the

debtor." Order at 5-6. The Bankruptcy Court also held that a

creditor can be ’known’ even though the debtor does not know

the creditor’s name and address. Id. at 6. The Bankruptcy

Court stated that the aforementioned standard was suggested by

the Bankruptcy Court for the Southern District of New York in

In re Brooks Fashion Stores, Inc., 124 B.R. 436 (Bankr.

S.D.N.Y. 1991).

In Brooks, the debtor had no knowledge of the claim of

the Michigan Employment Security Commission ("MESC").

Notice of the bar date for filing proofs of claim was published in

two national newspapers and a trade paper. A proposed plan of

reorganization was confirmed with an order containing a

permanent injunction against claims which arose prior to the

order’s entry. MESC argued unsuccessfully that it was not

barred by the order confirming the plan because it did not

receive written notice of the filing of the petition. The court

stated that "[w]here a debtor has no knowledge of a claim and in

good faith files its petition with as thorough a schedule as

possible, the debtor has done all that is required under the

Code." Id. at 444. The court noted that had there been a

"history of MESC redetermining [the debtor’s] taxes, whereby

[the debtor] should have reasonably foreseen the assessment, the

outcome here might very well be different." Id. at 444. It is

from this language that the Bankruptcy Court derived a

"reasonable affirmative duty on a debtor company to keep

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abreast of any obvious and potentially detrimental consequences

its actions may have." Order at 5.

We respectfully disagree with the Bankruptcy Court’s

interpretation of Brooks. The dicta in Brooks indicated that had

MESC redetermined the debtor’s taxes in prior years, it would

be reasonable for the debtor to foresee that MESC might again

exercise its right. Here, the Bankruptcy Court eliminated the

past dealings of a creditor with a debtor from its reasonably

foreseeable test. The decisions cited by the court in Brooks also

demonstrate that past dealings between the creditor and debtor

are essential in determining whether a creditor should have been

"known". See In re Flanigan’s Enterprises, Inc., 77 B.R. 963

(Bankr. S.D. Fla. 1987) (Creditor did not knowingly fail to list

insurer as creditor where insurance creditor waited almost three

years to notify the debtor of amounts due under a terminated

insurance contract.); Charter Crude Oil Co. v. Petroleos

Mexicanos (In re Charter Co.), 125 B.R. 650, 654 (M.D. Fla.

1991) (Three years prior to filing for bankruptcy debtor

allegedly breached its contract with creditor by emitting a

reduced payment to creditor. That debtor knew there was

possibility of a claim by creditor did not make the creditor

"known.")

Elsewhere in the Brooks opinion the court reemphasized

the importance of an historical relationship between the debtor

and creditor as a condition precedent for a creditor to be one of

debtor’s "known" creditors. In addressing MESC’s argument

that the discharge provision of the Code, 11 U.S.C. § 1141, is

unconstitutional, the court concluded that § 1141(d)(1)(A) is not

unconstitutional per se, but that its application in certain

circumstances could be unconstitutional. The facts in the cases

cited indicated "that the alleged creditor was ’known’ or clearly

should have been known under the circumstances." Id. In all

of the cases cited, there were past dealings between the creditors

and debtors. Moreover, the circumstances in the cases cited by

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the court strongly suggest that a search of the debtors’ records

would have revealed the creditors’ potential claims.’

To comply with the requirements of due process, a

debtor is not obligated to conduct an "impracticable and

extended” search for all potential creditors. Mullane, 339 U.S.

at 317-18. The debtor does not have a "duty to search out each

conceivable or possible creditor and urge that person or entity to

make a claim against it." Charter Crude Oil Co., supra, 125

B.R. at 655. Nor is the debtor "required to give actual notice of

the bar date to a creditor when the debtor could reasonably have

believed that the creditor had abandoned its claims against

debtor." Id. Even where a debtor knows there is a possibility

of a claim by a creditor, if the creditor’s claim is merely

conceivable, conjectural or speculative, the debtor is not

required to give actual notice to the debtor. Id. at 656.

However, if a debtor knows or should know of its potential

liability to a specific creditor, that creditor is a known creditor

entitled to actual notice." In re Thomson McKinnon Sec., Inc.,

130 B.R. 717, 720 (Bankr. S.D.N.Y. 1991).

The Bankruptcy Court found that Appellees were known

creditors in February 1988 because their claims were foreseeable

at the time Chemetron filed for bankruptcy. However, as stated

above, absent some course of dealing or some communication

>The cases cited in Brook regarding the constitutionality

of § 1141 shared in common specific prepetition relationships

between the debtor and creditor which strongly suggested that

the debtor had knowledge of "he creditor’s potential claim

against the debtor prior to filing the petition. See, Broomall

Industries, Inc. v. Data Design Logic Systems, Inc., 786 F.2d

401 (Fed. Cir. 1986) (Fact issue whether debtor on notice of

creditor’s patent infringement claim); Reliable Electric Co. v.

Olson Constr. Co., 726 F.2d 620 (10th Cir. 1984) (Debtor

allegedly breached subcontract pre-petition); In re Intaco Puerto

Rico, Inc., 494 F. 2d 94 (ist Cir. 1974) (Pre-petition

contractual relationship).

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between a debtor and potential claimant indicating the viability

of a claim, a creditor is not reasonably foreseeable. Appellees

did not produce any evidence which suggests a course of dealing

between Chemetron and Appellees or a similarly situated

resident during the relevant time period. There is nothing in the

record which contradicts the claim that Chemetron and

Allegheny International were unaware of Appellees’ claims until

Appellees filed their Ohio lawsuit, more than 4 years after

Chemetron filed for reorganization. It is uncontroverted that

between 1980, when the NRC first informed Chemetron of

unpermitted disposition of radioactive materials at the Bert

Avenue Site and February 1988, no one filed a claim or

expressed an intention to file a claim against Chemetron.

Even if we were to apply the foreseeability test proposed

by the Bankruptcy Court, the record does not support the claim

that Appellees were foreseeable claimants in 1988. In 1980 the

news of the contamination at the Bert Avenue Site was

publicized in the local newspapers and on television. At

meetings concerned residents were told by NRC experts that the

radiation was serious enough to require cleaning up eventually,

but did not pose a safety or health risk. In 1981 the EPA

reported that no ground water contamination had been found at

the Site. In 1983 the EPA reiterated that the Bert Avenue Site

presented no serious radiation hazard to the surrounding

neighborhood. If Chemetron gave any thought to the subject, it

was reasonable to assume that claims would not be filed because

of the assurances of these agencies that the Bert Avenue Site

posed no health risk to the neighborhood. There is no evidence

that Chemetron was aware of any danger the Site presented to

residents. In fact the danger did not exist according to the

agencies involved. Nor is there anything in the record to

support Appellees’ contention that Chemetron knew that children

played at the Site prior to 1980 when the Bert Avenue Site was

fenced and posted with warning signs. In 1975, the Site,

belonged to McGean-Rohco. Thus, there was no reason for

Chemetron to assume in 1988 that there would be claims from

residents for ailments caused by exposure to the contamination

from the Sites. At most, any future claim was speculative. We

find that Appellees were not foreseeable claimants and,

accordingly, were unknown creditors.

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The Bankruptcy Court found Appellees were entitled to

actual notice because, by application of its reasonable

foreseeability test, they were "known" creditors. Known

creditors are required to be given actual notice of the claims bar

date. New York, N.H. & H.R. Co., supra, 344 U.S. 293.

However, for unknown creditors such as Appellees whose

claims are speculative and not foreseeable, it is well established

that constructive notice of the bar date by publication satisfies

due process. Id., at 296; In re Thomson McKinnon oe

Inc., 130 B.R. at 720;

(In re Charter), 113 B.R. 725, 727-28 (M.D. Fla. 1990). Here,

publication of notice in the national editions of the Wall Street

Journal and New York Times as well as in local newspapers

where Debtors had ongoing business at the time of filing was

sufficient under the circumstances to apprise unknown parties of

the pendency of this action. New York, N.H. & H.R. Co.,

344 U.S. at 296; In re Brooks Fashion Stores Inc., 124 B. R.

at 445.

Except upon a showing of excusable neglect, a

bankruptcy court may not accept a late filing of a creditor’s

claim. In re Waterman Steamship Corp., 59 B.R. 724, 727

(Bankr. S.D.N.Y. 1986). Although it is questionable whether

excusable neglect remains a viable defense for filing a late proof

of claim when the claimant is entitled to only publication notice,

we shall err on the side of caution and apply the standard. The

determination of whether neglect is excusable

"is at bottom an equitable one, taking account of all

relevant circumstances surrounding the party’s omission.

These include. . . the danger of prejudice to the

debtor, the length of the delay and its impact on the

judicial proceedings, the reason for the delay, including

‘See Trump Taj Mahal Associates v. O’Hara (In re

Trump Taj Mahal Associates), No. 93-3571, 1993 U. S. Dist.

LEXIS 17827 at *18 n. 7. (D.N.J. December 13, 1993); In re

Best Products Co., Inc., 140 B.R. 353, 359 (Bankr. S. D. N.

Y. 1992); In re Waterman Steamship, 59 B.R. at 728.

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whether it was within the reasonable control of the

movant, and whether the movant acted in good faith."

Pioneer Investment Serv. Co. v. Brunswick Assocs. Ltd.

Partnership, U.S. , 123 L.Ed. 2d 74, 113 S. Ct. 1489, 1498

(1993).

In the case at bar the Bankruptcy Court found that

although Appellees, "while not acting very promptly or

diligently, were not so sluggish as to outweigh the fact that

Chemetron did not provide notice to alert the [Appellees] of the

bankruptcy proceedings and the claims Bar Date. " Order at 11.

We disagree and find that the notice was adequate under the

circumstances. We agree with the Bankruptcy Court that

Appellees did not act promptly or diligently. Their motion to

file a late claim occurred more than four years after the bar

date, two years after the Plan of Reorganization had been

confirmed and twelve years after media and neighborhood

attention first focused on the hazardous substances at the Bert

Avenue Site. That Appellees were allegedly unaware of their

claims does not constitute excusable neglect. In re Best

Products Co., Inc., 140 B.R. 353, 359 (Bankr. S.D.N.Y.

1992); In re Penn Central Transportation Co. _, 42 B.R. 657,

675 (E.D. Pa. 1984), aff'd, 771 F. 2d 762 (3d Cir. 1985). To

permit Appellees to file a late claim would prejudice Chemetron

by denying a "fresh start" to which it is entitled. In re Trump

Taj Mahal Associates, 156 B.R. 928 (Bankr. D. N.J. 1993),

aff'd, sub nom., Trump Taj Mahal Associates v. O’Hara (In re

Trump Taj Mahal Associates), No. 93-3571, 1993 U.S. Dist.

LEXIS 17827 (D. N. J. December 13, 1993). We conclude

that the totality of the circumstances weighs heavily against late

filing of Appellees’ claims.

Based on the foregoing, the record and the relevant law,

we conclude that notice by publication was sufficient, that the

claims were dischargeable and were discharged, and that the

Appellees have failed to demonstrate excusable neglect.

Accordingly, the Bankruptcy Court’s Order entered August 2,

1993 will be reversed.

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An order follows.

ce:

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BARRON P. McCUNE

SENIOR UNITED STATES DISTRICT

JUDGE

Counsel of record

IN THE UNITED STATES DISTRICT COURT FOR THE

WESTERN DISTRICT OF PENNSYLVANIA

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In re:

ALLEGHENY

INTERNATIONAL,

INC., SUNBEAM

CORPORATION,

SUNBEAM HOLDINGS,

INC., ALMET/

LAWNLITE,

INC., AND

CHEMETRON

CORPORATION,

Debtors.

CHEMETRON

CORPORATION,

Appellant,

vs.

PHYLLIS JASKEY

JONES, et al.,

Appellees.

Bankruptcy No. 88-448

Chapter 11

Civil Action No. 93-1582

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AND NOW, June __14_, 1994, the Order of the

Bankruptcy Court entered August 2, 1993 in the underlying

Chapter 11 reorganization proceeding and Adversary Proceeding

No. 92-2418 is hereby reversed. The Motion to File Late

Claims against Chemetron is denied. Appellees Phyllis Jaskey

against Chemetron in the Court of Common Pleas of Cuyahoga

County, Ohio, Jones v. McGean-Roheo, Inc., Case No. 227973,

pursuant to 11 U. S. C. § 362. -

BARRON P. McCUNE

SENIOR UNITED STATES DISTRICT

JUDGE

Hon. Joseph L. Cosetti

Thomas G. Hermann, Esquire

Squire, Sanders & Dempsey

4900 Society Center

127 Public Square

Cleveland, OH 44114-1304

M. Bruce McCullough, Esquire

George L. Cass, Esquire

Buchanan Ingersoll, P. C.

58th Floor, USX Tower

600 Grant St.

Pittsburgh, PA 15219

William Mitchell, Esquire

Armstrong, Mitchell & Damiani

1725 The Midland Buildi

Cleveland, OH 44115-1091

A-44

Randall Solomon, Esquire

Thomas L. Anastos, Esquire

Baker & Hostetler

3200 National City Center

Cleveland, OH 44114

U. S. Trustee

319 Federal Building

1000 Liberty Avenue

Pittsburgh, PA 15222

David R. Sargent, Esquire

One Citizens Plaza

6th Floor

Providence, RI 02903

Fried, Frank, Harris, Shriver & Jacobson

One New York Plaza

New York, NY 10004

Dennis J. Lewis, Esquire

Cohen & Grigsby, P. C.

2900 CNG Tower

625 Liberty Avenue

Pittsburgh, PA 15222

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CERTIFICATE OF SERVICE

Three copies of the foregoing Petition for Writ of

Certiorari to the United States Court of Appeals for the Third

Circuit were mailed this sd off

1996 to the following parties and U.S. Trustee to this

proceeding:

U.S. Trustee George Cass, Esq.

319 Federal Building Buchanan Ingersoll, P.C.

1000 Liberty Avenue 5800 USX Tower

Pittsburgh, PA 15222 600 Grant Street

(412) 644-4756 Pittsburgh, PA 15219

(412) 562-8800

Dennis G. Terez, Esq. Attorney for Chemetron

Squire, Sanders & Dempsey Corporation

4900 Society Center

127 Public Square

Cleveland, Ohio 44114-1304

(216) 479-8500

Attorney for Chemetron

Corporation

In addition, the following attorneys from the original

bankruptcy proceeding were served with a copy of the foregoing

Petition for Writ of Certiorari to the United States_Court of

Appeals for the Third Circuit this day of

1996:

M. Bruce McCullough, Esq. Cynthia Baker, Esq.

Buchanan Ingersoll, P.C. Fried, Frank, Harris,

58th Floor, USX Tower Shriver & Jacobson

600 Grant Street One New York Plaza

Pittsburgh, PA 15219 New York, NY 10004

Michael Lederman, Esq. Chemetron

Corporation

Sunbeam/Oster Company, Inc. c/o C.T. Corporation System

200 E. Las Olas Bivd., #2100 Statutory Agent

Fort Lauderdale, FL 33301-2248 Carew Tower

A-46 :

Dennis Lewis, Esq.

Alder Cohen & Grigsby,

yf

2900 CNG Tower

625 Liberty Avenue

Pittsburgh, PA 15222

PL\15400562.03A

Robert G. Sable, Esq.

Sable, Makaroff, Sherman &

Gasky, P.C.

7th Floor, Frick Bldg.

Pittsburgh, PA 15219-6002

William Mitchell

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