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Full title: Motion to Reconsider Order Dated May 27, 2021 and for Allowance of Late Filed Claim (related document(s)398) Filed by Catherine Darcy. Objections due by 6/25/2021. (Attachments: # 1 Exhibits A through F # 2 Notice # 3 Certificate of Service) (McLaughlin, John). Modified on 6/10/2021 to Properly Link Related Docket Entry (LB). (Entered: 06/09/2021)
Document posted on Jun 8, 2021 in the bankruptcy, 9 pages and 0 tables.
Bankrupt11 Summary (Automatically Generated)
Hearing Date: TBD MOTION BY CLAIMANT, CATHERINE DARCY, FOR RECONSIDERATION OF ORDER DATED MAY 27, 2021 [D.I. 398] AND FOR ALLOWANCE OF LATE-FILED CLAIM Pursuant to 11 U.S.C.A. §502(j) and the Federal Rules of Bankruptcy Procedure, Rule 3008, the Claimant, Catherine Darcy, hereby moves this Court for reconsideration of its Order dated May 27, 2021The suggestion of bankruptcy notified the superior court that Friendly’s was part of the group including Neapolitan Group Holdings, LLC, FIC Holdings, LLC, FIC Restaurants, Inc., and Friendly’s Franchising, LLC that had filed for relief under chapter 11 and that such cases were before this Court.On or about December 14, 2020, Darcy, through Barrett, served her proof of claim in this matter by U.S. First Class Mail.On April 30, 2021 at 9:03 p.m., Barrett was sent an email with the Notice of Reorganized Debtor’s First Omnibus Objection To Claims Pursuant To Sections 105 and 502 of the Bankruptcy Code and Rule 3007 of the Federal Rules of Bankruptcy Procedure (Non-Substantive Objection), (“Objection”).Moreover, Barrett, on behalf of Darcy (see Proof of Claim), never consented to service by electronic mail.
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Document ContentsIN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE __________________________________ ) Chapter 11 In re: ) ) Case No.: 20-12807 (CSS) FIC RESTAURANTS, INC.1 ) ) Reorganized Debtor. ) Objections Due: June 25, 2021, 4:00 pm ET __________________________________ ) Hearing Date: TBD MOTION BY CLAIMANT, CATHERINE DARCY, FOR RECONSIDERATION OF ORDER DATED MAY 27, 2021 [D.I. 398] AND FOR ALLOWANCE OF LATE-FILED CLAIM Pursuant to 11 U.S.C.A. §502(j) and the Federal Rules of Bankruptcy Procedure, Rule 3008, the Claimant, Catherine Darcy, hereby moves this Court for reconsideration of its Order dated May 27, 2021 [D.I. 398] disallowing in its entirety and expunging her claim, no. 312 on Exhibit 1 (Late-Filed Claims) attached to said Order. Moreover, Darcy moves this Court to extend the Bar Date for the filing of her Proof of Claim and/or allow her claim in the event the Court grants her motion for reconsideration. In support thereof, Darcy states the following: I. Factual Background 1. Darcy filed a civil action against Friendly’s Ice Cream, LLC (“Friendly’s”) on April 25, 2019 in the Hampshire County, Massachusetts Superior Court, which was docketed as 1980CV00072 (“civil action”). See, Docket Sheet and Complaint, attached hereto as Exhibit A. Darcy’s civil action claims Friendly’s negligence in failing to prevent Darcy’s fall on a slippery surface in its restaurant. Id. Discovery, including depositions, have been completed. See 1 The Reorganized Debtor in this chapter 11 case, its jurisdiction of organization, and the last four digits of its U.S. taxpayer identification numbers is FIC Restaurants, Inc., a Massachusetts corporation (1388) (“FIC”).
1Declaration of Peter G. Barrett, Esq., (“Barrett”) attached hereto as Exhibit B. As a result of discovery, Friendly’s has revealed that it has insurance coverage for an award or settlement in the civil action. See Defendant, Friendly’s Ice Cream, LLC’s Answers To Plaintiff’s First Set of Interrogatories (“Friendly’s Ans.”), at No. 27, attached hereto as Exhibit C. Specifically, Friendly’s was provided with coverage through National Union Fire Insurance Company of Pittsburgh, PA. See Defendant, Friendly’s Ice Cream, LLC’s Responses To Plaintiff, Catherine Darcy’s, First Set of Document Requests, (“Friendly’s Response To Requests”), at Exhibit 8, attached hereto as Exhibit D. 2. On November 9, 2020, Friendly’s filed a suggestion of bankruptcy in the civil action. See Suggestion of Bankruptcy, attached hereto as Exhibit C. The suggestion of bankruptcy notified the superior court that Friendly’s was part of the group including Neapolitan Group Holdings, LLC, FIC Holdings, LLC, FIC Restaurants, Inc., and Friendly’s Franchising, LLC that had filed for relief under chapter 11 and that such cases were before this Court. Id. Since November 9, 2020, the civil action has been stayed, and efforts that began prior to November 9, 2020 to bring the case into mediation or to effectuate some other resolution, have stalled. Barrett, at ¶6. 3. On or about December 1, 2020, Darcy provided to Barrett papers she had received via U.S. Mail regarding the bankruptcy case. Barrett, at ¶7. Barret saw the documents and received them for the first time on or about December 1, 2020. Barrett, at ¶7. Barrett assisted Darcy, who was 79 years old at the time, with preparing her proof of claim and mailed the proof of claim for Darcy’s review and signature on or about December 3, 2020. Barrett, at ¶8. Darcy signed the proof of claim on December 8, 2020 and mailed it back to Barrett. Barrett, at ¶9. On or about December 14, 2020, Darcy, through Barrett, served her proof of claim in this matter by
2U.S. First Class Mail. See Proof of Claim, attached hereto as Exhibit “E”, and see Barrett, at ¶10. The proof of claim designated Barrett as the person to whom notices to creditor should be provided. Exhibit E. Barrett believed that by mailing the proof of claim on December 14, 2020, that it would be timely filed within the December 15, 2020 deadline, either because it would arrive by that date to New York City, or that it was sufficiently deemed filed upon mailing. Barrett, at ¶10. 4. On April 30, 2021 at 9:03 p.m., Barrett was sent an email with the Notice of Reorganized Debtor’s First Omnibus Objection To Claims Pursuant To Sections 105 and 502 of the Bankruptcy Code and Rule 3007 of the Federal Rules of Bankruptcy Procedure (Non-Substantive Objection), (“Objection”). See Objection, attached hereto as Exhibit “F”. He also received 121 other emails that day. Barrett, at ¶11. He did not receive the Objection by mail. Barrett, at ¶11-12. The Objection set forth that a Hearing Date and Time of June 1, 2021 at 10:00 a.m. (ET). See Objection. The ground for the Objection to Darcy’s claim was that it was filed late, viz, the filing deadline was December 15, 2020 but the claim was not filed until December 18, 2020. Id. Not having received the Objection by mail, Barrett did not realize the importance of the document. Barrett, at ¶11-¶14. Indeed, he did not consent to receive pleadings relative to Darcy’s claim by electronic mail. Barrett, at ¶11. 5. Darcy, through Barrett, did not file an objection to the Objection by May 25, 2021. The Objection was sustained by this Court on May 27, 2021, and Darcy’s claim was disallowed in its entirety and expunged on the basis of its having been untimely filed.
3II. Standard of Review Motions for Reconsideration: Title 11 of the United States Bankruptcy Code, §502 provides, in pertinent part: “A claim that has been allowed or disallowed may be reconsidered for cause. A reconsidered claim may be allowed or disallowed according to the equities of the case.” 11 U.S.C.A. §502(j). Moreover, Rule 3008 of the Federal Rules of Bankruptcy Procedure provide, “A party in interest may move for reconsideration of an order allowing or disallowing a claim against the estate.” Fed. R. Bankr. 3008. Motions For Leave To File Proofs of Claim Late A court may allow the late filing of a claim on a showing of excusable neglect. Pioneer Inv. Services Co. v. Brunswick Associates Ltd. Partnership, 507 U.S. 380 (1993). Indeed, Rule 9006(b)(1) of the Rules of Bankruptcy Procedure acknowledge the court’s discretion in this regard. III. Argument A. There Is Good Cause and/or Excusable Neglect Sufficient To Grant The Motion for Reconsideration 1) The Objection Was Not Ripe For Adjudication And/Or Service Of The Objection Was Defective. The Objection was sent to Barrett by email on April 30, 2021 at 9:03 p.m. The scheduled hearing date was June 1, 2021 at 10:00 a.m. Rule 3007 of the Federal Rules of Bankruptcy Procedure require that “an objection to the allowance of a claim and a notice of objection [omitted] shall be filed and served at least 30 days before any scheduled hearing on the objection”. Rule 9006 of the Federal Rules of Bankruptcy Procedure states:
4When the period is stated in days or a longer unit of time: (A) exclude the day of the event that triggers the period; (B) [omitted] (C) include the last day of the period, but if the last day is a Saturday, Sunday, or legal holiday, the period continues to run until the end of the next day that is not a Saturday, Sunday, or legal holiday. See Fed. R. Bankr. Proc. 9006. Moreover, a “legal holiday” includes Memorial Day. Id. Due to the weekend and Memorial Day 2021 holiday, the thirtieth day after April 30, 2021 would have been May 30, 2021, but because of the weekend and Memorial Day holiday, that 30th day was extended to June 1, 2021. Therefore, the hearing should have been scheduled for June 2, 2021. The Objection was defective. Compare In re Lomas Financial Corp., 212 B.R. 46, 56 (Bankr. D. DE 1997). Additionally, Rule 3007 of the Federal Rules of Bankruptcy Procedure require that the “objection and notice shall be served on a claimant by first-class mail to the person most recently designated on the claimant’s original or amended proof of claim as the person to receive notices, at the address so indicated … .” In the case sub judice, Barrett was only provided an electronic notification of the objection; he never received the Objection by mail. Therefore, service of the Objection was defective and “fail[ed] as a substitute for the claims objection procedure specified in Rule 3007.” See In re White, 908 F. 2d 691, 693 (11th Circuit, 1990). “A judgment is also void when it is found that there has been defective service of process that is inconsistent with due process of law.” In re Levoy, 182 B.R. 827, 833-834 (B.A.P. 9th Cir. 1995). Since service was defective, the Order should be vacated. 2) The Claimant’s Failure To Respond To The Objection In A Timely Manner Was Based Upon Excusable Neglect.
5Barrett received the email with the Objection but was never served by U.S. Mail. See Fed. R. Bankr. P. 3007. Moreover, Barrett, on behalf of Darcy (see Proof of Claim), never consented to service by electronic mail. Barrett, at ¶11. Since Barrett did not receive a mailed version of the Objection2, the significance of the obligation to respond was not at all evident. Barrett, at ¶¶13-14. Indeed, several of the filings with which Barrett has been served electronically have had no impact on Darcy’s claim from the perspective of its survival.3 Without being served by mail, Darcy- through Barrett, should be excused from having failed to respond. “[T]he determination of whether or not neglect is excusable ‘is at bottom an equitable one,’ dependent on the ‘circumstances surrounding the party’s omission, ….’” In re Lambeth Corp., 227 B.R. 1, 8 (1998), quoting Pioneer Investment Services Co. v. Brunswick Associates, Ltd., 507 U.S. 380, 387-397 (1993). Here, the lack of service by mail understandably resulted in Barrett’s/Darcy’s lack of awareness regarding the obligation to respond. The Claimant’s conduct was in good faith. Moreover, as this motion is being filed within two weeks of the Order, there is no prejudice to the Debtor in reconsidering the Order. 2 Barrett should have been served with the mailed Objection since Darcy designated him to be the proper person to serve notices to creditors on her Proof of Claim. See Fed. R. Bankr. P. 2002. However, there is no evidence that Darcy was served by mail, either, and she has informed Barrett that she does not recall having received the Objection by mail. Barrett, at ¶12. 3 In fact, just 18 days after receiving the Objection by email, Barrett received another filing by electronic mail which was the order regarding removal. Barrett, ¶13.
6In view of the judicial preference for “disposing of cases on their merits”, this Court should reconsider its Order. See Zeitler v. Seitler (In re Zeitler), 221 B.R. 934, 937 (1st Cir. BAP 1998). B. Excusable Neglect Warrants The Court’s Allowance Of Darcy’s Late-Filed Claim i. The Claim Is Meritorious The claim at issue involves a personal injury matter. There have been no dispositive motions. The civil action has proceeded through the initial stages as well as discovery and is generally poised for trial or mediation. Indeed, counsel were discussing putting the case into mediation prior to the imposition of the automatic stay. Barrett, at ¶¶3-6. This is not a situation, for example, where a claim is stale due to the running of the statute of limitations. Compare In re W.R. Grace & Co., 626 B.R. 217 (2021) (Expiration of statute of limitations may provide grounds for disallowance of claim.) ii. The Failure To Timely File The Proof of Claim Was Based On Excusable Neglect Darcy was mailed the notice of the bar date for her proof of claim. She brought the documents to Barrett on or about December 1, 2020, and Barrett agreed to assist her with filing her proof of claim. Darcy was 79 years old and the Covid-19 pandemic was occurring at the time, warranting precautionary measures with client/attorney interaction. Barrett, at ¶8. Barrett prepared the document and mailed it back to Darcy on December 3, 2020 for her review and signature. Barrett, at ¶8. On December 8, 2020, Darcy signed the document. She mailed it back to Barrett and Barrett filed the document by first class mail on December 14, 2020. Barrett, at ¶10. This mode of transmitting the document was necessitated by the Covid-19 pandemic and served to delay the filing of the document. Barrett, at ¶8.
7Moreover, Barrett believed that the “mailbox rule” applied to filing procedure, as it does generally in civil litigation matters. See e.g., Mass. R. Civ. P. 5(b) (in pertinent part, “Service by mail is complete upon mailing.”) See also Mass. R. Civ. P. 6 (“Whenever a party has the right or is required to do some act or take some proceedings within a prescribed period after the service of a notice or other papers upon him and the notice or paper is served upon him by mail, 3 days shall be added to the prescribed period.”) Barrett, at ¶10. “An attorney’s inadvertent failure to file a proof of claim by the bar date can constitute “excusable neglect” within the meaning of Rule 9006(b)(1).” Pioneer Inv. Services Co. v. Brunswick Associates Ltd. Partnership, 507 U.S. 380 (1993). For the Court to allow the late-filed claim does not cause the Debtor undue prejudice. The claim is an unsecured and unliquidated claim that has not yet been determined in the courts of Massachusetts. Therefore, there is no immediate impact on the Debtor.4 Due to the foregoing factors, this Court should allow the late-filed claim. IV. Conclusion WHEREFORE, the Claimant, Catherine Darcy, respectfully moves this Court for reconsideration and vacation of its Order dated May 27, 2021, as it relates to her claim no. 312, 4 The Claimant intends to file a motion for relief from stay so that the state civil action can proceed.
8allowing an objection to her claim and that her late-filed claim be deemed as timely filed and for such other relief as this Honorable Court may deem to be proper. Dated: 9 June 2021 FERRY JOSEPH, P.A. /s/ John D. McLaughlin, Jr. _______________________________ John D. McLaughlin, Jr. (No. 4123) 824 North Market Street, Suite 1000 Wilmington, Delaware 19801 Tel: (302) 575-1555, ext. 107 Fax: (302) 575-1714 email@example.com - and - Peter G. Barrett, Esq. Markey Barrett, P.C. 1414 Main Street, Suite 830 Springfield, MA 01144 Phone (413) 273-7362 Fax (413) 273-7361 E-mail: firstname.lastname@example.org Counsel to Claimant, Catherine Darcy