Martinez v. Dex Media, Inc.

Filing 13

ORDER. Defendants Motion to Dismiss with Prejudice 6 is GRANTED. By Judge Lewis T. Babcock on 7/29/2011.(sah, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
LEWIS T. BABCOCK, JUDGE

Civil Case No. 10-cv-02805-LTB
STEPHANIE C. MARTINEZ,
Plaintiff,
v.
DEX MEDIA, INC, an R.H. Donnelley Company, a Delaware Corporation doing business in
Colorado,
Defendant.
______________________________________________________________________________
ORDER
______________________________________________________________________________
This matter is before me on Defendant Dex Media’s Motion to Dismiss with Prejudice
[Doc #6]. In its motion, Defendant seeks to dismiss Plaintiff’s complaint with prejudice as
barred pursuant to bankruptcy law and a bankruptcy court’s orders. After consideration of the
parties’ arguments, and for the reasons stated below, I GRANT Defendant’s motion.
I. Background
A. Plaintiff’s Claims
Plaintiff is a 51-year-old Hispanic woman who worked for Defendant in Colorado
Springs, Colorado, as an advertising consultant from approximately November 1989 until her
termination on April 2, 2009. She alleges that Defendant discriminated against her with respect
to the terms and conditions of her employment and discharged her on April 2, 2009, due to her
age and national origin. On or about April 28, 2009, Plaintiff filed a union grievance regarding
the above. On or about May 22, 2009, Plaintiff also filed a complaint with the Equal

Employment Opportunity Commission (the “EEOC”). Defendant participated in the proceedings
and processes concomitant with both filings. Then, on or about August 20, 2010, Plaintiff
received EEOC’s notice of right to sue. Plaintiff subsequently filed this lawsuit on November
16, 2010, alleging age and national origin discrimination claims against Defendant pursuant to
Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq., the Age Discrimination in
Employment Act of 1967, 29 U.S.C. § 633, et seq., and 42 U.S.C. § 1981.
B. Defendant’s Bankruptcy Proceedings
Defendant is a subsidiary of R.H. Donnelley Company, a Delaware corporation doing
business in Colorado. On May 28, 2009 (the “Petition Date”), R.H. Donnelley and some of its
subsidiaries, including Defendant (collectively, the “Debtors”), filed Chapter 11 bankruptcy
petitions under Title 11 of the United States Code. On June 1, 2009, the United States
Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”), entered an order
consolidating the Debtors’ Chapter 11 cases. Defendant filed its list of creditors and potential
creditors (the “Creditor Matrix”) with the Bankruptcy Court at this time. The Creditor Matrix
listed Plaintiff at her last known address (14 Polo Drive, Colorado Springs, CO 80906).
On September 11, 2009, the Bankruptcy Court entered an order (the “Bar Date Order”)
establishing October 30, 2009, at 4:00 p.m. EST (the “Bar Date”) as the deadline for parties,
other than governmental entities, holding claims against one or more of the Debtors arising on or
prior to the Petition Date to file proofs of claim. The Bar Date Order prescribed that any person
or entity that was required to file a proof of claim, but failed to do so on or before the Bar Date,
shall be forever barred, estopped, and enjoined, from asserting a claim against the Debtors or
thereafter filing a proof of claim with respect thereto in Debtors’ Chapter 11 cases. It also

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prescribed that such person shall not receive or be entitled to receive any payment or distribution
of property from the Debtors or their successor or assigns with respect to such claim. Written
notice of the Bar Date Order was mailed to all of the Debtors’ known creditors via First-Class
U.S. mail pursuant to Fed. R. Bankr. P. 2002. Additionally, the Debtors published notice of the
Bar Date in the national editions of the Wall Street Journal and USA Today on October 7, 2009.
On October 21, 2009, the Debtors filed their joint plan of reorganization with the
Bankruptcy Court (the “Plan”). Written notice of the hearing to confirm the Plan was mailed to
all of the Debtors’ known creditors. Debtors again published this notice in the national editions
of the Wall Street Journal and USA Today on November 24, 2009.
On January 12, 2010, the Bankruptcy Court entered an order confirming the Plan (the
“Confirmation Order”). The Plan became effective on January 29, 2010 (the “Effective Date”).
Consistent with 11 U.S.C. § 1141, the Confirmation Order provides that as of the Effective Date,
each party that has held, currently holds, or may hold a claim, debt, right, or cause of action
“shall be deemed to, completely and forever release, waive, void, extinguish, and discharge
unconditionally [Defendant] of and from any all claims and all other debts, rights, or causes of
action of any nature whatsoever.” Def.’s Mot. to Dismiss ¶ 8. Consistent with 11 U.S.C. § 524,
the Confirmation Order also provides that discharge operates as an injunction against the
commencement or continuation of an action; the employment of process; or an act to collect,
recover, or offset any such debt against Defendant. See 11 U.S.C. § 524. The reorganized
Debtors mailed written notice of the Effective Date to all of their known creditors.

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C. Defendant’s Motion
Defendant argues in its motion that pursuant to bankruptcy law and the Bankruptcy
Court’s orders, Plaintiff’s claims were discharged and are barred, and therefore Plaintiff’s
complaint should be dismissed with prejudice. Defendant asserts that Plaintiff received actual
notice of its bankruptcy proceedings because Defendant sent proper notice to her at her last
known address. Defendant further asserts that Plaintiff failed to submit a proof of claim before
the Bar Date, which she was required to do in order to preserve her claims. Nor did she file an
objection to the confirmation of the Plan. Defendant argues that Plaintiff’s claims are therefore
discharged and forever barred, that Plaintiff is not entitled to distribution under the Plan, and that
the continued prosecution of her claims violates the Bankruptcy Court’s orders and bankruptcy
law. Accordingly, Defendant contends that Plaintiff’s claims should be dismissed with
prejudice.
II. Analysis
A. Law
In a Chapter 11 bankruptcy, the confirmation of a debtor’s plan of reorganization
“discharges the debtor from any debt that arose before the date of such confirmation . . . whether
or not– a proof of the claim based on such debt is filed,” except for those debts provided for in
the plan or in the order confirming the plan. 11 U.S.C. § 1141(d)(1)(A)(I). “Debt” means
“liability on a claim,” and “claim” is defined to include the right to payment, whether or not such
right is reduced to judgment, liquidated, fixed, disputed, or the like. Id. § 101(12), (5).
Similarly, a bankruptcy discharge “voids any judgement at any time obtained, to the extent that
such judgment is a determination of the personal liability of the debtor with respect to any debt

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discharged under [section 1141], whether or not discharge of such debt is waived.” Id. §
524(a)(1). With a few exceptions that are inapposite here, principles of res judicata apply to
bankruptcy proceedings and orders. In re DePaolo, 45 F.3d 373, 376 (10th Cir. 1995). But a
creditor’s claim can be barred for untimeliness only if the creditor received reasonable notice of
the debtor’s bankruptcy and the attendant proceedings. See Reliable Elec. Co., Inc. v. Olson.
Const. Co., 726 F.2d 620, 623 (10th Cir. 1984). A discharge also “operates as an injunction
against the commencement or continuation of an action, the employment of process, or an act, to
collect, recover or offset any such debt as a personal liability of the debtor . . . .” 11 U.S.C. §
524(a)(2). Whether a claim was discharged and is barred thus involves asking if the claim
holder received adequate notice and whether the holder submitted a proof of claim so as to have
it included in the plan or confirmation.
Notice to creditors and potential creditors is an essential part of a bankruptcy proceeding
because creditors must be afforded due process. See Mullane v. Cent. Hanover Trust Co., 339
U.S. 306 (1950). A claim will not be discharged “if the debtor fails to properly schedule the
claim and the creditor does not receive notice of the debtor’s bankruptcy and the relevant filing
dates.” In re Walker, 927 F.2d 1138, 1144 (10th Cir. 1991); accord Reliable, supra. In fact, a
creditor in a Chapter 11 case has a “right to assume” that he will receive all of the notice
required by statute before his claim is forever barred. Reliable, 726 F.2d at 622 (quoting New
York v. New York, New Haven & Hartford R.R. Co., 344 U.S. 293, 297 (1953)).
To this end, Fed. R. Bankr. P. 2002 mandates that all creditors receive advance notice by
mail of the time fixed for filing proofs of claims and for filing objections to the confirmation of a
Chapter 11 plan. Fed. R. Bankr. P. 2002(a)(7), (b). Notice sent by First Class U.S. mail to the

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last known address of a creditor “satisfies due process because it is ‘reasonably calculated’ to
inform the creditor of the bar date for filing proofs of claim.” In re Eagle Bus. Mfr., Inc., 62
F.3d 730, 736 (5th Cir. 1995); see In re Schicke, 290 B.R. 792, 801 n.20 (B.A.P. 10th Cir. 2003),
aff’d, In re Schicke, 97 Fed. Appx. 249 (10th Cir. 2004). This is because “[p]apers sent by
United States mail are presumed received by the addressee, absent evidence to the contrary.”
Schicke, 290 B.R. at 801 n.20 (B.A.P. 10th Cir. 2003) (finding that because it was undisputed
that the bankruptcy court sent the notice to the creditor to the address listed in the debtor’s
schedule, it must be presumed that the addressee received the notice); Eagle, 62 F.3d at 735
(5th Cir. 1995) (“correctly mailed notice creates a presumption that proper notice was given”).
A mere denial of receipt “is insufficient to rebut a presumption that proper notice was given.”
Eagle, 62 F.3d at 735 (citing Moody v. Bucknum, 951 F.2d 204, 207 (9th Cir. 1991); In re
Longarnder & Assocs., 855 F.2d 455, 459 (7th Cir. 1988)). Instead, the presumption of proper
notice can be overcome only by evidence that the mailing was not in fact accomplished–for
example, with evidence that notice was never mailed, it was incorrectly addressed, or that no
creditor received notice. See Eagle, 62 F.3d at 735-36; see also Schicke, 290 B.R. at 800 n.17.
Turning to the submission of a proof of claim, Fed. R. Bankr. P. 3003(c)(2) prescribes
that “[a]ny creditor . . . whose claim or interest is not scheduled or scheduled as disputed,
contingent, or unliquidated shall file a proof of claim or interest within the time prescribed by
subdivision (c)(3) of this rule . . . .” The bankruptcy court establishes the deadline for filing a
proof of claim. Fed. R. Bankr. P. 3003(c)(3). A creditor who must file a proof of claim but fails
to do so shall not be treated as a creditor with respect to such claim for the purposes of voting
and distribution. Id. Moreover, the confirmation of a plan “discharges the debtor from any debt

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that arose before the date of such confirmation,” except for those debts provided for in the plan
or in the order confirming the plan. 11 U.S.C. § 1141(d)(1)(A)(i).
B. Discussion
Defendant contends that, under the law explicated above, Plaintiff’s instant claims were
discharged and are barred and therefore should be dismissed with prejudice. Plaintiff disagrees,
arguing in response that her due process rights were violated and that Defendant had an
affirmative duty to make additional disclosures during the EEOC and union grievance processes.
For the reasons explained below, I grant Defendant’s motion.
As a matter of law, Defendant afforded Plaintiff due process. Plaintiff and her last
known address were listed in Defendant’s Creditor Matrix. Defendant sent all those listed in the
Creditor Matrix the requisite notices via First Class U.S. mail. In so doing, Defendant satisfied
due process requirements and bankruptcy rules. Eagle, 62 F.3d at 736; see Schicke, supra.
Defendant also established a presumption of receipt, see Schicke, 290 B.R. at 801 nn.17, 20, thus
shifting the burden to Plaintiff to show evidence that notice was improperly sent.
Plaintiff fails to marshal such evidence. She does not contend that her address was
incorrect, that no other creditor received the notices, or that the notices were never in fact sent.
Instead, Plaintiff merely denies receiving any notice. But denial alone is insufficient to rebut the
presumption. Eagle, 62 F.3d at 736. Plaintiff’s citation to Reliable, supra, as support for her
argument on this point is misplaced. In Reliable, the creditor seeking to overturn a discharge
was not listed in the debtor’s schedule as a creditor and, as a result, did not receive any notice.
Reliable, 726 F.2d at 621. Here, however, Plaintiff and her last known address were listed by
Defendant in its Creditor Matrix.

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Because Plaintiff cannot find refuge under a due process challenge, the Bankruptcy
Court’s orders and bankruptcy law control. Plaintiff was required to submit a proof of claim by
the Bar Date. See Fed. R. Bankr. P. 3003(c)(2). She did not, so her claim was not listed in the
Plan. And the Plan’s confirmation discharged Defendant from all debts that arose before plan
confirmation that were not otherwise provided for in the Plan or the Confirmation Order. See 11
U.S.C. § 1141(d)(1)(A). Plaintiff’s claims arose before the Plan was confirmed: her claims
arose, at the latest, when she was terminated on April 28, 2009, and the Plan was confirmed on
January 12, 2010. Thus, pursuant to the two orders, to which res judicata applies, and
bankruptcy law, Plaintiff’s claims are forever barred. Additionally, Plaintiff is enjoined from
bringing her claims, and she shall not receive or be entitled to receive any payment or
distribution from the Defendant with respect to her claims. This is because Defendant’s
bankruptcy discharge “void[ed] any judgement at any time obtained” and “operates as an
injunction against the commencement or continuation of an action, the employment of process,
or an act, to collect, recover or offset any such debt as a personal liability of the debtor . . . .” Id.
§ 524(a)(1), (2).
Plaintiff also argues that her claims were not discharged because Defendant had an
affirmative duty to disclose its bankruptcy. She contends that Defendant should have disclosed
its bankruptcy to the EEOC or to her union representative during the appurtenant proceedings
and that Defendant’s failure to do so misled her. This argument is unavailing and does not
warrant avoidance of discharge, and I decline to address is substantively for two reasons. First
and foremost, the argument is a naked assertion devoid of legal support. Plaintiff does not cite
any legal authority for her proposition. Second, Plaintiff fails to explain how the breach of such

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duty, assuming it existed, would overcome the fact that Defendant provided Plaintiff proper
notice as a matter of law by mail and would also result in avoidance of discharge as to her
claims.
For the reasons set forth above, IT IS ORDERED that Defendant’s Motion to Dismiss
with Prejudice [Doc #6] is GRANTED.

Date: July

29

, 2011 in Denver, Colorado.

BY THE COURT:

s/Lewis T. Babcock
LEWIS T. BABCOCK, JUDGE

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