Delgado v. Derecktor Shipyards, Inc

Filing 38

ORDER DISMISSING CASE re 32 Objection to Motion to Re-Open. See attached Memorandum of Decision. The Clerk is directed to terminate the case. Signed by Judge Vanessa L. Bryant on 1/18/12. (Hildebrand, J.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT

ANGEL DELGADO,
Plaintiff,
v.
DERECKTOR SHIPYARDS, INC.
Defendant.

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CIVIL ACTION NO.
3:08-cv-00316 (VLB)
January 18, 2012

MEMORANDUM OF DECISION GRANTING DEFENDANT’s [DKT. # 32]
MOTION TO DISMISS

Plaintiff, Angel Delgado, brings this action alleging various claims of
employment discrimination pursuant to Title VII of the Civil Rights Act of
1964, and 42 U.S.C. §1981. Currently pending before the Court is an
Objection to the Plaintiff’s Motion to Re-Open the case.

I.

Background
On February 28, 2008 Plaintiff filed a three-count complaint alleging

claims of employment discrimination under Title VII of the Civil Rights Act
of 1964 and 42 U.S.C. §1981. On August 11, 2008, Defendant filed a Motion
to Stay pursuant to 11 U.S.C. 362(a) on the basis of the Defendant’s
pending Chapter 11 bankruptcy proceedings, reporting that the Defendant
filed a Chapter 11 bankruptcy petition in the United States Bankruptcy
Court, District of Connecticut on July 18, 2008. On September 25, 2008, the
Court granted the Defendant’s Motion to Stay and dismissed the case

without prejudice to reopening following the conclusion of the bankruptcy
proceedings. On October 3, 2011, the Plaintiff filed a Motion to Open
Dismissal. On October 11, 2011, the Court granted the Plaintiff’s Motion to
Open Dismissal asserting that the Defendant’s bankruptcy case had
concluded. On November 4, 2011, after several extensions of time, the
Defendant filed a Motion in Opposition to Plaintiff’s Motion to Open
Dismissal asserting that the Plaintiff’s claim of employment discrimination
was discharged upon confirmation by the Bankruptcy Court of the
Defendant’s Final Plan and asking that the Court dismiss the matter in its
entirety. Accordingly, the Court will construe the Defendant’s [34]
Objection to Plaintiff’s Motion to Open as a Motion to Dismiss.

II.

Standard of Review
“Under Federal Rule of Civil Procedure 8(a)(2), a pleading must

contain a ‘short and plain statement of the claim showing that the pleader
is entitled to relief.’” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). While
Rule 8 does not require that a complaint contain detailed factual
allegations, “[a] pleading that offers ‘labels and conclusions’ or ‘formulaic
recitation of the elements of a cause of action will not do.’ Nor does a
complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual
enhancement.’” Id. (internal quotations omitted). “To survive a motion to
dismiss, a complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on its face.’ A claim has

facial plausibility when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. (internal citations omitted).
In considering a motion to dismiss for failure to state a claim, the
Court should follow a “two-pronged approach” to evaluate the sufficiency
of the complaint. Hayden v. Paterson, 594 F.3d 150, 161 (2d Cir. 2010). “A
court ‘can choose to begin by identifying pleadings that, because they are
no more than conclusions, are not entitled to the assumption of truth.’” Id.
(quoting Iqbal, 129 S.Ct. at 1949-50). “At the second step, a court should
determine whether the ‘well-pleaded factual allegations,’ assumed to be
true, ‘plausibly give rise to an entitlement to relief.’” Id. (quoting Iqbal, 129
S.Ct. at 1950). “The plausibility standard is not akin to a probability
requirement, but it asks for more than a sheer possibility that a defendant
has acted unlawfully.” Iqbal, 129 S.Ct. at 1949 (internal quotation marks
omitted).

III.

Discussion
On July 18, 2008, the Defendant filed a Chapter 11 bankruptcy

petition in the United States Bankruptcy Court, District of Connecticut. It is
indisputable that Plaintiff had actual notice of the bankruptcy filing through
both [Dkt. #23] the Defendant’s Motion to Stay informing the Court of its
pending bankruptcy proceedings, and [Dkt. #24], the Court’s Order

dismissing the case without prejudice to reopening following the
conclusion of the Defendant’s Chapter 11 bankruptcy proceeding.
On April 14, 2010, the Bankruptcy Court for the District of
Connecticut issued an order confirming the Defendant’s Chapter 11 Final
Plan. Article X, Section 10.3 of the Final Plan provides, in part, that:
Except to the extent otherwise provided herein or
in the Confirmation Order, the rights afforded in
the Plan and the treatment of all Claims against or
Equity Interests in the Debtor hereunder shall be
in exchange for and in complete satisfaction,
discharge, and release of all debts of, Claims
against, and Equity Interests in, the Debtor of any
nature whatsoever, known or unknown, including,
without limitation, any interest accrued or
expenses incurred thereon from and after the
Petition Date, or against its Estate, the
Reorganized Debtor, or its properties or interests
in property. Except as otherwise provided herein
or in the Conformation Order, upon the Effective
Date, all claims against and Equity Interests in the
Debtor shall be satisfied, discharged and released
in full exchange for the consideration, if any,
provided hereunder. [Dkt. #32, Ex. 1.].
Additionally, Article X, Section 10.4 of the Final Plan also expressly and
permanently enjoins those “who have held, hold, or may hold Claims or
Equity Interests” from “commencing or continuing in any manner any
action or other proceeding of any kind on any such Claim or Equity Interest
against the Debtor or Reorganized Debtor” or “pursuing any Claim
released pursuant to this Article X.” [Id.].
The term claim is defined broadly under the Bankruptcy Code as “a
right to payment, whether or not such right is reduced to judgment,

liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured.” 11 U.S.C. §101(5)(A
The Plaintiff’s employment discrimination claim falls within this broad
definition of the term “claim” under the Bankruptcy Code. See In re

Northwest Airlines Corp., 2008 WL 630449, at *5 (Bankr. S.D.N.Y., March 5,
2008)(addressing plaintiff’s claim of employment discrimination as a
cognizable claim in defendant-employer’s bankruptcy proceedings).
Moreover, it is undisputed that Plaintiff’s claim of employment
discrimination arose prior to the filing of the Defendant’s bankruptcy
petition, given that the Plaintiff alleges that he was discriminated against
by employees of the Defendant between 2003 and 2005, prior to the filing of
the Defendant’s bankruptcy petition in 2008. Therefore, the Plaintiff falls
within the definition of a “creditor” under the Bankruptcy Code. See 11
U.S.C. §101(10)(A) (defining a “creditor” 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”).
Plaintiff contends that his claim of employment discrimination was
not discharged upon the termination Defendant’s bankruptcy proceedings
because the Defendant did not provide him with formal notice of the
proceedings or list the Plaintiff as a creditor in its schedules filed with the
Bankruptcy Court. Plaintiff, relying on a Supreme Court decision from 1953,
argues that known creditors must be provided with notice of the bar date
for filing proofs of claim or the hearing on plan confirmation, or the creditor

will not be bound by confirmation of the plan and its claims will not be
discharged. See City of New York v. New York, N.H. & H.R. Co., 344 U.S. 293
(1953).
Defendant, relying on the plain language of 11 U.S.C. §523(a)(3),
contends that actual notice of the Defendant’s bankruptcy proceedings is
sufficient to discharge the Plaintiff’s claim.
11 U.S.C. §523(a)(3) provides, in relevant part, that, “[a] discharge
under section . . . 1141 . . . of this title, does not discharge an individual
debtor from any debt . . . neither listed nor scheduled under section
521(a)(1) of this title, with the name, if known to the debtor, of the creditor
to whom such debt is owed . . . unless such creditor had notice or actual
knowledge of the case in time for such timely filing and request.” 11 U.S.C.
§523(a)(3).
The Second Circuit, in In re Medaglia, 52 F.3d 451, (2d Cir. 1995),
addressed directly the notice requirement under §523 of the Bankruptcy
Code. Specifically, the Second Circuit addressed the question of whether
“the qualifying clause in §523(a)(3)(b), which allows creditors’ actual
knowledge of a bankruptcy proceeding to substitute for formal notice of
the bar date, meets the requirements of due process.” Id. at 454.
Recognizing that the language of §523(a)(3)(b) imposes “a burden on
unlisted creditors who obtain timely knowledge of a bankruptcy
proceedings, that burden is minimal and certainly does not deprive
unlisted creditors of their opportunity to be heard,” the Second Circuit held

that the actual notice provision did not constitute a deprivation of due
process rights. Id. at 454. In reaching this conclusion, the Second Circuit
considered the Supreme Court’s decision in City of New York, but found it
to be inapplicable as the Supreme Court was construing §77 of the
Bankruptcy Act of 1898, which did not contain a constructive notice
provision. Id. at 456. In contrast, the plain language of §§523(a)(3)(A) and
(B) contain constructive notice clauses that make “crystal clear that a
creditor with timely, actual knowledge of the ‘case’ does not have the ‘right
to assume’ that it will receive formal notice before its claims are barred. In

re Medaglia, Id. at 457.
Plaintiff, despite actual notice of the Defendant’s bankruptcy
proceedings, failed to file a proof of claim in the Defendant’s bankruptcy
proceedings. Pursuant to the Bankruptcy Code and as articulated by the
Second Circuit’s decision in In re Medaglia, the Plaintiff’s claim was
discharged upon the Bankruptcy Court’s adoption of the Defendant’s Final
Plan. Accordingly, Defendant’s Motion to Dismiss is GRANTED and
Plaintiff’s claims are dismissed.

IV.

Conclusion
Based upon the foregoing reasoning, Defendant’s Motion to Dismiss

[Dkt. #32] is GRANTED. Accordingly, Plaintiff’s complaint is dismissed in
its entirety. The Clerk is directed to terminate the case.
IT IS SO ORDERED.

/s/
Vanessa L. Bryant
United States District Judge
Dated at Hartford, Connecticut: January 18, 2012.