Reyes v. Standard Parking Corporation
Filing
90
MEMORANDUM AND ORDER granting Third-party Defendant Rouse Providence, LLC's 58 Motion for Summary Judgment. So Ordered by Judge William E. Smith on 6/14/11. (Jackson, Ryan)
UNITED STATES DISTRICT COURT
DISTRICT OF RHODE ISLAND
___________________________________
)
MELISSA M. REYES,
)
Plaintiff,
)
)
v.
)
)
STANDARD PARKING CORPORATION,
)
CA. No. 09-166 S
Defendant / Third-party )
Plaintiff,
)
)
v.
)
)
HENRY M. LUKE, CO., INC.,
)
ALLIEDBARTON SECURITIY SERVICES,
)
LLC, AND ROUSE PROVIDENCE, LLC,
)
Third-Party Defendants. )
___________________________________)
MEMORANDUM AND ORDER
WILLIAM E. SMITH, United States District Judge.
In this matter, Third-party Defendant Rouse Providence, LLC
(“Rouse”) seeks summary judgment under Fed. R. Civ. P. 56(c)
against
Third-party
Plaintiff
Standard
Parking
Corporation’s
(“Standard”) claims for contribution, common-law indemnity, and
breach of contract.
For the reasons set forth below, Rouse’s
motion for summary judgment is GRANTED.
I.
Background
Rouse owns the Providence Place mall, a shopping, dining,
and
entertainment
Island.
destination
located
in
Providence,
Rhode
On January 16, 2006, Rouse executed a contract with
Standard (the “Management Agreement”) whereby Standard agreed to
manage the mall’s parking garage through September 30, 2008.
The
Management
Agreement
obligated
Rouse,
in
the
event
it
employed other contractors to perform work in the garage, to use
its
best
efforts
to
require
those
contractors
to
Standard for all claims arising out of their work.
indemnify
On June 2,
2008, Rouse contracted with Henry Luke, Co., Inc. (“Luke”) to
perform
repairs
however
the
to
the
contract
garage
did
not
(the
“Rouse-Luke
contain
the
Contract”);
indemnification
language required by the Management Agreement.
The
Plaintiff
in
this
case,
Melissa
Reyes
(“Reyes”),
alleges that while she was driving through the Mall’s parking
garage on June 10, 2008, a piece of concrete fell from its
ceiling and struck and damaged her vehicle, causing her bodily
injury.
On April 8, 2009, she sued Standard in tort alleging
negligence.
Standard then filed a third-party complaint for
contribution and common law indemnity against Luke on July 31,
2009.
Standard has since amended its complaint twice, adding
third-party
Defendant
AlliedBarton
Security
April 9, 2010 and Rouse on June 7, 2010.
Services,
LLC1
on
In its second amended
complaint, Standard added an additional breach of contract claim
against Rouse for failing to require Luke to indemnify Standard
as per the Management Agreement.
1
At all relevant times, third-party Defendant AlliedBarton
was under contract with Rouse to perform security-related
services in the garage.
2
On April 16, 2009, about a week after Reyes served Standard
with her negligence suit, Rouse’s parent company, General Growth
Properties
(“GGP”),
protection
in
the
petitioned
United
for
States
chapter
Bankruptcy
11
bankruptcy
Court
for
Southern District of New York (the “Bankruptcy Court”).
the
See In
re Gen. Growth Props., Inc., No. 09–11977-alg (Bankr. S.D.N.Y.).
On September 25, 2009, the Bankruptcy Court issued an order
establishing
November
12,
2009
as
the
bar
date
for
Rouse’s
creditors to file a proof of claim against GGP/Rouse for any
claims arising prior to its April 16, 2009 bankruptcy petition
date (i.e., prepetition).
ECF No. 62.)
Neither Standard nor Reyes filed a proof of claim
by the bar date.
order
and
(See Rouse’s Mot. for Summ. J. Ex. 2,
The Bankruptcy Court subsequently issued an
notice
confirming
“Confirmation Order”).
Rouse’s
bankruptcy
plan
(the
The Confirmation Order discharged all
claims against Rouse arising prior to March 8, 2010 and enjoined
creditors
from
taking
any
including filing a lawsuit.
action
related
to
such
claims,
(See Rouse’s Mot. for Summ. J. Ex.
3, ECF Nos. 63, 64.)
On February 2, 2011, Rouse filed the present motion seeking
summary judgment against Standard’s claims.
Rouse asserts that
Standard is enjoined from pursuing these claims because they
were permanently discharged pursuant to the Bankruptcy Court’s
order confirming Rouse’s chapter 11 reorganization.
3
Standard
counters that its claims were not subject to the bar date or the
Confirmation Order because they had not arisen as of Rouse’s
bankruptcy petition date, but even if they had, they remain
valid because it did not receive adequate notice of the bar
date.
II.
Legal Standard
Summary judgment may be granted only where there are no
genuine issues of material fact. Dávila v. Corporación de P.R.
para la Difusión Pública, 498 F.3d 9, 12 (1st Cir. 2007).
There
is a genuine issue of material fact where “a reasonable jury
could resolve the point in favor of the nonmoving party” in a
way
that
would
be
outcome
determinative.
Velez-Rivera
v.
Agosto-Alicea, 437 F.3d 145, 150 (1st Cir. 2006) (quoting United
States v. One Parcel of Real Prop., 960 F.2d 200, 204 (1st Cir.
1992)).
III. Standard’s compliance with the Bankruptcy Court’s orders
The Bankruptcy Court’s bar date order established November
12, 2009 “as the last date and time” for Rouse’s creditors “to
file a proof of claim [] based on prepetition claims against
[Rouse].”
(Rouse’s Mot. for Summ. J. Ex. 2, at 1, ECF No. 62.).
“Under the Bankruptcy Code proof of claims must be presented to
the Bankruptcy Court for administration, or be lost when a plan
of reorganization is confirmed.”
4
NLRB v. Bildisco and Bildisco,
465
U.S.
513,
529,
(1984)
(addressing
a
Chapter
11
reorganization) (citing 11 U.S.C. §§ 501, 502 and 1141).
With
limited
exceptions,
confirmation
of
a
chapter
11
bankruptcy plan “discharges the debtor from any debt that arose
before
the
date
1141(d)(1)(A).
of
such
Under
confirmation.”
the
Bankruptcy
See
Code,
11
the
U.S.C.
term
§
“debt”
includes “liability on a claim,” 11 U.S.C. § 101(12), and a
“claim” is defined 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; or
(B)
right to an equitable remedy for breach of
performance if such breach gives rise to a right
to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed,
contingent,
matured,
unmatured,
disputed,
undisputed, secured or unsecured.
11 U.S.C. § 101(5).
In enacting this provision, “Congress gave
the
the
term
‘claim’
‘broadest
available
definition.’”
Rederford v. US Airways, Inc., 589 F.3d 30, 35-36 (1st Cir.
2009) (quoting F.C.C. v. NextWave Pers. Commc'ns, 537 U.S. 293,
302, (2003)).
The
Court
common-law
contribution
required
turns
first
to
indemnity
claims.
claim
not
under
Rhode
did
Island
Standard’s
Standard
exist
law,
5
it
contribution
asserts
prepetition
had
(and
and
that
its
because,
as
has)
not
been
adjudged a joint tortfeasor with Rouse nor discharged any shared
liability to Reyes.
(See Rouse’s Mem. in Supp. of Mot. for
Partial Summ. J. 7, ECF No. 73 (citing R.I. Gen. Laws § 10-64).)
Standard also asserts that its Rhode Island common-law
indemnification claim did not exist prepetition because “[a]t
the time of Rouse’s bankruptcy filing, there was no allegation
that
the
prospective
indemnitor,
Rouse,
prospective indemnitee, Standard.”
was
liable
to
the
(Id. at 7-8 (citing Wilson
v. Krasnoff, 560 A.2d 335, 341 (R.I. 1989); Hawkins v. Gadoury,
713 A.2d 799, 803 (R.I. 1998)).)
However,
Standard’s
arguments
seem
to
conflate
having
a
valid cause of action under Rhode Island law with the existence
of
a
“claim”
under
federal
bankruptcy
law.
It
is
well
established that “[t]he accrual of a cause of action under state
law does not determine when a claim arises under the Bankruptcy
Code
.
.
.
because
the
Code
defines
‘claim’
to
include
contingent and unmatured claims, which may not yet constitute a
cause of action under state law.”
In re Designer Doors, Inc.,
389 B.R. 832, 837-38 (Bankr. D. Ariz. 2008); see also Woburn
Assocs. v. Kahn (In re Hemingway Transport, Inc.), 954 F.2d 1, 9
n.9 (1st Cir. 1992) (collecting cases holding that Congress did
not
intend
Bankruptcy
Code
“claim
criteria
to
turn
on
the
peculiarities of state law, the timing of a lawsuit, or the
claimant’s
failure
to
anticipate
6
specific
future
contingencies”); In re M.A.S. Realty Corp., 318 B.R. 234, 237
(Bankr.
within
D.
the
Mass.
2004)
purview
of
(“Section
claim
a
101(5)
cause
of
expressly
action
or
included
right
to
payment that has not yet accrued or become cognizable.” (citing
Cool Fuel, Inc. v. Bd. of Equalization of Calif. (In re Cool
Fuel, Inc.), 210 F.3d 999, 1006 (9th Cir. 2000) (“It is wellestablished that a claim is ripe as an allowable claim in a
bankruptcy proceeding even if it is a cause of action that has
not yet accrued.”))); In re R.H. Macy & Co., 283 B.R. 140, 146
(S.D.N.Y. 2002) (“[A] creditor need not have a cause of action
that is ripe for suit outside of bankruptcy in order for it to
have a prepetition claim for purposes of the Bankruptcy Code.”)
(internal citation omitted).
Because Rouse owned when Reyes’ was injured, Standard, as
manager of the garage, received a “contingent” right to payment
for contribution and common-law indemnification the moment Reyes
served Standard with her negligence suit on April 9, 2009.
11
U.S.C. § 101(5)(A); see also Rederford, 589 F.3d at 36 (“[T]he
inclusion of contingent claims in § 101(5)(A), ensures that even
the
most
uncertain
adjudicated
in
the
citation omitted).
before
Rouse
contribution
and
bankruptcy
to
estimate
proceedings.”)
claims
can
(quotation
be
and
Standard was served approximately one week
petitioned
and
difficult
for
bankruptcy.
common-law
Thus,
indemnification
7
Standard’s
claims
arose
prepetition,
albeit
contingently,
within
the
meaning
of
11
U.S.C. § 101(5).
Standard’s
because
it
breach
presents
indemnification
of
a
claim
contract
twist
in
the
on
claim
the
is
a
bit
typical
bankruptcy
stickier
contractual
context,
where
a
debtor/indemnitor’s liability arises out of its refusal to pay
an indemnitee.
For instance, if the Management Agreement had
obligated Rouse to indemnify Standard directly, then Standard’s
breach
of
contract
prepetition.
claim
undoubtedly
would
be
considered
In re Hemingway, 954 F.2d at 9 n.9 (“When parties
agree in advance that one party will indemnify the other party
in the event of a certain occurrence,” a contingent right to
payment exists “upon the signing of the agreement.”) (quotation
and citation omitted).
debtor
(Rouse)
obligation
to
Here, however, the liability of the
arises
require
indemnitee (Standard).
from
a
the
breach
third-party
of
(Luke)
its
to
contractual
indemnify
the
The relevant question then is: at what
point in these circumstances, if at all, did Standard have a
contingent breach of contract claim against Rouse within the
meaning of the Bankruptcy Code?
As the First Circuit has not addressed this situation headon, this Court finds it useful to rely on the frequently invoked
analytical framework set forth in In re All Media Props., Inc.,
8
to assess when a contingent claim for breach of contract arises
under 11 U.S.C. § 101(5):
[contract] claims are contingent as to liability if
the debt is one which the debtor will be called upon
to pay only upon the occurrence or happening of an
extrinsic event which will trigger the liability of
the debtor to the alleged creditor and if such
triggering event or occurrence was one reasonably
contemplated by the debtor and creditor at the time
the event giving rise to the claim occurred.
5 B.R. 126, 133 (Bankr. S.D. Tex. 1980), aff'd mem., 646 F.2d
193 (5th Cir. Unit A May 1981), overruled in part on other
grounds by In re Trusted Net Media Holdings, LLC, 550 F.3d 1035
(11th Cir. 2008); accord First City Beaumont v. Durkay (In re
Ford), 967 F.2d 1047, 1051 (5th Cir. 1992) (quoting same); Semel
v. Dill (In re Dill), 731 F.2d 629, 631 (9th Cir. 1984) (quoting
same); B.D. Int’l Discount Corp. v. Chase Manhattan Bank, N.A.
(In re B.D. Int’l Discount Corp.), 701 F.2d 1071, 1073 n.2 (2nd
Cir. 1983) (quoting same).
The test essentially involves two
prongs: “the Court must determine first what event or series of
events ‘triggers’ this liability and then whether the occurrence
of that event either was or could fairly have been contemplated
by the parties before confirmation of the plan.”
In re CD
Realty Partners, 205 B.R. 651, 657 (Bankr. D. Mass. 1997).2
2
In an apparent reference to this test, Standard asserts
that its claim was “trigger[ed]” by its “discovery that Rouse
breached the Management Agreement” and implies that this
discovery occurred after the bar date. Standard’s Mem. in Opp.
to Mot. for Summ. J. 8, ECF No. 73).
Standard’s discovery of
9
As to what triggered liability for Standard’s breach of
contract
claim,
the
following
events
are
relevant:
(1)
the
execution of the Management Agreement in January 16, 2006; (2)
Rouse’s failure to require Luke to indemnify Standard upon the
execution of the June 8, 2008 Rouse-Luke Agreement; and (3) the
service of Reyes’ negligence suit upon Standard on April 9,
2008.
Each of these events occurred prepetition, or prior to
GGP/Rouse’s April 16, 2009 chapter 11 petition.
As to whether
these events “could fairly have been contemplated by the parties
before confirmation of the plan,” In re CD Realty Partners, 205
B.R.
at
Management
657,
the
Agreement
Court
concludes
obligating
so.
Rouse
to
On
its
require
face,
the
third-party
the breach is irrelevant to the issue of when a claim arises
under the Bankruptcy Code.
The In re All Media Props., Inc.
test makes clear that the events triggering liability must be
only “reasonably contemplated” by the parties in order to
constitute a contingent breach of contract claim under the
Bankruptcy Code. 5 B.R. 126, 133 (Bankr. S.D. Tex. 1980), aff'd
mem., 646 F.2d 193 (5th Cir. Unit A May 1981), overruled in part
on other grounds by In re Trusted Net Media Holdings, LLC, 550
F.3d 1035 (11th Cir. 2008); see also Boston & Maine Corp. v.
Mass. Bay Transp. Auth., 587 F.3d 89, 100 (1st Cir. 2009)
(holding in a bankruptcy case that “actual knowledge by the
creditor of the claim is not necessary” for “a contingent claim
to exist”).
Moreover, as Standard filed its third-party complaint
against Luke approximately six months before the bar date, it
had ample opportunity to discover the existence of the RouseLuke contract before the bar date. See Boston & Maine, 587 F.3d
at 101. (“A contingent claim . . . exists if sufficient
information was available to the prospective claimants that, if
sought out, would give the plaintiff constructive knowledge of
the claim . . . [the Bankruptcy Code] does not allow plaintiffs
to put on blinders or attempt an ‘ostrich defense.’” (citation
omitted)).
10
contractors to indemnify Standard contemplates liability arising
from the work of such third-party contractors.
Moreover, that
Rouse might breach the Management Agreement always remained a
possibility.
Pearl-Phil GMT (Far East) Ltd. v. Caldor Corp.,
266 B.R. 575, 580 (S.D.N.Y. 2001) (“Certainly the possibility of
a future breach is within the presumed contemplation of the
contracting parties.” (citing In re Russell, 193 B.R. 568, 571
(Bankr. S.D. Cal. 1996) (“It is within the fair contemplation of
the parties entering into a contract that the other party may
breach it, or [has] made representations to induce the making of
the contract.
Thus, a contingent claim arises at that point in
time, although it may never mature.”))).
Because the events triggering Standard’s breach of contract
claim against Rouse all arose prepetition and were well within
the
fair
contemplation
of
both
parties,
Standard
had
a
prepetition contingent breach of contract “claim” against Rouse,
within the meaning of 11 U.S.C. § 101(5).
In
finding
that
Standard’s
contribution,
common-law
indemnity and breach of contract claims arose prepetition, the
Court concludes that Standard was required to file proof of
these claims with the Bankruptcy Court by the bar date.
Since
it did not, and because its alternative notice argument fails,
see infra, Standard is permanently enjoined from pursuing these
pursuant
to
the
Bankruptcy
Court’s
11
Confirmation
Order.
See
Factors Funding, Inc. v. Fili (In re Fili), 257 B.R. 370, 373
(B.A.P. 1st Cir. 2001) (confirmation of a bankruptcy plan is a
“final order, with res judicata effect.”)
IV.
Notice
A claimant’s prepetition claim against a chapter 11 debtor
can survive the bankruptcy plan’s confirmation if the claimant
received
constitutionally
inadequate
notice
of
the
bar
date.
See generally Arch Wireless, Inc. v. Nationwide Paging, Inc. (In
re Arch Wireless, Inc.), 534 F.3d 76, 82-87 (1st Cir. 2008).
As
such, Standard argues that even if its claims arose prepetition,
they
were
not
discharged
by
the
Confirmation
Order
because
notice of the bar date was inadvertently sent to One Providence
Place instead of its correct address at Eleven Providence Place,
in Providence, Rhode Island.
undisputed
other
facts
offices
that
(1)
around
the
In response, Rouse highlights the
Standard
country,
received
notice
including
its
at
eight
corporate
headquarters, and (2) Standard implicitly acknowledged receipt
of notice when it filed a timely proof of claim against GGP for
an unrelated matter in the same bankruptcy proceedings.
(See
Rouse’s Statement of Undisputed Facts ¶¶ 17, 18, ECF No. 60.)3
3
Of course, a threshold matter in the bankruptcy notice
analysis is whether Standard was a known or unknown creditor.
However, the parties do not seem to dispute that Standard was a
known creditor (Standard’s Mem. in Opp. to Mot. for Summ. J. 10;
Rouse’s Reply 3, ECF 78), and the Court has no reason to believe
12
In the bankruptcy context, notice to a company’s branch or
division
generally
satisfies
the
notice for the entire company.
due
process
requirements
of
See, e.g., In re Frontzak, No.
08 B 8580, 2009 WL 4576040, at *3 (Bankr. N.D. Ill. Dec. 2,
2009) (finding notice properly served despite its receipt by the
wrong division of Wells Fargo bank, and stating “[f]or purposes
of due process, moreover, notice to one arm or division of a
business
entity
has
frequently
been
held
adequate
notice
to
another arm or division of the same entity”); In re Petroleum
Prod. Mgmt., Inc., 240 B.R. 407, 415 (Bankr. D. Kan. 1999) (“A
creditor who chooses to operate its business by dividing its
activities into various departments cannot shield itself against
notice properly sent to the creditor in its name and at its
place of business.”); Nat’l Union Fire Ins. Co. of Pittsburgh,
PA v. Broadhead, 155 B.R. 856, 858–59 (S.D.N.Y. 1993) (“There is
no
statutory
requirement,
however,
that
one
identify
specific division of a company on a bankruptcy notice.
it
required
by
due
process.
Once
delivered,
it
the
Nor is
is
the
responsibility of the creditor to distribute the notice to the
appropriate
party
within
its
organization.”);
In
re
Drexel
Burnham Lambert Group, Inc., 129 B.R. 22, 24 (Bankr. S.D.N.Y.
1991) (finding notice properly served on branch offices of a
otherwise as Rouse listed Standard in the schedule of creditors
it presented the Bankruptcy Court.
13
bank because the bank “bears responsibility for having adequate
systems
in
place
communications
empire”).
to
reach
ensure
the
that
legal
appropriate
notices
parts
of
and
its
other
business
Under the weight of this authority, due process was
satisfied upon Standard’s receipt of notice of the bar date at
eight
of
its
branch
offices,
including
its
corporate
headquarters.
V.
Conclusion
For
these
contribution,
reasons,
common-law
the
Court
indemnity,
holds
and
that
breach
Standard’s
of
contract
claims against Rouse were prepetition claims within the meaning
of 11 U.S.C. § 101(5) of the Bankruptcy Code.
Accordingly, the
claims have been discharged pursuant to the Bankruptcy Court’s
Confirmation
Order.
Rouse’s
motion
therefore GRANTED.
IT IS SO ORDERED.
/s/ William E. Smith
William E. Smith
United States District Judge
Date: June 14, 2011
14
for
summary
judgment
is
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