Meadows v. AMR Corp.

539 B.R. 246

Lawrence M. MEADOWS, Appellant

v.AMR CORPORATION, et al., Appellees.

No. 14 Civ. 8708PAC.

United States District Court, S.D. New York.

Signed Oct. 8, 2015.

Stephen Andrew Youngman, Weil, Gotshal & Manges LLP, Dallas, TX, for Appellee.

OPINION & ORDER

PAUL A. CROTTY, District Judge.

Pro se Appellant Lawrence Meadows appeals an order of the United States Bankruptcy Court for the Southern District of New York dated September 5, 2014, granting Debtor–Appellee AMR Corporation's (“AMR”) objections and disallowing as untimely three amended proofs of claim filed by Meadows. The Bankruptcy Court determined that the amended claims—filed eight, eighteen, and twenty months after the bar date—did not relate back to Meadows's sole timely proof of claim. The Bankruptcy Court's order is AFFIRMED.

BACKGROUND

Meadows was employed as a pilot for American Airlines (“American”), a subsidiary of AMR, beginning in the early 1990s. He received long-term disability benefits from American from 2004 through December 2007, when the benefits were terminated. In October 2011, Meadows's employment at American was terminated. Meadows's claims in AMR's bankruptcy proceeding relate to several proceedings and lawsuits that Meadows commenced in connection with the termination of his long-term disability benefits and his employment at American.

In July 2010, Meadows brought a lawsuit against American in the United States District Court for the Southern District of Florida seeking recovery of long-term disability benefits (the “ERISA Action”). See Meadows v. American Airlines, Inc., 10–cv–22175–CMA (S.D.Fla. July 1, 2010). In March 2011, the district court granted final summary judgment to American. See Meadows v. American Airlines, Inc., 2011 WL 1102774 (S.D.Fla. Mar. 24, 2011). The Eleventh Circuit affirmed. Meadows v. American Airlines, Inc., 520 Fed.Appx. 787 (11th Cir.2013).

In September 2011, Meadows filed a complaint under the Sarbanes–Oxley Act with the Occupational Safety and Health Administration (“OSHA”) alleging that American had retaliated against him for reporting corporate fraud by threatening to terminate his employment (the “SOX Action”). In December 2012, OSHA issued a determination that there was no reasonable cause to believe that American had violated the Sarbanes–Oxley Act and dismissed the complaint. Meadows appealed to the Office of Administrative Law Judges. That appeal was stayed pursuant to AMR's bankruptcy proceeding and is still pending.

In February 2012, Meadows initiated a grievance pursuant to the collective bargaining agreement between American and its pilots, designated Grievance 12–011, alleging that he was not properly notified of changes in his employment status or his termination. In his grievance filing, Meadows referenced the Americans with Disabilities Act and the SOX Action.

On November 29, 2011, AMR and its related debtor entities filed for chapter 11 bankruptcy. See In re AMR Corporation, 11–15463–shl (S.D.N.Y.Bankr.2011) ( “Bankr. Dkt.”). On May 4, 2012, the Bankruptcy Court entered an order setting July 16, 2012 as the deadline to file proofs of claims (the “Bar Date”). Bankr. Dkt. 2609. On March 20, 2012, Meadows filed Proof of Claim No. 1916 in the amount of $470,340, which consisted of a $338,900 priority claim and a $131,440 unsecured claim. The claim stated that it was for “pilot long-term disability payments”. No supporting documentation was included.

On July 13, 2012, the Allied Pilots Association (“APA”) timely filed Proof of Claim No. 8331 in the amount of $5,361 billion. The APA asserted that claim on behalf of itself and all affected individual member pilots (including Meadows) on account of alleged violations of the collective bargaining agreement. The APA claim included Meadows's Grievance 12–011. On December 19, 2012, the Bankruptcy Court issued an order approving a settlement between the APA and American that, among other things, extinguished nearly all pending grievances that the APA had on behalf of its pilots, including Grievance 12–011. Bankr. Dkt. 5800.

Meadows subsequently submitted three amendments to his original claim after the Bar Date. On March 11, 2013, eight months after the Bar Date, Meadows filed Amended Claim No. 13478, seeking “at least $5,000,000” attributed to “Pilot long term disability, EEOC charges including wrongful termination and discrimination, SOX claim, etc”. Meadows again asserted a $338,900 priority claim, with the balance as an unsecured claim. Meadows attached a list of pending proceedings and lawsuits from which he sought potential future recovery, including various EEOC charges, the SOX Action, and Grievance 12–011. On January 24, 2014, eighteen months after the Bar Date, Meadows filed Amended Claim No. 13788, That claim also sought at least $5 million, including a $338,900 priority claim, on essentially the same bases as the first amended claim. On March 5, 2014, twenty months after the Bar Date, Meadows filed Amended Claim No. 13865. That claim was also for $5 million, but entirely unsecured. The asserted bases were essentially the same as the prior two amended claims.

On October 21, 2013, the Bankruptcy Court issued an order confirming the debtors' Fourth Amended Joint Chapter 11 plan, which discharged all prepetition claims against the debtors except for those preserved by a properly filed proof of claim. Bankr. Dkt. 10367. On March 17, 2014, AMR filed objections to the three amended claims, arguing that Meadows's original claim (the ERISA Action in the Southern District of Florida) was fully litigated and resolved and that the amended claims were not timely and did not satisfy the relation-back requirements. Bankr. Dkt. 11840. The Bankruptcy Court heard objections on April 17, 2014, at which Meadows was represented by counsel. See Bankr. Dkt. 12012. On August 27, 2014, the Bankruptcy Court issued its ruling, granting AMR's objections and disallowing the three amended claims. Bankr. Dkt. 12266. On September 5, 2014, the court memorialized those rulings in its final order, Bankr. Dkt., 12258. On October 9, 2014, the Bankruptcy Court modified its ruling. Bankr. Dkt. 12288, The court determined that Meadows's original claim had been fully resolved in the Southern District of Florida ERISA Action and afterward by the Eleventh Circuit. Id. at 27. The amended claims did not relate back to the original claim because they asserted statutory claims well beyond the original claim for long-term disability benefits and asserted an amount over ten times the original claim. Id. The court also held that the amended claims should not be permitted based on excusable neglect. Id. at 32–33.

Meadows appealed in October 2014. He argues that the Bankruptcy Court erred in holding that the amended claims did not relate back to his original claim. Meadows also claims that the Bankruptcy Court improperly accepted statements made by counsel for the APA at the claim objection hearing, denied Meadows the opportunity to adequately rebut those statements, and improperly modified its final order in a manner that deprived Meadows of substantial rights. AMR responds that the Bankruptcy Court properly determined that the amended claims did not relate back to the original claim nor did it abuse its discretion in disallowing the amended claims.

DISCUSSION

I. Applicable Law

A. Appellate Standard of Review

United States District Courts have jurisdiction to hear appeals “from final judgments, orders, and decrees” of Bankruptcy Courts. 28 U.S.C. § 158(a)(1). “On appeal, the court may ‘affirm, modify, or reverse a bankruptcy judge's judgment, order, or decree or remand with instructions for further proceedings.’ ” In re DPH Holdings Corp., 468 B.R. 603, 611 (S.D.N.Y.2012) (quoting Fed. R. Bankr. P. 8013 ). Findings of fact are reviewed for clear error and legal conclusions are reviewed de novo. Id.

“[T]he decision to grant or deny an amendment to a timely filed proof of claim rests within the sound discretion of the bankruptcy judge.” In re Integrated Resources, Inc., 157 B.R. 66, 69 (S.D.N.Y.1993). Such decisions are reviewed for abuse of discretion, which occurs only when a court “applies legal standards incorrectly or relies upon clearly erroneous findings of fact, or proceeds on the basis of an erroneous view of the applicable law.” In re Harris, 464 F.3d 263, 268 (2d Cir.2006).

B. Relation–Back Standard

Courts employ a two-step inquiry to determine whether to permit late amendments to a timely filed proof of claim. First, the court determines if the amendment “relates back” to the original claim, which is met where the amendment “1) corrects a defect of form in the original claim; 2) describes the original claim with greater particularity; or 3) pleads a new theory of recovery on the facts set forth in the original claim.” In re Enron Corp., 419 F.3d 115, 133 (2d Cir.2005). If it does relate back, the court then “examine[s] each fact within the case and determine[s] whether it would be equitable to allow the amendment.” Id. To make this determination, the court considers whether the late claimant acted in good faith and can justify the delay, whether the opposing party would be unduly prejudiced by the amendment, and whether the creditors would receive a windfall from a disallowance. Id.

C. Excusable Neglect Standard

The court may also permit a late-filed claim if the delay was due to the claimant's “excusable neglect”. Id. at 121 (quoting Fed. R. Bankr. P. 9006(b)(1) ). The process to find excusable neglect is equitable in nature, taking into account “all of the relevant circumstances surrounding the party's omission”, including “[1] the danger of prejudice to the debtor, [2] the length of the delay and its potential impact on judicial proceedings, [3] the reason for the delay, including whether it was within the reasonable control of the movant, and [4] whether the movant acted in good faith,” Id. (quoting Pioneer Inv. Serv. Co. v. Brunswick Assoc. Ltd. P'ship, 507 U.S. 380, 395, 113 S.Ct....