UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

In Re:

Settlement Facility Dow Corning Trust,

Case No. 09-12418

Linda Gabriele Pagano,

Honorable Denise Page Hood

Claimant.

___________________________________________/

OPINION AND ORDER REGARDING LATE CLAIM REQUEST

and

ORDER FOR SUBMISSION OF SCHEDULING ORDER

I. BACKGROUND

Claimant Linda Gabriele Pagano seeks to submit a late claim before the Settlement

Facility–Dow Corning Trust (“SF-DCT”) pursuant to the Amended Joint Plan of Reorganization

(“Plan”) in the Dow Corning Corporation (“Dow Corning”) bankruptcy action. 

On December 12, 2007, the Court entered an Agreed Order Allowing Certain Late Claimants

Limited Rights to Participate in the Plan’s Settlement Facility (“Late Claim Agreed Order”) which

addressed the issue of claimants seeking to submit a late claim before the SF-DCT. The deadline

for filing a Proof of Claim in the bankruptcy action was January 15, 1997 (or February 14, 1997 for

foreign claimants) and for filing a Notice of Intent to participate before the SF-DCT was August 30,

2004. (6/22/2009 Second Stipulation and Order to Show Cause, p. 1, n. 1) The Claimants Advisory

Committee (“CAC”) and Dow Corning agreed that late claim requests dated after June 1, 2007 or

received by the Court after June 5, 2007 are presumptively without merit. (Late Claim Agreed

Order, ¶ 15) The CAC and Dow Corning agreed that any claimant filing a late claim request would

be required to show excusable neglect as to why the late claim request was submitted after June 1,

J:09-cv-12418-DPH Doc # 5 Filed 09/28/12 Pg 1 of 6 Pg ID 12
2

2007 or received by the Court after June 5, 2007. (Late Claim Agreed Order, ¶ 15)

After Dow Corning and the CAC reviewed Claimant’s late request, the Court, on June 22,

2009, entered a Second Stipulation and Order to Show Legal Support and Cause Why Request to

File a Late Claim in the Dow Corning Settlement Facility Should not be Dismissed. Dow Corning

and the CAC agree that the SF-DCT records show Claimant did not timely file a Proof of Claim

during the bankruptcy proceeding, did not timely submit a Notice of Intent to participate before the

SF-DCT, or otherwise submit a request to participate in the Dow Corning bankruptcy case prior to

June 2007. Claimant submitted a response to the Show Cause Order. The Court addresses the

Claimant’s reasons below.

II. ANALYSIS

Section 8.7 Amended Plan of Reorganization states that this Court retains jurisdiction to

resolve controversies and disputes regarding the interpretation and implementation of the Plan and

the Plan Documents, including the Settlement and Fund Distribution Agreement (“SFA”), and, to

enter orders regarding the Plan and Plan Documents. (Plan, §§ 8.7.3, 8.7.4, 8.7.5) The Plan

provides for the establishment of the SF-DCT, which is governed by the SFA. (Plan, § 1.131) The

SF-DCT was established to resolve Settling Personal Injury Claims in accordance with the Plan.

(Plan, § 2.01) The SFA and Annex A to the SFA establish the exclusive criteria by which such

claims are evaluated, liquidated, allowed and paid. (SFA, § 5.01) Resolution of the claims are

governed by the SFA and corresponding claims resolution procedures in Annex A. (SFA, § 4.01)

Generally, the provisions of a confirmed plan bind the debtor and any creditor. 11 U.S.C.

§ 1141(a); In re Adkins, 425 F.3d 296, 302 (6th Cir. 2005). Section 1127(b) is the sole means for

modification of a confirmed plan which provides that the proponent of a plan or the reorganized

J:09-cv-12418-DPH Doc # 5 Filed 09/28/12 Pg 2 of 6 Pg ID 13
3

debtor may modify such plan at any time after confirmation of such plan and before substantial

consummation of the plan. 11 U.S.C. § 1127(b). “In interpreting a confirmed plan courts use

contract principles, since the plan is effectively a new contract between the debtor and its creditors.”

In re Dow Corning Corporation, 456 F.3d 668, 676 (6th Cir. 2006); 11 U.S.C. § 1141(a). “An

agreed order, like a consent decree, is in the nature of a contract, and the interpretation of its terms

presents a question of contract interpretation.” City of Covington v. Covington Landing, Ltd. P’ship,

71 F.3d 1221, 1227 (6th Cir. 1995). A court construing an order consistent with the parties’

agreement does not exceed its power. Id. at 1228.

The Supreme Court in addressing a late claim filed beyond the deadline set forth in Bankr.

R. 3003 used the “excusable neglect” standard under Fed. R. Civ. P. Rule 60(b)(1) to determine

whether the Bankruptcy Court had the authority to enlarge time limitations under Bankr. R. 9006(b),

which is patterned after Fed. R. Civ. P. 6(b). The Supreme Court approved the following factors that

a court may consider in finding excusable neglect: 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. Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 395

(1993). The Supreme Court disapproved the allowance of a late claim based on the omissions of

an attorney. Id. at 396. The Supreme Court noted that “clients must be held accountable for the acts

and omissions of their attorneys.” Id. at 396. A client, having chosen a particular attorney to

represent him in a proceeding, cannot “avoid the consequences of the acts or omissions of this freely

selected agent,” and that “[a]ny other notion would be wholly inconsistent with our system of

representative litigation, in which each party is deemed bound by the acts of his lawyer-agent and

J:09-cv-12418-DPH Doc # 5 Filed 09/28/12 Pg 3 of 6 Pg ID 14
4

is considered to have notice of all facts, notice of which can be charged upon the attorney.” Id. at

397. In assessing a claim of excusable neglect, “the proper focus is upon whether the neglect of [the

parties] and their counsel was excusable.” Id. (emphasis in original). An attorney or pro se

litigant’s failure to timely meet a deadline because of “[i]nadvertence, ignorance of the rules, or

mistakes construing the rules do not usually constitute ‘excusable neglect.’” Id. at 392; Rose v. Dole,

945 F.2d 1331, 1335 (6th Cir. 1991). Equitable tolling, although applied sparingly, has been

allowed where a claimant has actively pursued judicial remedies by filing a defective pleading

during the statutory period or where the complainant has been induced or tricked by an adversary’s

misconduct into allowing the filing deadline to pass. Irwin v. Dep’t of Veterans Affairs, 489 U.S.

89, 96 (1990). Courts have been less forgiving in receiving late filings where the claimant failed

to exercise due diligence in preserving his or her legal rights. Id.

Addressing the prejudice to the debtor (here, reorganized debtor) factor, the Court finds that

allowing this one claim to proceed against the SF-DCT would not greatly prejudice the assets under

the Plan. However, the history of this bankruptcy action and the post-confirmation bankruptcy

proceeding, show that numerous claimants have sought to participate in the settlement program

before the SF-DCT. The settlement fund is a capped fund over a limited time period. Allowing this

one claim would result in disparate treatment of other claimants who timely submitted their claims

before the SF-DCT. If the Court were to allow late claimants to proceed, this would result in

substantial costs in terms of claim payments and administrative expenses. The funds to be used to

pay out these claims and the administrative costs involved in processing these claims would

significantly impact the funds available to the SF-DCT and to the claimants who timely filed their

claims. The SF-DCT and Dow Corning would be prejudiced if this and other claims are allowed

J:09-cv-12418-DPH Doc # 5 Filed 09/28/12 Pg 4 of 6 Pg ID 15
5

to proceed before the SF-DCT. This factor weighs in the reorganized debtor’s favor.

As to the delay and potential impact on the proceedings factor, again, allowing one claim to

go forward may not further delay the administration of the Plan since claims are currently being

considered by the SF-DCT. However, allowing this claim, along with other claims would further

delay the administration of the Plan. Reviewing late claimants’ medical records relating to their

claims requires significant time by the claim reviewers and would impact review of timely claims

currently before the SF-DCT. This factor weighs in the reorganized debtor’s favor.

Regarding the reason for the delay factor, Claimant asserts that her reason for the late filing

is that she thought she was going to die in 2008 because of her lung cancer. She suffered a mini

stroke in May 2008 and suffers from many ailments. Claimant asserts that it did not cross her mind

that these ailments were a result of her implants until recently. Both of her implants have been

removed and were raptured beyond recognition. She claims that her mother has died and her

husband was hospitalized for kidney failure. Claimant was consumed by grief, stress and illness and

thought she was going to die. Based on Claimant’s stated reasons, the reason for delay factor weighs

in Claimant’s favor.

There has been no showing of bad faith by the Claimant and this factor weighs in her favor.

Weighing the factors noted above, the Court finds Claimant has shown excusable neglect as

to why her late claim should be allowed to be litigated. The Court will allow the late claim to go

forward and that the parties must submit a scheduling order for the resolution of the late claim

request within 30 days from the date of this Order. (Second Stipulation and Order to Show Cause,

¶ 5)

III. CONCLUSION

J:09-cv-12418-DPH Doc # 5 Filed 09/28/12 Pg 5 of 6 Pg ID 16
6

Accordingly, for the reasons set forth above,

IT IS ORDERED that Claimant Linda Gabriele Pagano’s request to submit a late claim (Doc.

No. 1) is GRANTED for further litigation or resolution. The parties must submit a scheduling order

for the resolution of the late claim request within 30 days from the date of this Order

 /s/ Denise Page Hood 

DENISE PAGE HOOD

United States District Judge

DATED: September 28, 2012

CERTIFICATE OF SERVICE/MAILING

I certify that a copy of this document was served on this date electronically or by ordinary mail to

all parties in interest.

Date: September 28, 2012 /s/ Sarah Schoenherr 

Deputy Clerk (313) 234-5090

J:09-cv-12418-DPH Doc # 5 Filed 09/28/12 Pg 6 of 6 Pg ID 17