1995 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

12-18-1995

Chemetron Corp. v. Jones

Precedential or Non-Precedential:

Docket 94-3371

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Recommended Citation

"Chemetron Corp. v. Jones" (1995). 1995 Decisions. Paper 310.

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1 
2 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

 

No. 94-3371 

 

CHEMETRON CORPORATION 

v. 

PHYLLIS JASKEY JONES; PAMELA JO SWANSINGER; 

SANDRA JASKEY HUJARSKI; PATRICIA HUJARSKI; 

TERESA HUJARSKI ROSS; JANICE JASKEY BUTVIN; 

FRANK BUTVIN; ROBERT BUTVIN; BRIAN BUTVIN; 

SUSAN BUTVIN; WALTER ANIELSKI; ARLENE VANS; 

YVONNE VANS BEKOSCKE; ANTHONY VANS; GREGORY 

VANS; CAROL SCHULTZ; MARY SHAFFER; BRITTANY 

CULL; STEPHANIE SCHAFFER, 

 Appellants. 

 

On Appeal from the United States District Court 

for the Western District of Pennsylvania 

(D.C. Civil Action No. 93-cv-01582) 

 

 Argued February 3, 1995 

 Before: SCIRICA, ROTH and SAROKIN, Circuit Judges

(Opinion Filed December 18, 1995) 

 

William Mitchell, Esq. (Argued) 

Deborah J. Papushak, Esq. 

Armstrong, Mitchell & Damiani 

1725 The Midland Building 

101 Prospect Avenue, West 

Cleveland, Ohio 44115-1091 

 Attorneys for Appellants 
3 

 

Dennis G. Terez Esq. (Argued) 

Squire, Sanders & Dempsey 

4900 Society Center 

127 Public Square 

Cleveland, Ohio 44114-1304 

George L. Cass, Esq. 

Buchanan, Ingersoll, Professional Corporation 

5800 USX Tower 

600 Grant Street 

Pittsburgh, PA 15219-2887 

 Attorneys for Appellee 

 

OPINION OF THE COURT 

 

ROTH, Circuit Judge: 

 In this appeal, we consider whether a group of former 

residents and occasional visitors to a neighborhood containing a 

toxic site were "known" creditors entitled to actual written 

notice of the debtor's bankruptcy filing and bar claims date. We 

hold that the members of this group were not known creditors and 

that therefore publication notice satisfied the requirements of 

due process. However, we also conclude that the district court 

failed to adequately consider whether the group's late filing was 

due to "excusable neglect" and that the district court improperly 

reached the issue of whether their claims had been discharged. 

Accordingly, we will affirm the district court's finding that 
3 

notice was sufficient but reverse its findings on excusable 

neglect and discharge. 

I. 

 Beginning in 1965, appellee Chemetron Corporation 

("Chemetron") owned and operated a manufacturing facility on 

Harvard Avenue in Cuyahoga Heights, Ohio, as well as a nearby 

landfill on Bert Avenue in Newburgh Heights, Ohio. From 1965 to 

1972, Chemetron manufactured an antimony oxide catalyst at the 

Harvard Avenue facility in a process that utilized depleted 

uranium. After catalyst production ceased in 1972, a portion of 

the Harvard Avenue facility was demolished. In 1975, Chemetron 

placed a quantity of rubble from the Harvard Avenue demolition in 

the Bert Avenue landfill. Later in 1975, Chemetron sold both 

sites to McGean Chemical Company. McGean Chemical Co. 

subsequently merged with Rohco, Inc., to become McGean-Rohco, 

Inc., the current owner of both sites. 

 Beginning in 1980, potential problems at the sites 

received significant attention from major newspapers in the 

Cleveland area. On July 8, 1980, the Cleveland Press reported on 

radiation levels at a site "near Harvard Avenue" in Newburgh 

Heights. On July 9, 1980, the Cleveland Plain Dealer published a 

similar article. Related articles appeared in The Plain Dealer

on September 5 and September 12. On September 23, 1990, The 

Plain Dealer ran a front-page article on "Cuyahoga County's only 

known radioactive dump." App. at 289-95. The September 23 

article quoted Phyllis Jones, the lead plaintiff in this case, 

discussing problems at the sites. Id. at 295. 
4 

 Between 1980 and 1988, Chemetron was involved in

 periodic clean-up efforts at both sites at the 

direction of Nuclear Regulatory Commission. The efficacy of 

these efforts remains dubious. 

 On February 20, 1988, Chemetron and other debtors filed 

a joint petition for reorganization under Chapter 11 of the 

Bankruptcy Code in the Bankruptcy Court for the Western District 

of Pennsylvania. Following Bankruptcy Rule 3003(c)(3), the 

bankruptcy court issued a bar date order, fixing the bar claims 

date at May 31, 1988. Stated simply, under bankruptcy law, the 

bar claims date is the last day on which existing claims can be 

filed against the debtor. See discussion Part III, infra. 

 The bar date order required that actual notice be 

provided to all persons known to have claims against the debtors. 

The order required notice to all other claimants by publication 

in the national editions of the New York Times and Wall Street 

Journal. It is undisputed that the debtors complied with the 

order and, in addition, voluntarily published notice in seven 

other newspapers in areas where they were doing business at the 

time of the filing. On July 12, 1990, the bankruptcy court 

confirmed Chemetron's reorganization plan. 

 On March 2, 1992, almost four years after the bar 

claims date, twelve years after the first newspaper articles 

detailing problems at the sites, and two years after her comments 

in The Plain Dealer's front page article, Phyllis Jones and 

fourteen other individuals brought suit against Chemetron, McGean 

Chemical Co., and McGean-Rohco, Inc., in the Court of Common 
5 

Pleas of Cuyahoga County, Ohio. The suit was later amended to 

name a total of twenty-one plaintiffs. The gravamen of the 

complaint alleged injury from exposure to toxic chemicals as a 

result of time spent in the Bert Avenue area. 

 Plaintiffs' ties to the Bert Avenue area centered 

around visits to or occupancy of two houses in the vicinity. Only 

two members of the group actually occupied the properties during 

the period from 1965-1975 when Chemetron owned the sites. The 

other members of the group visited the properties periodically, 

ranging from "several times per week," App. at 8, to "weekly," 

App. at 14, to "monthly," App. at 16, to "occasional" visits, 

App. at 9. The record indicates that the visits stopped in 1985, 

three years prior to Chemetron's bankruptcy petition. None of 

the plaintiffs currently resides near either site. Sixteen of 

the plaintiffs still reside in Ohio. Five of the plaintiffs live 

in Texas. 

 In the state court action, Chemetron moved to dismiss 

the suit, arguing that any such claim had been discharged in 

bankruptcy. The plaintiffs responded by seeking permission from 

the bankruptcy court to file late claims. By separate motion, 

plaintiffs sought a declaration from the bankruptcy court that 

their claims had not been discharged by the reorganization plan. 

This second motion was converted to an adversary proceeding. 

 On August 2, 1993, the bankruptcy court granted the 

motion to file late claims, finding that plaintiffs were known 

creditors entitled to actual notice of the bankruptcy proceeding 

and bar claims date. The bankruptcy court also, sua sponte, 
6 

permitted the plaintiffs to proceed against Chemetron in the Ohio 

lawsuit and dismissed without prejudice the adversary proceeding. 

 Chemetron appealed to the district court, which 

reversed the grant of the motion to file late claims. The 

district court held that plaintiffs were not known creditors and 

that publication notice was sufficient. The district court then 

concluded, without explanation, that plaintiffs' "claims were 

dischargeable and were discharged." Chemetron v. Jones (In re 

Allegheny Int'l), 170 B.R. 83, 90 (W.D. Pa. 1994). This appeal 

followed. 

II. 

 Jurisdiction in this appeal is proper pursuant to 28 

U.S.C. § 158(d). We review the bankruptcy court's findings of 

fact for clear error, the same standard of review used by the 

district court. See Universal Minerals, Inc. v. C.A. Hughes & 

Co., 669 F.2d 98, 101-02 (3d Cir. 1981). When reviewing mixed 

questions of law and fact, we exercise plenary review over the 

bankruptcy court's choice, interpretation, and application of the 

underlying rule of law. See Mellon Bank, N.A. v. Metro 

Communications, Inc., 945 F.2d 635, 642 (3d Cir. 1991), cert. 

denied, 503 U.S. 937 (1992). 

III. 

 The central issue before us is whether plaintiffs were 

"known" or "unknown" claimants at the time of the bankruptcy 

court's order. If claimants were "known" creditors, then due 

process entitled them to actual notice of the bankruptcy 

proceedings. Absent such notice, their suit may proceed. If 
7 

claimants were "unknown" creditors, however, then notice by 

publication was sufficient to satisfy the requirements of due 

process and their claims are barred, absent some other basis for 

relief. We hold that the claimants in the instant case were 

"unknown" creditors. 

 Our inquiry is guided by one of the principal purposes 

of bankruptcy law, to secure within a limited period the prompt 

and effectual administration and settlement of the debtor's 

estate. Katchen v. Landy, 382 U.S. 323, 328 (1966). To this 

end, Bankruptcy Rule 3003(c) requires that claimants against an 

estate in bankruptcy under Chapter 11 file timely proofs of claim 

in order to participate in a reorganization. Under Rule 

3003(c)(3), these proofs of claim must be filed prior to a bar 

date established by the bankruptcy court. After the passage of 

the bar claims date, a claimant cannot participate in the 

reorganization unless she establishes sufficient grounds for the 

failure to file a proof of claim. See In re Best Products Co., 

140 B.R. 353, 357 (Bankr. S.D.N.Y. 1992). Except for narrow 

statutory exceptions not relevant here, confirmation of the 

debtor's reorganization plan discharges all prior claims against 

the debtor. 11 U.S.C. § 1141; Charter Crude Oil Co. v. Petroleos 

Mexicanos (In re Charter Co.), 125 B.R. 650, 654 (M.D. Fla. 

1991). 

 Inadequate notice is a defect which precludes discharge 

of a claim in bankruptcy. Due process requires notice that is 

"reasonably calculated to reach all interested parties, 

reasonably conveys all the required information, and permits a 
8 

reasonable time for a response." Greyhound Lines, Inc. v. Rogers 

(In re Eagle Bus Mfg., Inc.), 62 F.3d 730, 735 (5th Cir. 1995) 

(citation omitted). For notice purposes, bankruptcy law divides 

claimants into two types, "known" and "unknown." In re Charter 

Co., 125 B.R. 650, 654 (M.D. Fla. 1991). Known creditors must be 

provided with actual written notice of a debtor's bankruptcy 

filing and bar claims date. City of New York v. New York, N. H. 

& H. R. Co., 344 U.S. 293, 296 (1953). For unknown claimants, 

notification by publication will generally suffice. See In re 

Argonaut Fin. Serv., Inc., 164 B.R. 107, 112 (N.D. Cal. 1994); In 

re Thomas McKinnon Sec., Inc., 130 B.R. 717, 719-20 (Bankr. 

S.D.N.Y. 1991). 

 As characterized by the Supreme Court, a "known" 

creditor is one whose identity is either known or "reasonably 

ascertainable by the debtor." Tulsa Professional Collection 

Serv., Inc. v. Pope, 485 U.S. 478, 490 (1988). An "unknown" 

creditor is one whose "interests are either conjectural or future 

or, although they could be discovered upon investigation, do not 

in due course of business come to knowledge [of the debtor]." 

Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 317 

(1950).1

 

1 Although Mullane involved the notice due beneficiaries 

on judicial settlement of accounts by the trustee of a common 

trust fund, subsequent courts have interpreted the case to set 

the standard for notice required under the Due Process Clause in 

Chapter 11 bar date cases. See In re Pettibone Corp., 162 B.R. 

791, 806 (Bankr. N.D. Ill. 1994); In re R.H. Macy & Co., 161 B.R. 

355, 359 (Bankr. S.D.N.Y. 1993). 
9 

 A creditor's identity is "reasonably ascertainable" if 

that creditor can be identified through "reasonably diligent 

efforts." Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 798 

n.4 (1983). Reasonable diligence does not require "impracticable 

and extended searches . . . in the name of due process." Mullane, 

339 U.S. at 317. A debtor does not have a "duty to search out 

each conceivable or possible creditor and urge that person or 

entity to make a claim against it." In re Charter Co., 125 B.R. 

650, 654 (M.D. Fla. 1991). 

 Precedent demonstrates that what is required is not a 

vast, open-ended investigation. See Mullane, 339 U.S. at 317 

("Nor do we consider it unreasonable for the State to dispense 

with more certain notice to those beneficiaries whose interests 

are either conjectural or future or, although they could be 

discovered upon investigation, do not in due course of business 

come to knowledge of the common trustee."); see also Trump Taj 

Mahal Assocs. v. O'Hara (In re Trump Taj Mahal Assocs.), 1993 

U.S. Dist. LEXIS 17827 at *9 (D.N.J. Dec. 13, 1993) (explaining 

that "those creditors who hold only conceivable, conjectural or 

speculative claims" are unknown). The requisite search instead 

focuses on the debtor's own books and records. Efforts beyond a 

careful examination of these documents are generally not 

required.2 Only those claimants who are identifiable through a 

 

2 Although some courts have held, regardless of the 

circumstances, that the "reasonably ascertainable" standard 

requires only an examination of the debtor's books and records, 

without an analysis of the specific facts of each case, see

e.g., In Re Best Products Co., l40 B.R. 353, 358 (Bankr. S.D.N.Y. 

l992); In re Texaco, Inc., l82 B.R. 937, 955 (Bankr. S.D.N.Y. 
10 

diligent search are "reasonably ascertainable" and hence "known" 

creditors. 

 In the instant case, the bankruptcy court failed to 

apply the "reasonably ascertainable" standard. It instead 

crafted a "reasonably foreseeable" test from dictum in In re 

Brooks Fashion Stores, Inc., 124 B.R. 436 (Bankr. S.D.N.Y. 1991). 

In applying this test, the bankruptcy court found that "Chemetron 

knew or should have known that it was reasonably foreseeable that 

it could suffer claims from individuals living near the Bert 

Avenue Dump. . . ." It therefore found that claimants were known 

creditors. 

 We hold that in substituting a broad "reasonably 

foreseeable" test for the "reasonably ascertainable" standard, 

the bankruptcy court applied an incorrect rule of law. This 

constitutes clear error. The bankruptcy court's expansive test 

departed from established rules of law and produced a result in 

conflict with other decisions. See In re New York Trap Rock 

Corp., 153 B.R. 642, 646 (Bankr. S.D.N.Y. 1993) (holding 

government agency that failed to file claim for environmental 

cleanup to be an "unknown creditor" even where debtor had entered 

real estate contract with another agency of same governmental 

 

l995), we do not construe it so narrowly. Situations may arise 

when creditors are "reasonably ascertainable," although not 

identifiable through the debtor's books and records. See, e.g., 

Tulsa Professional Collection Serv., Inc. v. Pope, 485 U.S. at 

49l (hospital's claim against deceased patient's estate possibly 

reasonably ascertainable). We need not address this possibility 

precisely, because, as we discuss, plantiffs' claims in this case 

are so speculative that the identities of the plaintiffs could 

not be ascertained with "reasonably diligent efforts." 

Mennonite, 462 U.S. at 798, n.4. 
11 

entity); see also In re Trans World Airlines, Inc., 182 B.R. 102, 

106 (D. Del. 1995) (holding claim unknown where plaintiffs had 

not filed suit until one year after bar claims date); In re 

Texaco Inc., 182 B.R. 937, 954-55 (Bankr. S.D.N.Y. 1995) (holding 

claim unknown where owners of adjacent land filed environmental 

action after bar claims date); In re Hunt, 146 B.R. 178, 182 

(Bankr. N.D. Tex. 1992) (holding claims unknown where plaintiffs 

filed state court suit and counterclaim after bar claims date). 

Even if we were writing on a blank slate, we would reject the 

bankruptcy court's expansive standard. Put simply, such a test 

would place an impossible burden on debtors. 

 A review of the facts in the case at bar reveals why 

the bankruptcy court's standard should not be followed. None of 

the claimants involved currently resides near either site. The 

claimants instead are scattered across Ohio and as far away as 

Texas. We are hard-pressed to conceive of any way the debtor 

could identify, locate, and provide actual notice to these 

claimants. 

 It has been suggested that Chemetron could have 

conducted a title search on all properties surrounding the sites 

to determine all persons who might have lived in the area during 

the twenty years between Chemetron's operation of the sites and 

the Chapter 11 proceeding. We decline to chart a jurisprudential 

course through a Scylla of causational difficulties and a 

Charybdis of practical concerns. 

 The causational difficulties are manifold and apparent. 

Under the bankruptcy court's rule, the debtor would have to 
12 

notify all reasonably foreseeable claimants, a determination that 

would rise and fall on potentially attenuated and certainly 

ambiguous causal nexi. At the most basic level, it remains 

unclear in the instant case what geographic area might be 

affected and hence how great an expanse the debtor's title search 

need cover. There is no indication whether a sufficient search 

would address properties one mile from the sites or one hundred 

miles away. The geographic area would presumably be affected by 

the potential for contaminant migration by air, water, or other 

carrier, further expanding the necessary notification area. Nor 

is the temporal dimension any more defined. With lingering 

contaminants and slow rates of decay, there would be no reason to 

limit future debtors to searching only for those exposed during 

their periods of ownership. And while we might be urged to bring 

these determinations under Mullane's "reasonably calculated under 

the circumstances" umbrella, 339 U.S. at 314, we hesitate to 

thrust the judiciary into a domain where decisions turn on rarely 

pellucid and often disputed scientific studies, requiring 

different varieties of technical expertise from case to case. In 

light of these problems of causation, the bankruptcy court's rule 

is unworkable. 

 We also anticipate grave practical difficulties with 

the bankruptcy court's broad notice requirement. Even if 

Chemetron had been required to search all potentially relevant 

title documents, its efforts would have come to no avail in this 

case. The vast majority of the claimants involved here were not 

property owners, but guests. No title search could reveal the 
13 

identity of claimants who merely visited houses in the vicinity 

of the sites at some point in the distant past, and we decline to 

impose any Orwellian monitoring requirements on Chemetron and 

similarly situated corporations. Moreover, as demonstrated by 

the claimants here, debtors also face the problem of identifying 

all individuals whose parents might have lived in or visited 

houses in the vicinity of the site. And the problems of 

ascertaining, let alone notifying, all such persons implicate yet 

again all the difficulties of causation previously discussed. 

 Such an investigation, which would be required by the 

bankruptcy court's finding that claimants are known creditors, 

clearly contradicts both the caselaw cited above and common 

sense. Creditors cannot be required to provide actual notice to 

anyone who potentially could have been affected by their actions; 

such a requirement would completely vitiate the important goal of 

prompt and effectual administration and settlement of debtors' 

estates. We reject the "reasonably foreseeable" test and follow 

the "reasonably ascertainable" standard. 

 In reaching this result, we are not unsympathetic to 

the alleged injury suffered by the claimants in this case. We 

stress that our holding addresses the burden placed on the 

bankruptcy debtor to provide actual notice to potential 

claimants, not the merits of a timely and properly filed tort 

suit. Where a debtor has sought the protection of bankruptcy 

law, however, procedural protections such as the bar claims date 

apply. These provisions cannot be circumvented by forcing 

debtors to anticipate speculative suits based on lengthy chains 
14 

of causation. Accordingly, the bankruptcy court erred in finding 

that the claimants in this case were "known" creditors, and the 

district court's decision reversing the bankruptcy court on this 

finding will therefore be affirmed. 

IV. 

 Having held that claimants were "unknown" creditors, we 

have little difficulty holding that the notice which Chemetron 

published in the New York Times and the Wall Street Journal was 

sufficient. It is well established that, in providing notice to 

unknown creditors, constructive notice of the bar claims date by 

publication satisfies the requirements of due process. New York, 

344 U.S. at 296. Such notice must be "reasonably calculated, 

under the circumstances, to apprise interested parties of the 

pendency of the action and afford them an opportunity to present 

their objections." Mullane, 339 U.S. at 314. We find that 

Chemetron's notice met this standard. 

 Claimants argue that, given Chemetron's ongoing 

difficulties in cleaning up the Cleveland area sites as well as 

Chemetron's knowledge of the hazardous materials deposited there, 

Chemetron should have published notice in a Cleveland area paper. 

This argument fails. 

 "It is impracticable . . . to expect a debtor to 

publish notice in every newspaper a possible unknown creditor may 

read." Best Products, 140 B.R. at 358. Publication in national 

newspapers is regularly deemed sufficient notice to unknown 

creditors, especially where supplemented, as here, with notice in 

papers of general circulation in locations where the debtor is 
15 

conducting business. See, e.g., Brown v. Seaman Furniture Co., 

171 B.R. 26 (E.D. Pa. 1994) (holding publication in local and 

national editions of the New York Times sufficient notice to 

claimant in Pennsylvania); In re Chicago, Milwaukee, St. Paul & 

Pacific R.R. Co., 112 B.R. 920 (N.D. Ill. 1990) (holding 

publication notice in the Wall Street Journal adequate under 

bankruptcy law); Wright v. Placid Oil Co., 107 B.R. 104 (N.D. 

Tex. 1989) (holding publication in The Wall Street Journal

sufficient notice to unknown creditor injured in Louisiana). 

Furthermore, claimants' argument is undermined by the fact that 

none of the claimants resided near the Cleveland sites at the 

time of the publication notice. Even publication in a Cleveland 

newspaper would not have reached the claimants currently residing 

in Texas or any other potential claimants who had moved away from 

Cleveland. 

 Because Chemetron's publication notice was reasonably 

designed to reach all interested parties, the district court's 

finding that the notice was sufficient to apprise unknown parties 

of the claims bar date is affirmed. 

V. 

 Although we find little merit in claimants' notice 

arguments, we believe their claim of "excusable neglect" received 

inadequate consideration. Bankruptcy Rule 9006(b)(1) empowers a 

bankruptcy court to permit a creditor to file a late claim if the 

movant's failure to comply with an earlier deadline "was the 

result of excusable neglect." See Pioneer Inv. Serv. Co. v. 

Brunswick Assocs. Ltd. Partnership, ___ U.S. ___, ___, 113 S. Ct. 
16 

1489, 1491-92 (1993). In the instant case, because claimants are 

unknown creditors and Chemetron's publication notice was 

sufficient, claimants must show that their failure to file in a 

timely manner was due to "excusable neglect;" otherwise, their 

claims arising pre-petition will be barred. See Best Products, 

140 B.R. at 359. 

 The determination whether a party's neglect of a bar 

date is "excusable" is essentially an equitable one, in which 

courts are to take into account all relevant circumstances 

surrounding a party's failure to file. See Pioneer, 113 S. Ct. 

at 1498. The considerations to be weighed include: 

the danger of prejudice to the debtor, the length of 

the delay and its potential impact on judicial 

proceedings, the reason for the delay, including 

whether it was within the reasonable control of the 

movant, and whether the movant acted in good faith. 

Id.

3

 The bankruptcy court, in considering whether claimants 

should be permitted to file a late claim under the totality of 

the circumstances, wrote: 

 

3 As the district court properly noted, it is unsettled 

whether "excusable neglect remains a viable defense for filing a 

late proof of claim when the claimant is entitled to only 

publication notice." Chemetron, 170 B.R. at 89 (citing Trump Taj 

Mahal Assocs. v. O'Hara (In re Trump Taj Mahal Assocs.), 1993 

U.S. Dist. LEXIS 17827 at *18 n.7 (D.N.J. Dec. 13, 1993)). 

 Under Bankruptcy Rule 9006(b), which allows the 

bankruptcy court to permit a late filing in cases of "excusable 

neglect," no differentiation is made between known and unknown 

creditors. Accordingly, claimants are not foreclosed from 

pursuing an "excusable neglect" defense in the instant matter. 
17 

This court's understanding of In re Remington Rand is 

that acting promptly and diligently is but one factor 

when a court is considering the totality of the 

circumstances. The court finds that [claimants], while 

not acting very promptly or diligently, were not so 

sluggish as to outweigh the fact that Chemetron did not 

provide reasonably calculated notice to alert 

[claimants] of the bankruptcy proceedings and the 

claims Bar Date. Therefore, the totality of the 

circumstances dictate that [claimants] are entitled to 

file a late claim. 

Jones v. Chemetron Corp. (In re Allegheny Int'l, Inc.), Ch. 11 

Case No. 88-00448 JLC, Adv. No. 92-2418, slip op. at 11 (Bankr. 

W.D. Pa. July 24, 1993). This analysis failed to adequately 

consider the totality of the circumstances presented. Not only 

was the bankruptcy court incorrect in its assumption that 

claimants were known creditors entitled to actual notice, but the 

court failed to make additional relevant factual findings, 

including the danger of prejudice to the debtor, the length of 

the delay and its potential impact on judicial proceedings, the 

reason for the delay, and whether the movant acted in good faith. 

 On appeal, the district court undertook its own review 

of the record to determine whether the totality of the 

circumstances supported claimants' filing of late claims. The 

district court wrote: 

We agree with the Bankruptcy Court that [claimants] did 

not act promptly or diligently. Their motion to file a 

late claim occurred more than four years after the bar 

date, two years after the Plan of Reorganization had 

been confirmed and twelve years after media and 

neighborhood attention first focused on the hazardous 

substances at the Bert Avenue Site. That [claimants] 

were allegedly unaware of their claims does not 

constitute excusable neglect. To permit [claimants] to 

file a late claim would prejudice Chemetron by denying 

a "fresh start" to which it is entitled. We conclude 
18 

that the totality of the circumstances weighs heavily 

against late filing of [claimants'] claims. 

Chemetron, 170 B.R. at 89-90 (citations omitted). 

 Although the totality of the circumstances analysis 

conducted by the district court was more appropriate than that 

conducted by the bankruptcy court, the district court's analysis 

also fell short of that required under Pioneer. The district 

court failed to undertake a comprehensive analysis of how the 

claimants' late filing would prejudice Chemetron, and also failed 

to consider the role that Chemetron might have played in 

contributing to the delay. Accordingly, we remand this issue to 

the bankruptcy court, with directions that the bankruptcy court 

undertake a more comprehensive and thorough determination of 

whether the totality of the circumstances support claimants' 

defense of "excusable neglect." 

VI. 

 Finally, we disagree with the district court's 

treatment of the discharge issue. In the final paragraph of its 

memorandum and order, the district court concluded that the 

instant claims "were dischargeable and were discharged." 

Chemetron, 170 B.R. at 90. The bankruptcy court, however, had 

declined to reach the issue of discharge, deciding instead to 

dismiss claimants' adversary proceeding without prejudice. In 

fact, the district court itself noted that "[t]he Bankruptcy 

Court reserved ruling on the issue whether Appellants' claims are 

discharged in light of the permission to file the late claims." 
19 

Id. at 86. We hold that the district court improperly reached 

the issue of discharge. 

 Chemetron contends that the issue of discharge was 

properly before the district court because Chemetron, in its 

notice of appeal to the district court, expressly appealed from 

the memorandum opinion and final order of the bankruptcy court in 

both the Chapter 11 proceeding and "the related Adversary 

Proceeding." This reference to the adversary proceeding, 

however, was not sufficient to create jurisdiction in the 

district court. Because the bankruptcy court reserved ruling on 

the issue of discharge, the bankruptcy court's dismissal without 

prejudice was not a final appealable order under 28 U.S.C. 

§158(d) and therefore was not properly before the district court. 

Accordingly, we will vacate the district court's ruling on 

discharge and remand this issue to the bankruptcy court. 

VII. 

 For these reasons, we will affirm the district court's 

rulings that claimants were known creditors and that Chemetron's 

publication notice was sufficient. We will vacate and remand to 

the bankruptcy court the district court's judgment that claimants 

failed to demonstrate excusable neglect. We will also vacate and 

remand to the bankruptcy court the district court's ruling on 

discharge. 
20 

Chemetron v. Jones

No. 94-3371 

SAROKIN, Circuit Judge, concurring in the judgment. 

 I concur with the majority's judgment to affirm. I 

write separately, however, because I disagree with the majority's 

analysis regarding the definition of a "known" creditor entitled 

to actual notice under the law. The majority rejects the 

"reasonably foreseeable" test in favor of the "reasonably 

ascertainable" test. I believe that both are applicable. 

I. 

 The "reasonably foreseeable" test determines which 

persons are entitled to receive notice. The "reasonably 

ascertainable" test determines the type of notice these persons 

are entitled to receive. All reasonably foreseeable claimants 

are entitled to receive some form of notice. Those who are 

reasonably ascertainable are entitled to actual notice. Those 

who are not are entitled to constructive notice -- usually some 

form of publication reasonably calculated to reach them. 

 The bankruptcy court adopted the following standard to 

evaluate who qualifies as a known creditor in a bankruptcy 

proceeding: 

[I]f at the time of the filing it is 

reasonably foreseeable to a debtor, who is or 

should be aware of the potential consequences 

of its actions, that a party that is 

foreseeable will most likely file a claim 
21 

against the debtor, that party is a "known" 

creditor of the debtor. Furthermore, the 

fact that a debtor does not know the name and 

address of a creditor does not prevent that 

creditor from being "known." 

In re Allegheny International, Inc., No. 88-00448, typescript at 

5-6 (Bankr. W.D. Pa. July 14, 1993). The court's standard would 

entitle a party whose claim was "reasonably foreseeable" to 

actual notice irrespective of whether or not that party's name 

and address was readily ascertainable. That result is not only 

illogical; it is contrary to Supreme Court jurisprudence. Tulsa 

Professional Collection Serv., Inc. v. Pope, 485 U.S. 478, 490 

(1988). 

 I do not believe, however, that in restoring the 

"ascertainable" test to its proper place, as the majority does, 

we need go so far as to discard the "reasonably foreseeable" 

standard entirely. These tests are not mutually exclusive, or 

even at odds. They address separate issues. The "reasonably 

foreseeable" test has to do with whether the debtor knew or 

should have known that a claim would be brought; the "reasonably 

ascertainable" test has to do with the debtor's ability to learn 

the identity and location of the potential claimant or claimants. 

 The manufacturer of a product which it knows to be 

defective and who filed for bankruptcy should be under an 

obligation to give actual notice of the proceedings to known 

purchasers and users of its products, even if they have made no 

claim. They may not have done so because the injury had not yet 

manifested itself or they otherwise were unaware of the risks of 

such injury. Absent such requirement, if the harmful effects of 
22 

the product did not manifest themselves for some period of time, 

consumers could be barred from relief for their injuries. 

 A rule whereby individuals whose claims are reasonably 

foreseeable are deemed "known" creditors if their identity and 

location is reasonably ascertainable would go a long way toward 

addressing these interests. Under such a rule, the following two 

steps would be required as a prerequisite to mandating actual 

notice to the tort claimants. First, the claims must be 

reasonably foreseeable. If they are reasonably foreseeable, then 

actual notice must be given to those claimants who are reasonably 

ascertainable. If there is a class or category of foreseeable 

claimants whose identity and/or location cannot be reasonably 

ascertained, then they are not "known creditors" entitled to 

actual notice (although they should receive substituted notice 

through reasonable means most likely to reach them). Such a 

result strikes the proper balance between the various purposes of 

bankruptcy law, which is concerned not merely with affording a 

fresh start to those who warrant it, but also with protecting the 

interests of creditors and claimants who may be adversely 

affected by the bankruptcy proceeding. 

 This result is clearly supported by the case law. The 

Mullane court was careful to limit its holding to the facts of 

that case, noting that "certain notice" was unnecessary for 

"beneficiaries whose interests are either conjectural or future . 

. . in view of the character of the proceedings and the nature of 

the interests here involved." Mullane v. Central Hanover Bank & 

Trust Co., 339 U.S. 306, 317 (1950) (emphasis added). 
23 

Furthermore, a claimant's interests are not "conjectural or 

future" simply because a lawsuit has not been filed yet. These 

interests exist from the time of the tortious act, not just from 

the time the claimant seeks to vindicate them in court.4

II. 

 Under this rule, I would find that it was not 

reasonably foreseeable that plaintiffs would file claims against 

Chemetron. As the district court noted in its opinion, 

throughout the early 1980s both the Nuclear Regulatory Commission 

and the Environmental Protection Agency time and again reassured 

both Chemetron and local residents that the radiations from the 

Bert Avenue site presented no serious safety or health risk to 

the surrounding neighborhood. Chemetron Corp. v. Jones, et al., 

No. 93-1582, typescript at 11 (W.D. Penn. June 11, 1994). 

Therefore, "[i]f Chemetron gave any thought to the subject, it 

 

4 The majority cites Trump Taj Mahal Assocs. v. O'Hara (In re 

Trump Taj Mahal Assocs.), 1993 WL 534494 (D.N.J. Dec. 13, 1993), 

for the proposition that "those creditors who hold only 

conceivable, conjectural, or speculative claims" are unknown. 

See Majority Opinion, typescript at 9. Trump Taj Mahal is a 

memorandum opinion by a district court, not reported in the 

relevant Reporter. As a district court opinion, it is not binding 

upon us. As an unreported memorandum opinion, it has no 

precedential value. 

 The Supreme Court, in Tulsa Professional Collection 

Serv., Inc. v. Pope, 485 U.S. 478 (1988) held that "it is 

reasonable to dispense with actual notice to those with mere 

'conjectural' claims." Id. at 490 (emphasis added). The Random 

House College Dictionary describes "conjectural" as "of the 

nature of or involving conjecture; problematical." Insofar as 

"problematical" suggests that the event is more likely than not 

not to occur, a claim that is "reasonably foreseeable" is not 

"problematical." 
24 

was reasonable to assume that claims would not be filed because 

of the assurances of these agencies that the Bert Avenue Site 

posed no health risk to the neighborhood." Id. Therefore, 

"there was no reason for Chemetron to assume in 1988 that there 

would be claims from residents for ailments caused by exposure to 

the contamination from the Sites. At most, any future claim was 

speculative." Id. at 12. Under the facts of this case, I 

entirely agree with the district court's conclusion that 

"Appellees were not foreseeable claimants and, accordingly, were 

unknown creditors." Id. Since the claims were not foreseeable 

there is no reason to address whether the claimants were 

reasonably ascertainable. 

III. 

 For the reasons stated above, I concur with the 

majority's judgment, though not with its reasoning in this one 

respect.