Opinion ID: 40564
Heading Depth: 2
Heading Rank: 2

Heading: The Involuntary Bankruptcy Petition

Text: 17 First, this Court must decide whether FitzGerald's participation in the August 9, 2002 involuntary bankruptcy petition against Whitaker preserved its claims against peremption under subsection 9:4813(E). That provision extinguishes the surety's liability to those who fail to institute an action asserting their claims or rights within a year after the period determined by § 9:4822. § 9:4813(E). Although the appropriate length of the peremption period for the Lifeshare project is disputed, the parties agree that, if the period did in fact run, the involuntary bankruptcy petition was timely in both matters. The question is whether the petition constituted an action asserting [its] rights and claims under § 9:4813(E). 3 18 The involuntary bankruptcy petition identified Whitaker as debtor, its business and the amount it owed FitzGerald: $586,258.17, including liened amounts of $418,596.58 and un-liened amounts of $167,661.59. It did not mention the PWA or specify claims made under the Act. In both the Biomedical and Lifeshare matters, the bankruptcy court determined that this constituted an assertion of FitzGerald's claim or right. The district court in the Biomedical matter disagreed, determining that the involuntary bankruptcy petition did not provide notice sufficient to preserve FitzGerald's rights under the PWA. 4 It found that general allegations regarding amounts due and payable, as found in the involuntary petition relied upon by FitzGerald, without any identifying language, do not provide notice sufficient to preserve FitzGerald's rights under the LPWA. Fid. & Deposit Co. v. FitzGerald Contractors, Inc., No. 03-1757, 2004 WL 2751654 (W.D.La. May 25, 2004). 5
19 Although prescription and peremption are distinct concepts, at oral argument both parties agreed that the peremption period at issue should be treated as a prescriptive period for purposes of preserving the claim. Therefore, we treat it as such while declining to adopt affirmatively their interpretation of Louisiana law. 20 Prescription is interrupted under Louisiana law when the obligee commences action against the obligor, in a court of competent jurisdiction and venue. LA. CIV. CODE ANN. art 3462; see Hensgens v. Deere & Co., 869 F.2d 879, 881 (5th Cir.1989). Louisiana courts have interpreted the meaning of commenc[ing] action for purposes of interrupting prescription. Determining that a workmen's compensation suit filed on behalf of a plaintiff who died in an unrelated accident prior to filing interrupted prescription, the Louisiana Supreme Court said that the essence of interruption of prescription by suit has been notice to the defendant of the legal proceedings based on the claim involved. Nini v. Sanford Bros., Inc., 276 So.2d 262, 264-65 (La.1973). As we have recognized, the Court in Nini adopted a broad view of when prescription could be interrupted. 21 [T]he Court in Nini has, to all appearances, rejected this narrower view. There National Surety was not treated as a narrow exception carved out of the general rule but as illustrative of the general rule itself. It is notice not of the plaintiff's intention to assert his demand, but of any demand stemming from the same tortious occurrence or conduct, which interrupts prescription as to subsequent demands on that cause of action, at least to the extent that the first demand sufficiently implies the second. 22 Louviere v. Shell Oil Co., 509 F.2d 278, 287 n. 9 (5th Cir.1975)(reversing dismissal and concluding that suit by the employer's subrogated insurer to recover benefits paid an injured employee under the Longshoremen's and Harbor Workers' Compensation Act will interrupt prescription to permit a subsequent suit by the employee for his damages arising out of the same occurrence). 23 The Nini standard allows flawed or misdirected filings to interrupt prescription. In Batson v. Cherokee Beach and Campgrounds, Inc., 530 So.2d 1128, 1130 (La. 1988), where plaintiff had brought a second tort suit after the first one's dismissal for failure to state a cause of action, the court determined that prescription will be interrupted whether or not the original pleading sets forth a cause of action. In Parker v. Southern American Insurance Co., 590 So.2d 55 (La.1991), the plaintiff had filed a compensation suit for her husband's death against his employer and later filed a tort action against that employer's insurer. In that case, the former suit interrupted the prescription period for the latter because a pleading which alleges a factual occurrence and liability of a named defendant interrupts prescription despite failure to state a cause of action by alleging negligence. Id. at 56. As the Louisiana Supreme Court explained, The fundamental purpose of prescription statutes is only to afford a defendant economic and psychological security if no claim is made timely, and to protect him from stale claims and from the loss of non-preservation of relevant proof. They are designed to protect him against lack of notification of a formal claim within the prescriptive period, not against pleading mistakes that his opponent makes in filing the formal claim within the period. 24 Giroir v. S. La. Med. Ctr., Etc., 475 So.2d 1040, 1045 (La.1985)(reversing judgment of court of appeals and determining that amendments changing capacity of suing husband and adding children as wrongful death plaintiffs successfully related back). 25 This Court has applied Nini to allow certain legal actions which are not lawsuits to interrupt prescription. In McGee v. O'Connor, 153 F.3d 258 (5th Cir.1998), we held that filing of proofs of claim in a bankruptcy interrupts prescription of contract claims under Louisiana law. Drawing an analogy between proofs of claim in bankruptcy proceedings and those in succession proceedings—which under the relevant Louisiana statute suspend prescription— we said that the key to Parker is that the defendant there received notice.  6 Id. at 262 (emphasis in the original). As a result, worker's compensation claims will interrupt the running of prescription for tort claims against third parties. See Drury v. U.S. Army Corps of Eng'rs., 359 F.3d 366, 368 (5th Cir.2004). 26 Nini is, of course, not without its limits. Certain federal administrative actions will not interrupt prescription of state law claims. In Drury, we determined that a suit under the Federal Tort Claims Act did not interrupt prescription for a state tort suit. Drury, 359 F.3d at 368-69. Likewise, in Fitzgerald v. Secretary, U.S. Dept. of Veterans Affairs, we noted that no authority supported the proposition that filing an administrative Title VII complaint would interrupt prescription of state law discrimination claims. 121 F.3d 203, 210 (5th Cir.1997). The lynchpin, again, is notice to the defendant. 27 FitzGerald argues that the involuntary bankruptcy petition gave sufficient notice of its claim to Whitaker to preserve its claim, and that this Court should extend Nini to the present case. It emphasizes that the $586,258.17 amount claimed included the $82,473.89 amount that was the subject of the Biomedical proceedings and the $81.689.00 amount that was the subject of the Lifeshare proceedings. 28 We disagree. The involuntary bankruptcy petition did not provide sufficient notice to prevent peremption and preserve the claim. The amounts owed under the PWA are indistinguishable in the involuntary bankruptcy petition from Whitaker's traditional contractual obligations to FitzGerald. 29 While both the contractual and PWA obligations stem from the same set of events, in cases reliant on Nini, more information was available than is here. In O'Connor, the proofs of claim were for the debtor's obligation. 153 F.3d at 262. We specifically distinguished that case from one in which a proof of claim for the proceeds of an auction house's bankruptcy did not interrupt prescription in a tortious conversion suit against its former employee. Id. at 262 n. 5 (citing Hilbun v. Goldberg, 823 F.2d 881 (5th Cir.1987)). Here, the petition is against Whitaker, not its surety. More importantly, the legal and factual bases for the debt are not identified. In Parker and Nini, the factual and legal bases of liability were spelled-out. 590 So.2d at 56, 276 So.2d at 266. The involuntary bankruptcy petition includes no references to the PWA, nor to the Biomedical Project, the Lifeshare Project or any other private work. It indicates merely the creditor and the amount owed. 30 O'Connor does not identify precisely the quantum of description that constitutes proper notice; but we believe the line falls beyond the reach of this involuntary bankruptcy petition. In Abramson v. Boedeker, we noted that an involuntary bankruptcy petition serves as even less notice than the generalized complaint. . . . The `right' of a creditor to hang on to his self-help priority may not, therefore, be equated with concepts of fair notice from pleadings. 379 F.2d 741, 745 n. 7 (5th Cir.1967)(evaluating such a petition in the context of determining whether it or an amended complaint established the date of bankruptcy). More substantial notice is required to preserve a PWA claim. 31 This conclusion is bolstered by the instruction of the Louisiana Supreme Court in Metro Erection, that PWA rights were in derogation of common rights and must be strictly construed against those to whom the right is accorded. Metro Erection, 627 So.2d at 148.
32 Alternatively, FitzGerald argues that the involuntary bankruptcy petition qualifies as an informal proof of claim, and that O'Connor requires the claim be preserved. F&D responds that the doctrine of informal proof of claim does not apply, both because the doctrine is an equitable one and because FitzGerald timely filed. In In re Nikoloutsos, 199 F.3d 233 (5th Cir.2000), we adopted a five-part test for qualifying something as an informal proof of claim: 33 (1) [T]he claim must be in writing; (2) the writing must contain a demand by the creditor on the debtor's estate; (3) the writing must evidence an intent to hold the debtor liable for such debt; (4) the writing must be filed with the bankruptcy court; and (5) based upon the facts of the case, allowance of the claim must be equitable under the circumstances. 34 Id. at 236. The parties do not dispute that the first four conditions have been met in the present case. 35 In Nikoloutsos, the claimant, a woman seeking to enforce a judgment against her husband for maliciously assaulting her, filed her complaint late. Orally, the bankruptcy court seemed willing to accept the complaint as a proof of claim; but later, without explanation, it did not recognize it as such. This Court noted that the rules of equity require being flexible with regard to form when justice requires. Id. at 237 (punctuation omitted). Our other applications of the informal proof of claim doctrine have rectified similar injustices but not mere mistakes in advocacy. See, e.g., Greyhound Lines, Inc. v. Rogers, 62 F.3d 730 (5th Cir.1995) (regarding an informal proof of claim where claimant failed to file because of concomitant court-ordered alternative dispute resolution program); cf. DeCell & Assocs. v. FDIC, 36 F.3d 464 (5th Cir.1994) (holding there was no informal proof of claim where assignee of letter of credit sued FDIC in its corporate capacity but not in its receivership capacity and failed to make a deposit insurance claim). FitzGerald was represented by counsel and had the opportunity to raise its claim under the PWA. It chose to file only the petition for involuntary bankruptcy within the peremption period. Equity does not support application of the doctrine in this instance. Even if this Court were to consider the present involuntary bankruptcy petition an informal claim, for O'Connor to apply, FitzGerald would still have had to provide sufficient notice. It did not, so the district court's judgment is affirmed.
36 A certificate of substantial completion was filed for the Biomedical project on September 17, 2001. The section 9:4822 period elapsed thirty days later, and the section 9:4813 period one year after that. Thus, FitzGerald had until October 17, 2002 to institute an action asserting its claim. The only action it undertook before that deadline was joining the involuntary bankruptcy petition against Whitaker on August 9, 2002. Because that action did not constitute an action asserting [its] rights and claims under § 9:4813(E), FitzGerald's claim in the Biomedical matter is perempted.