Court Opinion

ID: 3016465
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:15:37.158592+00
Date Added: 2024-06-11T11:47:00.231316
License: Public Domain

No. 95-2413

DOUGLAS K. MCSHERRY,            *
                                           *   On Appeal from the United
              Plaintiff-Appellant,    *        States District Court for
                                           *   the Western District of
     versus                                *   Missouri.
                                           *
TRANS WORLD AIRLINES, INC.,                *
                                           *   [NOT TO BE PUBLISHED]
              Defendant-Appellee.          *

                         Submitted:       January 11, 1996

                           Filed:     March 7, 1996

Before LOKEN, REAVLEY* and HANSEN, Circuit Judges.

PER CURIAM.

              The question in this appeal is whether an employee’s claim of
discriminatory termination under the Americans with Disabilities Act
(ADA)1 was discharged in bankruptcy, given that         the employer’s Chapter
11 plan was confirmed after the employee was terminated but before he
received his right to sue letter from the administrative agency
investigating his allegations.       The district court2 concluded that, for
the purposes of the

     *
      The HONORABLE THOMAS M. REAVLEY, United States Circuit
     Judge for the United States Court of Appeals, Fifth
     Circuit, sitting by designation.
     1
      42 U.S.C. § 12101 et. seq.
     2
      The Honorable Fernando J. Gaitan, Jr., United States
District Judge for the Western District of Missouri.
bankruptcy code, the employee’s claim arose before confirmation.
Because all claims arising before confirmation are discharged, the court
dismissed the employee’s suit alleging discriminatory termination.         The
employee now appeals, reasserting that he had no claim until he received
his right to sue letter.      We affirm.

                                        I.

        On January 31, 1992, appellee Trans World Airlines (TWA) filed a
Voluntary Petition for Reorganization in Bankruptcy.      Some nine months
later, on September 18, 1992, TWA terminated appellant McSherry’s
employment as a pilot.      Shortly before his termination, McSherry filed a
charge of discrimination with the Office of Federal Contract Compliance,
complaining that his impending termination constituted disability
discrimination under the ADA.3      On August 12, 1993, TWA’s Chapter 11
bankruptcy plan was confirmed.      The plan required all claims arising
before confirmation to be filed with the bankruptcy court by December 3,
1993.       McSherry did not file a proof of claim with the bankruptcy court
by that date.      The Department of Labor completed its investigations in
the fall of 1993 and undertook conciliation between TWA and McSherry.
Shortly after December 6, 1993, TWA offered to settle all of McSherry’s
claims, including his claim of discriminatory termination.      McSherry
refused the offer.      On April 12, 1994, McSherry received his right to
sue letter from the Department of Labor, and he filed suit in Federal
District Court on July 1, 1994.      The district court granted TWA’s motion

        3
      The ADA incorporates by reference the powers, remedies, and
procedures set forth in Title VII, 42 U.S.C. § 2000e et. seq. See
42 U.S.C. § 12117(a). Title VII requires employees alleging
discrimination to file a charge with the appropriate
administrative agency, and bars suits until the employee has
received a right to sue letter. 42 U.S.C. § 2000e-5(e)(1),
(f)(1).

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to dismiss, reasoning that McSherry’s claim was discharged in bankruptcy
because it arose before confirmation of the plan.

                                     II.

        In considering a motion to dismiss, we accept as true all factual
allegations in the complaint.    Leatherman v. Tarrant County Narcotics
Intelligence & Coordination Unit, 113 S. Ct. 1160, 1161 (1993) (citations
omitted).    The motion will be granted only if no set of facts would
entitle the plaintiff to relief.    Conley v. Gibson, 78 S. Ct. 99, 102
(1957).

        With exceptions not relevant here, confirmation of a debtor’s
bankruptcy plan discharges debts arising prior to the date of
confirmation.    11 U.S.C. § 1141(d).   The Bankruptcy Code (Code) defines
“debt” as “liability on a claim.”    11 U.S.C. § 101(12).   “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.”    11 U.S.C. § 101(5)(A).
        Because the plan was confirmed on August 12, 1993, plaintiff’s
claim was discharged on that date unless it arose after confirmation.
The central issue in this dispute, therefore, is whether McSherry’s
cause of action fell within the definition of claim in § 101(5)(A) on
August 12, 1993.

        It is clear that the definition of “claim,” as stated in the Code,
is broad enough to encompass an obligation on which a civil action would
be premature because jurisdictional prerequisites have not been met.
Both the allegedly unlawful actions and the harm occurred on the date of
termination, and McSherry’s right to redress that wrong existed on that
date.    While lack of a right to sue letter may have left his claim
unmatured or contingent on

                                    -3-
that date, § 105(A) specifically includes such claims within its
definition.

        McSherry relies primarily on a Third Circuit case, Avellino &
Bienes v. M Frenville Co. (In re M. Frenville Co.), 744 F.2d 332 (3d
Cir. 1984), cert. denied, 469 U.S. 1160 (1985), in support of his
argument that he had no claim at the time of confirmation because he had
not yet been issued a right to sue letter and therefore could not bring
suit.    Frenville holds that a claim does not arise in bankruptcy until a
cause of action has accrued under non-bankruptcy law.    Id. at 337.    That
holding does not help McSherry because under Title VII his claim accrued
at the time of termination, not at the time he received his right to sue
letter.    Title VII requires an employee to file a “charge” with the
appropriate administrative agency within one hundred eighty days after
the alleged unlawful employment practice occurs or be barred from filing
a claim in district court based on the same occurrence.    42 U.S.C. §
2000e-5(e).    This court has held that the “occurrence” in unlawful
termination suits is the termination itself, so an employee has one
hundred eighty days from the date of termination to file a charge.      See
Harris v. Norfolk & W. Ry. Co., 616 F.2d 377, 379 (8th Cir. 1980);
Rudolph v. Wagner Elec. Corp., 586 F.2d 90, 91 (8th Cir. 1978), cert.
denied, 441 U.S. 924 (1979).    Under the applicable non-bankruptcy law
McSherry’s claim accrued on the date of termination, which occurred
before confirmation.

         Frenville does not concern claims that are unmatured due to
failure to meet jurisdictional prerequisites and does not hold that a
claim exists only if one can bring suit based on that claim.    Another
Third Circuit case has made clear that a claim can arise in bankruptcy
even though jurisdictional prerequisites to filing a claim in court have
not been met.    In Kilbarr Corp. v. General Servs. Admin. (In re
Remington Rand Corp.), 836 F.2d

                                    -4-
825 (3rd Cir. 1980), the government had signed a series of contracts
with the debtor before bankruptcy.       After the debtor commenced
bankruptcy, the government began an audit pursuant to the Contract
Dispute Act of 1978, 41 U.S.C. § 605(a), to ensure the government had
not been overcharged.     Id. at 827.    After the debtor’s plan had been
confirmed, the government’s audit revealed the government had been
overcharged, and the government sought to collect for breach of
contract.    The debtor asserted that the government’s claim arose before
confirmation and was therefore discharged.       The government argued that
under the Contract Dispute Act, it could not bring suit in district
court until a federal contract officer had certified the validity of the
claim; and that because the required certification occurred post-
confirmation, the government’s claim arose after confirmation and was
not discharged.    After a careful reading of the Contract Dispute Act,
the Third Circuit rejected the government’s position, holding that the
government’s claim arose during the audit process, and before
confirmation, because that is when the breach and the harm occurred, and
because the government knew before confirmation that it had been
overcharged.    The court noted that “the certification process of §
605(a) of the [Contract Dispute] Act does not create a claim; it merely
creates a jurisdictional prerequisite to judicial resolution of existing
claims.”    Id. at 826.

     Similarly, under Title VII the right to sue letter is merely a
jurisdictional prerequisite, and does not create a claim.       Instead, as
discussed above, the claim was created under Title VII when McSherry was
terminated.

                                        -5-
                                  III.

     For the foregoing reasons, the order of the district court
dismissing the plaintiff’s complaint is affirmed.

     AFFIRMED.

     A True copy.

           Attest:

                 CLERK,, U.S. COURT OF APPEALS, EIGHTH CIRCUIT

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