Opinion
Case No. 02 B 02474.
November 24, 2004
MEMORANDUM OPINION
This matter is before the court on the Motion of Julio Montenegro ("Montenegro") to Reinstate or for Leave to File an Administrative Expense Claim. Montenegro, a personal injury claimant, failed to file an administrative proof of claim by the June 20, 2003 bar date. He now seeks entry of an order granting him leave to file the claim and deeming it timely filed.
BACKGROUND
On January 22, 2002, Kmart Corporation and thirty-seven of its subsidiaries and affiliates filed voluntary Chapter 11 petitions in this court. Kmart continued to operate as debtor in possession thereafter.
On July 11, 2002, after the filing of the petitions, Montenegro allegedly sustained personal injuries at a Kmart store in Miami, Florida. The next day, he retained Jack G. Bernstein and the firm of Bernstein and Maryanoff to represent him in connection with his claim for injuries. On July 26, 2002, Anne Sanchez, a paralegal at the Bernstein firm, sent a letter to Kmart advising of the representation and requesting that Kmart turn the letter over to its insurance carrier for discussion and negotiation of the claim. On October 10, 2002, Lorraine Curtis, a claims examiner at the Kmart Customer Incident Center, wrote to Sanchez advising that Curtis would be handling the file and that any future correspondence should be directed to her attention.
Bernstein sent Curtis a demand letter on October 29, 2002, for settlement negotiation purposes, describing the incident and detailing the injuries and treatment. Curtis responded on November 12, 2002, advising that Kmart's medical review specialists would complete their work in four weeks and that she would contact Bernstein with a possible resolution thereafter.
On March 6, 2003, Curtis sent Sanchez a letter stating that Kmart's investigation and evaluation of the claim were complete and offered $4,000 in settlement. Bernstein states in his affidavit that Curtis "apparently" contacted the firm later and asked that the March 6 offer be disregarded. In any event, Sanchez wrote to Curtis on April 3, 2003, rejecting Kmart's "most recent offer of $5,000" and submitting a counterdemand of $95,000. That demand was rejected by Curtis in an April 4, 2003 letter, which contained a further counteroffer of $13,000. Finally, on May 8, 2003, Bernstein wrote to Curtis rejecting the $13,000 offer and countering with "$75,000, or [Kmart's] policy limits."
In the meantime, on or about April 23, 2003, this Court had entered an order confirming the "First Amended Joint Plan of Reorganization of Kmart Corporation and its Affiliate Debtors and Debtors-in-Possession," as modified (the "Plan"). The Plan became effective on May 6, 2003 (the "Effective Date"). Shortly after the Effective Date, Trumbull Services, LLC, the court-approved noticing agent in this case, caused to be served a "Notice Regarding (A) Entry of Order Confirming the First Amended Joint Plan of Reorganization of Kmart Corporation and its Affiliated Debtors and Debtors-in-Possession, (B) Occurrence of Effective Date, and (C) Notice of the Administrative Bar Date" (the "Notice"). Paragraph 7 on the fourth page of the Notice contained a section entitled "Administrative Claims Bar Date." That section stated that "Administrative Claims" (other than certain types of claims dealt with elsewhere in paragraph 7) had to be filed by June 20, 2003 (the "Administrative Bar Date"). A supplemental administrative claims bar date of August 22, 2003 was thereafter fixed by order dated July 9, 2003 for certain claimants who did not receive notice of the original Administrative Bar Date.
A notice of the supplemental bar date was thereafter served, together with an "Administrative Expense Claim (Supplemental Bar Date)" form (the "Supplemental Administrative Bar Date Claim Form").
Two days after entry of the confirmation order, on April 25, 2003, Tammy Hoinville, a paralegal at the Bernstein firm, called Trumbull and inquired whether a claim form had to be filed on behalf of Hilaria Ocasio, another postpetition personal injury claimant represented by the Bernstein firm. Hoinville asked generally whether claim forms had to be filed with respect to claimants who were injured subsequent to the bankruptcy petition, and specifically, whether a claim had to be filed for Ocasio. The Trumbull representative advised that if the accident occurred after the filing of the bankruptcy petition on January 22, 2002, then no claim form had to be filed.
Kmart supplied a transcript of the recorded telephone conversation between Hoinville and "Janet," a Trumbull representative. At one point in the conversation, Hoinville asked, "My question is simple, well I mean not simple, but yet maybe simple. `Cause now that you guys have you know, when then [sic] went into bankruptcy there was a form that we had to fill out. We need to know if we need to do for those also that were you know filed after the bankruptcy, um judgment entered?" Further conversation ensued and then the following exchange took place:
[Hoinville]: OK basically, just to answer my question so I know. If the incident occurred in December for instance do we have to file that form? Do we have to file any forms?
[Janet:] If it was before 1/22/02 — yes
. . .
[Hoinville:] OK, no that one is 12/21/02, so I'm fine?
[Janet:] Yeah
[Hoinville:] So I don't need to file any forms?
[Janet:] No, well you don't need to file a proof of claim form and you didn't. We didn't send you a notice and I can't find your name anywhere, but I would definitely check with Kmart first-just to be safe, OK?
[Hoinville:] So for you guys I don't need to do anything?
[Janet:] I'm not saying that. I know that anybody that has anything to claim prior to 1/22/02 had to file a claim form. Are you saying that her accident happened in December 2002?
[Hoinville:] Yes
[Janet:] It was after the bankruptcy then?
[Hoinville:] Yes
[Janet:] Then you have to do whatever it is that you have to do for an accident case
[Hoinville:] OK, then we do not need to file a claim form then?
[Janet:] No
[Hoinville:] Oh my god-good lord, that's great news. Thank you very much.
[Janet:] You're welcome
Bernstein avers in his affidavit that neither he nor his firm received the administrative bar date notice allegedly mailed by Trumbull with respect to the Montenegro claim. He also never received Kmart's Plan or the order confirming same.
According to Bernstein, sometime after June 12, 2003, he received the Notice with respect to a different personal injury claimant (i.e., Ocasio). As Bernstein was out of town from June 15 through June 26, 2003, and was thereafter involved in a complex real estate transaction through June 28, 2003, he did not review his mail until July 1, 2003.
Although the notice was addressed to Hilaria "Osario" (in care of Hoinville, at the Bernstein firm), it apparently was intended for Hilaria Ocasio.
On July 3, 2003, an administrative claim was filed with Trumbull by the Bernstein firm on behalf of Hilaria Ocasio. Thereafter, on July 18, 2003, an administrative claim was filed by the firm on behalf of Julio Montenegro.
A second claim was filed on behalf of "Osario" on July 21, 2003 on the Supplemental Administrative Bar Date Claim Form.
Bernstein avers that on July 14, 2003, he sent an administrative claim form to Trumbull on behalf of Montenegro by overnight mail. Trumbull apparently has no record of the claim being received. According to Bernstein, the Montenegro claim that was received by Trumbull on July 18, 2003 was transmitted by mail on July 15, 2003 by Jason Turchin, of the Bernstein firm, as a cautionary measure after he learned of the supplemental administrative bar date. This claim was submitted on the Supplemental Administrative Bar Date Claim Form.
The Court need not determine whether a claim form was actually sent by Bernstein by overnight mail on July 14, 2003, as it would have no effect on the disposition of this motion, discussed below.
Kmart asserts that the Notice was in fact mailed to the Bernstein firm with respect to the Montenegro claim. Kmart submitted as Exhibit D to its objection the affidavit of Marc V. Orfitelli, a Case Analyst at Trumbull, indicating that the Notice was sent on May 9, 2003 to Montenegro, in care of Anne Sanchez at the Bernstein firm. Orfitelli avers that the Notice was sent again on May 19, 2003, together with an administrative claim form, to the same address. According to Orfitelli, neither mailing was returned as undeliverable. He states that "Trumbull sent . . . the mailings via first-class mail service" and that the "mailing labels . . . had the exact names and addreses" as set forth in his affidavit. Finally, Orfitelli avers that the facts set forth in his affidavit are documented in Trumbull's records, which are maintained in the ordinary course of its business and which he personally reviewed.
Kmart later submitted the supplemental affidavit of Wendy Cappola, Director of Operations at Trumbull. Cappola attests to the May 9 and May 19, 2003 mailings to Montenegro, in care of Sanchez, and also avers that the Notice was sent on June 12, 2003 to Hilaria "Osario," in care of Tammy Hoinville, at the Bernstein firm. According to Cappola, a notice of the August 22, 2003 supplemental administrative claims bar date was mailed to Hilaria "Osario," in care of Hoinville, on July 10, 2003. Cappola avers, as did Orfitelli, that none of these mailings were returned as undeliverable and that the facts set forth in her affidavit are documented in Trumbull's records, which are maintained in the ordinary course of its business and which she personally reviewed.
Montenegro ultimately retained bankruptcy counsel and filed the instant motion on November 12, 2003. The motion was continued from time to time and finally heard at the Court's March 30, 2003 omnibus late claims hearing.
Again, Montenegro contends that he never received the notices allegedly mailed by Trumbull in May, 2003, and he objects to the competency of the Orfitelli and Cappola affidavits. He further contends, in the alternative, that his claim should be deemed timely based on excusable neglect.
Montenegro's bankruptcy counsel essentially echoed the objection made, during argument on the first motion heard at the March 30 omnibus hearing, by counsel for another personal injury claimant. The other claimant's counsel had contended, inter alia, that Orfitelli's unqualified statement that Trumbull mailed the Notice was not really accurate, because Trumbull had engaged a subcontractor to do the actual mailing.
DISCUSSION
A fundamental requirement of due process is "notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." Mullane v. Central Hanover Bank Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 (1950) (citations omitted). Accordingly, unless a creditor is given reasonable notice of the bankruptcy case and the relevant bar dates, his claim cannot be constitutionally discharged. In re O'Shaughnessy, 252 B.R. 722, 729 (Bankr. N.D. Ill. 2000) (citations omitted); see also Chemetron Corp. v. Jones, 72 F.3d 341, 346 (3rd Cir. 1995), cert. denied, 517 U.S. 1137, 116 S.Ct. 1424, 134 L.Ed.2d 548 (1996).
The court reviews the totality of circumstances to determine whether reasonable notice was given. O'Shaugnessy, 252 B.R., at 730. The court should consider, among other things, whether any inadequacies in the notice prejudiced the creditor and whether notice is given in enough time to afford a creditor sufficient opportunity to respond to "the impending deprivation of its rights." O'Shaugnessy, 252 B.R., at 730 ( citing In re Walker, 149 B.R. 511, 514 (Bankr. N.D. Ill. 1992)).
The Supreme Court has "repeatedly recognized that mail service is an inexpensive and efficient mechanism that is reasonably calculated to provide actual notice." Tulsa Professional Collection Services, Inc. v. Pope, 485 U.S. 478, 490, 108 S.Ct. 1340, 99 L.Ed.2d 565 (1988). Mail properly addressed, stamped, and deposited in the mail system is presumed to have reached its destination in the usual time and to have actually been received by the party to whom it was addressed. See, e.g., In re Bucknum, 951 F.2d 204, 207 (9th Cir. 1991); Hagner v. U.S., 285 U.S. 427, 430, 52 S.Ct. 417, 76 L.Ed. 861 (1932). Kmart claims the benefit of this presumption based on the Orfitelli and Cappola affidavits and contends that the presumption cannot be rebutted by the simple denial of receipt set forth in Bernstein's affidavit.
It is true that while a simple denial of receipt may create a question of fact, it does not rebut the presumption. See In re Longardner Assoc., Inc., 855 F.2d 455, 459 (7th Cir. 1988), cert. denied, 489 U.S. 1015, 109 S.Ct. 1130, 103 L.Ed.2d 191 (1989);; In re Pettibone Corp., 123 B.R. 304, 310 (Bankr. N.D.Ill. 1990); see also In re Ms. Interpret, 222 B.R. 409, 413 (Bankr. S.D.N.Y. 1998) ("a party must do more than merely assert that it did not receive the mailing; its testimony or affidavit of non-receipt is insufficient, standing alone, to rebut the presumption").
The Court, however, is not inclined to indulge Kmart the benefit of a presumption in this case. Kmart does not dispute that the Notice was actually mailed by a subcontractor of Trumbull, and not by Trumbull itself. As such, neither of the Trumbull affidavits were made on personal knowledge. Accordingly, the Court weighs the evidence presented, without consideration of any presumption, to determine whether the Notice with respect to Montenegro's claim was actually received by the Bernstein firm. Under all the circumstances, including those recited above and the lack of any information regarding the return address used or the process for tracking returned mail, the Court finds that the bar date notices allegedly mailed by Trumbull with respect to the Montenegro claim were not received by the Bernstein firm. Bernstein did not become aware of the bar date until after he reviewed the Notice mailed by Trumbull on June 12, 2003 with respect to the Ocasio claim.
Kmart did not respond to the objection made at the hearing by Montenegro's counsel concerning the competency of the Trumbull affidavits. However, Kmart's counsel, in arguing the first motion at the omnibus hearing (which was an administrative claimant's motion to alter or amend judgment under Rule 59(e)), contended that the claimant's objection to the competency of Orfitelli's affidavit was based on a mere "technicality," i.e., the role of Bowne of Cleveland, a subcontractor that (as characterized by Kmart) "actually physically stuffs [the] envelopes" for Trumbull. (Transcript, at 16) Kmart further contended that Trumbull's engagement of a subcontractor had, in any event, been disclosed at a hearing held on December 15, 2003 on the late claim motion of Linda and Joseph Joy and could not, therefore, be raised as newly discovered or previously unavailable evidence on a Rule 59(e) motion. Finally, Kmart contended that "[t]he law . . . does not require the service agent to . . . submit a declaration from a person who actually stuffed the envelopes. All that is required is testimony of the business practice by which the mailing was conducted." (Transcript, at 17)
It is true that if a Trumbull employee had done the actual mailing, an affidavit from that specific employee would not be necessary to establish the presumption; an affidavit from an appropriate employee with knowledge of the company's usual and customary mailing practices and procedures, as well as compliance therewith in the particular instance, would suffice. Here, however, the mailing was accomplished by an entirely different organization, operating from its own, entirely separate, business premises. Under these circumstances, the Trumbull affidavits lack the requisite personal knowledge. Indeed, Cappola's testimony at the Joy hearing makes this clear. Prior to that hearing, there had been certain discrepancies and ambiguities concerning the dates of service of the Notice, as provided in various Trumbull affidavits and certificates of service. For example, certain affidavits stated that the Notices and claim forms were mailed on May 15, 2003, while others stated that they were mailed on May 19, 2003. According to Cappola's testimony, the inconsistencies resulted from the fact that the dates in Trumbull's database were, at least initially, incorrect. She explained that the Notices were originally intended by Trumbull to be mailed on May 15, but because there were so many addressees, it took the subcontractor a few days to get the materials ready. As a result, the mailing did not actually go out until May 19. It was not until after Trumbull contacted Bowne and confirmed that the mailing actually took place on May 19, that Trumbull corrected the information in its system. Cappola testified: "Once we discovered that the system information was incorrect, we updated our system to reflect the correct dates." (December 15, 2003 transcript, at 20)
This testimony underscores the reason for the personal knowledge requirement and demonstrates that it is no mere "technicality." Moreover, Kmart, by implying that this "technical" requirement can be overlooked, is in essence advocating a double standard for the parties' affidavits in this case. While Kmart suggests that the presumption arises notwithstanding a technical defect in its own affidavits, it presses the insufficiency of the claimant's affidavit to rebut the presumption.
Finally, Kmart's attempt to downplay Bowne's role as that of a mere "envelope stuffer" is contrary to the testimony given by Wendy Cappola at the Joy hearing, as well as her affidavit filed several days prior thereto. Cappola refers to Bowne as the "third party print shop that handled the mailing" and explains that Trumbull provided Bowne the requirements for the mailing, including the name and address file to be used therefor and the documents to be served. Indeed, it has become clear through subsequent affidavits filed in this case with regard to other late-filed claims that Bowne itself did not mail the notice either, but further subcontracted the mailing to yet another entity, Northwest Mailing Services in Chicago.
Moreover, even if the Court were to assume that the Bernstein firm received the Notice with respect to the Montenegro claim, the Court would nonetheless deem the claim timely on excusable neglect grounds. Rule 9006(b)(1) of the Federal Rules of Bankruptcy Procedure provides in relevant part that
when an act is required or allowed to be done at or within a specified period by these rules or by a notice given thereunder or by order of court, the court for cause shown may at any time in its discretion . . . (2) on motion made after the expiration of the specified period permit the act to be done where the failure to act was the result of excusable neglect.
Prior to the Supreme Court's decision in Pioneer Investment Services Co. v. Brunswick Associates Ltd. Partnership, 507 U.S. 380, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993), there was a disagreement among the circuits as to the meaning and scope of "excusable neglect." Robb v. Norfolk Western Railway Co., 122 F.3d 354, 358 (7th Cir. 1997). The Seventh Circuit was among those that interpreted the phrase narrowly. Id. That narrow approach was rejected in Pioneer, and the Supreme Court made it clear that neglect could be excusable even where it was the result of carelessness on the part of a litigant or his attorney.
Of course, not all carelessness is excusable. The Supreme Court concluded in Pioneer that the determination of whether neglect is "excusable"
is at bottom an equitable one, taking account of all relevant circumstances surrounding the party's omission. These 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. 507 U.S. at 395. The four factors cited by the Court are, however, not exclusive. As the Seventh Circuit has noted, the Supreme Court "specifically rejected an approach that would `narrow the range of factors to be considered.'" Robb, 122 F.3d at 362.
In Robb, for example, the Seventh Circuit held that an attorney's "track record" may be considered as one of the circumstances bearing on whether his negligence constitutes "excusable neglect." Another factor that has been considered is the attorney's relative experience in the area at issue. In U.S. v. Brown, 133 F.3d 993 (7th Cir. 1998), cert. denied, 523 U.S. 1131, 118 S.Ct. 1824, 140 L.Ed. 2d 960 (1998), the defendant's attorney in a criminal case filed an appeal one day late. He had miscalculated the 10-day deadline, believing that weekends and holidays tolled the appeal period. The trial court considered the attorney's inexperience in federal court, his good faith, and the lack of prejudice resulting from his mistake. The Seventh Circuit affirmed, stating, inter alia, that "[t]hese are reasonable factors to consider, and ones invited by the Supreme Court in Pioneer and this court in Prizevoits." Brown, 133 F.3d at 997.
Although Robb involved a motion under Fed.R.Civ.P. 60(b)(1) for relief from a judgment based on allegations of "excusable neglect," the Seventh Circuit has noted that "the tenor of [the Pioneer decision] is that the term bears the same or similar meaning throughout the federal procedural domain." Prizevoits v. Indiana Bell Telephone Co., 76 F.3d 132, 134 (7th Cir. 1996).
The attorney was a Wisconsin lawyer, and his excuse was that he had confused Wisconsin rules with the federal rules. He believed that weekends and holidays tolled the 10-day deadline, which they would have in Wisconsin, because the prescribed period was less than 11 days, However, under Fed.R.App.P. 26(a), which was applicable to the appeal, weekend days were only to be excluded if the period was less than seven days. Brown, 133 F.3d at 996. The court noted that Brown was the attorney's only client in the federal courts. Id. at 997.
Prizevoits was a civil case where "experience within the federal courts worked against the attorney claiming excusable neglect." Brown, 133 F.3d at 997.
It must be remembered, however, that "[i]t is difficult to draw bright lines in this inquiry." Brown, 133 F.3d at 996. In U.S. v. Guy, 140 F.3d 735 (7th Cir. 1998), for example, the defendant's lawyer made a mistake identical to the one made in Brown. Nonetheless, the Seventh Circuit found the neglect inexcusable, noting that the attorney's level of experience was the "critical difference." In Guy, the defendant's lawyer was an experienced federal criminal appellate litigator who "must" have known how to compute the appeal deadline in a federal criminal case. Guy, 140 F.3d at 736.
The court also noted that the Brown decision had "probed the outer boundaries of excuse." Guy, 140 F.3d at 736.
Again, the fact-intensive and equitable inquiry required by Pioneer is a balancing test, and "[b]alancing tests naturally produce indeterminacy; focusing on one factor may change the balance, and, in turn, the result." Brown, 133 F.3d at 997.
Here, the Court notes that the Notice did not define "Administrative Claims;" it merely included on the first of its seven pages a statement that capitalized terms and phrases would, unless otherwise defined in the Notice, have the meanings set forth in the Plan and Confirmation Order, neither of which were served with the Notice. The only definition actually included in the package was contained not in the Notice itself, but in the instructions on the back of the claim form, and the only mention of personal injury claims was in a small font check-box on that form.
Section 503(b) of the Bankruptcy Code provides for the allowance, as "administrative expenses," of "the actual, necessary costs and expenses of preserving the estate, including wages, salaries, or commissions for services rendered after the commencement of the case" and certain taxes. It is not, of course, readily apparent that a postpetition personal injury claim might be a cost of "preserving the estate," and the types of claims that are specifically mentioned in the statute are of a totally different nature.
The other categories included in § 503(b) relate, inter alia, to professional compensation and reimbursement of expenses, as well as to fees and mileage payable under chapter 119 of title 28.
Thorough research would reveal, however, that in 1968, the Supreme Court held that tort claims resulting from the negligence of a receiver in an arrangement proceeding under Chapter XI of the former Bankruptcy Act were entitled to administrative priority. Reading Co. v. Brown, 391 U.S. 471, 20 L.Ed.2d 751, 88 S.Ct. 1759 (1968). The Court reasoned, inter alia, that "actual and necessary costs" of administration should be construed to include "costs ordinarily incident to operation of a business, and not be limited to costs without which rehabilitation would be impossible." Id. at 483. The decision was driven by the statutory objective of "fairness to all persons having claims against an insolvent," the Court noting that the "petitioner did not merely suffer injury at the hands of an insolvent business: it had an insolvent business thrust upon it by operation of law." Reading Co. v. Brown, 391 U.S. at 477-478. The Court concluded that it would be unfair to exclude or subordinate "the claims of those on whom the arrangement is imposed to the claims of those for whose benefit it is instituted." Id. at 479. This case law doctrine survived enactment of the Bankruptcy Code and is sometimes referred to as the " Reading exception" to the usual requirements for administrative priority, e.g., that the expense benefited the estate. See, e.g., In re Jack/Wade Drilling, Inc., 258 F.3d 385, 387-88 (5th Cir. 2001); 4 L. King, Collier on Bankruptcy ¶ 503,06[3][c][i] (15th ed. rev. 2003).
Although Montenegro has not specifically contended that his personal injury counsel was confused by the Notice, he does suggest that Bernstein was led to believe that he had taken all steps necessary to prosecute and protect Montenegro's claim. Bernstein was under this impression because of the ongoing negotiations with and settlement offers made by claims examiner Curtis, Curtis' statement that she would be handling the file and that all correspondence should be directed to her attention, and, significantly, the statement made on April 25, 2003 by a Trumbull representative that no claim form need be filed with respect to incidents occurring after the Chapter 11 petition. Montenegro contends that these communications and course of conduct conflict with the substance of the Notice and support application of the excusable neglect doctrine.
This Court agrees, particularly in light of the fact that the delay resulting from Bernstein's failure to timely file the claim was not unreasonable in the context of this case and is nonprejudicial in any event. As indicated above, Bernstein did not become aware of the bar date until after he reviewed the Notice mailed by Trumbull on June 12, 2003 with respect to the Ocasio claim. Bernstein reviewed that notice on July 1, 2003 and filed the Montenegro claim on July 18. He ultimately obtained bankruptcy counsel who filed this motion on November 12, 2003.
The Court rejects Kmart's contention that Bernstein's filing of the Ocasio claim in July, promptly after reviewing the Notice received with respect to the Ocasio claim, forecloses any suggestion that he might have been confused upon receipt of a Notice in May with respect to Montenegro. In May, Bernstein was still in the midst of settlement negotiations with Kmart as to the Montenegro claim, and his firm had just recently been told by Trumbull that no claim form was necessary for postpetition injuries. The Court cannot conclude that his reaction under such circumstances would necessarily be identical to his response in July, upon receiving an additional Notice with respect to yet another client holding a claim for personal injuries.
This delay has not prejudiced Kmart, because, inter alia, Kmart is still involved in the process of reviewing, reconciling, and litigating postpetition personal injury claims. Indeed, Kmart sought and obtained an extension of the claims objection deadline to February 2, 2004, i.e., almost three months beyond the date that Montenegro's motion was filed. Moreover, under the procedures established in this case for the resolution of postpetition personal injury claims (the "Postpetition PI Procedures"), the questionnaires to be submitted by claimants were not even due until February 15, 2004, and Kmart's responses were not due until ninety days after receipt of the questionnaires. The claimants then may take up to ninety additional days to serve their replies. Even that does not end the litigation process, because where no agreements are reached, the claimants may obtain relief from the plan injunction to litigate their claims in nonbankruptcy fora. Clearly, the claims process for postpetition personal injuries is far from complete.
Or forty-five days from the date mailed, if the questionnaire was not served by January 1, 2004.
The Court notes that scores of agreed orders have been entered over the past several months lifting the plan injunction to allow personal injury actions to proceed as to claimants who have exhausted the Postpetition PI Procedures or the similar procedures established earlier in this case for prepetition personal injury claims.
Kmart contends, inter alia, that if multiple late administrative claims are deemed timely filed, the value of Kmart's stock might be affected, thereby impairing the stock distributions made to prepetition creditors. However, allowing the late filing of this claim will not open the proverbial floodgates, because as time goes by (and delay in the filing of claimants' motions therefore increases), the likelihood of a favorable excusable neglect determination diminishes. Moreover, it must be remembered that each inquiry is fact-intensive and equitable in nature, and "focusing on one factor may change the balance, and, in turn, the result." Brown, 133 F.3d at 997.
In light of the good faith exhibited by claimant and counsel, the minimal (if any) prejudice to the Debtors resulting from the delay in this case, and the role that Kmart may have played in contributing to that delay, forfeiture of any claim, regardless of its merits, would be an excessive sanction. Accordingly, "[a]lthough inadvertence, ignorance of the rules, or mistakes construing the rules do not usually constitute `excusable' neglect," Pioneer, 507 U.S. at 392 (emphasis added), under all the circumstances of this case, any neglect was excusable.
CONCLUSION
For all of the reasons set forth above, the court grants Montenegro's Motion to the extent that it seeks leave to file an administrative expense claim have it deemed timely filed. This opinion constitutes the court's findings of fact and conclusions of law in accordance with Bankruptcy Rule 7052. A separate order will be entered pursuant to Bankruptcy Rule 9021.