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Discrimination Claims following Chapter 11 Bankruptcy Claims Remain Open for Adjudication
(March 2010) By Tamiya N. Wilkes, Associate
For more information, contact Paul Farquharson.
Fougere Holcombe v. US Airways, Inc.,
No.: 08-1506 (4th Cir. March 5, 2010)
Available at
http://pacer.ca4.uscourts.gov/opinion.pdf/081506.U.pdf
Fougere Holcombe ("Holcombe") filed suit against her former
employer, US Airways, Inc. ("US Airways"), in the United States District Court
for the Eastern District of New York. Holcombe alleged that US Airways violated
the Americans with Disabilities Act by failing to accommodate her disability.
While Holcombe's lawsuit was pending, US Airways filed for
Chapter 11 bankruptcy reorganization in the United States Bankruptcy Court for
the Eastern District of Virginia ("Bankruptcy Court"). Pursuant to 11 U.S.C. §
1141(d)(1)(A), a Chapter 11 bankruptcy plan discharges a debtor from any debt
that arose before confirmation of the bankruptcy plan by the Bankruptcy Court.
Holcombe, however, did not file a proof of claim in the Bankruptcy Court based
on her allegations of discrimination. US Airway's plan of reorganization was
confirmed by the Bankruptcy Court. After confirmation of its Chapter 11 plan for
reorganization, US Airways filed a second bankruptcy petition.
It was not until US Airways filed the bankruptcy petition
that Holcombe filed a claim in Bankruptcy Court based on her allegations of
discrimination. US Airways filed a Motion for Summary Judgment alleging that
Holcombe's claim was barred because the actions giving rise to her claim
occurred prior to the adoption of US Airways' confirmation plan in the first
bankruptcy. US Airways' Motion for Summary Judgment was granted by the
Bankruptcy Court and the U.S. District Court for the Eastern District of
Virginia ("District Court") affirmed the Bankruptcy Court's order. Holcombe
appealed the decision of the District Court to the United States Court of
Appeals for the Fourth Circuit ("Fourth Circuit").
The Fourth Circuit found that Holcombe received multiple
notices of US Airways pending bankruptcy, prior to the confirmation of the first
Chapter 11 plan of reorganization. Nevertheless, Holcombe failed to file a proof
of claim in the Bankruptcy Court. Therefore, Holcombe's claim was properly
discharged on that date, unless her claim arose after confirmation. Holcombe
argued that her discrimination claim was a continuing violation which accrued
pre-confirmation and had persisted into the post-confirmation period. Holcombe
also argued that US Airways' conduct was intentional and deceitful and therefore
not subject to discharge in bankruptcy.
The Fourth Circuit held that any claims arising prior to the
confirmation of the first bankruptcy were discharged following confirmation.
However, to the extent that Holcombe had any post-confirmation discrimination
claims, such claims were not discharged by the first confirmation plan and
thereby may not be dismissed by the District Court.
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