In re: Todd, No. 0:10-bk-15857-RJH (Bankr. D. Ariz., January 28, 2011).
The court in a recent Arizona bankruptcy case answered the question of whether it is sufficient notice of a deadline to file a nondischargeability action to give notice to a creditor's attorney who had not appeared in the bankruptcy course, but had previously represented the attorney in a state court action.
Creditors Doug and Kimberly McManus obtained a judgment for $6 million against William Todd for the wrongful death of their daughter. Todd then filed for Chapter 7 bankruptcy protection. Notice of the first meeting of creditors was sent to the Robins & Curtin, the law firm that represented the McManuses in the wrongful death action.
The creditors did not file an objection to discharge of the $6 million owed to them by the deadline, and then challenged the court's method of notice. The court agreed with the McManuses that notice was not received by an authorized agent of the debtors, and gave them 30 days to file an objection to discharge.
Although the court held that it was sufficient notice to send notice to the creditors' state court attorney, the notice was never actually received. Although there is a presumption, called the Mailbox Rule, that notice is received if it is properly dispatched in the mail, that presumption can be overcome by evidence of nonreceipt. Here, the creditors provided evidence in the form of affidavits from all employees who normally handle such notices that they never received the notice, and also that the case was high-profile, and they would have certainly acted on the notice had they received it.
