No. 99-20
In the Supreme Court of the United States
GLORIA ROBINSON, PLAN ADMINISTRATOR OF THE LANDMARK INSURANCE GROUP PLAN,
ETC., PETITIONERS
v.
CLOCK TOWER PLACE INVESTMENTS, LIMITED, ET AL.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
BRIEF FOR THE FEDERAL DEPOSIT
INSURANCE CORPORATION IN OPPOSITION
SETH P. WAXMAN
Solicitor General
Counsel of Record
Department of Justice
Washington, D.C. 20530
(202) 514-2217
WILLIAM F. KROENER, III
General Counsel
JACK D. SMITH
Deputy General Counsel
ANN S. DUROSS
Associate General Counsel
COLLEEN J. BOLES
Senior Counsel
DANIEL GLENN LONERGAN
Counsel
Federal Deposit Insurance
Corporation
Washington, D.C. 20429
QUESTION PRESENTED
Whether the district court erred in denying petitioners' administrative
claim on timeliness grounds.
In the Supreme Court of the United States
No. 99-20
GLORIA ROBINSON, PLAN ADMINISTRATOR OF THE LANDMARK INSURANCE GROUP PLAN,
ETC., PETITIONERS
v.
CLOCK TOWER PLACE INVESTMENTS, LIMITED, ET AL.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
BRIEF FOR THE FEDERAL DEPOSIT
INSURANCE CORPORATION IN OPPOSITION
OPINIONS BELOW
The opinion of the court of appeals (Pet. App. 1-8) is unpublished, but
the decision is noted at 175 F.3d 1013 (Table). The district court's order
(Pet. App. 9-15) is unreported.
JURISDICTION
The judgment of the court of appeals was entered on March 29, 1999. The
petition for a writ of certiorari was filed on June 28, 1999. The jurisdiction
of this Court is invoked under 28 U.S.C. 1254(1).
STATEMENT
1. The Landmark companies developed, owned, and managed a large portfolio
of residential golf and resort communities. Clock Tower Place Investments
(Clock Tower) was a holding company for the Landmark companies, and Oak
Tree Savings Bank was the sole owner of Clock Tower. In October 1991, Clock
Tower and its subsidiaries (Debtors) petitioned for Chapter 11 bankruptcy
relief. The Office of Thrift Supervision immediately placed Oak Tree in
receivership and appointed the Resolution Trust Corporation (RTC) as its
receiver. The RTC was statutorily dissolved in 1995, and the Federal Deposit
Insurance Corporation (FDIC) became receiver of Oak Tree. See 12 U.S.C.
1441a(m)(1); Pet. App. 4-5.
Petitioner Robinson is the former plan administrator of the Landmark Group
Health Insurance Program (Plan). Landmark Land Co., Inc. (Landmark), which
is not among the debtors in the bankruptcy proceedings below, established
the Plan in the 1980s to pay the health benefits of the Landmark companies.
Health benefits under the Plan were paid out of the employers' assets. In
October 1991, immediately after the Debtors had filed their bankruptcy petitions,
Landmark created a voluntary employees' beneficiary association trust (Trust)
in accordance with 26 U.S.C. 501(c)(9) in order to ensure adequate funding
for the Plan. Petitioners Carney and Welch served as trustees. The Debtors
participated in this Trust, contributing funds to pay the benefits of the
participants. The Trust was not established for any investment purpose,
but was merely a conduit or "pay-as-you-go" trust to fund health
benefit payments as claims were received. See Pet. App. 4-5, 10; FDIC C.A.
Br. 7.
Beginning in 1989, Landmark's Benefits Committee decided to pay health benefits
to certain allegedly ineligible individuals-primarily golf professionals
working under contract for the Landmark companies. Both Robinson and Welch
knew of the decision to make those payments; Robinson learned of them in
1989. Before the Trust was created, payments to the allegedly ineligible
golf professionals exceeded $700,000, and, shortly after the Trust's inception
and the bankruptcy filing, an additional $286,000 was disbursed. Petitioners'
claim is that these payments violated the Employee Retirement Income Security
Act of 1974 (ERISA), 29 U.S.C. 1001 et seq. (Petitioners are not bringing
a claim on behalf of themselves for their own health expenses.) Although
Landmark, the initial Plan sponsor, made the payments, petitioners assert
that the RTC and the FDIC somehow assumed liability. See FDIC C.A. Br. 7-8,
17-18.
2. In April 1996, several years after the applicable bar dates imposed by
the district court, petitioners moved to file a proof of claim in bankruptcy
and an administrative claim. Pet. App. 5-6. The district court denied the
motion on alternate grounds. First, the court determined that petitioners
had not set forth an "administrative claim" under Section 503(b)
of the Bankruptcy Code, 11 U.S.C. 503(b), which provides that only "actual
and necessary" costs and expenses of the estate may be allowed as administrative
expenses. Pet. App. 12. Second, the district court found that the claims
were in any event time-barred because petitioners had not established "excusable
neglect" under Federal Rule of Bankruptcy Procedure 9006(b)(1) for
filing the claims late. Pet. App. 13. Indeed, the court added, petitioners
had not even acted in good faith, because, when they eventually did file
a claim, they initiated an adversary proceeding instead of moving to file
a proof of claim. See id. at 14.
In an unpublished per curiam order, the court of appeals affirmed. Without
addressing the district court's primary holding that petitioners had not
even filed a valid "administrative claim," the court upheld the
district court's alternative holding that petitioners' claims were time-barred.
See Pet. App. 6-8.
ARGUMENT
Petitioners contend that the court of appeals "erred in failing to
consider the legal significance of the fact" that petitioners did not
receive "actual notice" of the bankruptcy proceedings. Pet. i
(questions presented). That contention warrants no further review. As an
initial matter, this Court generally does not grant certiorari to address
an issue that the courts below "fail[ed] to consider," for a court's
failure to consider an issue, particularly in an unpublished order, creates
no precedent and has no significance beyond the particular case. At bottom,
the petition amounts to a simple request for error correction, which is
ordinarily an inappropriate basis for seeking certiorari.
Moreover, there is no error to correct. Petitioners do not deny that they
had constructive notice of the bankruptcy proceedings and that constructive
notice is sufficient for "those with mere conjectural claims."
Tulsa Prof'l Collection Servs., Inc. v. Pope, 485 U.S. 478, 490 (1988).
Petitioners' argument rests instead on the factual premise that the Debtors
in fact "knew of petitioners' claims" on the date of the bankruptcy
filing. Pet. 8. That premise is false: As the district court appears to
have recognized, there is no reasonable sense in which the Debtors could
be said to have "known" of those claims. See Pet. App. 13. Petitioners
argue (Pet. 6) that such knowledge can somehow be inferred from the mere
reference in certain bankruptcy schedules to the ongoing expected liability
for funding routine health insurance claims under the Plan. But that argument
is unsound. Petitioners, who are no longer administrators or trustees of
the Plan or Trust (Pet. App. 10), do not seek payment for their medical
expenses, nor does their claim have anything clearly to do with unpaid medical
expenses. Instead, petitioners challenge, on obscure legal grounds (see
Pet. App. 5, 12), payments the Plan had already made to the golf professionals.
Petitioners cite no evidence to rebut the lower courts' implicit conclusion
that the Debtors did not in fact "know" that such a claim would
be brought.
As this Court has stated, not "everyone who may conceivably have a
claim [is] properly considered a creditor entitled to actual notice. * *
* [I]t is reasonable to dispense with actual notice to those with mere conjectural
claims." Tulsa Prof'l Collection Servs., 485 U.S. at 490 (citing Mullane
v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950)). Despite petitioners'
factbound suggestion to the contrary, their underlying claim below was sufficiently
"conjectural" that actual notice was unnecessary, and that fact
alone distinguishes this case from those upon which they now rely. See Pet.
8-13 (citing, inter alia, New York v. New York, New Haven & Hartford
R.R., 344 U.S. 293 (1953), and several court of appeals cases).
CONCLUSION
The petition for a writ of certiorari should be denied.
Respectfully submitted.
SETH P. WAXMAN
Solicitor General
WILLIAM F. KROENER, III
General Counsel
JACK D. SMITH
Deputy General Counsel
ANN S. DUROSS
Associate General Counsel
COLLEEN J. BOLES
Senior Counsel
DANIEL GLENN LONERGAN
Counsel
Federal Deposit Insurance
Corporation
AUGUST 1999