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finding that the standards for class certification were met where the parties stipulated that the class met the standards of Rule 23, the class had been certified pre-petition by another court, and the certification motion was unopposed
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CASE NUMBER 17–40243
11-30-2017
IN RE: ERIE ISLANDS RESORT & MARINA, an Ohio General Partnership, Debtor.
Andrew W. Suhar, Suhar & Macejko, LLC, Youngstown, OH, for Debtor.
Andrew W. Suhar, Suhar & Macejko, LLC, Youngstown, OH, for Debtor.
MEMORANDUM OPINION REGARDING MOTION TO CERTIFY CLASS CLAIMS OF UNDIVIDED INTEREST OWNERS
Kay Woods, United States Bankruptcy Judge
Before the Court is Motion of [sic] Pursuant to Bankruptcy Rule 9014 for Order Applying Bankruptcy Rule 7023 to State Certified Class Claims of Undivided Interest Owners or, Alternatively, Extension of Bar Date Deadline to Allow Individual Class Member Claims ("Class Claim Motion") (Doc. 203) filed on October 31, 2017 by D. Jeffery Rengel, Esq., allegedly on behalf of an Ohio common pleas court certified class of persons. The Court held a hearing on the Class Claim Motion on November 29, 2017 ("Class Claim Hearing"), at which appeared Mr. Rengel and Timothy M. Reardon, Esq. on behalf of Michael D. Buzulencia, Chapter 7 Trustee ("Trustee"). No party opposed the Class Claim Motion.
At the conclusion of the Class Claim Hearing, the Court denied the Class Claim Motion, in part, and granted it, in part. This Memorandum Opinion memorializes that ruling. To the extent there are any inconsistencies between the Court's bench ruling at the Class Claim Hearing and this Memorandum Opinion, this Memorandum Opinion controls.
This Court has jurisdiction pursuant to 28 U.S.C. § 1334 and General Order No. 2012–7 entered in this district pursuant to 28 U.S.C. § 157(a). Venue in this Court is proper pursuant to 28 U.S.C. §§ 1391(b), 1408, and 1409. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). The following constitutes the Court's findings of fact and conclusions of law pursuant to Rule 7052.
References to "Rule" in this Memorandum Opinion mean the Federal Rules of Bankruptcy Procedure.
I. PROCEDURAL AND FACTUAL BACKGROUND
On April 9, 2010, Mr. Rengel filed a lawsuit on behalf of Carl R. Gordon and Gerri L. Gordon (collectively, the "Gordons"), captioned Gordon et al. v. Erie Islands Resort & Marina, et al. , Case No. 10–CV–271H (the "Gordon Action"), in the Court of Common Pleas of Ottawa County, Ohio ("Common Pleas Court"). On or about November 15, 2011, Mr. Rengel filed a lawsuit on behalf of Karen Walderzak (together with the Gordons, the "Class Representatives"), captioned Walderzak v. Erie Islands Resort & Marina, et al. , Case No. 2011–CV–606H (the "Walderzak Action"), in the Common Pleas Court. The Gordon Action and the Walderzak Action each "sought recovery on behalf of a class of persons that allege claims against the Debtor and other defendants arising from the marketing and sale of certain deeded undivided interests and rights of usage in the Debtor real property." (Class Claim Mot. ¶ 5.)
The Common Pleas Court consolidated the Gordon Action and the Walderzak Action on November 21, 2013 and entered an order certifying a class (the "Common Pleas Class Action"). "On August 4, 2015, the Common Pleas Court entered an order clarifying and defining the class to include ‘Persons or Entities, other than Defendants, who owned an Undivided Ownership Interest or Ownership Interest in Erie Islands Resort & Marina in Bay, [sic] Township, Ottawa County ... on or after April 9, 1995’ (the ‘Certified Class’)." (Id. ¶ 6 (ellipses in original).)
Erie Islands Resort & Marina, an Ohio general partnership ("Erie Islands" or "Debtor"), filed a voluntary petition under chapter 7 of the Bankruptcy Code on February 16, 2017. Mr. Buzulencia was appointed Chapter 7 Trustee for the Debtor's estate.
On October 2, 2017, "Class Counsel" filed a proof of claim in this bankruptcy case, purportedly on behalf of the Certified Class, which was denominated Claim No. 20–1 ("Claim 20"). (Id. ¶ 7) Claim 20 sets forth (i) the identity of the creditor as "Rengel Law Office as legal representative of class action members;" (ii) an unsecured claim in an "Unliquidated" amount; and (iii) the basis of the claim as "Class action civil suit pending in state court." (Claim 20 at 1–2.) Claim 20 specifies that it is not secured and that it is not entitled to priority under 11 U.S.C. § 507(a). (Id. ) Thus, Claim 20 asserts a nonpriority unsecured claim. Attached to Claim 20 (but not labeled as an exhibit, referenced in, or incorporated into Claim 20) is a 34–page document, which appears to be a copy of Consolidated Order Granting and Modifying Class Certification (on Remand) in Case No. 2011–CV–606H. Although the file stamp on the document is difficult to read, the date appears to be August 4, 2015.
"Class Counsel" is not defined in the Class Claim Motion. Claim 20 was filed by Rengel Law Office. However, the Class Claim Motion refers to "Class Counsel and claim filer, D. Jeffery Rengel." (Class Claim Mot. at 6.)
Case No. 2011–CV–606H is the case number for the Gordon Action. (See Class Claim Mot. ¶ 5.) This appears to be the case number the Common Pleas Court assigned to the consolidated case, defined in this Memorandum Opinion as the Common Pleas Class Action.
On October 5, 2017, the Trustee filed Motion of Michael D. Buzulencia, Chapter 7 Trustee, for the Entry of Orders (i) Approving Bidding Procedures for the Sale of Debtor's Assets, Including the Designation of a Stalking Horse Bidder; (ii) Scheduling an Auction of Debtor's Assets; (iii) Scheduling a Hearing to Consider the Sale of the Debtor's Assets and to Approve the Form and Manner of Notices Related Thereto; (iv) Approving Break–Up Fee; and (v) Approving the Sale of the Debtor's Assets to the Proponent of the Highest and Best Bid Free and Clear of All Liens, Claims and Interests Pursuant to Section 363 of the Bankruptcy Code ("Sale Motion") (Doc. 151), in which the Trustee sought authority from this Court to sell all of the Debtor's assets, including the Debtor's real estate ("Real Estate") and personal property. The Court held a hearing on the Sale Motion on October 5, 2017 and, on that same date, entered Order (i) Approving the Bid Procedures to Be Used in the Sale of the Debtor's Assets to the Proponents of the Highest and Best Bids for the Assets; (ii) Scheduling an Auction of the Debtor's Assets; (iii) Approving the Break–Up Fee; (iv) Scheduling a Hearing to Consider the Sale of the Debtor's Assets; and (v) Approving the Form and Manner of Notice Related Thereto ("Bid Procedures Order") (Doc. 168).
On October 26, 2017, the Trustee filed Report of No Bids (Doc. 194), in which he indicated that (i) he had not received any bids from qualifying buyers prior to the bid deadline established in the Bid Procedures Order; and (ii) there were no bids other than the bid of Diamond Acquisitions, LLC.
The Court held a hearing on November 2, 2017 to consider the Sale Motion. On November 8, 2017, the Court entered Order (a) Authorizing and Approving the Sale of Substantially All of the Debtor's Assets Free and Clear of All Liens, Claims, Encumbrances and Interests; (b) Granting Related Relief (Doc. 211).
II. ANALYSIS
The Trustee has not objected to the allowance of Claim 20. Instead, the Trustee filed Motion of Michael D. Buzulencia, Chapter 7 Trustee, for an Order (i) Authorizing Trustee's Compromise and Settlement with Class Action; (ii) Approving the Terms of the Settlement; and (iii) Certifying the Class for Settlement Purposes ("Compromise Motion") (Doc. 177). By filing the Compromise Motion, the Trustee appears to acknowledge the validity of Claim 20. Because no party has objected to the allowance of Claim 20, it is deemed allowed under 11 U.S.C. § 502.
At the November 29, 2017 hearing on the Compromise Motion, the Trustee orally withdrew the Compromise Motion without prejudice.
"A claim or interest, proof of which is filed under section 501 of this title, is deemed allowed, unless a party in interest ... objects." 11 U.S.C. § 502(a) (2017).
Despite the absence of an objection to Claim 20, the Court must address three questions. First, can the Court allow Claim 20 as a class claim? Second, should Claim 20 be allowed as a class claim? Last, does Rengel Law Office have standing to file a class claim?
A. Can the Court Allow Claim 20 as a Class Claim?
The seminal case on class claims is In re American Reserve Corp. , 840 F.2d 487 (7th Cir. 1988), in which the Seventh Circuit held that application of Rule 7023 is discretionary, but may be applied by the bankruptcy court at any stage of a bankruptcy case, including when a proof of claim is filed.
We start with the Bankruptcy Rules. Bankruptcy Rule 7023 provides: " Rule 23 F.R.Civ.P. applies in adversary proceedings." Bankruptcy Rule 9014, which applies to "a contested matter in a case ... not otherwise governed by these rules" states that "[t]he court may at any stage in a particular matter direct that one or more of the other rules in Part VII shall apply. Rule 9014 thus allows bankruptcy judges to apply Rule 7023—and thereby Fed.R.Civ.P. 23, the class action rule—to "any stage" in contested matters. Filing a proof of claim is a "stage". All disputes in bankruptcy are either adversary proceedings or contested matters, see Daniel R. Cowans, 1 Bankruptcy Law and Practice , 189 (1986), so Rule 23 may apply throughout a bankruptcy case at the bankruptcy judge's discretion.
Id. at 488. Thus, although class claims may be filed in a bankruptcy case, an entity does not have a right to file a class claim. Whether to allow a claim as a class claim falls within the sound discretion of the bankruptcy court. Indeed, in remanding the matter to the bankruptcy court, which had found in favor of the class claim filing, the Seventh Circuit stated, "Finally, the bankruptcy judge did not recognize that he has discretion under Rule 9014 not to apply Rule 7023—and therefore not to apply Rule 23 —in this ‘contested matter’. We trust that the bankruptcy judge will exercise discretion prudently on remand." Id. at 494.
The Sixth Circuit has adopted the reasoning of American Reserve and recognizes class claims in certain circumstances.
Although there is a conflict between the reported decisions considering the permissibility of a class proof of claim in bankruptcy proceedings, the more equitable resolution was recently enunciated by the Seventh Circuit in In re American Reserve , 840 F.2d 487 (7th Cir. 1988) which endorsed the filing of a class proof of claim.
Reid v. White Motor Corp. , 886 F.2d 1462, 1469 (6th Cir. 1989) (internal citation omitted). While recognizing the right to file a class claim in bankruptcy, the Sixth Circuit nonetheless found that the bankruptcy court in White Motor did not abuse its discretion in denying the class proof of claim.Accordingly, to answer the first question, the Court finds that it can allow Claim 20 as a Class Claim.
B. Should Claim 20 Be Allowed as a Class Claim?
The fact that a claim can be allowed as a class claim does not mean that it should be so allowed. In deciding whether to allow a class claim, this Court is required to follow a two-step process.
It is important to note that there are two steps in the class proof of claim process. Two decisions must be made: (1) Whether Rule 7023 should be made applicable to the proof of claim; and (2) whether a class should be certified under Rule 23. A decision favorable to the class on one step is not sufficient. Application of Rule 7023 to the proof of claim does not assure that the putative class will be certified or that the movant will be designated the class representative. Conversely, anticipated certification by the bankruptcy court or pre-petition certification by another court does not assure that Rule 7023 will be made applicable to the proof of claim.
In re Computer Learning Ctrs., Inc. , 344 B.R. 79, 86 (Bankr. E.D. Va. 2006) (n.9 omitted). The Class Claim Motion does not address this two-step process. Instead, Mr. Rengel takes for granted that Claim 20 is properly filed and the Court will apply Rule 7023. Thus, the Class Claim Motion starts from those premises. Although the Class Claim Motion does not address the two steps contemplated by the Computer Learning Centers case, the Court will undertake that task.
Claim 20 has been filed as a purported class claim based on the pending Common Pleas Class Action. Accordingly, the Court finds that application of Rule 7023 is appropriate to determine whether class certification is proper with respect to Claim 20.
Federal Rule of Civil Procedure 23 provides, in pertinent part:
(a) Prerequisites. One or more members of a class may sue or be sued as representative parties on behalf of all members only if:
(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the interests of the class.
(b) Types of Class Actions. A class action may be maintained if Rule 23(a) is satisfied and if:
(1) prosecuting separate actions by or against individual class members would create a risk of:
(A) inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class; or
(B) adjudications with respect to individual class members that, as a practical matter, would be dispositive of the interests of the other members not parties to the individual adjudications or would substantially impair or impede their ability to protect their interests; [or]
* * *
(3) the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. The matters pertinent to these findings include:
(A) the class members' interests in individually controlling the prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the controversy already begun by or against class members;
(C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and
(D) the likely difficulties in managing a class action.
FED. R. CIV. P. 23 (2017).
The Class Claim Motion provides, "The the [sic] Trustee, the Class Counsel, and the Class Representatives, [sic] stipulated that for purposes of the Class Settlement that the Certified Class meets the standards of Fed. R. Civ. P. 23(a) and (b)." (Class Claim Mot. ¶ 12.) Based on this stipulation, Mr. Rengel urges this Court to "adopt the findings of the Common Pleas Court with respect to the certification of the Certified Class pursuant to rule 23 [sic] of the Ohio Rules of Civil Procedure ...." (Id. at 8.) Mr. Rengel states:
To certify the class, the Common Pleas Court determined that (i) an identifiable class exists and that the proposed class is unambiguous, (ii) the Class Representatives are members of the class, (iii) there are sufficient questions of law and fact that are common to the class, (iv) the claims of the Class Representatives are typical of the class, (v) the Class Representatives fairly and adequately protect the class, and (vi) the Class Representatives met the requirements of Ohio Civ. R. 23(B). Gordon v. Erie Islands Resort & Marina , 2015 WL 12862551 (Ohio Com. Pl.).
(Id. )
The factors to consider in determining whether to allow a class claim are similar to the class certification factors. Here the parties stipulate that the requirements of Federal Rule of Civil Procedure 23 (a) and (b) are met. This stipulation is sufficient for this Court to find that the Certified Class meets the standard for class certification in Federal Rule of Civil Procedure 23(a) and (b). Although prepetition certification of a class in a different court is not dispositive of whether a proof of claim should be allowed as a class claim, this Court finds that Claim 20 could be allowed as a class proof of claim. The final question that must be answered, however, before this Court can determine if Claim 20 should be allowed as a class claim, is whether Rengel Law Office has standing to file a class claim.
C. Does Rengel Law Office Have Standing to File a Class Claim?
Notwithstanding the Trustee's lack of objection to Claim 20, the Court has the authority to determine whether Rengel Law Office has standing to assert Claim 20 as a nonpriority unsecured class claim. In O'Donnell v. O'Donnell (In re O'Donnell) , 326 B.R. 901 (6th Cir. BAP 2005), the Sixth Circuit Bankruptcy Appellate Panel held:
This case turns on whether Normali has standing to file proofs of claim in the Debtors' cases .... A trial court, or any appellate court, may sua sponte deny any claim for lack of standing of the party attempting to bring the claim. See e.g., FW/PBS, Inc. v. City of Dallas , 493 U.S. 215, 231, 110 S.Ct. 596, 607, 107 L.Ed.2d 603 (1990) (holding that "[t]he federal courts are under an independent obligation to examine their own jurisdiction, and standing ‘is perhaps the most important of [the jurisdictional] doctrines.’ ").
Id. at *3. Consequently, the Court will examine the standing of Rengel Law Office to assert Claim 20 as a class claim.
The Sixth Circuit's analysis in Reid v. White Motor Corp. , 886 F.2d 1462 (6th Cir. 1989), is instructive and applicable to the instant facts. Prior to White Motor Corporation ("WMC") filing for chapter 11 protection, former employees, who had been terminated when WMC sold its truck division, filed a class action seeking severance pay in Michigan circuit court (the "Michigan Case"). Approximately three years prior to WMC's bankruptcy petition date, the Michigan circuit court certified the Michigan Case as a class action (the "Burch Class"). Reid, an attorney who represented the Burch Class in the Michigan Case, filed a proof of claim seeking more than $3,000,000.00 in severance benefits. Attached to the proof of claim was a list of unidentified names, juxtaposed by dollar amounts. The list did not identify the names as former employees of the truck division or members of the Burch Class. The WMC trustee objected to the class claim and the bankruptcy court granted summary judgment in favor of the trustee.
In granting summary judgment, the bankruptcy court held, inter alia , that (i) class proofs of claim could not be used to circumvent Rule 3003, which requires individual proofs of claim; and (ii) Reid did not comply with the proper procedures in Rule 9014 to certify the class in the bankruptcy case. Although the Sixth Circuit reversed the bankruptcy court's ruling regarding the use of class proofs of claim, it held that Reid had no standing to represent the class and assert the class claim.
The Sixth Circuit also rejected Reid's argument that he was the authorized agent of the putative class and had filed the class proof of claim in accordance with Rule 3001(b). In rejecting this argument, the Sixth Circuit relied on Reid's failure to comply with Rule 2019, which is applicable only to cases filed under chapter 9 or 11.
Moreover, Reid had no authorization designating him as a representative of the putative class. Under Fed.R.Civ.P. 23, the class representative must be a member of the class he claims to represent. Fed.R.Civ.P. 23 ; General Telephone Co. v. Falcon , 457 U.S. 147, 156, 102 S.Ct. 2364, 2370, 72 L.Ed.2d 740 (1982). "A class representative must be part of the class and ‘possess the same interest and suffer the same injury’ as the class members." Davis v. Ball Memorial Hosp. Ass'n, Inc. , 753 F.2d 1410, 1420 (7th Cir. 1985) (quoting East Texas Motor Freight System, Inc. v. Rodriguez , 431 U.S. 395, 403, 97 S.Ct. 1891, 1896, 52 L.Ed.2d 453 (1977) ). "Stated another way, the plaintiff must have standing to represent the class." In re W.T. Grant Co. , 24 B.R. 421, 425 (Bankr. S.D.N.Y. 1982).... In the case at bar, Reid was not a member of the class of former employees of WMC's Diamond Reo Truck Division. Reid was merely an attorney who had offered his services to the putative class in order to prosecute their entitlement to severance pay against WMC. As such, Reid lacked standing to initiate this class action.
Id. at 1471 (emphasis added).
The Sixth Circuit also rejected Reid's argument that, because he was authorized to represent the Burch Class in the Michigan circuit court, he was authorized to act as an agent for the purported class in the bankruptcy case. In rejecting this argument, the Sixth Circuit held:
It is well-settled that consent to being a member or the representative of a class "in one piece of litigation is not tantamount to a blanket consent to any litigation the class counsel may wish to pursue." In re Standard Metals Corp. , 817 F.2d 625, 631 (10th Cir. 1987), modified
on other grounds , 839 F.2d 1383 (1988 [1987] ) ; In re Manville Forest Products Corp. , 89 B.R. 358, 376–77 (Bankr. S.D.N.Y. 1988) ; In re Baldwin United Corp. , 52 B.R. 146, 149 (Bankr. S.D. Ohio 1985) ; cf. In re Ross , 37 B.R. 656, 658 (Bankr. 9th Cir. BAP 1984). Accordingly, the bankruptcy court was well within its discretion to dismiss Reid's class proof of claim since he has failed to elucidate his authority as agent for the WMC former employees.
Id. at 1472 (n.14 omitted).
Like Reid in White Motor , Rengel Law Office (i) is not a member of the Certified Class; and (ii) has no authorization designating it as a representative of the Certified Class. The only document attached to Claim 20 is an order of the Common Pleas Court, which (i) certifies a class of plaintiffs; (ii) designates the Gordons and Walderzak as the Class Representatives; and (iii) instructs the Class Representatives to provide certain specified notice to members of the class.
The Common Pleas Court appointed the Gordons and Walderzak as the Class Representatives for the Certified Class; however, the Class Representatives did not file Claim 20. Rengel Law Office filed Claim 20. Mr. Rengel glosses over this anomaly and states:
Class Counsel and claim filer, D. Jeffery Rengel, is an authorized agent of the class claimants and has been attorney of record for the class since 2010 filing and the August 4, 2015 Ohio state court certification of the class. Authorization can be either express authorization from each individual purported class members [sic] or can be accomplished through the class certification process. See American Reserve , [840 F.2d 487 (7th Cir. 1988),] supra, (noting that the "representative in a class action is an agent for the missing" and "[a] representative is an agent only if the class is certified"). As the named claimants, as certified Class Representatives, were entitled to file class proofs of claim on behalf of the UDI unnamed claimants, the class claims were properly filed pursuant to Bankruptcy Rule 3001(b).
(Class Claim Mot. at 6–7.) In American Reserve , the "representative in a class action" was the certified class representative, not the attorney who filed the class action. Mr. Rengel conflates the concept of class representatives—i.e. , the Gordons and Walderzak—with himself as the attorney who filed the two state court actions that were consolidated into the Common Pleas Class Action. By doing so, he appears to misunderstand and misrepresents the state of the law. Neither Mr. Rengel nor Rengel Law Office became "class representative" for purposes of filing a class claim simply because Mr. Rengel filed the Common Pleas Class Action. Mr. Rengel provides no other evidence to support his statement that he is the "agent" of the Certified Class.
Rule 3001(b) provides, "A proof of claim shall be executed by the creditor or the creditor's authorized agent except as provided in Rules 3004 and 3005." FED. R. BANKR. P. 3001(b) (2017). Rengel Law Office cannot rely on Rule 3001(b) because there is no indication that Rengel Law Office is the authorized agent for the Certified Class.
At the Class Claim Hearing, the Court inquired whether Mr. Rengel or Rengel Law Office had been certified by the Common Pleas Court as class counsel. Mr. Rengel represented that the Common Pleas Court found that he and his firm had sufficient experience, skill, and competency to qualify them to represent the class. He conceded, however, that he had not been designated in any court order as certified class counsel. As a consequence, this case is distinguishable from In re Trebol Motors Distributor Corporation , 211 B.R. 785 (Bankr. D.P.R. 1997), which allowed certified class counsel to file a proof of claim as a class claim. "The Bonilla creditors were certified as a class and Ness, Motley was designated and appointed by the District Court to serve as class counsel for all members of the Bonilla class, as defined and certified in the District Court's order." Id. at 787.
Nothing on the face of Claim 20 or the attachment thereto indicates that Mr. Rengel or Rengel Law Office is anything other than legal counsel for the Gordons and Walderzak. " Rule 3001(b) allows a creditor to decide to file a proof of claim and to instruct an agent to do so; it does not allow an ‘agent’ to decide to file a proof of claim and then inform a creditor after the fact." Sheftelman v. Standard Metals Corp. (In re Standard Metals Corp.) , 817 F.2d 625, 631 (10th Cir. 1987) (n.10 omitted). In the instant case, it appears that Mr. Rengel did exactly what was found to be prohibited in Standard Metals —i.e. , as the attorney who filed the Common Pleas Class Action (but who is not certified class counsel), he filed the alleged class proof of claim and then informed the Certified Class about it after the fact.
Mr. Rengel argues that the Gordons and Walderzak, as Class Representatives, were entitled to file a class proof of claim. However, the Class Representatives did not file Claim 20 or any other proof of claim. Moreover, there is no evidence that the Class Representatives authorized Mr. Rengel or Rengel Law Office to file Claim 20 as a class proof of claim in their names because Claim 20 was filed in the name of Rengel Law Office.
Thus, since Rengel Law Office is neither a member of the Certified Class, the class representative, an authorized agent for the Certified Class, nor class counsel appointed by the Common Pleas Court, this Court finds that Rengel Law Office does not have standing to file a class claim.
D. Can Rengel Law Office's Lack of Standing Be Remedied?
Although Rengel Law Office does not have standing to file a class claim on behalf of the Certified Class, can this deficiency be remedied?
On July 11, 2017, the Trustee filed Request for Notice to Creditors (Doc. 97), which stated that there will be assets for distribution. The next day, Notice of Need to File Proof of Claim Due to Recovery of Assets ("Notice of Claim") (Doc. 98) was sent to all creditors and parties in interest in this case. The Certificate of Notice (Doc. 104) indicates that the Notice of Claim was sent to Carl R. Gordon c/o Mr. Rengel and to Carl R. Gordon, et al. , c/o Mark S. Abood, Esq. There is no indication that either Gerri L. Gordon or Karen Walderzak, as the other Class Representatives, received the Notice of Claim. In the Class Claim Motion, Mr. Rengel states:
The Trustee Bar Date Notice sent to the class members included a letter prepared by Class Counsel which informed the class members that a class action had been previously certified in Ohio's Ottawa County Common Pleas Court and that the class was represented by class legal counsel. The letter also informed the class members that the Class Representatives and Class Counsel had been, and would be, representing their interests in the bankruptcy proceedings.
(Class Claim Mot. at 6.) Mr. Rengel goes on to state that it would be reasonable to assume that the members of the Certified Class relied on his representations and refrained from filing individual proofs of claim. These statements in the Class Claim Motion are highly confusing and inaccurate because the Court, through its noticing agent, sent the Notice of Claim and such Notice of Claim did not include any letter. The Court assumes Mr. Rengel is referring to a letter he prepared that was sent with the Bid Procedures Order, which is not relevant to the filing of a proof of claim.
The Court finds that, with the exception of Mr. Gordon, most, if not all of the other members of the Certified Class were not identified by the Trustee prior to sending the Notice of Claim. Specifically, Ms. Gordon and Ms. Walderzak were not sent the Notice of Claim. Based on the Common Pleas Court order that certified the class, the Gordons and Walderzak, as Class Representatives, were creditors known to the Debtor. As such, each of them should have received the Notice of Claim.
It is not clear whether the names of any other members of the Certified Class were known to the Trustee.
--------
Mr. Rengel is correct that, as certified Class Representatives, the Gordons and Walderzak could have filed Claim 20 as a class proof of claim. It appears that at least two of the Class Representatives were not notified of the need to file a proof of claim. Therefore, in the interests of justice and for reasons of equity, this Court will allow Claim 20—which was timely filed—to be amended to change the name of the claimant from Rengel Law Office to the Gordons and Walderzak, as Class Representatives. Such amendment must be done no later than December 7, 2017. Failure to timely amend Claim 20, as set forth herein, shall result in disallowance of Claim 20 in its entirety.
III. CONCLUSION
The Court makes the following findings:
1. This Court has discretion to allow Claim 20 as a class claim.
2. Claim 20, which was timely filed, could be allowed as a class claim.
3. The parties' stipulation that the requirements of Federal Rule of Civil Procedure 23 (a) and (b) are met is sufficient for this Court to find that the Certified Class meets the standard for class certification in Federal Rule of Civil Procedure 23(a) and (b).
4. Rengel Law Office is neither a member of the Certified Class, the class representative, an authorized agent for the Certified Class, nor class counsel appointed by the Common Pleas Court. Accordingly, Rengel Law Office does not have standing to file a class claim.
5. The Class Representatives could file a class proof of claim.
The Court will grant the Class Claim Motion, in part, and deny it, in part. Although Rengel Law Office lacks standing to file a class proof of claim, Mr. Rengel, as legal counsel for the Class Representative, can ascertain whether the Class Representatives desire to file a class proof of claim. If the Class Representatives want to assert a class claim, the Court will grant leave for Claim 20 to be amended—no later than December 7, 2017—to substitute the Class Representatives as the named claimant.
An appropriate order will follow.
ORDER GRANTING, IN PART, AND DENYING, IN PART, MOTION TO CERTIFY CLASS CLAIMS OF UNDIVIDED INTEREST OWNERS
Before the Court is Motion of [sic] Pursuant to Bankruptcy Rule 9014 for Order Applying Bankruptcy Rule 7023 to State Certified Class Claims of Undivided Interest Owners or, Alternatively, Extension of Bar Date Deadline to Allow Individual Class Member Claims ("Class Claim Motion") (Doc. 203) filed on October 31, 2017 by D. Jeffery Rengel, Esq., allegedly on behalf of an Ohio common pleas court certified class of persons. The Court held a hearing on the Class Claim Motion on November 29, 2017 ("Class Claim Hearing"), at which appeared Mr. Rengel and Timothy M. Reardon, Esq. on behalf of Michael D. Buzulencia, Chapter 7 Trustee. No party opposed the Class Claim Motion.
For the reasons set forth at the Class Claim Hearing and in the Court's Memorandum Opinion Regarding Motion to Certify Class Claims of Undivided Interest Owners, the Court hereby finds:
1. This Court has discretion to allow Claim 20 as a class claim.
2. Claim 20, which was timely filed, could be allowed as a class claim.
3. The parties' stipulation that the requirements of Federal Rule of Civil Procedure 23 (a) and (b) are met is sufficient for this Court to find that the Certified Class meets the standard for class certification in Federal Rule of Civil Procedure 23(a) and (b).
4. Rengel Law Office is neither a member of the Certified Class, the class representative, an authorized agent for the Certified Class, nor class counsel appointed by the Common Pleas Court. Accordingly, Rengel Law Office does not have standing to file a class claim.
5. The Class Representatives could file a class proof of claim.
As a consequence, the Court hereby grants the Class Claim Motion, in part, and denies it, in part. Further, in the interests of justice and for reasons of equity, the Court hereby grants leave for Claim 20 to be amended to change the name of the claimant from Rengel Law Office to the Gordons and Walderzack, as Class Representatives. Such amendment must be done no later than December 7, 2017. Failure to timely amend Claim 20, as set forth herein, shall result in disallowance of Claim 20 in its entirety.