In Re: The Roman Catholic Diocese of Rockville Centre, New York

Background

The Roman Catholic Diocese of Rockville Centre, New York filed for Chapter 11 bankruptcy in October 2020 after numerous lawsuits were brought under New York’s Child Victims Act. The bankruptcy court later established August 14, 2021, as the deadline for people with sexual-abuse claims to file proofs of claim. The court-approved notice program included direct notice to known claimants and widespread television, radio, print, online, social-media, mailing, and community outreach efforts for potential claimants who were not known to the Diocese.

Claimant 90565 filed a proof of claim on August 19, 2022, more than a year after the deadline. The proof of claim itself stated in bold type that it had to be received by August 14, 2021. It showed that Claimant 90565 signed it on July 25, 2022, but the record did not explain why the claim was not filed until nearly a month later. Claimant 90565 had not previously filed a claim in the bankruptcy case or a civil action against the Diocese, according to the opinion.

The Diocese objected to the claim as untimely. Claimant 90565 asked the bankruptcy court to extend the deadline retroactively under Bankruptcy Rule 9006(b)(1), which permits an extension after a deadline when the failure to act resulted from “excusable neglect.” Claimant 90565 argued that the Diocese would not be prejudiced, the delay would not disrupt the proceedings, the delay was related to the time needed to come to terms with the alleged abuse, and the filing was made in good faith. Claimant’s counsel submitted supporting materials, but no statement from Claimant 90565 explaining the delay.

Bankruptcy Court Ruling

On July 12, 2023, the bankruptcy court sustained the Diocese’s objection to Claimant 90565’s proof of claim and disallowed it, along with five other late-filed claims. Applying the four factors identified by the Supreme Court in Pioneer Investment Services Co. v. Brunswick Associates Limited Partnership, the bankruptcy court found that good faith, lack of prejudice, and the likely lack of harm to the proceedings favored the claimants. But it found that the most important factor—the reason for the delay—did not.

The bankruptcy court found that potential claimants had constructive notice of the deadline through the extensive publication program, even if they did not receive individualized notice. It also found no evidence that the difficulties of processing the alleged abuse caused confusion about the deadline or interfered with the notice process. The court noted that hundreds of other claimants filed before the deadline and that Claimant 90565 did not explain the delay after learning that the deadline had passed.

District Court’s Analysis

The district court first rejected the Diocese’s argument that it could not consider Claimant 90565’s excusable-neglect arguments because no document formally titled a motion had been filed in the bankruptcy court. Claimant 90565 had raised the Rule 9006 request and the relevant arguments in response to the Diocese’s objection, and the Diocese had an opportunity to respond. The district court treated that filing as the equivalent of a formal motion and considered the appeal.

The district court then held that the bankruptcy court did not abuse its discretion. “Abuse of discretion” means a decision based on legal error, a clearly mistaken factual finding, or a decision outside the range of permissible choices. The district court explained that the bankruptcy court considered all four Pioneer factors; it did not rely only on the reason-for-delay factor. However, the factors do not receive equal weight in the Second Circuit. The reason for the delay is the most important and is treated as essentially decisive in ordinary late-filing cases.

The district court agreed that the lack of individualized notice did not establish excusable neglect on this record. The record did not show when Claimant 90565 first learned of the bankruptcy or the bar date. In addition, Claimant 90565 signed the proof of claim after the deadline had already passed, and the claim was not filed until nearly a month after it was signed. The court concluded that lack of notice could not explain that later delay.

The court also found insufficient support for the assertion that Claimant 90565 needed additional time to process the alleged abuse. That assertion came from counsel and was not supported by an affidavit from Claimant 90565 or evidence from another person who could provide relevant proof. The district court distinguished a bankruptcy decision involving a different claimant because that claimant had submitted a sworn explanation, had been confused about which deadline applied, and had promptly filed a bankruptcy claim after learning of the bar date.

Finally, the district court held that the bankruptcy court was not required to address Claimant 90565’s request to preserve a right to participate in a possible future late-claims fund. The request appeared only in one sentence in the conclusion of Claimant 90565’s response, and no such fund existed when the bankruptcy court considered the objection. The district court stated that any application could be considered if such a fund were later established.

Disposition

The district court affirmed the bankruptcy court’s order sustaining the Diocese’s objection and disallowing Claimant 90565’s late-filed claim. The clerk was directed to remove the appeal from the court’s list of open matters.