Thomas v. Brugh (In re Brugh)

Citations: 202 B.R. 765; 1996 Bankr. LEXIS 1770Docket: Bankruptcy No. 95-00438-B7; Adv. No. 96-90302

Court: United States Bankruptcy Court, S.D. California; November 19, 1996; Us Bankruptcy; United States Bankruptcy Court

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An Order by Bankruptcy Judge John L. Peterson addresses the timeliness of Plaintiff Donald J. Thomas' complaint under F.R.B.P. 4007(c). Thomas seeks to except from discharge a $100,000 claim related to his termination from National City Jeep Eagle, owned by Gary Brew Enterprises, Ltd. (GBE), whose owners are Defendants Gary and Joyce Brugh. Thomas' employment was terminated on March 30, 1992, and he filed a racial discrimination complaint against GBE, which was dismissed on June 8, 1994, due to lack of prosecution. The Brughs filed for Chapter 7 bankruptcy on January 17, 1995, and Thomas was not listed as a creditor; the deadline for objections to the discharge was April 24, 1995, and discharge was granted on May 20, 1995. Thomas filed a complaint against Adam Adams, managing agent of National City Jeep Eagle, on March 27, 1995, later amending it to include the Brughs after their discharge had been granted. The complaint against Adams was dismissed on January 10, 1996, and the one against the Brughs remains pending.

In their answer, the Brughs assert that Thomas’ complaint is barred by the statute of limitations and claims procedures, requesting judgment in their favor. Thomas argues that he was unaware of the Brughs' bankruptcy and thus his debt is non-dischargeable under 11 U.S.C. 523(a)(3)(B). However, the Court finds that, even assuming Thomas lacked notice of the bankruptcy, he cannot prevail because any civil rights claim related to his termination had expired prior to the Brughs' bankruptcy filing, negating the obligation to list him as a creditor. The ruling references prior case law establishing that federal law governs the statute of limitations for civil rights claims, borrowing the most appropriate state statute.

Petitioners in No. 85-1626 acknowledge that the first two Wilson holdings apply to 1981 cases but dispute the applicability of the third. They argue that Section 1981 pertains primarily to economic rights and that the relevant limitations period is six years, applicable to contractual interference suits in Pennsylvania. However, the Court of Appeals refutes this assertion, emphasizing that Section 1981 encompasses broader personal rights beyond mere contractual rights, including rights to sue, testify, and equal treatment under the law. The section, part of federal law against racial discrimination, asserts that contracting rights should not be racially influenced. The Court of Appeals correctly identified the appropriate Pennsylvania two-year limitations period for personal injury actions.

Under California law, the statute of limitations for personal injury is one year, which expired on March 30, 1993, following Thomas' discharge from National City Jeep Eagle. Although Thomas filed a timely complaint against GBE, it was dismissed for lack of prosecution on June 8, 1994. He subsequently filed another complaint on March 27, 1995, amending it to include the Brughs. However, this was still two years after the one-year statute of limitations had lapsed, leading to the conclusion that Thomas' complaint is barred. Consequently, the court orders judgment in favor of defendants Gary W. and Joyce E. Brugh, dismissing Thomas' complaint with prejudice. The case arose from Thomas' discharge on March 30, 1992, with claims of racial discrimination under 42 U.S.C. 1981. In a related case, the court determined that the Chapter 7 Trustee's removal of the action to bankruptcy court was inappropriate, remanding it to the United States District Court for further proceedings.