In The Matter Of M. Frenville Co., Inc.

Status

61 later cases cite In The Matter Of M. Frenville Co., Inc.; 61 of those citations sat close to treatment language and were flagged for reading, and all of them have been read. Citations that did not sit near treatment language were not flagged and were not read one by one, so a court that weakened this case without using any of that language would not appear here.

Treatments

Overruled

• Sitting en banc, the Third Circuit overruled Frenville’s accrual test for determining when a bankruptcy claim arises and held that prepetition exposure to a product or conduct giving rise to injury creates a claim.

  JELD-WEN, Inc. v. Van Brunt (In re Grossman’s Inc.) · United States Court of Appeals for the Third Circuit (en banc) · filed June 2, 2010

  We are persuaded that the widespread criticism of Frenville’s accrual test is justified, as it imposes too narrow an interpretation of a “claim” under the Bankruptcy Code. Accordingly, the Frenville accrual test should be and now is overruled.

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Declined to follow

• The bankruptcy court rejected Frenville’s conclusion that a contribution or indemnity claim arises only when the state-law cause of action accrues, holding that an unmatured prepetition right to payment is a bankruptcy claim subject to the automatic stay.

  Baldwin-United Corp. v. Named (In Re Baldwin-United Corp.) · United States Bankruptcy Court for the Southern District of Ohio · filed April 10, 1985

  To the extent that In re M. Frenville Co.; Inc., 744 F.2d 332 (3rd Cir.1984) cert. denied, — U.S. -, 105 S.Ct. 911, 83 L.Ed.2d 925 (1985), holds to the contrary, we find that decision fundamentally at odds with applicable precedents from the Sixth Circuit, and respectfully decline to follow it.

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• The bankruptcy court expressly declined to follow Frenville’s state law claim accrual rationale and held that the contribution and indemnification claims arising from prepetition conduct were subject to the automatic stay.

  In Re Johns-Manville Corp. · United States Bankruptcy Court for the Southern District of New York · filed February 11, 1986

  This court also chooses not to follow the Frenville rationale, because it ignores congressional intent to define “claim” broadly.

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• The bankruptcy court declined to follow Frenville and held that contingent contribution and indemnity claims based on prepetition conduct were prepetition claims discharged by the confirmed plan.

  In re Production Plating, Inc. · United States Bankruptcy Court for the Eastern District of Michigan · filed August 11, 1988

  This court declines to follow the reasoning of the Third Circuit Court of Appeals in Avellino & Biennes v. M. Frenville Co., Inc. (In the Matter of Frenville), 744 F.2d 332 (3rd Cir.1984), cert. denied, 469 U.S. 1160, 105 S.Ct. 911, 83 L.Ed.2d 925 (1985).

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• The District of Colorado rejected Frenville's claim-accrual rule as unduly narrow and declined to follow it when deciding whether appellate costs were subject to the bankruptcy stay.

  Grynberg v. Danzig (In Re Grynberg) · United States District Court for the District of Colorado · filed October 11, 1990

  We agree with the bankruptcy court that Frenville unduly narrows the definition of a claim found in the bankruptcy code and decline to follow it in this instance.

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• The bankruptcy court adopted Manville’s rejection of Frenville’s state law accrual approach and held that a bankruptcy claim arises when the acts giving rise to liability occur.

  Waterman Steamship Corp. v. Aguiar (In Re Waterman Steamship Corp.) · United States Bankruptcy Court for the Southern District of New York · filed June 10, 1992

  Moreover, in In re Johns-Manville Corp. 57 B.R. 680, 689 (Bkrtcy.S.D.N.Y.1986), the Court declined to follow In re Frenville Co., 744 F.2d 332 (3d Cir.1984) cert denied, 469 U.S. 1160, 105 S.Ct. 911, 83 L.Ed.2d 925 (1985), in which the Third Circuit Court of Appeals mistakenly applied state law rather than federal bankruptcy law to determine when creditors’ claims arose. ... We agree with the Manville Court and hold that a claim arises at the moment when acts giving rise to the alleged liability are performed.

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• The district court rejected Frenville’s nonbankruptcy accrual approach for determining when CERCLA claims arise in bankruptcy and used the Seventh Circuit’s inquiry into a potential claimant’s knowledge of contingent response costs.

  AM International, Inc. v. Datacard Corp. · United States District Court for the Northern District of Illinois · filed October 5, 1992

  Accordingly, the Court adopts and incorporates Magistrate Judge Guzman’s Report and Recommendation and the holdings contained therein pursuant to 28 U.S.G § 636(b)(1). ... Further, the legal reasoning applied to the facts in Jensen, Chateaugay, and National Gypsum fit more appropriately to the facts at bar. Although Judge Murphy in Union Scrap and Sylvestor Bros, did not cite In re Frenville, Judge Murphy’s conclusion on when a claim arises for bankruptcy purposes is the same conclusion reached by the Frenville court. That is, the Frenville court held that a claim for bankruptcy purposes arose when a cause of action arose under state law. 744 F.2d at 337. Likewise, the Union Scrap court held that a claim for bankruptcy purposes arose under CERCLA when a “legal obligation” arose under CERCLA, which is when response costs are incurred. 123 B.R. at 836. The Frenville holding, however, has been rejected by numerous subsequent cases that considered the issue, including several in this district. ... I agree with AMI that the analysis of the Minnesota cases oversimplifies the bankruptcy test for determining the existence of a claim. The issue is broader than whether a claim could be brought outside of bankruptcy.

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• The Southern District of Florida expressly declined to follow Frenville’s accrued state law theory for determining when a bankruptcy claim arises.

  Epstein v. Official Committee of Unsecured Creditors of the Estate of Piper Aircraft Corp. (In Re Piper Aircraft Corp.) · United States District Court for the Southern District of Florida · filed June 6, 1994

  For the reasons stated by the Bankruptcy Court, see Piper, 162 B.R. at 624, this Court likewise declines to follow Frenville.

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• The Ohio Court of Appeals expressly declined to follow Frenville's rule that a claimant's right to payment must exist before the bankruptcy petition for the claim to be prepetition.

  Curtis v. Payton, Unpublished Decision (2-5-1999) · Ohio Court of Appeals · filed February 5, 1999

  However, theFrenville court overlooked the fact that the definition of claim contained in the Bankruptcy Code, includes a right to payment that is fixed or contingent, liquidated or unliquidated, etc. Section 101(5)(A), Title 11, U.S. Code. Thus, we, too, decline to follow the decision in Frenville.

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• The Tenth Circuit adopted the conduct theory for determining when a bankruptcy claim arises, rejecting the accrual theory represented by Frenville.

  Watson v. Parker (In re Parker) · United States Court of Appeals for the Tenth Circuit · filed December 23, 2002

  The second issue concerns determination of the date on which a claim arose for purposes of classifying it as a pre- or post-petition claim. The circuits are divided as to whether to use a conduct theory, which determines the date of a claim by the date of the conduct giving rise to the claim, or an accrual theory, which determines the date of a claim pursuant to the state law under which liability for the claim arose. Compare Grady v. A.H. Robins Co., Inc., 839 F.2d 198 (4th Cir. 1988), with Avellino & Bienes v. M. Frenville Co., Inc. (In re M. Frenville Co. Inc.), 744 F.2d 332 (3d Cir. 1984). We recognized this split of authority in Franklin Savings Ass’n v. Office of Thrift Supervision, 31 F.3d 1020, 1022 (10th Cir. 1994), but found it unnecessary to take a position. We now adopt the conduct theory as the one more in tune with the plain language and the policy underlying the Bankruptcy Code.

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• The Tennessee Supreme Court rejected Frenville's state-law accrual test, applied Grossman's prepetition exposure test retroactively, and held that the asbestos claims arose before the manufacturers' bankruptcy petitions.

  Evelyn Nye v. Bayer Cropscience, Inc. · Supreme Court of Tennessee · filed June 7, 2011

  Even without the authority of Wright, we would have applied the Grossman’s test retroactively for two primary reasons. First, the Frenville test was not sound law; its reasoning was flawed, and it was universally rejected by other courts. We see no reason to perpetuate bad law.

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• The bankruptcy court rejected the requested Frenville accrual test and applied the Fourth Circuit conduct test to hold that the asbestos claims arose before the petition.

  L.K. Comstock & Company, Inc. v. Reibie · United States Bankruptcy Court for the District of Maryland · filed March 2, 2020

  In their earlier papers, the Reibie Defendants asked the Court to follow the test articulated by the Third Circuit in Avellino & Bienes, A Partnership v. M. Frenville Co. (In re M. Frenville Co.), 744 F.2d 332, 337 (3d Cir. 1984). As perhaps recognized by the Reibie Defendants, most courts (including the Third and Fourth Circuits) have rejected the Frenville analysis. ... For purposes of section 101(5) of the Code, this Court not only is bound to follow the conduct test used by the Fourth Circuit in Grady and Holcombe, but it also agrees with the Fourth Circuit’s reasoning and general application of that test in light of the underlying objectives of the Code. Under the conduct test, as adopted by the Fourth Circuit, “[a] claim arises upon exposure, not manifestation.” In re Lloyd E. Mitchell, Inc., 373 B.R. 416, 424 (Bankr. D. Md. 2007) (relying on Grady for this standard) (citations omitted); see also Holcombe, 369 Fed. App’x at 428; In re Jason Pharm., Inc., 224 B.R. 315 (Bankr. D. Md. 1998). As a result, the Reibie Defendants’ claims arose prepetition, at the time of Mr. Reibie’s alleged asbestos exposure.

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