Anderberg-Lund Printing Co., In re, ANDERBERG-LUND
| Decision Date | 07 April 1997 |
| Docket Number | No. 96-2752,ANDERBERG-LUND,96-2752 |
| Citation | 109 F.3d 1343 |
| Parties | , Bankr. L. Rep. P 77,328 In rePRINTING CO., also known as Lane Envelope, also known as Great Way Publications, Debtor. W.A. LANG CO., Appellant, v. PRINTING CO., also known as Lane Envelope, also known as Great Way Publications, Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
William Richard Busch, St. Paul, MN, argued, for Appellant.
Michael Boutin LeBaron, Bloomington, MN, argued, for Appellee.
Before MAGILL, BEAM, and LOKEN, Circuit Judges.
W.A. Lang Co. ("Lang") appeals from the district court's 1 affirmance of the bankruptcy court's 2 denial of Lang's claim for administrative expenses pursuant to 11 U.S.C. § 503(b). We affirm.
Lang is a general insurance agency whose business includes the sale of worker's compensation insurance. Lang is a licensed agent of General Insurance Company of America (GICA). Under the agency agreement between Lang and GICA, Lang is allowed to chose between two types of billing for the GICA policies it sells. Under "direct billing," insureds are billed by and pay premiums directly to GICA's parent company. Under "agency billing," Lang pays to GICA the premiums due, and in turn collects the premium amount and commissions from the insured. The Lang-GICA agency agreement obligates Lang to pay premiums due under "agency billing" policies whether or not Lang is paid by the insured.
In 1993, Lang sold a GICA worker's compensation policy to Anderberg-Lund Printing Company. Lang elected agency billing for this policy, which was to run for the term of July 1, 1993, to July 1, 1994. Later in 1993, Anderberg-Lund experienced financial difficulties, and failed to make payments to Lang. As it was obliged to under the agency agreement, Lang continued to make payments on the policy to GICA. As a result of Anderberg-Lund's delinquencies, GICA issued at Lang's request a notice of cancellation for the policy on December 14, 1993.
The next day, Anderberg-Lund filed for Chapter 11 bankruptcy, and continued to operate the business as a debtor-in-possession. Pursuant to 11 U.S.C. § 108(b), cancellation of the GICA policy was deferred for sixty days. At the end of this period, Anderberg-Lund was able to secure a replacement policy. After the filing of the bankruptcy petition, but before Anderberg-Lund obtained the new policy, Lang made two more premium payments to GICA. These two payments totaled $22,364.68.
Based upon a post-cancellation audit, GICA determined that it had been entitled to an earned premium of $67,928.20 for the period the Anderberg-Lund policy had been in effect. GICA had, however, received payments based on the estimated premium totaling $89,995.44. The difference, $22,067.24, was "unearned premium" that the policy required GICA to refund. When both Anderberg-Lund and Lang made demands for the unearned premium, GICA filed an interpleader complaint as an adversary proceeding in Anderberg-Lund's bankruptcy case.
In separate answers to GICA's complaint, both Anderberg-Lund and Lang laid claim to the unearned premium. Anderberg-Lund also asserted a cross-claim against Lang for damages under section 362(h) of the bankruptcy code, based on Lang's alleged violations of the automatic stay. Most significant to this appeal, Lang alleged as a cross-claim against Anderberg-Lund that the two post-petition premium payments it had made to GICA on behalf of Anderberg-Lund were an administrative expense under 11 U.S.C. § 503(b). 3 Lang claims that, deducting for that portion of the unearned premium allocable to the post-petition payments, it is entitled to an administrative expense of $18,830, the earned premium portion of the $22,364.68 it actually paid for post-petition coverage. The adversary proceeding thus concerned two sums of money: (1) the unearned premium of $22,067.24 that GICA had been overpaid over the course of the policy; and (2) the post-petition earned premium of $18,830 that Lang paid GICA after Anderberg-Lund filed for bankruptcy. 4
The bankruptcy court heard testimony and accepted evidence in the adversary proceeding, and issued its findings, conclusions, and order on December 9, 1994. The bankruptcy court's order had three components: (1) it determined that the policy required that the unearned premium amount interpleaded by GICA be refunded to the insured, Anderberg-Lund; (2) it denied Anderberg-Lund's cross-claims for damages; and (3) it ordered that "[t]he claims made by [Lang] are DISMISSED with prejudice on the merits." No. 4-93-6995, Adv. 4-94-398, slip op. at 14 (D.Minn. Dec. 9, 1994).
Lang did not appeal from this order. On January 16, 1995, however, Lang disregarding the adversary proceeding, filed a motion in the core proceeding seeking 503(b) administrative expenses based on its claim to the post-petition earned premiums. On January 26, the bankruptcy court summarily denied Lang's motion. Lang appealed this denial to the district court, which concluded that the bankruptcy court had denied the 503(b) claim in its prior order in the adversary proceeding, and that res judicata prevented Lang from relitigating the claim by motion. Lang appeals.
The binding effect of a former adjudication, often generically termed res judicata, can take one of two forms. Claim preclusion (traditionally termed res judicata or "merger and bar") " 'bars relitigation of the same claim between parties or their privies where a final judgment has been rendered upon the merits by a court of competent jurisdiction.' " Plough v. West Des Moines Community Sch. Dist., 70 F.3d 512, 517 (8th Cir.1995) (quoting Smith v. Updegraff, 744 F.2d 1354, 1362 (8th Cir.1984)). Issue preclusion (or "collateral estoppel") applies to legal or factual issues "actually and necessarily determined," with such a determination becoming "conclusive in subsequent suits based on a different cause of action involving a party to the prior litigation." Montana v. United States, 440 U.S. 147, 153, 99 S.Ct. 970, 973, 59 L.Ed.2d 210 (1979). The principles of res judicata generally apply to bankruptcy proceedings. Katchen v. Landy, 382 U.S. 323, 334, 86 S.Ct. 467, 475, 15 L.Ed.2d 391 (1966).
In this case the question is one of claim preclusion since the administrative expense claim Lang brought by motion was identical to Lang's cross-claim in the prior adversary proceeding. Claim preclusion will bar a subsequent suit when: "(1) the first suit resulted in a final judgment on the merits; (2) the first suit was based on proper jurisdiction; (3) both suits involved the same cause of action; and (4) both suits involved the same parties or their privies." Lovell v. Mixon, 719 F.2d 1373, 1376 (8th Cir.1983). Furthermore, the party against whom res judicata is asserted must have had a full and fair opportunity to litigate the matter in the proceeding that is to be given preclusive effect. Plough, 70 F.3d at 517.
There is no dispute that the two proceedings at issue in this case involved the same parties and the same cause of action. Therefore, we need only determine: (1) whether the bankruptcy court had jurisdiction to decide the administrative expense claim in the adversary proceeding; (2) whether the bankruptcy court's order in the adversary proceeding was a final judgment on the merits; and (3) whether Lang had a full and fair opportunity to litigate the administrative expense claim in the adversary proceeding.
A claim for an administrative expense pursuant to section 503(b) is a core proceeding for which the bankruptcy court has jurisdiction under 28 U.S.C. § 157(b)(2). Even when contested, however, a 503(b) claim is not properly brought in an adversary proceeding. See Fed.R.Bankr.P. 7001. Such claims are appropriately brought by motion in the bankruptcy case, and relief is typically granted in contested claims only upon notice and hearing. Fed.R.Bankr.P. 9013, 9014; Minn.Bankr.Local Rule 1201. See also Colandrea v. Union Home Loan Corp. (In re Colandrea ), 17 B.R. 568, 583 (Bankr.D.Md.1982) (). Indeed, Lang's second administrative expense claim for the earned premium was made by motion in conformance with both the federal and local bankruptcy rules.
Thus, Lang's initial assertion of its administrative expense claim as a cross-claim in the adversary proceeding was unusual. We nonetheless conclude that the claim was...
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