In re DiBerto
| Decision Date | 07 July 1994 |
| Docket Number | Bankruptcy No. 90-2331-JEY. Adv. No. 93-1025-JEY. |
| Citation | 171 BR 461 |
| Parties | In re Robert DiBERTO, Debtor. Robert DiBERTO, Plaintiff, v. The MEADOWS AT MADBURY, INC., Defendant. |
| Court | U.S. Bankruptcy Court — District of New Hampshire |
COPYRIGHT MATERIAL OMITTED
COPYRIGHT MATERIAL OMITTED
Franklin Jones, Michael, Jones & Wensley, Rochester, NH, for plaintiff/debtor.
John Malmberg, Orr & Reno, Concord, NH, for defendant Meadows at Madbury, Inc.
Mark H. Gardner, Engel, Gearreald & Gardner, PA, Exeter, NH, for Sable Trust, Bluebird Trust, Argus Trust and M. Frank Douglas.
Geraldine B. Karonis, Manchester, NH, for U.S. trustee.
INDEX
Introduction ................................................... 464-65
Background ..................................................... 465-66
Appeals ........................................................ 467
Administrative Appeal ........................................ 467
Motion to Intervene Appeal ................................... 467
Motion to Direct Funds Appeal ................................ 467
Motion for Interpretation Appeal ............................. 467
Motion for Protective Order Appeal ........................... 467-69
Recap Re Procedural Posture .................................... 469
The Essential Issue and Dispute ................................ 469-70
The Doctrine of Res Judicata ................................... 470-71
Application in Reorganization Cases ............................ 471-72
Douglas Entities' Contentions .................................. 472-76
Conclusion ..................................................... 476-77
In compliance with an Order issued by the United States District Court on October 21, 1993 regarding the captioned bankruptcy and adversary proceeding, this Court held a hearing on November 23, 1993 on an appeal remanded by that Court. The appeal was remanded for consideration of this Court to determine whether the August 6, 1992 Order confirming the chapter 11 plan of reorganization in this case has a res judicata effect on the issues raised by the appellants pertaining to the plan. Although the Court heard the parties present on the res judicata issue on November 23, the Court was informed at that hearing that there were additional appeals in this proceeding outstanding in the United States District Court relating to the res judicata issue. The Court therefore continued the hearing awaiting the District Court's decisions on the outstanding appeals.
On January 20, 1994 the District Court issued its Order remanding two additional appeals so that this Court could consider the res judicata effect of the confirmation of the plan on each of the Orders remanded at a single hearing. The Court then scheduled a hearing on the res judicata effect of the plan on the remanded matters and heard the parties on January 31, 1994. The Court then took the matter under submission.
The appellants (and movants) with regard to the Orders remanded are Frank Douglas, Bluebird Trust, Sable Trust and Argus Trust, (hereinafter the "Douglas Entities").
After reviewing the entire record in these proceedings, and for the reasons set forth below, the Court finds that the Order Confirming the First Amended Plan Of Reorganization is a final and binding Order pursuant to the provisions set forth in § 1141 of the Bankruptcy Code. Moreover, in my view, the doctrine of res judicata bars all parties from relitigating the issues raised by the appellants regarding the Orders remanded to this Court.
This chapter 11 proceeding was filed on December 3, 1990. The First Amended Plan of Reorganization, Dated August 23, 1991, With March 23, 1992 Modifications filed with this Court on March 23, 1992 (Court Doc. No. 109) was confirmed after a series of hearings by this Court's Order of August 6, 1992 (Court Doc. No. 155). At the confirmation hearing on April 10, 1992, the only remaining issue was the dispute between the debtor and the Douglas Entities. This dispute involved litigation pending in the Strafford County Superior Court1 which is referred to in the debtor's plan of reorganization as the "Douglas Litigation". The Plan of Reorganization, page 2, paragraph J., defines the Douglas Litigation as follows:
Douglas Litigation shall mean the 6 actions pending in the Strafford County Superior Court which have been consolidated and involve disputes surrounding the severance of the joint venture relationship between Debtor and M. Frank Douglas and various trust entities.
Under the Plan of Reorganization, Article II, the Douglas Entities were designated in Class 5, 6 and 25 as follows:
First Amended Plan of Reorganization, Court Doc. 109 at pp. 6-7.
Article III of the Plan, pages 9-12, specifies how each of the Douglas Entities claims are to be treated under the Plan:
The Disclosure Statement filed with regard to the Plan of Reorganization on August 26, 1991 (Court Doc. No. 59) stated at page 8 thereof the following:
The Douglas Litigation will be completed, and to the extent that Mr. Douglas is determined to have any valid claim, that claim will be paid from the monies held by the Clerk of the Strafford County Superior Court.
Notwithstanding this recitation in the August 1991 Disclosure Statement, and in the Plan of Reorganization in both its original and final forms, the Douglas Entities in a number of objections filed with regard to the both the Disclosure Statement and the Plan prior to confirmation of the Plan in August of 1992 did not object to the Plan provisions regarding the treatment of the Douglas Litigation claims but instead objected on various other grounds, including primarily the contention that the debtor was unfairly providing that only six of his 24 properties would be mortgaged to support the promised distribution to general creditors under the plan and that all 24 properties should be subjected to that mortgage to be issued by the reorganized debtor.2 See Objections filed by Douglas Entities, Court Doc. Nos. 69 (10/28/91); 70 (10/29/91); 97 (1/9/92); 120 (4/20/92); and 122 (4/28/92).
At the final confirmation hearing on July 27, 1992 the debtor and the Douglas Entities reached an agreement and the Douglas Entities' objections were withdrawn. As stated in the Order confirming the plan, in paragraph 25, page 3, "The objections of Frank Douglas, Sable Trust, Argus Trust and Bluebird Trust were withdrawn in open court on July 27, 1992." As to the Douglas Litigation, the confirming Order provided in paragraph 1(a), page 3, that "The Douglas Litigation shall not be removed to this Court as provided for in Article III.Z. of the Plan, but rather shall proceed and be determined in the Strafford County Superior Court."3 The Order confirming the Plan was never appealed and became a final Order.
Notwithstanding the foregoing, the Douglas Entities have continuously attempted to litigate issues provided for in the plan and confirming order in this Court. The Court repeatedly informed the parties at the various hearings on these issues that it was not the function of this Court to relitigate disputes that were resolved in the plan of reorganization.4 Time after time the Court reminded the attorneys that the plan and confirmation order were binding. A total of six appeals in this case have been filed to date. Two appeals have been dismissed. One appeal is still pending in the United States District Court. Three appeals were remanded to this Court and are the subject of this opinion. The appeals filed and their dispositions are discussed in detail below.
To continue reading
Request your trial