In re North Alabama Anesthesiology Group, PC
| Decision Date | 14 April 1993 |
| Docket Number | Bankruptcy No. 88-8456,No. CV93-PT-252-NE.,CV93-PT-252-NE. |
| Citation | 154 BR 752 |
| Parties | In re NORTH ALABAMA ANESTHESIOLOGY GROUP, P.C., Debtor. NORTH ALABAMA ANESTHESIOLOGY GROUP, P.C., James N. Jeter and Thomas F. Shultz, Plaintiffs-Appellees, v. James B. ZICKLER, Defendant-Appellant. |
| Court | U.S. District Court — Northern District of Alabama |
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John M. Heacock, Jr., Lanier Ford Shaver & Payne, Huntsville, AL, for appellant.
Michael Fraser Ford, Munsey Ford & Heflin, Tuscumbia, AL, Jerry W. Schoel, Melinda M. Dionne and Paul Avron, Schoel, Ogle Benton & Centeno, Birmingham, AL, for appellees and debtor.
This is an appeal, pursuant to 28 U.S.C. § 158(a), from the judgment and decision of the United States Bankruptcy Court for the Northern District of Alabama (Case No. 88-8456, Chapter 11).
North Alabama Anesthesiology Group, P.C. (NAAG) filed a Chapter 11 petition in the United States Bankruptcy Court for the Northern District of Alabama, Northern Division, on September 2, 1988. Defendant-appellant (hereinafter Zickler) was listed as a creditor in NAAG's bankruptcy petition and on the mailing matrix filed with the clerk of the bankruptcy court.1
On June 30, 1987, Zickler entered into a consulting and non-compete agreement with NAAG. Zickler had not been previously associated with NAAG. This agreement provided that NAAG would pay Zickler $215,000 in 60 monthly installments of $3,583.33. The agreement provided that Zickler would provide consultation advice to NAAG and that he would not compete with NAAG for five years.2 NAAG's obligations under the agreement were personally guaranteed by the non-debtor plaintiffs-appellees, James N. Jeter and Thomas F. Shultz (hereinafter Jeter and Shultz).
After NAAG filed its Chapter 11 petition, it filed an application to reject its agreement with Zickler. The bankruptcy court's mailing records indicate that a copy of NAAG's application was sent to Zickler at the address indicated on the mailing matrix. On September 29, 1988, a hearing was held in Florence, Alabama on NAAG's application to reject the agreement. Zickler and his attorney, Conrad Pitts, appeared at the hearing in Florence, Alabama. On October 13, 1988, Zickler filed a document with the bankruptcy court in which he stated that he would not contest NAAG's application to reject its agreement with him.3
On April 10, 1989, NAAG filed its Plan and Disclosure Statement (reorganization plan). On May 15, 1989, the bankruptcy court set the date for the confirmation hearing. On July 13, 1989, the bankruptcy court confirmed NAAG's proposed plan of reorganization.4 The bankruptcy court's mailing records indicate that notice of all the above hearings were sent to all listed creditors.
On March 3, 1989, prior, of course, to the filing of NAAG's proposed plan, Zickler filed suit in Alabama state court against NAAG, Jeter, Shultz and Turner for breach of the agreement. Jeter, Shultz and Turner, in their August 7, 1989 answer, stated that the bankruptcy court's order confirming the reorganization plan released and discharged them from all personal obligations, including their guaranties.5 On March 15, 1991, the Circuit Court of Lauderdale County, Alabama granted Jeter's, Shultz's, and Turner's motion for summary judgment. The Alabama Supreme Court in Zickler v. Shultz, 603 So.2d 916, reh'g denied, (Ala.1992), held that the bankruptcy court's confirmation order did not bar Zickler's state court action against Jeter and Shultz under the doctrine of res judicata and reversed the trial court's judgment.
On September 29, 1992, almost two months after the Alabama Supreme Court denied an application for rehearing, NAAG, Jeter and Shultz filed a complaint in the bankruptcy court seeking to enjoin the state court action. On October 29, 1992, Zickler filed a Motion for Summary Judgment or Dismissal of Complaint, and a Motion for Abstention, under 28 U.S.C. § 1334(c)(1), asking the bankruptcy court to abstain from hearing NAAG's, Jeter's and Shultz's complaint seeking to enjoin Zickler's state court action.6
On November 6, 1992, NAAG, Jeter and Shultz filed a Motion for Summary Judgment on their Complaint for Injunctive Relief based upon the bankruptcy court's order confirming NAAG's Chapter 11 plan. On November 19, 1992, a hearing was held in Florence, Alabama on NAAG's, Jeter's and Shultz's Motion for Summary Judgment. On December 10, 1992, the bankruptcy court granted NAAG's, Jeter's and Shultz's Motion for Summary Judgment and enjoined Zickler from prosecuting the state court action.7 Zickler filed a Notice of Appeal to this court on December 17, 1992.
On appeal, Zickler contends that the Bankruptcy Court erred when it entered its summary judgment order on December 12, 1992. This order permanently enjoined Zickler from pursuing the state court civil action against Jeter and Shultz.8 Zickler claims that the bankruptcy court record contains ample evidence that he did not receive notice of the confirmation hearing on NAAG's reorganization plan. Zickler argues that since he did not receive notice of the hearing, the order confirming the plan was invalid insofar as it purported to release Zickler's rights against Shultz and Jeter.9
Zickler further contends that the bankruptcy court did not have subject matter jurisdiction to release Jeter and Shultz as guarantors. Zickler argues that the bankruptcy court's jurisdiction does not extend to property outside the estate, especially that of non-debtors such as Jeter and Shultz. Zickler further contends that the issue of subject matter jurisdiction should have been considered initially (sua sponte) by the bankruptcy court before it enjoined the action in state court. Zickler asserts that the bankruptcy court did not have subject matter jurisdiction to issue an injunction against him; consequently, the present state court action should proceed.
Jeter and Shultz contend, however, that a creditor such as Zickler may not collaterally attack provisions in a confirmed Chapter 11 plan of reorganization because an order confirming a reorganization plan is entitled to res judicata effect.
When reviewing findings of fact by the bankruptcy court, under Bankruptcy Rule 8013, a district court may reject those findings only if they are clearly erroneous. The advisory notes to Rule 8013 state that the findings of a bankruptcy judge are to be given the same weight as the findings of a district judge under Rule 52 of the Federal Rules of Civil Procedure. Using Rule 52 as a lodestar, this court can reject the bankruptcy court's findings of fact only if, after viewing all of the evidence, the court ". . . is left with the definite and firm conviction that a mistake has been committed." Anderson v. Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985). Questions of law, however, are subject to review de novo. In re Holywell Corp., 913 F.2d 873, 879 (11th Cir.1990); Richmond Leasing Co. v. Capital Bank N.A., 762 F.2d 1303, 1307 (5th Cir.1985).
This court will address the bankruptcy court's ultimate factual conclusion that Zickler received sufficient notice of the contents of the reorganization plan and the order confirming the plan.10 The bankruptcy court made the following findings of fact: (1) Zickler was listed as a creditor both on the debtor's petition and on the bankruptcy court's mailing matrix; (2) Zickler's address was the same as that which was listed in the agreement executed between him and the debtor; (3) no mail was returned to the bankruptcy court, which indicated Zickler was no longer receiving his mail at the listed address; (4) Zickler had moved to Florida, but he was still receiving mail at the address listed in the debtor's petition; (5) Zickler had participated in the debtor's bankruptcy proceeding by attending hearings and filing documents with the court; and (6) Zickler had been represented by competent legal counsel.
Zickler argues that his affidavit filed on November 9, 1992, is "ample evidence" of the fact that he did not receive any notification of the confirmation hearing in NAAG's case. Furthermore, Zickler cites In re Spring Valley Farms, Inc., 863 F.2d 832 (11th Cir.1989) for the proposition that failure to give notice of a hearing by the bankruptcy court constitutes a violation of a creditor's constitutional rights if rights of the creditor are affected by the hearing and subsequent order(s). This court notes that according to the bankruptcy court's mailing records, notice was mailed to Zickler at his Alabama address and not returned, whereas the creditors in In re Spring Valley Farms, Inc. were never mailed notice of the bar date for filing a claim. Id. at 834. Cf. Dunlap v. Transamerica Occidental Life Ins. Co., 858 F.2d 629 (11th Cir.1988).
This court need not decide whether Zickler received actual notice of the hearing regarding NAAG's reorganization plan. For further consideration, however, the court will assume proper notice.
This court must now examine whether the bankruptcy court's unappealed order confirming NAAG's reorganization plan, which by its express terms released Jeter and Shultz as guarantors, was entitled, under any circumstances, to res judicata effect as to these non-debtors. The court must address Zickler's claim that the bankruptcy court had no subject matter jurisdiction to release Jeter and Shultz as guarantors.
Zickler argues that In re Gallucci, 931 F.2d 738 (11th Cir.1991), is dispositive of the present appeal. In In re Gallucci the Eleventh Circuit addressed whether a Chapter 7 trustee could proceed against the debtor's mother's home, which the trustee claimed as part of the bankruptcy estate. Id. at 740. The Eleventh Circuit found that the home was not part of the estate and hence no subject...
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