In re Howe case brief

 In re Howe (5^th Cir. 1990)

 

Facts: Howe’s filed for Chapter 11 in 1982. Confirmed on January 28, 1983. Five years later they filed in state court lender liability claims that were removed to federal court and referred to the bankr. Court. The creditors moved to dismiss on res judicata, prescription, or equitable or judicial estoppel. Howes moved to abstain and remand arguing it was a state law issue. Bankruptcy court granted the bank’s motion and the district court affirmed. The Howes’ lender liability claims that are the subject of the appeal were not scheduled as an asset of the estate, nor were they disclosed or treated in the 4^th amended plan of reorg. And disclosure statement. Plan treated Premier as an allowed claim, partially secured and partially unsecured. Howe’s now sue for lender liability b/c they incurred substantial debt without regard to their ability to repay the sum. They sought $14.5 M b/c they claim the bank wanted their land and owed them fiduciary and contractual duties and violated La. Securities law and state law fraud.

Issue: Does res judicata bar the case in question?

Holding: Yes. It stems from the same nucleus of operative facts that informed their earlier bankruptcy proceedings. 

 

Analysis: Circuit test for res judicata are: 1. The parties be identical in both suits 2. A court of competent jurisdiction rendered the prior judgment 3. There was a final judgment on the merits in the previous decision, and 4. The plaintiff raises the same cause of action or claim in both suits. The question is whether the 4^th prong is met. Fifth circuit adopted the rule that states, “it bars all claims that were or could have been advanced in support of the cause of action on the occasion of its former adjudication, … not merely those that were adjudicated.” The central transaction in a previous case was a passing of title to the property in exchange for the cancellation of the mortgage debt. See Southmark.

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