Terrebonne Fuel & Lube, Inc. v. Placid Refining Co.

158 B.R. 71, 1993 WL 326846
CourtDistrict Court, E.D. Louisiana
DecidedJuly 22, 1993
DocketCiv. A. No. 93-1246; Bankruptcy No. 86-01526-B
StatusPublished

This text of 158 B.R. 71 (Terrebonne Fuel & Lube, Inc. v. Placid Refining Co.) is published on Counsel Stack Legal Research, covering District Court, E.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Terrebonne Fuel & Lube, Inc. v. Placid Refining Co., 158 B.R. 71, 1993 WL 326846 (E.D. La. 1993).

Opinion

ORDER AND REASONS

WICKER, District Judge.

This matter came before the Court on motion of Terrebonne Fuel & Lube, Inc. to dismiss the appeal of Placid Refining Company from an order of the bankruptcy court. After considering the record, the briefs and exhibits filed by the parties, the arguments of counsel, and the applicable law, the motion to dismiss the appeal is GRANTED.

This is a motion by the bankruptcy debt- or, Terrebonne Fuel, to dismiss the appeal by its creditor, Placid Refining Co., from the bankruptcy court’s March 23, 1993 order denying Placid’s Motion for Order to Debtor to Dismiss State Claims with Prejudice.

Facts

This matter arises from the bankruptcy proceedings of Terrebonne Fuel, a wholesale fuel distributor which had a contract to purchase fuel from Placid Refining. Terrebonne’s Plan of Reorganization, which was confirmed on April 16, 1987, listed a $1.5 million claim by Placid against Terrebonne under the fuel contract, but did not list any claims by Terrebonne against Placid.

[73]*73On April 24, 1987, Terrebonne filed a complaint for equitable subordination in bankruptcy court, claiming that Placid had forced Terrebonne into bankruptcy by prematurely calling in its loan made for the credit purchases and by effectively cutting off Terrebonne’s cash flow under an assignment of accounts receivables. The bankruptcy judge dismissed that complaint with prejudice on June 29, 1989, stating:

In summary, the Court finds that Debtor’s complaint fails to state a claim under 11 U.S.C. § 510(c) for equitable subordination and, thus, was not a core proceeding under 28 U.S.C. § 157. Taken as a breach of contract cause of action, the Complaint represents at best a “related to” matter and the Court would use its discretion to abstain, declining to exercise whatever jurisdiction may exist.

Terrebonne did not appeal that ruling.

On July 25, 1989, Terrebonne filed an action against Placid in state court, asserting that Placid forced it into bankruptcy prematurely.1 Placid filed an exception of res judicata and a reconventional demand in the state proceeding and then brought its motion in bankruptcy court seeking an order to the debtor to dismiss the state court action.

On March 23, 1993 the bankruptcy judge ordered Placid’s motion dismissed, on the basis that “the Court lacks the jurisdiction to render the requested relief.” In written reasons, the judge stated that the bankruptcy court has only limited post-confirmation jurisdiction and was without jurisdiction to issue such an order regarding a state court proceeding. He reiterated his earlier finding that Terrebonne’s claim is neither a core proceeding nor a related matter, because the bankruptcy estate ceased to exist upon confirmation and substantial consummation of the reorganization plan, and concluded, “[Reservation of jurisdiction beyond what is necessary to effectuate the plan of reorganization is beyond the power of the bankruptcy court.”

On March 24, 1993 Placid filed its notice of appeal of the bankruptcy court’s ruling.

On March 29, 1993, the state district court issued a ruling that dismissed Placid’s exception of res judicata with prejudice, ruled in favor of Terrebonne on the merits of the state case and awarded it $500,000, and dismissed Placid’s reconven-tional demand. Placid has filed a suspen-sive appeal of the state court’s ruling.

Issues on Appeal

Regarding its appeal of the bankruptcy court’s dismissal of its motion to dismiss state court proceeding, Placid argues that an order confirming a debtor’s plan of reorganization is res judicata as to a subsequent state court action filed by the debtor against a creditor in the bankruptcy.

Terrebonne contends, in its motion to dismiss Placid’s appeal, that Placid’s failure to obtain a stay of the bankruptcy court’s order dismissing its motion, coupled with the state court judgment which fully litigated the issues of res judicata and estop-pel, constitutes a bar to Placid pursuing this appeal. Terrebonne argues the state court’s judgment dismissing Placid’s exception of res judicata/estoppel with prejudice is entitled to full faith and credit in this Court and, therefore, Placid’s appeal should be dismissed as moot.

In opposition to dismissal of its appeal, Placid argues that the state court judgment on the exception of prescription/res judicata is not res judicata because its appeal is pending. Under Louisiana law the state trial judge’s denial of Terrebonne’s exception of res judicata is an interlocutory judgment, which may be reviewed only on appeal of the entire matter. Placid contends that it has perfected a suspensive appeal of the judgment on the merits, and that the judgment will not be res judicata until the case completed the appeal process.

28 U.S.C. § 1738 provides that properly authenticated judicial proceedings of any state court “shall have the same full faith [74]*74and credit in every court within the United States ... as they have by law or usage in the courts of such State ... from which they are taken.”2

A judgment is entitled to full faith and credit, even as to questions of jurisdiction, when the second court's inquiry discloses that those questions have been fully and fairly litigated and finally decided in the court which rendered the original judgment. Fidelity Stand. Life Ins. Co. v. First Nat. B. & T. Co., Ga., 510 F.2d 272 (5th Cir.1975), cert. den., 423 U.S. 864, 96 S.Ct. 125, 46 L.Ed.2d 94.

“In general a case becomes moot when the issues presented are no longer ‘live' or the parties lack a legally cognizable interest in the outcome.” Murphy v. Hunt, 455 U.S. 478, 481, 102 S.Ct. 1181, 1183, 71 L.Ed.2d 353 (1982). The exception to this mootness doctrine is where a case is within the class of cases “capable of repetition, yet evading review.” Id., at 482, 102 S.Ct. at 1183. However, that exception requires that there must be a reasonable expectation or demonstrated probability, and not a mere physical or theoretical possibility, that the same controversy will recur involving the same complaining party. Id.

Generally, “an appeal will be dismissed as moot when events occur during the pendency of the appeal which prevent the appellate court from granting any effective relief.” In re Highway Truckdrivers and Helpers Local Union 107, 888 F.2d 293, 297 (3rd Cir.1989).

Under B.R. 8005, which governs motions for stay of a bankruptcy court order, the consequence of failing to obtain a stay is that the prevailing party may treat the judgment of the lower court as final notwithstanding that an appeal is pending. 9 J. Moore,

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Cite This Page — Counsel Stack

Bluebook (online)
158 B.R. 71, 1993 WL 326846, Counsel Stack Legal Research, https://law.counselstack.com/opinion/terrebonne-fuel-lube-inc-v-placid-refining-co-laed-1993.