New Cases For the Week of March 11

Browning v. Levy (DBN Subscription Required)	6th Cir.	The following provision, in a liquidating plan of reorganization, was ineffective to avoid the preclusive effect of entry of the confirmation order as to claims against the debtor's original bankruptcy counsel: "In accordance with section 1123(b) of the Bankruptcy Code, the Company shall retain and may enforce any claims, rights, and causes of action that the Debtor or its bankruptcy estate may hold against any person or entity, including, without limitation, claims and causes of action arising under sections 542, 543, 544, 547, 548, 550, or 553 of the Bankruptcy Code." The fact that the debtor's claims against its former counsel would have been non-core claims in the bankruptcy court did not destroy the preclusive effect of the confirmation order as to those claims. While the bankruptcy court could not make a final decision in a non-core proceeding, absent the consent of the parties, it could hear the matter and refer it to the district court. Through its bankruptcy jurisdiction, the district court could decide the claim, allowing for a correct adjustment of the relations between all of the parties. Therefore, a confirmed plan in a bankruptcy case may operate to bar both core and non-core proceedings. Moreover, the fact that a shareholder-creditor's ERISA claims against debtor's former counsel could not have been adjudicated in bankruptcy court (due to the exclusive jurisdiction of federal district courts over ERISA claims) did not prevent such claims from being precluded by confirmation of the debtor's plan. The bankruptcy court is not a free standing court, but rather a unit of the district court. Because the bankruptcy court is a unit of the district court, and therefore able to share in the district courts' exclusive jurisdiction over ERISA claims, the bankruptcy court has no less power to hear ERISA claims than it does any other non-core bankruptcy proceeding. Thus, the crediot could have asserted its ERISA claims against debtor's former counsel in the bankruptcy court, and those claims could have been referred to the district court. The creditor's failure to raise its claims against counsel in the bankruptcy court has a res judicata effect with respect to those claims. Since the basis of the claims asserted against the debtor's former counsel was that counsel's actions contributed to the debtor's need to file bankruptcy, the claims "arose out of the same transaction as the bankruptcy" thereby satisfying the "identity of claims" element required for res judicata.