614 F. App'x 714
5th Cir.2015Background
- Gulf States Long Term Acute Care (the Debtor) filed Chapter 11; BSW and partner Gregory Frost had represented the Debtor pre‑bankruptcy but were not bankruptcy counsel and were not creditors.
- The confirmed Third Amended Plan purported to (a) retain avoidance and fraudulent transfer actions against certain named defendants (not Frost/BSW) and (b) retain “any and all other claims and causes of action” generally.
- The bankruptcy court appointed David Adler as the disbursing agent to pursue preserved claims for creditors. Adler sued Frost and BSW in an adversary proceeding asserting common‑law tort and contract claims (malpractice, conspiracy, fraud, looting).
- District court withdrew the reference and granted Frost/BSW’s Rule 12(b)(1) motion, holding Adler lacked standing because the Plan did not specifically and unequivocally reserve the asserted claims.
- Adler’s motion to reconsider was denied; he appealed only the standing and reconsideration rulings. Adler attempted on appeal to raise a new exception to the governing precedent but had not preserved that argument below.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Adler (post‑confirmation disbursing agent) has standing to pursue common‑law claims against non‑creditor defendants | Adler: United Operating should not bar suits against non‑creditor defendants; blanket reservation plus distribution scheme is sufficient | Frost/BSW: Plan did not specifically and unequivocally retain these claims; blanket reservation is inadequate under United Operating | Court: Adler lacked standing; Plan’s blanket reservation insufficient; dismissal affirmed |
| Whether a proposed exception to United Operating applies (i.e., non‑creditor defendants are exempt) | Adler: Plan need not meet United Operating’s specificity for non‑creditors; exception urged on appeal | Frost/BSW: United Operating applies uniformly; no exception | Court: Argument forfeited—not raised below; court did not consider creating an exception |
| Whether explicit reservation of avoidance/fraudulent transfer claims preserves state law common‑law claims | Adler: Plan’s retention of certain avoidance claims and references to related litigation support retention | Frost/BSW: Reservation of avoidance claims does not preserve common‑law tort/contract claims | Court: Reservation of avoidance claims is insufficient to preserve separate common‑law claims |
| Whether district court abused discretion in denying reconsideration | Adler: Reconsideration should allow proposed exception and reconcile inconsistent standing results | Frost/BSW: No abuse — Adler’s new theory was not timely raised | Court: No abuse of discretion; reconsideration denial affirmed |
Key Cases Cited
- Dynasty Oil & Gas, LLC v. Citizens Bank (In re United Operating, LLC), 540 F.3d 351 (5th Cir. 2008) (plan must expressly, specifically, and unequivocally reserve claims to preserve post‑confirmation standing)
- Wooley v. Haynes & Boone, L.L.P. (In re SI Restructuring Inc.), 714 F.3d 860 (5th Cir. 2013) (blanket reservation of all causes of action is insufficient to put creditors on notice)
- Compton v. Anderson (In re MPF Holdings US LLC), 701 F.3d 449 (5th Cir. 2012) (reorganization plan must set forth legal basis for reserved claims)
- Evercore Capital Partners II, L.L.C. v. Nancy Sue Davis Trust (In re Davis Offshore, L.P.), 644 F.3d 259 (5th Cir. 2011) (court interprets plan terms de novo and holistically)
- United States v. Renda Marine, Inc., 667 F.3d 651 (5th Cir. 2012) (standard of review for Rule 12(b)(1) dismissal)