Fulmer v. Fifth Third Equipment Finance Co. (In re Veg Liquidation, Inc.), 572 B.R. 725

Debtors (Allens, Inc.) filed chapter 11 on Oct. 28, 2013; the court approved a § 363 sale to Sager Creek on Feb. 12, 2014. Sale order contained express findings about adequate notice, fair bidding procedures, and buyer good faith.
Case converted to chapter 7 on June 6, 2014; trustee appointed and had the one-year Rule 60(b) window to seek relief from the sale order but did not move within that period.
Multiple creditors received notice and had opportunity to object; some PACA creditors moved under Rule 60(b)(3) but withdrew; no timely appeal of the sale order was taken.
Trustee filed an adversary complaint (initial Feb. 26, 2016; amended Apr. 27, 2016) alleging pre-sale misconduct, concealment, breaches of fiduciary duty, fraudulent transfer, and other claims tied to the sale/auction.
Court previously dismissed trustee’s fraud-on-the-court and § 363(n) collusion claims (Sept. 29, 2016) and ruled trustee lacked standing to seek Rule 2019 sanctions; defendants moved again to dismiss remaining claims and sought denial of leave to amend.
Court dismissed the remaining claims, holding res judicata and the finality protections of § 363 (including § 363(m)) and Rule 60 preclude this collateral attack; denied leave to amend as futile.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether trustee may relitigate sale-related claims after final sale order	Trustee: claims allege pre-sale misconduct and damages to estate; seeks damages (not direct rescission)	Defendants: trustee is litigating issues that could have been raised before/at sale and thus barred by res judicata and finality doctrines	Court: barred — res judicata and sale finality prevent collateral attack; dismissal granted
Timeliness under Rule 60(b)(3) for fraud-based relief	Trustee: alleges fraud and concealment that would allow relief from order	Defendants: trustee filed well after Rule 60(b)(3) one-year limit; no timely motion or appeal	Court: Rule 60(b)(3) time-bar applies; trustee filed too late; fraud-on-court claim previously dismissed
Applicability of § 363(m)/(n) protections	Trustee: seeks relief tied to auction/bidding defects and damages from sale	Defendants: § 363(m) protects good-faith purchaser and prevents collateral attacks absent stayed appeal; § 363(n) not established	Court: § 363(m) applies to protect sale finality; § 363(n) claims dismissed earlier for failure to plead collusion
Leave to amend complaint	Trustee: requests leave to add facts/claims to cure defects	Defendants: amendment would be futile given res judicata, finality, prior rulings and lack of standing for Rule 2019 relief	Court: denied leave to amend as futile; second amended complaint would not survive dismissal

Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard: plausibility required)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading must allege more than possibility)
Lundquist v. Rice Memorial Hosp., 238 F.3d 975 (res judicata elements)
Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394 (res judicata bars relitigation)
In re Marlar, 267 F.3d 749 (trustee role and privity analysis in bankruptcy)
In re Met-L-Wood Corp., 861 F.2d 1012 (collateral attacks on bankruptcy sales barred)
In re Brook Valley VII Joint Venture, 496 F.3d 892 (trustee remedies vs. attack on sale order)
In re Trism, Inc., 328 F.3d 1003 (§ 363(m) preserves sale validity)
In re Farmland Indus., Inc., 408 B.R. 497 (sale finality and § 363 protections)
Cinicola v. Scharffenberger, 248 F.3d 110 (when reversal would affect sale validity)
Jefferson County v. Halverson (In re Paulson), 276 F.3d 389 (claims attacking integral sale provisions are barred)
Braden v. Wal-Mart Stores, Inc., 588 F.3d 585 (pleading plausibility standard explained)