In Re marchFirst, Inc.
448 B.R. 499
Bankr. N.D. Ill.2011Background
- CIT leased telecommunications equipment pre-petition to marchFirst and affiliates; the leases were rejected when the prior trustee failed to assume or reject them.
- The bar date for filing administrative expense requests was October 11, 2001; CIT filed original requests on October 11, 2001 and amended requests on December 10, 2002.
- Maxwell, as chapter 7 trustee, objected to the amended requests as untimely and argued claim preclusion would bar them.
- CIT alleged Maxwell breached fiduciary duties, causing loss of its equipment, and sought administrative expenses for the value of the converted equipment in the amended requests.
- CIT later pursued an adversary proceeding; the court and higher courts held the adversary claims were time-barred by a statute of limitations, leading to final judgments.
- The bankruptcy court ultimately held the amended administrative expense requests untimely and barred by claim preclusion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| timeliness of amended requests | CIT argues amendments relate back to timely originals. | Maxwell contends amendments filed after bar date are untimely with no cause to permit tardy filing. | Amended requests untimely and barred. |
| relation back of amendments | Amendments arise from same core facts as originals and relate back. | Amendments involve different conduct and different relief, not sufficiently linked to originals. | Amendments do not relate back; rejected. |
| claim preclusion | N/A or not raised clearly; focus on preclusion arguments by Maxwell. | Final adversary proceeding judgment and identity of parties/claims preclude the amended requests. | Amended requests barred by claim preclusion. |
| finality and effect of prior judgments | Adversary proceeding dismissal was not on the merits; relies on Barton doctrine analysis. | Judgment is final on the merits due to statute of limitations and res judicata. | Judgment is final; supports preclusion. |
Key Cases Cited
- Highway J Citizens Grp. v. U.S. Dep't of Transp., 456 F.3d 734 (7th Cir. 2006) (claims arise from same core of operative facts for preclusion)
- Katchen v. Landy, 382 U.S. 323 (U.S. 1966) (creditor's claims and bankruptcy proceedings in typical preclusion context)
- Plaut v. Spendthrift Farm, Inc., 514 U.S. 211 (U.S. 1995) (finality rules treat statute-of-limitations dismissals as judgments on the merits)
- In re Belmont Realty Corp., 11 F.3d 1092 (1st Cir. 1993) (preclusion in bankruptcy context among related proceedings)