Phillips v. Kelley
72 So. 3d 1079
| Miss. | 2011Background
- Phillips through RJK Investments sued Kelley, Templet, Pike County National Bank, and Hall in Pike County Circuit Court for multiple tort claims related to seizure of property after a fire.
- Phillips filed a separate Chapter 7 bankruptcy in November 2008; Derek A. Henderson was appointed trustee.
- Bankruptcy trustee moved to approve a compromise and settlement and to dismiss the current action with prejudice.
- Bankruptcy court order directed the trustee to execute a dismissal with prejudice releasing defendants from further liability in this case.
- The trustee moved the circuit court to enter an Order of Dismissal; the circuit court dismissed all claims with prejudice on July 1, 2010.
- Phillips (individually) moved for voluntary dismissal of his claims on July 22, 2010 and appealed the circuit court’s dismissal after filing notice of appeal on August 2, 2010.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the bankruptcy order extend to RJK’s claims? | Phillips/RJK contend order excludes RJK. | Bankruptcy order covers all claims and releases defendants. | Yes; order unambiguously includes all claims. |
| Is collateral attack barred by res judicata? | RJK/Phillips did not challenge in bankruptcy court. | Travelers Idem and res judicata bar collateral challenges. | Barred; collateral attack prohibited. |
| Where should challenges to the bankruptcy order be raised? | Challenge should be in bankruptcy court or on appeal therefrom. | State court cannot adjudicate bankruptcy-order challenges. | Challenges belong in bankruptcy court or on direct appeal. |
Key Cases Cited
- Travelers Indem. Co. v. Bailey, 557 U.S. 137 (2009) (bankruptcy orders cannot be collateral attacked; jurisdiction cannot be questioned collaterally)
- Celotex Corp. v. Edwards, 514 U.S. 300 (1995) (proper forum for bankruptcy-order challenges is bankruptcy court or appeal therefrom)
- Mariner Health Care, Inc. v. Estate of Edwards, 964 So.2d 1138 (Miss. 2007) (bankruptcy stipulation scope decided by bankruptcy court; leave to bankruptcy court)
- Kontrick v. Ryan, 540 U.S. 443 (2004) (lack of jurisdiction may be challenged on direct appeal; collateral attack improper)