WCI Communities, Inc., 08-11643

WCI Communities, Inc. (debtor and related entities) filed Chapter 11 in 2008 and confirmed a plan in August 2009; the effective date was September 3, 2009. The plan discharged pre-confirmation claims against the debtor and enjoined claimants.
As part of restructuring, the debtor created a new entity that adopted the name WCI Communities, Inc. (the appellant here) and acted as disbursing agent.
The developer-controlled Lesina Condominium Association filed a broad proof of claim in the debtor’s bankruptcy prior to Turnover, describing potential construction-defect and assessment claims as contingent and unliquidated.
After Turnover (when unit owners assumed control of the association, post-confirmation), the independent Association discovered construction defects and notified WCI; it then sought to pursue Florida statutory claims in state court.
The Association moved in bankruptcy for a declaratory judgment that the confirmed plan did not discharge its claims; the Bankruptcy Court granted that relief, applying Frenville (the accrual test) per Wright, and found the claims arose post-confirmation and were not discharged. WCI appealed.

Issue	Plaintiff's Argument (WCI)	Defendant's Argument (Association)	Held
When did the Association’s "claims" arise for discharge purposes under 11 U.S.C. § 1141(d)?	Grossman's test applies retroactively: claims arise when claimant was first exposed to the conduct/product (pre-confirmation here), so claims were discharged.	Under Wright, Frenville controls for cases confirmed before Grossman's; under Frenville the Association’s claims arose at Turnover (post-confirmation) and thus were not discharged.	Court affirmed Bankruptcy Court: Frenville applies (per Wright carve-out) because confirmation preceded Grossman's; Association’s claims arose post-confirmation and were not discharged.
Whether the Association (via its earlier proof of claim) received due process such that Grossman's should nonetheless apply	The Association filed a proof of claim and participated in the bankruptcy, so it had notice and opportunity to be heard; Wright’s carve-out shouldn’t bar discharge.	The pre-Turnover association was developer-controlled and could not assert the unit-owners’ statutory claims; unit owners lacked notice and opportunity pre-confirmation, so due process requires Frenville.	Court held filing by a developer-controlled association did not equate to due process for unit owners; Wright’s due-process rationale applies, so Frenville governs.

In re M. Frenville Co., 744 F.2d 332 (3d Cir. 1984) (announced accrual test: claim depends on right to payment and when that right arose under non-bankruptcy law)
In re Grossman’s Inc., 607 F.3d 114 (3d Cir. 2010) (rejected Frenville; held claim arises when claimant was first exposed pre-petition to conduct/product giving rise to injury)
Wright v. Owens Corning, 679 F.3d 101 (3d Cir. 2012) (limited Grossman’s retroactivity on due-process grounds: for plans confirmed before Grossman’s, Frenville applies if claimants lacked notice they held claims)
Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950) (due process requires notice and opportunity to be heard)
In re Szostek, 886 F.2d 1405 (3d Cir. 1989) (confirmation order has res judicata effect only as to matters properly before the court)