Sally PRATT, et al., Plaintiffs-Appellants/Cross-Appellees, v. VENTAS, INC., a/k/a Vencor, Inc., et al., Defendants-Appellees/Cross-Appellants, John Does, # 1 through # 5, Defendant-Appellee.
Nos. 02-5632, 02-5638
United States Court of Appeals, Sixth Circuit
April 20, 2024
Argued: March 18, 2004. Decided and Filed: April 20, 2004. See also 284 B.R. 79.
THE COURT: Don‘t use that expression.
DEFENDANT KETCHINGS: I‘m sorry.
Everybody saying I‘m just this awful person that I‘m really not. And I‘m quite sure if she knew me in the world, she would be part of the persons who said I was always a true friend to her and to the victim‘s family. And I feel that giving me 20, 40 years of incarceration that‘s not going to bring the family members back or to pay back with my heart. And I can‘t feel how the family members feel for losing their child, but I can sympathize because I would hate for that to happen to my son. And I can only imagine how they feel. I know that she‘s truly upset, you know.
When this crime happened, my son was just born three days prior to this case. And I was very truly upset, you know, to find out what had happened. And I just looked at my son, and, you know, tears came from my eyes. And I do, really do feel in my heart that I‘m truly sorry for the family members at what happened. And, you know, I do have a strong family background even though I made some wrong decisions in my life, you know. And my parents always taught me to be respectful to others, you.
But, you know, I just can‘t say nothing more. I‘m truly sorry.
The fact that the sentencing judge criticized Ketchings for his failure to admit guilt even after he made the above-quoted remarks clearly contradicts the Michigan Court of Appeals‘s finding that the sentencing judge concerned himself only with remorsefulness and not with the admission of guilt. In sum, whether evaluated as “an unreasonable application of [ ] clearly established Federal law,”
The state, as a final point, raises the possibility that on remand a sentence of 40 to 80 years for second-degree murder might again be imposed based on other factors. That outcome, although possible, is far from certain in light of the Michigan Sentencing Guidelines. In addition, such a possibility does not affect the appropriateness of resentencing before another judge as the remedy for the Fifth Amendment violation that occurred in this case.
III. CONCLUSION
For all of the reasons set forth above, we AFFIRM the judgment of the district court.
John D. Dyche (briefed), David B. Tachau (argued and briefed), Tachau, Maddox, Hovious & Dickens, Louisville, Ky, for Defendant-Appellee Cross-Appellant in 02-5632 and 02-5638.
Before: COLE and GILMAN, Circuit Judges; SCHWARZER, Senior District Judge.*
OPINION
GILMAN, Circuit Judge.
Sally Pratt and others (Plaintiffs) filed various state-law claims against a large health care provider, Vencor, Inc., which subsequently spun off a subsidiary with the same name as the parent company, and then changed the name of the parent company to Ventas, Inc. When “New Vencor,” the subsidiary, filed for Chapter 11 bankruptcy in the Bankruptcy Court for
Ignoring the injunction, Plaintiffs sued Ventas in the district court below, which subsequently dismissed their case for lack of subject matter jurisdiction. Plaintiffs then filed a motion to vacate the Confirmation Order in the Delaware bankruptcy court. Because Supreme Court precedent requires us to accord preclusive effect to the Delaware bankruptcy court‘s conclusion that it had jurisdiction over this matter, Plaintiffs are barred by res judicata from continuing their suit in this court. We therefore AFFIRM the judgment of the district court.
I. BACKGROUND
A. Factual background
Two lower court opinions, one in Delaware and the other in Kentucky, have summarized the relevant facts of the present case. See In re Vencor, Inc., 284 B.R. 79 (Bankr.D.Del.2002), and Pratt v. Ventas, Inc., 273 B.R. 108 (W.D.Ky.2002). Because the principal issues on appeal are questions of law, we abstract the following undisputed facts from the lower courts’ opinions:
Prior to May, 1998, Ventas operated, inter alia, several nursing homes under the name Vencor, Inc. (“Old Vencor“). On May 1, 1998, Old Vencor changed its name to Ventas and spun off its nursing home operations to a newly incorporated entity named Vencor, Inc. (“New Vencor“). Ventas retained ownership of the real estate and became New Vencor‘s landlord at many of the facilities.... On September 13, 1999, New Vencor and several of its affiliates filed for relief under chapter 11 of the
Bankruptcy Code .
In re Vencor, Inc., 284 B.R. at 81.
Each of the named Plaintiffs in this case had filed a state court suit against one of the Vencor entities prior to or soon after the commencement of its bankruptcy proceedings. In September 1996, Plaintiff Sally Pratt filed suit against “old” Vencor for age discrimination and wrongful termination. In March 1998, Plaintiff Valiza Nystrom filed suit against Vencor Hospitals Texas for constructive discharge. In October 1998, Mark Dayman, Executor of the Estate of Liesel Dayman, filed suit against “new” Vencor for negligence. In November 1999, Plaintiff Robert McCray, pursuant to a Power of Attorney for Lee Ona Lee, sued Vencor Nursing Centers East for negligence.
Pratt, 273 B.R. at 110. Finally, Nystrom‘s attorney Mark Byrne filed suit against Vencor for tortious interference with his prospective contractual advantage with his client. Id. at n. 2.
After New Vencor filed for bankruptcy, it filed motions pursuant to
As part of that Plan, Ventas agreed to contribute $40 million to the funding of a settlement with the United States and agreed to amendments of certain leases which it had with [New Vencor], thereby reducing [New Vencor‘s] rental obligations. In exchange, Ventas was given a release of [Plaintiffs’ personal injury and other] claims arising from operation of the nursing homes prior to May 1, 1998.
In re Vencor, Inc., 284 B.R. at 81. The terms of the Plan thus incorporated an injunction proscribing suits against New Vencor and Ventas for “any alleged improprieties committed in connection with [New] Vencor‘s bankruptcy, prior to the date of confirmation.” Pratt, 273 B.R. at 111.
B. Procedural background
Plaintiffs filed suit in the United States District Court for the Western District of Kentucky, alleging that Ventas obtained the releases in the Confirmation Order through fraudulent means. They argued that in overseeing New Vencor‘s bankruptcy proceedings, the bankruptcy court lacked jurisdiction over Plaintiffs’ third-party action against Ventas. As a consequence, Plaintiffs contended that the Confirmation Order‘s injunction barring suit against Ventas had no preclusive effect on Plaintiffs’ suit filed in the federal district court in Kentucky. Ventas responded by filing a motion to dismiss the complaint pursuant to
Relying on the Supreme Court‘s decision in Celotex Corp. v. Edwards, 514 U.S. 300, 115 S.Ct. 1493, 131 L.Ed.2d 403 (1995), the district court held that Plaintiffs were barred from collaterally attacking the Confirmation Order issued by the Delaware bankruptcy court. Pratt, 273 B.R. at 116. The district court subsequently granted Ventas‘s motion based upon a lack of subject matter jurisdiction. It also expressly declined to consider whether the bankruptcy court exceeded its statutory authority in granting injunctive relief to Ventas. Id. The court concluded that it could “not properly exercise appellate review over these earlier bankruptcy proceedings.” Id. ((quoting
Plaintiffs were encouraged to pursue their claim in the Delaware bankruptcy court, in the United States District Court for the District of Delaware, and if necessary, in the United States Court of Appeals for the Third Circuit. Id. The complaint was initially dismissed with prejudice, but the district court later modified the order to make it “without prejudice,” presumably so that Plaintiffs could raise their claims against Ventas in the proper forum.
Each side appealed the district court‘s decision, but this court held both appeals in abeyance while Plaintiffs pursued the merits of their claims in the Delaware bankruptcy court. The bankruptcy court subsequently held that there was no basis for Plaintiffs’ assertion that it lacked jurisdiction to grant the releases to Ventas contained in New Vencor‘s Plan. In re Vencor, Inc., 284 B.R. at 86. Plaintiffs did not appeal this latter decision.
On December 6, 2002, this court lifted the stay on the present appeal of the district court‘s decision in Pratt v. Ventas, 273 B.R. 108 (W.D.Ky.2002). This matter is now ripe for disposition.
II. ANALYSIS
A. Standard of review
This court reviews whether the district court properly dismissed a claim pursuant
B. Application of the “collateral attack” doctrine
The district court held that Plaintiffs’ suit filed in the Western District of Kentucky was an impermissible collateral attack on the bankruptcy court‘s Confirmation Order. Pratt, 273 B.R. at 116. A “collateral attack” is a tactic whereby a party seeks to circumvent an earlier ruling of one court by filing a subsequent action in another court. Id. at 114 (citing Willy v. Coastal Corp., 503 U.S. 131, 137, 112 S.Ct. 1076, 117 L.Ed.2d 280 (1992)). As applied to the present case, the district court below believed that Plaintiffs’ suit against Ventas in Kentucky was an improper attempt to circumvent the Delaware bankruptcy court‘s Confirmation Order that enjoined Plaintiffs from pursuing their claims against Ventas.
The district court found that the Supreme Court‘s decision in Celotex Corp. v. Edwards, 514 U.S. 300, 115 S.Ct. 1493, 131 L.Ed.2d 403 (1995), controlled the disposition of Plaintiffs’ action. In Celotex, Bennie and Joann Edwards won a judgment against Celotex in the District Court for the Northern District of Texas for asbestos-related injuries. Celotex posted a supersedeas bond to stay the execution of the judgment pending its appeal to the Fifth Circuit. Northbrook Property and Casualty Insurance Company served as surety on the bond. The Fifth Circuit affirmed the judgment for the Edwardses, but, on that very day, Celotex filed a Chapter 11 petition for reorganization in the Bankruptcy Court for the Middle District of Florida. An injunction was issued by the bankruptcy court, pursuant to
Because the Supreme Court concluded that the district court‘s action would “seriously undercut[] the orderly process of the law,” id. at 313, 115 S.Ct. 1493 it held that the Edwardses would not be permitted to collaterally attack the Florida bankruptcy court‘s § 105 injunction in the federal courts in Texas. The Court reasoned:
It is for the court of first instance to determine the question of the validity of the law, and until its decision is reversed for error by orderly review, either by itself or by a higher court, its orders based on its decision are to be respected. If respondents believed the Section 105 Injunction was improper, they should have challenged it in the Bankruptcy Court, like other similarly situated bonded judgment creditors have done. If dissatisfied with the Bankruptcy Court‘s ultimate decision, respondents can appeal to the district court for the judicial district in which the bankruptcy judge is serving, see
28 U.S.C. § 158(a) , and then to the Court of Appeals for the Eleventh Circuit, see§ 158(d) .
Celotex, 514 U.S. at 313, 115 S.Ct. 1493 (quotation marks and citation omitted).
In the present case, the district court found that Celotex was controlling, reasoning as follows:
Like the claimants in [Celotex], Plaintiffs ... assert that the Bankruptcy Court exceeded its jurisdictional bounds
by enjoining post-confirmation suits against a non-debtor third-party for its pre-confirmation action. Celotex reaffirmed the rule that such a challenge cannot be sustained.... [I]f the Confirmation Order was issued in error—whether the result of either fraud or lack of jurisdiction—it remains the responsibility of the Delaware Bankruptcy Court, Delaware District Court, and, if necessary, the Third Circuit, to effect any necessary corrections.
Pratt, 273 B.R. at 116 (emphasis added).
In Celotex, the Supreme Court reaffirmed
the well-established rule that ‘persons subject to an injunctive order issued by a court with jurisdiction are expected to obey that decree until it is modified or reversed, even if they have proper grounds to object to the order.’
514 U.S. at 306, 115 S.Ct. 1493 (quoting GTE Sylvania, Inc. v. Consumers Union, 445 U.S. 375, 386, 100 S.Ct. 1194, 63 L.Ed.2d 467 (1980)) (emphasis added). The bankruptcy court‘s injunction in Celotex, therefore, was to be honored only if it was acting “with jurisdiction.” Accordingly, the Celotex court examined whether the Florida bankruptcy court had jurisdiction to enjoin the Edwardses from proceeding against the third-party surety. The Court ultimately held that the Edwardses’ action fell within the bankruptcy court‘s jurisdiction to adjudicate matters that are “related to” a case under Title 11. Id. at 310, 115 S.Ct. 1493; see
The district court in the present case, by contrast, “expressly decline[d] to consider whether the Bankruptcy Court exceeded its statutory authority in granting injunctive relief to Defendants.” Pratt, 273 B.R. at 116. As excerpted above, the district court stated that it was the responsibility of the Delaware bankruptcy court, the Delaware district court, and the Third Circuit to correct any jurisdictional errors. Id. The district court‘s reliance on Celotex for the proposition that litigants must go through the “proper channels of the statutorily-defined appellate process,” id. at 116, to challenge a bankruptcy court‘s judgment was perfectly appropriate. But the district court should not have dismissed the Plaintiffs’ case under the collateral attack doctrine without first determining that the Delaware bankruptcy court in fact had jurisdiction to enter the Confirmation Order. Its failure to do so, however, is harmless in light of the Plaintiffs subsequent return to the bankruptcy court for the very purpose of challenging that court‘s authority to grant Ventas a full release from their claims.
C. Application of res judicata
While the present appeal was held in abeyance, Plaintiffs returned to Delaware to litigate their claim that the bankruptcy court lacked jurisdiction to release Ventas. See In re Vencor, Inc., 284 B.R. 79 (Bankr.D.Del.2002). The bankruptcy court reviewed two rounds of briefs and held two hearings on the myriad of claims raised by Plaintiffs. Id. at 82. Following these proceedings, the court issued an opinion with a section dedicated specifically to Plaintiffs’ jurisdictional argument. The court “conclud[ed] that the Confirmation Order was not beyond [its] jurisdiction.” Id. at 86.
Now that the Delaware bankruptcy court has adjudicated the issue of
Plaintiffs argue, however, that the timeliness of their motion was the real issue before the Delaware bankruptcy court, not jurisdiction. At oral argument, Plaintiffs’ counsel contended that the court‘s conclusion that it was not acting in excess of its jurisdiction was simply dicta. We read the bankruptcy court‘s discussion of Plaintiffs’ jurisdictional issue not as dicta, however, but as an alternative holding. After concluding that the Plaintiffs’ motion to set aside the Confirmation Order was untimely, In re Vencor, Inc., 284 B.R. at 83-84, the court stated:
The [Plaintiffs] assert that the relief requested in their Motion can nonetheless be granted. They argue that Rule 60(b)(4) permits the modification of the Confirmation Order because it was entered by this Court beyond its jurisdiction and is, therefore, void.
Id. at 85 (emphasis added). The above-quoted language indicates that the bankruptcy court considered the Plaintiffs’ jurisdictional claim to be an alternative basis for relief. After examining that alternative ground, the court “conclude[d] that there is no basis for an assertion that this Court lacked jurisdiction to consider and grant the releases contained in the Plan.” Id. at 86. We therefore conclude that the bankruptcy court‘s decision in In re Vencor, Inc. is a judgment on the merits of this jurisdictional issue. See Gillespie v. U.S. Steel Corp., 321 F.2d 518, 529-30 (6th Cir.1963) (holding that where a matter is argued before the court, and the court‘s opinion passes on the issue, the language is not dicta).
A judgment is “any order from which an appeal lies.”
The Supreme Court addressed similar circumstances in Stoll v. Gottlieb, 305 U.S. 165, 59 S.Ct. 134, 83 L.Ed. 104 (1938). In Stoll, a bankruptcy court confirmed a debtor‘s reorganization plan that included a release of the debtor‘s bond guarantors. Gottlieb, one of the bondholders, did not appear at the hearing on the reorganization plan. The plan was confirmed over the objection of other bondholders, but no one appealed the confirmation order. Instead, Gottlieb launched a two-pronged attack. He first instituted an action against the bond guarantors in the Illinois state court system. Second, Gottlieb filed a motion to vacate the bankruptcy court‘s confirmation order on the basis that it did not have jurisdiction to cancel the bond guaranty. The bankruptcy court denied Gottlieb‘s contested motion. Back in state court, the bond guarantors defended themselves on the ground that the bankruptcy
We see no reason why a court in the absence of an allegation of fraud in obtaining the judgment, should examine again the question whether the court making the earlier determination on an actual contest over jurisdiction between the parties, did have jurisdiction of the subject matter of the litigation. In this case, the order upon the petition to vacate the confirmation settled the contest over jurisdiction.
Id. at 172, 59 S.Ct. 134.
In the present case, there are no allegations of fraud regarding the decision handed down in In re Vencor, Inc. As in Stoll, Plaintiffs engaged Ventas in “an actual contest over jurisdiction,” and therefore “the order upon the petition to vacate the confirmation settled” this issue. See also Republic Supply Co. v. Shoaf, 815 F.2d 1046, 1053-54 (5th Cir.1987) (holding that where a bankruptcy court determined that it had subject matter jurisdiction, its confirmation of a reorganization plan that released a third-party guarantor had res judicata effect in a subsequent suit).
We note, moreover, that the Stoll court “express[ed] no opinion as to whether the Bankruptcy Court did or did not have jurisdiction of the subject matter.” Id. at 171 n. 8, 59 S.Ct. 134. In fact, the Supreme Court assumed that the bankruptcy court “did not have jurisdiction of the subject matter of the order.” Id. at 171, 59 S.Ct. 134 (emphasis added). Whether the bankruptcy court erred in its determination was immaterial to the Court, which held that
we base our conclusion here on the fact that in an actual controversy the question of the jurisdiction over the subject matter was raised and determined adversely to the respondent. That determination is res judicata of that issue in this action....
Id. at 177, 59 S.Ct. 134. We likewise pass no judgment on whether the Delaware bankruptcy court erred in determining that it had jurisdiction to enter the Confirmation Order and the releases contained therein. For our purposes, the fact that the Delaware bankruptcy court has decided the matter is enough to preclude us from entertaining an identical claim in this court.
D. Ventas‘s cross-appeal
In its original order, the district court dismissed Plaintiffs’ complaint “with prejudice.” Pratt, 273 B.R. at 116. The court subsequently amended its dismissal as being “without prejudice” because the “order was limited solely to the question of whether jurisdiction was proper in the Western District of Kentucky, and did not reach the merits of the parties’ underlying substantive claims.” In doing so, the court explained that it had not intended to preclude Plaintiffs from litigating their claims in an appropriate venue, i.e., the Delaware bankruptcy court.
On its face, the motion presented by Ventas to the district court was brought pursuant to
The rationale behind this is that merely because one court does not have jurisdiction over a dispute does not necessarily mean that another court is precluded from properly exercising jurisdiction over the matter. Moreover, if a court does not have jurisdiction over a matter, it cannot properly reach the merits of the case.
Wilkins v. Jakeway, 183 F.3d 528, 533 n. 6 (6th Cir.1999) (citation omitted).
Ventas is technically correct that the district court dismissed Plaintiffs’ claim pursuant to Ventas‘s
III. CONCLUSION
For all the reasons set forth above, we AFFIRM the judgment of the district court.
INTERNATIONAL BROTHERHOOD OF BOILERMAKERS, LOCAL UNION No. S-251, Plaintiff-Appellant, v. THYSSENKRUPP ELEVATOR MANUFACTURING, INC., Defendant-Appellee.
No. 02-6439.
United States Court of Appeals, Sixth Circuit.
Argued: March 11, 2004. Decided and Filed: April 23, 2004.