Contributing Editors: Kesha Tanabe, Tanabe Law & Andy J. Moeller, University of St. Thomas Law
BAP_Raynor_v_Walker_19-6010_7_25_2019.pdf
In Raynor v. Walker, 602 B.R. 703 (July 25, 2019), the BAP affirmed dismissal of the debtor’s adversary proceeding seeking determination that debts had been discharged and denying his post-dismissal motion.
In 2005, the debtor received a chapter 7 discharge of debts including personal guaranties of obligations owed by two companies. A few years later, the companies refinanced the bank loans that had given rise to the underlying obligations for the discharged guaranties. After the companies and the Debtor defaulted, the bank commenced actions to recover against the companies and the debtor. A shareholder of one of the companies commenced an adversary proceeding seeking to except the guaranties from the discharge, but this action was quickly dismissed. The debtor then filed a complaint to commence a second adversary proceeding seeking declaratory judgement that his 2008 loan was discharged in his bankruptcy case. The bankruptcy court dismissed this because the Debtor took on the debt after his bankruptcy case was concluded, so the discharge injunction did not apply.
The bank’s collection action proceeded to trial and the state court held the debtor liable for the companies’ debt. The debtor then filed another complaint to commence a third additional adversary proceeding and characterized the 2008 loan as “a second generation discharged indebtedness.” The court dismissed on the basis that the complaint was a collateral attack on the final orders of the bankruptcy court and that the relief sought would require the bankruptcy court to review the state court’s rulings in violation of the Rooker-Feldman doctrine. The debtor then filed a motion to vacate the judgment, which the bankruptcy court denied because the debtor merely repeated the same arguments.
On appeal, the BAP held that a court may bypass Rooker-Feldman to dispose of a case based on res judicata. The BAP held that the debtor was precluded from pursuing the last adversary proceeding because the claims arose out of the same set of operative facts as the claims that had been dismissed in the second adversary proceeding.