[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
U.S. COURT OF APPEALS
_____________ ELEVENTH CIRCUIT
APR 29, 2011
No. 09-12237 JOHN LEY
CLERK
_____________
D.C. Docket No. 08-00391-CV-J-12
BKCY No. 05-03817-3F1
In Re: WINN-DIXIE STORES, INC.,
Debtor.
________________________________________________________________
IRT PARTNERS, L.P.,
EQUITY ONE HUNTER’S CREEK,
Plaintiffs-Appellants
Cross-Appellees,
versus
WINN-DIXIE STORES, INC.,
Defendant-Appellee
. Cross-Appellant.
____________
Appeals from the United States District Court
for the Middle District of Florida
____________
(April 29, 2011)
Before EDMONDSON, HILL and ALARCON,* Circuit Judges.
________________
*Honorable Arthur L. Alarcon, United State Circuit Judge for the Ninth Circuit, sitting by
designation.
HILL, Circuit Judge:
Appellants, IRT Partners, L.P. and Equity One, Inc., appeal the district
court’s order affirming the bankruptcy court’s decision to sustain the debtor’s,
Winn-Dixie Stores, Inc., objections to appellants’ attempt to amend their claims
post-confirmation of the debtor’s reorganization plan.1 For the following reasons,
we affirm the district court’s order.
I.
This appeal arises out of a Chapter 11 proceeding commenced by Winn-
Dixie Stores, Inc. (“Winn-Dixie”), in 2005. During the course of the proceedings,
the bankruptcy court authorized Winn-Dixie to reject its leases with both
appellants. After Winn-Dixie sent notices of rejection to appellants, each filed a
proof of claim with the bankruptcy court on September 14 and October 31, 2005
respectively.2 Winn-Dixie objected to these claims.
The bankruptcy court ruled on Winn-Dixie’s objections, reducing
appellants’ original claims and disallowing any amounts exceeding the reduced
claims, without objection, appearance, or appeal by appellants.
1
Winn-Dixie Stores, Inc., filed a cross-appeal contingent on our reversing the district
court. Because we affirm the district court’s decision, we do not address the cross-appeal.
2
Although appellants filed a motion to extend the rejection claims bar date to November
15, 2005, no hearing was sought and no ruling made.
2
After notice to all interested parties, and without objection by either
appellant, on November 9, 2006, the bankruptcy court entered an order confirming
Winn-Dixie’s reorganization plan, which provided that unsecured claims would be
paid by distribution of new common stock issued by Winn-Dixie. On December
22, 2006, and January 9, 2007, Winn-Dixie distributed and appellants accepted
these shares of stock in satisfaction of their reduced original claims.
On January 5, 2007, each appellant filed an Amended Proof of Claim, which
included the reduced original claim amount and additional claims for rejection
damages. IRT Partners, L.P.’s original claim was for $20,364.24, reduced to
$11,636.71, and its amended claim was for $185,244.67. Equity One, Inc.’s
original claim was for $87,498.59, reduced to $16,913.96, and its amended claim
was for $878,478.41. Winn-Dixie filed objections to the attempt to amend the
reduced claims and the bankruptcy court sustained these objections, disallowing
the amended claims.
II.
In considering Winn-Dixie’s objections to appellants’ attempts to amend
their claims, the bankruptcy court framed the issue as whether the doctrine of res
judicata barred the amended claims, and held that it did. On appeal to the district
court, appellants argued that this framing of the issue was a mistake of law, and
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that the correct legal question was under what conditions amendments to claims
should be allowed under In re International Horizons, Inc., 751 F.2d 1213 (11th
Cir. 1985). Appellants argued that the bankruptcy court’s failure to apply
International Horizons’ five-pronged test for determining when a bankruptcy
claim may be amended was reversible error.
The district court, however, agreed with the bankruptcy court that the legal
issue on appeal was the res judicata effect of Winn-Dixie’s confirmed
reorganization plan. We agree. The question in this case is not when a claim may
be amended in the general case – for which International Horizons provides a test
– but rather whether a confirmed reorganization plan precludes subsequent efforts
to amend prior claims – an issue not addressed by International Horizons because
it did not involve an attempt to amend a claim post-confirmation.
Whether Winn-Dixie’s confirmed reorganization plan is entitled to the
preclusive effect of res judicata is the threshold issue in this case. If Winn-Dixie’s
reorganization plan is not entitled to res judicata effect, then International
Horizons might provide the applicable test for whether appellants’ proposed
amendments are permissible in this case. But the first question we must resolve is
whether Winn-Dixie’s reorganization plan is entitled to res judicata and
precludes subsequent amendment of claims.
4
Section 4.3(g) of Winn-Dixie’s reorganization plan provides that
distributions of its reorganized common stock were intended to be “in full
satisfaction, settlement, release, and discharge of and in exchange of” allowed
claims (emphasis added). Section 12.13 of the plan also provides that:
[A]ll consideration distributed under the Plan shall be in exchange
for, and in complete satisfaction, settlement, discharge and release of,
all Claims of any nature whatsoever against the Debtors . . . not
limited to . . . debts of the kind specified in Section 502 of the
Bankruptcy Code [which includes rejection damages] . . . [and] all
Persons shall be precluded from asserting against the Debtors . . .
any other or further claims, debts, rights, . . . based upon any act,
omission, transaction, occurrence or other activity of any nature that
occurred prior to the Effective Date [of the Reorganization Plan] . . .
(emphasis added)
This language makes clear that, upon confirmation, the reorganization plan
was intended to satisfy all claims – including those for rejection damages – and
that appellants would be “precluded from asserting against the Debtors . . . any
other or further claims” based on “any omission” that “occurred prior to the
Effective Date of the [Plan].” It is clear that the plan undertook to extinguish all
claims, substituting for them a new contractual relationship between Winn-Dixie
and its creditors, defined by the terms of the plan itself. The only question is
whether the law permits such a result.
At least one circuit has held that it does. In Holstein v. Brill, 987 F.2d 1268
5
(7th Cir. 1993), the Seventh Circuit held that confirmation of a reorganization plan
is equivalent to a final judgment in an ordinary civil action, which extinguishes the
claim and substitutes for it a judgment, which defines the new obligations of the
parties. The effect of the confirmation of the plan, the Seventh Circuit wrote, is
that “each claimant gets a ‘new’ claim, based upon whatever treatment is accorded
to it in the plan itself.” Id. at 1270. As a result, reasoned the court, res judicata
should preclude post-confirmation amendments absent some “compelling reason.”
Id.
We agree with this reasoning and result. Although amendment should be
freely granted prior to confirmation – under the guidance of International
Horizons – amendment of a creditor’s claim after confirmation of a plan can
render a plan infeasible or alter the distribution to other creditors. Therefore, we
hold that post-confirmation amendment – while not prohibited – is not favored,
and only the most compelling circumstances justify it. In the absence of such
compelling reasons, a confirmed reorganization plan should be accorded res
judicata effect on a creditor’s subsequent attempt to amend his claim.
Therefore, confirmation of the Winn-Dixie reorganization plan precludes
appellants’ post-confirmation attempt to amend their claims unless there are
compelling circumstances that militate in favor of the amendments. We find none.
6
Appellants attempted to amend their claims after they had been reduced by
the Bankruptcy Court without objection or appeal by them, and after Winn-Dixie’s
reorganization plan had been confirmed without objection by them. The
reorganization plan language explicitly sets forth that acceptance of the new
common stock constitutes full satisfaction of a claim. Appellants accepted this
stock without objection. We find nothing in these facts that compels us to permit
appellants to object belatedly and amend their claims.
Appellants argue that their original claims contained language reserving the
right to amend and supplement those claims. But such language cannot, as a
matter of law, be construed to protect in perpetuity appellants’ right to amend their
claims. Such a construction of this language would truly render illusory all
finality achieved by a reorganization plan. We decline to give so broad an
interpretation to appellants’ purported reservation of rights.
Appellants were in sole possession of the information regarding the amount
of their claims and the record reveals no reason for delay in amending those
claims.3 Although appellants assert that they had to mitigate their damages and so
3
It is for this reason that we find In re Telephone Co., 308 B.R. 579 (Bankr. M.D. Fla.
2004) inapposite. In that case, the IRS was permitted a post-confirmation amendment of its
claim because it provided adequate notice to the bankruptcy court that the examination of the
claim amount was pending and that the debtor was not cooperative, thus producing delay.
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did not know for some time how much lost rent to claim, they state in their brief
on appeal that such efforts were “concluded in late 2006.” Nevertheless, they
allowed, without objection, the plan to be confirmed on November 9, 2006, and,
without objection, their initial claims to be reduced on November 30, 2006. It was
not until two months later, on January 5, 2007, that they filed their amended
claims. Such tardiness cannot be excused in this case.
We can find no compelling reason that would support amendment of
appellants’ claims that have been precluded by the res judicata effect of Winn-
Dixie’s confirmed plan. Accordingly, the judgment of the district court upholding
the bankruptcy court’s decision to sustain Winn-Dixie’s objections to amendment
of appellants’ claims is hereby
AFFIRMED.
8