[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
April 4, 2008
No. 07-15615 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
D. C. Docket No. 06-00095-CV-LGW-3
MATTHEWS, WILSON & MATTHEWS, INC.,
SAMANTHA D. WATKINS,
Plaintiffs-Appellants,
versus
CAPITAL CITY BANK,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Georgia
_________________________
(April 4, 2008)
Before BIRCH, DUBINA and HULL, Circuit Judges.
PER CURIAM:
Plaintiffs appeal the district court’s order granting summary judgment to the
defendants on their state law claims of fraud, conversion, money had and received,
breach of fiduciary duty and for an accounting.1 After review, we affirm.
I. BACKGROUND
This diversity action arises out of a series of loans by defendant Capital City
Bank (“the bank”)2 to plaintiff Matthews, Wilson & Matthews, Inc. (“MWM”) that
were secured with a piece of MWM’s property in Conyers, Georgia (“Conyers
property”). Plaintiff Samantha Watkins is the chief executive officer and sole
shareholder of MWM.
MWM had trouble making loan payments, and ultimately filed for Chapter 7
bankruptcy. The bankruptcy trustee sought approval from the bankruptcy court to
sell the Conyers property and use the sale proceeds to satisfy the bank’s lien. On
behalf of MWM, Watkins filed an objection to the sale in which she argued that the
bank had engaged in fraud, misappropriated funds and failed to give an accounting.
The factual allegations in Watkins’s bankruptcy objection are also included in
plaintiffs’ claims in this case. After a hearing, the bankruptcy court overruled
Watkins’s objection and approved the sale of the Conyers property and the use of
1
On appeal, plaintiffs do not challenge the district court’s conclusion that plaintiffs
abandoned a Truth In Lending Act claim. Thus, we do not address this claim.
2
Capital City Bank is the successor in interest to Farmers and Merchants Bank, which
made the loans.
2
the sale proceeds to apply to the bank’s lien. Thus, the bankruptcy court
effectively decided plaintiffs’ claims adversely to the plaintiffs.
Over a year after the bankruptcy court’s order approving the sale, MWM
amended its schedule of personal property to include state law claims of fraud,
conversion and misapplication of funds against the bank in connection with the
loans secured by the Conyers property. In response, the bankruptcy trustee filed a
formal abandonment of this property, pursuant to 11 U.S.C. § 554(a). Section
554(a) provides that “[t]he trustee may abandon any property of the estate that is
burdensome to the estate or that is of inconsequential value and benefit to the
estate.” 11 U.S.C. § 554(a).
Plaintiffs then filed this civil action against the bank asserting the state law
claims. The district court granted the bank’s motion for summary judgment. The
district court concluded, among other things, that the bankruptcy court’s order
approving the sale of the Conyers property precluded the plaintiffs’ state law
claims because the plaintiffs had already raised these same claims in the
bankruptcy objection to the sale, and the bankruptcy court had overruled the
objection. Plaintiffs filed this appeal.
II. DISCUSSION
On appeal, plaintiffs argue that the district court erred in giving preculsive
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effect to the bankruptcy court’s order approving the sale.3
In a diversity case, we apply the law of the state in which the district court
sits to determine whether the doctrine of res judicata applies. Wesch v. Folsom, 6
F.3d 1465, 1471 (11th Cir. 1993). Under Georgia law, the doctrine of res judicata,
or claim preclusion, will bar a subsequent action when there is: “‘(1) identity of the
cause of action, (2) identity of the parties or their privies, and (3) previous
adjudication on the merits by a court of competent jurisdiction.’” Gunby v. Simon,
277 Ga. 698, 699 (2004) (quoting Waldroup v. Greene County Hosp. Auth., 265
Ga. 864, 866 (1995) and citing O.C.G.A. § 9-12-40).
Plaintiffs argue only that the bankruptcy court was not a court of competent
jurisdiction over the state law claims. Plaintiffs contend that “the abandoned tort
action would be treated as if it were never a part of the estate, leaving the
bankruptcy court without jurisdiction to issue orders which have a preclusive
effect.” Thus, according to plaintiffs, the bankruptcy trustee’s formal
abandonment of their state law claims retroactively divested the bankruptcy court
of jurisdiction over those claims and restored the claims to them in their pre-
petition status.
This argument is foreclosed by In re Martin, 490 F.3d 1272 (11th Cir. 2007).
3
We review de novo a district court’s application of the doctrine of res judicata. Kizzire
v. Baptist Health Sys., Inc., 441 F.3d 1306, 1308 (11th Cir. 2006).
4
In In re Martin, the appellant argued that a bankruptcy trustee’s abandonment of an
interest in a state court action “divested the bankruptcy court of jurisdiction and
restored his ability [to] proceed in that litigation.” 490 F.3d at 1276. This Court
concluded that a bankruptcy trustee’s “abandonment [is] a ministerial act pursuant
to the Bankruptcy Code which divested the Trustee, and [the debtor’s] estate, of
any remaining interest . . . . and does not re-vest [the debtor] with the ability to re-
litigate” issues already decided. Id.
Here, as the district court found (and plaintiffs do not dispute), the claims
plaintiffs now assert are the claims they raised in their bankruptcy objection to the
trustee’s motion to sell the property and the bankruptcy court overruled their
objection. Over a year later, and only after MWM amended its bankruptcy petition
to list the claims, did the bankruptcy trustee formally abandon the claims pursuant
to § 554(a).
As in Martin, the bankruptcy trustee’s abandonment of plaintiffs’ claims was
a ministerial act performed only after the claims had already been rejected by the
bankruptcy court and were of inconsequential value. Under Martin, what reverted
back to MWM after the trustee’s abandonment was “any remaining interest” in the
claims after the bankruptcy court had approved the Conyers property sale. The
trustee’s abandonment did not “re-vest” the plaintiffs with the ability to relitigate
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the claims overruled by the bankruptcy court.
For these reasons, the district court did not err in applying the doctrine of res
judicata.4
AFFIRMED.
4
We also find no error in the district court’s alternative conclusions that some of
plaintiffs’ claims are barred by the applicable statutes of limitation and that there is no genuine
issue of material fact as to the remaining timely claims.
6