Mourad v. Farrell (In Re V&M Management, Inc.)

          United States Court of Appeals
                        For the First Circuit

No. 01-9006

                     IN RE: V&M MANAGEMENT, INC.,

                               Debtor,
                        _____________________

                           ALPHONSE MOURAD,

                              Appellant,

                                  v.

                      DONALD F. FARRELL, ET AL.,

                              Appellees.


              APPEAL FROM THE BANKRUPTCY APPELLATE PANEL

                         OF THE FIRST CIRCUIT


                                Before

                         Boudin, Chief Judge,
                      Torruella, Circuit Judge,
                  and Stahl, Senior Circuit Judge.


     Alphonse Mourad on brief pro se.
     Harold B. Murphy, Andrew G. Lizotte and Hanify & King, P.C. on
brief for appellees Donald F. Farrell, Harold B. Murphy, and Hanify
& King, P.C.
     Paul D. Moore, Anthony J. Fitzpatrick, Mobina F. Mohsin and
Duane Morris LLP on brief for appellee Stephen S. Gray.



                          February 24, 2003
           Per Curiam.    Alphonse Mourad appeals from the bankruptcy

court's dismissal of his claims, which were removed from state

court pursuant to 28 U.S.C. 1452(a), and its denial of his motion

to remand.1   The Bankruptcy Appellate Panel for the First Circuit

affirmed the bankruptcy court judgment and adopted its findings of

fact and conclusions of law.           On appeal, we review the bankruptcy

court's findings of fact for clear error, and afford de novo review

to its conclusions of law.         In re Healthco Int'l, Inc., 132 F.3d

104, 107 (1st Cir. 1997).

            Appellees--Trustee Stephen Gray and the Hanify & King

firm ("H&K") and the latter's attorneys--argue that this court

lacks    jurisdiction    to    review   the   bankruptcy     court's   decision

denying Mourad's motion to remand this case to state court.              See 28

U.S.C. § 1452(b) (2000).         However, Mourad argues that "the U.S.

Bankruptcy Court has no or questionable jurisdiction to rule upon

any matters regarding the State Court malpractice suit filed in the

Suffolk Superior Court."        Because this argument attacks the lower

court's subject matter jurisdiction, we not only have jurisdiction

to review but are obligated to do so.          See Things Remembered, Inc.

v.   Petrarca,   516    U.S.    124,    131   n.1   (1995)    (Ginsburg,   J.,

concurring)(citing Mansfield, C. & L. M. R. Co. v. Swan, 111 U.S.

379, 382 (1884)); In re Celotex Corp., 124 F.3d 619, 625 (4th Cir.



     1
       The bankruptcy court granted the motion to remand one of
Mourad's claims but dismissed the remaining claims on non-
jurisdictional grounds.

                                        -2-
1997).

          Mourad's state law claims consist of various allegations

of fraud, professional malpractice, and breach of fiduciary duty on

the part of Gray, H&K and its attorneys who served as legal counsel

to the debtor corporation ("the Debtor" or "V&M").      The claims

retained by the bankruptcy court wholly arise out of the trustee

and counsel's performance of their duties with respect to the

Debtor after the petition for bankruptcy was filed, and we have

little difficulty in finding that these state law claims are civil

proceedings "arising under title 11, or arising in or related to [a

case] under title 11."   28 U.S.C. § 1334(b) (2000). See, e.g., In

re Southmark Corp., 163 F.3d 925, 931 (5th Cir. 1999) (finding

jurisdiction over accountant malpractice claims), cert. denied, 527

U.S. 1004 (1999).

          Whether these state law claims are core or non-core is

largely immaterial--Mourad never challenged the district court's

reference of these claims to the bankruptcy court, see 28 U.S.C. §

157 (2000)--except to the extent that this distinction might shed

light on how to classify Mourad's claims under the jurisdictional

headings of section 1334(b).   But this further question (whether

his claims qualify for the "arise under" or "arise in" heading

rather than the "relate to" heading) is not presented to us, for

Mourad has not moved for mandatory abstention pursuant to section

1334(c)(2), see also Fed. R. Bankr. P. 5011, and the abstention

provision, which is waivable by the parties, does not detract from


                               -3-
the district court's subject matter jurisdiction. See Celotex, 124

F.3d at 627 n.4.        Mourad's jurisdictional attack having failed,

there is no other ground upon which a review of the bankruptcy

court's remand decision can be had.         28 U.S.C. § 1452(b).

            This brings us to the issue of Mourad's standing to bring

these     claims   as   former   president,    sole   director   and    sole

shareholder of V&M. In dismissing Mourad's non-remanded claims for

lack of standing, the bankruptcy court found that Mourad was

precluded from re-litigating the issue of his standing.          The court

relied upon its prior ruling, as part of the confirmation of the

reorganization plan, that Mourad's equity interest in the Debtor

had no value.      The court also relied upon the preclusion effect of

its prior determinations, in at least three proceedings in the V&M

bankruptcy case, that Mourad lacked standing.

            Applying    the   doctrine    of   collateral   estoppel,    the

bankruptcy court concluded that its prior ruling on the value of

Mourad's equity interest precluded him from contending that his

equity interest "had (or could have) such value as would give him

standing in the present matter."         Because the only harm to himself

which Mourad's non-remanded claims alleged was in his capacity as

an equity security holder in the Debtor, the court reasoned, he was

precluded from arguing that he had standing to pursue the present

claims.

            In support of his standing, Mourad now disputes the

bankruptcy court's finding that his equity interest in the Debtor


                                    -4-
had no value.    We agree with the bankruptcy court that Mourad is

precluded from re-litigating the issue of the value of his equity

interest.    As the bankruptcy court stated, "[b]y the 1997 order

confirming the Joint Plan of Reorganization, the [bankruptcy court]

has already adjudicated that Mr. Mourad's equity interest in the

Debtor is of no value."       The requirements of issue preclusion are

satisfied. See Grella v. Salem Five Cent Sav. Bank, 42 F.3d 26, 30

(1st Cir. 1994).2

            Mourad attempts on appeal, as he did in his opposition to

defendants' motion to dismiss, to base his standing on his 1)

personal    liability   (as   sole    shareholder   of   a   subchapter   S

corporation) for certain debts owed by the Debtor, and 2) stake in

the opportunity to recover the value of his equity.           We need not

decide whether standing can be supported on these grounds, because

these allegations could have been raised in the prior bankruptcy

proceedings where Mourad's standing was adjudicated. To the extent

that Mourad now seeks to add these new (but previously available)

factual allegations to establish his standing to bring the present

claims, such assertions do not defeat the bar of issue preclusion.

See Perry v. Sheahan, 222 F.3d 309, 318 (7th Cir. 2000).

            In his brief on appeal, Mourad does not dispute (and

     2
       Specifically, the bankruptcy court found that "Mr. Mourad
was a party to and active participant in the Plan confirmation
process; this matter was actually litigated; the quantification of
Mr. Mourad's interest was necessary for confirmation of the plan;
and the confirmation order is a valid final judgment." Mourad has
not disputed any of those findings, nor does there appear to be any
valid basis for doing so.

                                     -5-
appears to concede) that the issue of standing has been previously

adjudicated.   His only challenge to the court's dismissal of his

claims on preclusion grounds is that "the [bankruptcy court] has

been and continues to be biased towards Mourad."   This contention,

which is based on judicial rulings against him, is groundless. See

Liteky v. United States, 510 U.S. 540, 554 (1994). Moreover,

Mourad's brief contains no developed argument challenging the

bankruptcy court's determination of no bias (made in connection

with denial of the motion for recusal in this case).   "Our general

rule with regard to such poorly developed arguments is to treat

them as forfeited." Donahue v. City of Boston, 304 F.3d 110, 122

(1st Cir. 2002).

     The bankruptcy appellate panel's decision dated February 26,

2001, is affirmed.




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