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. e du/thir dc ir c uit_1999/187Filed July 1, 1999

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 98-3309

WAYNE COPELIN

v.

SPIRCO, INC., f/k/a Nasco Inc.

STEPHEN I. GOLDRING, Trustee

INNOVO GROUP, INC.,* Appellant (Pursuant to Rule 12(a), F.R.A.P.)

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

(D.C. No. 96-cv-00342J) District Judge: Honorable D. Brooks Smith

ARGUED MARCH 9, 1999

BEFORE: MANSMANN, SCIRICA, and NYGAARD, Circuit Judges.

(Filed: July 1, 1999)

James R. Walsh (Argued) Spence, Custer, Saylor, Wolfe

& Rose

400 United States National Bank Building

P.O. Box 280 Johnstown, PA 15907 Attorney for AppellantThomas E. Reilly (Argued)

Davis & Reilly

437 Grant Street 1124 Frick Building Pittsburgh, PA 15219 Attorney for Appellee

OPINION OF THE COURT

NYGAARD, Circuit Judge.

Innovo Group, Inc., the parent corporation of debto r Spirco, Inc., f/k/a Nasco, Inc.,1 appeals a Distric t Court Order disallowing Innovo from using Innovo stock to satisfy a Tennessee state court judgment against it. The Di strict Court concluded that the judgment does not fall wit hin the terms of Spirco's approved Bankruptcy Plan of Reorganization, and that Wayne Copelin, who holds t he judgment against Innovo, is merely seeking to colle ct on a judgment he holds against a non-debtor. We agree an d will

affirm.

I.

Spirco and Innovo hired Wayne Copelin to serve as Spirco's president. Copelin, Spirco and Innovo exec uted a written employment agreement that included a clause entitling Copelin to compensation in the amount of $100,000 if his employment was terminated for any r eason other than for cause. Appellants' App. at 99. The Employment Agreement did not make Innovo's liabilit y contingent upon Spirco's failure to pay. Approximat ely five months later, Spirco terminated Copelin without cau se, but

___________________________________________________ ______________

1. Spirco and Innovo merged under the terms of Spir co's Plan of Reorganization filed with the Bankruptcy Court, wit h Innovo as the surviving corporation. During the course of relevan t litigations, Nasco changed its name to Spirco. As such, the documents in the record refer to both Spirco and Nasco to reflect the name of the company at the various stages of the Tennessee State Court and ban kruptcy litigation. However, for ease of understanding, we will only us e the company name Spirco to refer to both Spirco and Nasco.

2did not pay the $100,000 compensation due under the

contract.

Copelin sued Spirco and Innovo jointly and severall y in Tennessee state court alleging breach of contract, misrepresentation, breach of covenant of good faith and fair dealing, and promissory estoppel. Spirco filed a vo luntary petition for relief with the Bankruptcy Court for t he Western District of Pennsylvania under Chapter 11 o f the Bankruptcy Code, 11 U.S.C. S 101 et seq., which ide ntified Copelin as a creditor holding a disputed claim for $250,000 under the Employment Agreement. Copelin then filed in state court a notice of intention to non-suit Spirc o without prejudice. The state court dismissed Spirco, but In novo remained a party. Innovo then sought to remove the state court action to the Bankruptcy Court for the United States

District Court for the Middle District of Tennessee under 28 U.S.C. S 1452(a) claiming that the matter was relat ed to Spirco's bankruptcy proceeding then pending in the Bankruptcy Court for the Western District of Pennsy lvania. Copelin objected and requested that the case be rem anded to the Tennessee State Chancery Court.

The Tennessee Bankruptcy Court conducted a hearing to determine the proper forum and concluded that: (1) Copelin's suit had no significant impact on the Spi rco bankruptcy action; (2) Innovo's only relation to th e Spirco bankruptcy case was as a non-debtor co-defendant in the Copelin action; and (3) no objective of the bankrup tcy code would be furthered by removing the case to the Bank ruptcy

Court for the Middle District of Tennessee. Innovo did not appeal, and the case remained in state court.

Spirco filed an Amended Plan of Reorganization with the Bankruptcy Court in the Western District of Pennsyl vania. A copy of the scheduling order and Amended Plan was forwarded to Wayne Copelin c/o his attorney in the

Tennessee state court action.

The Plan stated that Spirco would receive a dischar ge and the "discharge of the Debtor shall also effect a discharge of [Innovo with] respect to all claims ag ainst Spirco, Inc." Appellee's App. at 23. Further, the P lan commanded that "at no time shall [Innovo] be deemed a

3debtor." Id. The Bankruptcy Court for the Western D istrict

of Pennsylvania confirmed the Amended Plan which st ated in relevant part:

Article II-Specifications of Claims and Inte rests

Pursuant to Sections 1122 and 1123(a)(1) of the Bankruptcy Code, the following classes of Cl aims are designated:

(H) Class 8 - Class 8 consists of holders o f Allowed General Unsecured Claims upon which [Innovo] is liable, by guaranty or otherwise, as establi shed by (a) the entry of a final Order upon motion filed by[Spirco] or Class 8 Claimant, or (b) written acknowle dgment of [Innov]. Appellants' App. at 65.

Article III-Plan of Reorganization

On the Effective Date of the Plan, [Spirco] shall be deemed merged into its parent corporation, [ Innovo], with [Innovo] being the surviving corporatio n. Therefore, on the Effective Date, [Spirco] w ill cease to exist as a separate corporate entity and [In novo] shall incur liability of [Spirco] only as provided for in this Plan. Appellants' App. at 66.

Article X - Effect of Confirmation; Issuance of Group Common Stock; Vesting of Property; Discharge

. . . At no time shall [Innovo] be deemed a debtor. [Innovo] shall incur no obligations as a res ult of such merger except as specifically provided in th e Plan.

D. Upon the Effective Date, [Spirco] shall r eceive a discharge pursuant to Section 1141 of the Ba nkruptcy Code. The discharge of [Spirco] shall also e ffect a discharge of [Innovo] will [sic] respect to all claims and interest against Spirco, Inc.

Appellee's App. at 23.

While confirmation of the Reorganization Plan was pending, Innovo filed an Amended Answer to Copelin' s state court complaint claiming that Spirco was an indispe nsable party to the suit and that the suit should be dismi ssed until Spirco could be properly joined. The state co urt did

4not find that Spirco was an indispensable party and Spirco

did not join the action. Appellants' App. at 129.

Spirco filed a Motion to Classify Claims in the Bankruptcy Court for the Western District of Pennsy lvania alleging that Copelin filed non-bankruptcy litigati on against Innovo to establish Innovo's liability for Spirco's obligation by guarantee or otherwise and that Innovo "denies a ny responsibility to [Copelin] for obligations due and owing by the Debtor [Spirco]." Spirco requested that this cl aim be classified as a Class 8 claim if Copelin successful ly established Innovo's liability for Debtor's obligat ions. Appellants' App. at 77. The Bankruptcy Court for th e Western District of Pennsylvania ordered that in th e event Copelin obtained a final order in state court estab lishing Innovo liable for Spirco's obligations, then Copeli n would be

deemed to have an Allowed Class 8 claim. Under the terms of the confirmed Amended Plan of Reorganization, In novo could satisfy any Allowed Class 8 claim with paymen t of

Innovo stock.

The Tennessee State Chancery Court granted summary judgment in favor of Copelin against Innovo for $10 0,000 plus costs. The Order stated in pertinent part:

ORDERED, ADJUDGED and DECREED that Summary Judgment is hereby granted in favor of the P laintiff, Wayne Copelin, against the Defendant, Innovo Group, Inc., as to the issue of severance benefits described in Paragraph 9, of that Employment Agreement, d ated January 2, 1992, and identified as Exhibit B , to this Complaint filed in this cause, and that the Plaintiff, Wayne Copelin, have and recover of the Defen dant, Innovo Group, Inc., the sum of $100,000.

Appellants' App. at 149.

Copelin was given a certificate for 352,113 shares of Innovo stock to satisfy the judgment. Copelin's att orney returned the stock stating that the judgment agains t Innovo was "for a sum certain of money, not stock." Spirco , as merged with and into Innovo, then filed a Motion fo r Enforcement of Discharge Injunction and Terms of Confirmed Plan, Together with Request for Finding o f Contempt and Imposition of Sanctions with the Bankr uptcy

5Court for the Western District of Pennsylvania. Spi rco

contended that under the terms of the Amended Plan, Copelin's judgment against Innovo in state court co uld be satisfied with Innovo stock. Copelin contested the motion.

The Bankruptcy Court for the Western District of Pennsylvania enjoined Copelin from "pursuing Innovo Group in any other forum to collect on the debt Inn ovo jointly owes along with [Spirco]." The court found that: (1) Innovo was a guarantor or otherwise liable to Copel in based on Spirco's obligation to Copelin; (2) the dispute was a core proceeding, and therefore the bankruptcy court had jurisdiction to enter a final judgment; (3) Copelin had a Class 8 claim payable in Innovo stock; (4) the debt owed to Copelin "by Debtor" was discharged; (5) Copelin was barred from challenging the classification of the judgment against Innovo as a Class 8 claim; and (6) the denial of re moval by the Bankruptcy Court for the Middle District of Ten nessee regarding Copelin's state court action s against Sp irco and Innovo did not bar the reorganized debtor from enjo ining Copelin's collection efforts. See In re Spirco, Inc ., 201 B.R. 744 (Bankr. W.D. Pa. 1996).

Copelin appealed the Bankruptcy Court's decision to the

United States District Court for the Western Distri ct of Pennsylvania. The District Court concluded that: (1 ) whether Copelin could execute on the state court ju dgment was a non-core matter related to a case arising und er title 11; (2) Copelin's state court lawsuit was against I nnovo, not Spirco; (3) Copelin's collection efforts did not in volve rights created by bankruptcy law; (4) the discharge of Inn ovo under the Amended Plan was limited to "those claims and interest against Spirco" and that Class 8 claims in cluded only those "upon which [Innovo] is liable, by guara nty or otherwise"; (5) there was no evidence that Innovo w as a guarantor of Spirco; and (6) the preclusive effect accorded the orders confirming the Amended Plan and classify ing the claims by the bankruptcy court was too broad. See I n re Spirco, Inc., 221 B.R. 361 (W.D. Pa. 1998).

The District Court ordered the Bankruptcy Court to recognize the state court judgment against Innovo f or $100,000 plus costs.

6II.

A. Jurisdiction

28 U.S.C. S 157 sets forth the jurisdiction of the bankruptcy courts. It states in pertinent part:

(b)(1) Bankruptcy judges may hear and determ ine all cases under title 11 and all core proceeding s arising under title 11, or arising in a case under t itle 11, referred under subsection (a) of this sectio n, and may enter appropriate orders and judgments, subj ect to

review under section 158 of this title.

(2) Core proceedings include, but are not li mited to-

(A) matters concerning the administration of the

estate;

. . .

(I) determinations as to the dischargability of particular debts;

(J) objections to discharges;

(K) determinations of the validity, extent, or priority of liens;

(L) confirmation of plans

. . .

(c)(1) A bankruptcy judge may hear a proceed ing that is not a core proceeding but that is otherwi se related to a case under title 11. In such proceeding, t he bankruptcy judge shall submit proposed findi ngs of

fact and conclusions of law to the district court, and any final order or judgment shall be entered by the district judge after considering the bankrup tcy judge's proposed findings and conclusions after revi ewing de novo those matters to which any party has ti mely and specifically objected.

In sum, as the Bankruptcy Court for the Western Dis trict of Pennsylvania correctly observed, its jurisdictio n extends over four types of matters: (1) title 11 cases, (2) proceedings that arise under title 11, (3) proceedings that ari se in a case

7under title 11, and (4) proceedings related to a ca se under

title 11. See Spirco, 201 B.R. at 748; 28 U.S.C. SS 1334(a), (b). We conclude that the Bankruptcy Court had jurisdiction because this matter is a "proceeding r elated to

a case under title 11."

A proceeding is related to a case under title 11 if it "could conceivably have any effect on the estate being administered in bankruptcy" such that " `it is poss ible that [the] proceeding may impact on the debtor's rights, liabilities, options, or freedom of action or the h andling and administration of the bankrupt estate.' " Halper v. Halper, 164 F.3d 830, 837 (3d Cir. 1999) (quoting In re Gui ld & Gallery Plus, Inc., 72 F.3d 1171, 1181 (3d Cir. 199 6) (other citations and quotations omitted)); see also United States Trustee v. Gryphon at the Stone Mansion, Inc., 166 F.3d 552, 556 (3d Cir. 1999) (noting that test to determ ine if matter is "related to" a bankruptcy is whether the outcome of the proceeding could conceivably have any effect on the estate being administered in bankruptcy). As we rea ffirmed in Halper, the key word "is `conceivable.' Certaint y, or even likelihood [of effect on the estate being administe red in bankruptcy] is not a requirement." 164 F.3d at 837 (quoting In re Guild, 72 F.3d at 1181) (other quota tions omitted). Thus, jurisdiction is a threshold issue d etermined by speculating whether the ultimate outcome of the litigation could conceivably affect the bankrupt es tate. Here, the Bankruptcy Court had jurisdiction to hear Spirco's, as merged into Innovo, motion to enforce the terms of the Bankruptcy Plan of Reorganization beca use resolution of that motion may arguably have had an impact on Spirco's bankruptcy. That the underlying issue i s enforcement of a state court judgment is irrelevant to our analysis of the Bankruptcy Court's jurisdiction.

B. Standard of Review

The scope of our review critically depends on the n ature of the Bankruptcy Court's and the District Court's jurisdiction. In a core case, a bankruptcy court ca n enter a final judgment over which a District Court can exer cise only appellate review. See 28 U.S.C. SS 157(b)(1), 158(a ). During a non-core proceeding, however, a bankruptcy court can

8only issue proposed findings and conclusions; the d istrict

court alone can enter final judgment, and exercise de novo review of the bankruptcy court's proposals. See 28 U.S.C. S 157(c)(1). In either case, we have appellate juri sdiction

over the district court's final decision. See 28 U. S.C. SS 158(d), 1291. The nature of the bankruptcy and t he district court's jurisdictions, however, determines whether we are reviewing the final decision of the bankrupt cy court or the district court, i.e., to whose fact-finding we owe clear-error deference. See Halper, 164 F.3d at 836 ("[A] proceeding's core or non-core nature is crucial in bankruptcy cases because it defines both the extent of the Bankruptcy Court's jurisdiction, and the standard b y which the District Court reviews its factual findings.").

A core proceeding, " `invokes a substantive right p rovided by title 11 or . . . by its nature, could arise onl y in the context of a bankruptcy case.' " Id. (quoting In re Guild, 72 F.3d at 1178). When reviewing a core proceeding, we accept the Bankruptcy Court's findings of fact unless clea rly

erroneous. See id. at 835.

In contrast, a non-core proceeding belongs to "the broader universe of all proceedings that are not co re proceedings but are nevertheless `related to' a ban kruptcy case." Id. at 837. Thus, a "non-core" matter may in clude a proceeding that is not against the debtor or the de btor's property. See id. When reviewing a non-core proceed ing, we treat the district court as the trial court, accept ing its findings of fact unless clearly erroneous. See 28 U.S.C. S 157. Of course, conclusions of law are reviewed d e novo in both core and non-core proceedings. See id.

The Bankruptcy Court for the Western District of Pennsylvania opined that Spirco's motion to enforce the terms of the Reorganized Plan and enjoin enforcemen t of the state court judgment against Innovo was a core proceeding because "[s]uch a request would arise on ly in the context of a bankruptcy case wherein a plan of reorganization was confirmed and debtor had receive d a discharge." Spirco, 201 B.R. at 748. Innovo claims that " `[b]ut for' the filing of the Chapter 11 case by `Spirco' and the terms of its Plan, `Copelin' would have been fr ee to

9pursue collection from `Spirco' or `Innovo' or both , until his

claim was satisfied." Appellants' Br. at 26-27. We disagree.

At issue here is whether Copelin has the right to c ollect his judgment from Innovo, a non-debtor who became involved in a bankruptcy court proceeding through t he confirmation of an Amended Plan. This, we conclude, is a non-core proceeding. See Northern Pipeline Construc tion Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S. Ct. 2858 (1982) (criticizing the exercise of jurisdiction by a nonArticle III judge over a state law claim that was c onnected to a bankruptcy solely because the plaintiff filed a petition for bankruptcy). Indeed, it would be inconsistent w ith Northern Pipeline to require Copelin to have his ri ghts determined by a non-Article III court simply becaus e Innovo invoked the protection of the bankruptcy court thro ugh a bankruptcy court procedure. It is clear from the re cord that Copelin sued and won a state court judgment against Innovo, not Spirco. Innovo remained a party to the action after Copelin filed a notice of non-suit against Sp irco because Innovo was originally a party to the Employ ment Agreement.2 Additionally, by the very terms of the

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2. The Tennessee state court concluded that Spirco was not an indispensable party. Tennessee's Rules of Civil Pro cedure state:

Rule 19. Joinder of Persons Needed for Just Adjudication.

19.01 Persons to Be Joined if Feasible. A pe rson subject to the jurisdiction of the court shall be joined as a party if (1) in the person's absence complete relief cannot be a ccorded among those already parties, or (2) the person claims an interest relating to

the subject of the action and is so situated tha t the disposition of

the action in the person's absence may (i) as a practical matter impair or impede the person's ability to protect th at interest, or (ii)

leave any of the persons already parties subject t o a substantial risk of incurring double, multiple, or otherwise inc onsistent obligations by reasons of the claimed interest. If the pers on has not been so joined, the court shall order that the person be mad e a party. If the

person properly should join as a plaintiff but refu ses to do so, he or she may be made a defendant, or in a proper case , an involuntary plaintiff. This rule shall be construed to a llow joint tort-feasors

and obligors on obligations that are joint and s everal to be sued

eitherjointly or severally.

Tenn. R. Civ. P. 19.01.

10Reorganization Plan, Innovo is not the debtor. Cope lin's

judgment resulted from a "garden variety contract c laim [against Innovo,] and is not against the bankrupt e state." Beard v. Braunstein, 914 F.2d 434, 444 (3d Cir. 199 0) (holding that RICO and state law alter ego and comm on law fraud claims brought against shareholders, officers

, directors and managing agents of a corporation that filed bankruptcy were not barred by the bankruptcy court' s order confirming the Reorganization Plan, in part, because "the bankruptcy court would not have had jurisdicti on to hear [the plaintiff 's] claims against the defendan ts"). Copelin's judgment did not result from a claim file d against a debtor that invoked bankruptcy law. Thus, the Dis trict Court properly concluded,

the efforts to execute on the judgment are n ot against the debtor . . . [because] they do not seek to satisfy the state court judgment by obtaining any proper ty of the bankruptcy estate. . . . Copelin's efforts t o collect on the judgment do not involve rights created b y bankruptcy law, [therefore], the issue befor e[this court] is not of the type which arises only in the context of a bankruptcy case.

Spirco, 221 B.R. at 367 (citing Beard, 914 F.2d at 444).

We reject Innovo's assertions urging us to hold tha t a non-debtor party who is independently liable on a s tate court judgment may subvert that judgment and invoke core treatment from a bankruptcy court simply by assumin g obligations of a debtor who is also obligated to th e same creditor. Both the Bankruptcy Court and Innovo characterize the issue as "debtor['s] request[ ][of ] enforcement of the injunction arising from plan confirmation against efforts by a pre-petition cred itor to collect a debt owed to that creditor by debtor and a third party." Spirco, 201 B.R. at 749. However, the debt is owed only by Innovo, the third party. The fact that Spir co merged into Innovo with Innovo as the surviving corporatio n does not does not change our analysis.

The proceeding was non-core, therefore, the Bankrup tcy Court's jurisdiction arose under 28 U.S.C. S 157(c) (1), and we exercise jurisdiction under 28 U.S.C. S 1291. As such,

11the Bankruptcy Court's findings and conclusions are mere

recommendations entitled to no deference, and the D istrict Court's findings of fact are subject to review for clear error.

C. Is Copelin's Claim Against Innovo a

Class 8 Claim Under the Terms of the Plan an d the Bankruptcy Court Order?

We also reject Innovo's assertion that the language and terms of the Reorganization Plan included Copelin's state court judgment against Innovo. First, the terms of the Reorganization Plan and the Bankruptcy Court Order dated November 18, 1994, expressly limits the discharge o f Innovo's liability. See, e.g., Art. II(H) ("Class 8 consists of holders of Allowed General Unsecured Claims upon wh ich [Innovo] is liable, by guaranty or otherwise, as es tablished by (a) the entry of a Final Order upon motion filed by Debtor or Class 8 Claimant, or (b) written acknowle dgment of [Innovo]."); Art. III ("Innovo shall acquire all assets and powers belonging to the Debtor but shall incur liab ility of [Spirco] only as provided for in this Plan."); Art. X(C) ("At no time shall [Innovo] be deemed a debtor. [Innovo] sh all incur no obligations as a result of such merger except as specifically provided in the Plan."); Art. X(D)("Up on the Effective Date, [Spirco] shall receive a discharge pursuant to Section 1141 of the Bankruptcy Code. The dischar ge of [Spirco] shall also effect a discharge of[Innovo wi th] respect to all claims and interests against Spirco, Inc.").

Importantly, although the Bankruptcy Court classifi ed Copelin's claim as a Class 8 claim, the express ter ms of the Order do not encompass Innovo's independent liabili ty to Copelin. The Order of the Court dated November 8, 1 994, states in relevant part:

1. Each of the named Respondents herein have initiated Litigation against Innovo Group, I nc. in an effort to establish Innovo Group, Inc. liabi lity[sic] for [Spirco's] obligations to such Respondents;

2. Each of the named Respondents herein shal l be and are deemed to be holders of Disputed Cla ss 8 claims against [Spirco] as provided in the c onfirmed Plan of Reorganization;

123. In the event that Respondents, or any one of them,

obtain a final Order of Court in the aforesa id Litigation establishing Innovo group, Inc. liability [s ic] for the Debtors obligations, then such Respondent sh all be deemed to have an Allowed Class 8 claim paya ble pursuant to the terms of the confirmed Plan of Reorganization.

Appellants' App. at 193-94. The plain language in t he Reorganization Plan and the Order classifying claim s reveals that judgments entered against Innovo indiv idually, without reference to Spirco's liability, do not fal l within any of these provisions.

Second, the Tennessee state judgment does not indic ate that Innovo's liability was contingent on Spirco's liability. The Bankruptcy Court's faulty analysis is evident i n its characterization of Spirco's motion to enforce the terms of the Reorganization Plan. The Bankruptcy Court premi sed its decision on the statement that "debtor Spirco, Inc. has moved for an order enforcing the provision of its c onfirmed plan of reorganization which prohibits respondent W ayne Copelin from continuing his efforts in another foru m to collect from Innovo Group, Inc. on a pre-petition d ebt owed by debtor and guaranteed by Innovo." Spirco, 201 B. R. at 746. The Tennessee state court, however, found that Innovo was independently liable, not liable as a guarantor .3

Because Spirco's Reorganization Plan and the classification of claims by their terms do not appl y to Copelin's state court judgment against Innovo, Stol l v. Gottlieb, 305 U.S. 165, 59 S. Ct. 83 (1938), Chicot County Drainage District v. Baxter State Bank, 308 U.S. 37 1, 60 S. Ct. 317 (1940), and In re Szostek, 886 F.2d 1405, 1 408-10 (3d Cir. 1989), are not controlling. As explained, the Reorganization Plan expressly limits the discharge of Innovo's obligations to those "claims and interest against Spirco" "upon which [Innovo] is liable by guaranty or otherwise, as established by (a) the entry of afina l Order upon motion filed by Debtor or Class 8 Claimant, or (b) written acknowledgment of [Innovo]." Appellants' Ap p. at

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3. Innovo concedes that the Tennessee state court f ound Innovo separately liable to Copelin.

1365, Article II(H); Appellee's App. at 23, Article X (D). There is

no indication that Innovo's liability on the Tennes see state court judgment arises from either of these two situ ations. Moreover, the Reorganization Plan makes it clear th at despite the merger of Spirco and Innovo, Innovo is not the debtor; therefore, Innovo's protections under Spirc o's Reorganization Plan are limited. Appellee's App. at 23, Article X(C); Article X(D).

Finally, reading the plan to allow a general discha rge of Innovo is incorrect. Generally, independent obligat ions of a parent corporation are not discharged by its subsid iary's bankruptcy absent a general discharge provision. To the contrary, the general rule of First Fidelity Bank v . McAteer, 985 F.2d 114 (3d Cir. 1993), controls. In McAteer, we said:

While it is true that the bankruptcy court's confirmation of the amended plan binds the d ebtor and all creditors vis-a-vis the debtor, it does not follow that a discharge in bankruptcy alters the right o f the creditor to collect from third parties. Sect ion 524(e) specifically limits the effect of a discharg e. It provides that ". . . discharge of a debt of the debto r does not affect the liability of any other entity on, or the property of any other entity for, such debt. " This section assures creditors that the discharge of a debtor will not preclude them from collecting the f ull amount of a debt from co-debtors or other liable pa rties.

Id. at 118 (quoting 11 U.S.C. S 524(e)) (emphasis a dded).

In sum, the District Court did not err by determini ng that Copelin's claim against Innovo does not qualify as a Class

8 claim. There is no evidence that Innovo's liabili ty on the Employment Agreement is contingent on Spirco's liab ility. Further, the release provision is limited in scope. When read in context with other provisions of the plan, it is clear that this discharge provision is limited to those c laims and obligations upon which Innovo's liability results f rom "claims and interest against Spirco" or Innovo's st atus as "guaranty or otherwise, as established by (a) the e ntry of a final Order upon motion filed by Debtor or Class 8 Claimant, or (b) written acknowledgment of [Innovo] ." Appellants' App. at 65; Appellee's App. at 23. We h old that

14the state court judgment rendered against Innovo do es not

fall within the plain terms of Spirco's Plan of Reorganization. We will affirm the District Court's denial of Spirco's motion to enjoin Copelin's enforcement of the state court judgment.4

III.

In conclusion, Copelin holds a judgment against Inn ovo for breach of contract, breach of the covenants of good faith and fair dealing, and promissory estoppel. The Dist rict Court correctly decided that Copelin's judgment aga inst

Innovo does not fall within the terms of either the Reorganization Plan or the Bankruptcy Court's order that any final order establishing Innovo's liability for Spirco's obligations be classified as an Allowed Class 8 cla im. Therefore, we affirm.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

___________________________________________________ ______________

4. Because we affirm the District Court, we need no t address Copelin's other arguments.

15