UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_________________________________________

No. 91-5091

_________________________________________

IN THE MATTER OF: RAYWOOD F. BAUDOIN,

LOUELLA H. BAUDOIN and

RAYWOOD BAUDOIN, INC., Debtors.

BANK OF LAFAYETTE,

Appellant,

VERSUS

RAYWOOD F. BAUDOIN, LOUELLA H. BAUDOIN

AND RAYWOOD BAUDOIN, INC.,

Appellees.

_________________________________________________________________

Appeal from the United States District Court

for the Western District of Louisiana

_________________________________________________________________

(January 6, 1993)

Before REYNALDO G. GARZA, DAVIS, and BARKSDALE, Circuit Judges.

BARKSDALE, Circuit Judge:

At issue is whether Chapter 7 debtors may, three years after

discharge, bring a lender liability action in state court against

their creditor which, inter alia

, bid in its mortgages to purchase

the debtors' property sold duri ng their personal bankruptcies in

liquidation of their estate, and filed a proof of claim and

received partial payment in the bankruptcy for the debtors' whollyowned corporation. Because we hold that the lender liability claim

would have been a "core proceeding" in the earlier bankruptcy

actions, the state action is barred by res judicata

. Therefore, we2

REVERSE the district court's summary judgment for the debtors and

RENDER judgment for the creditor.

I.

Beginning in 1978, the Bank of Lafayette (Bank) had a lending

relationship with Mr. and Mrs. Raywood F. Baudoin and their whollyowned corporation, Raywood F. Baudoin, Inc. (RFBI). In 1985, the

Bank made three s eparate loans to RFBI, totalling over $500,000.

Each was secured by Mr. Baudoin's personal guarantee, mortgages on

two pieces of the Baudoins' real property (in Lafayette and Grand

Coteau, Louisiana), and an assignment of RFBI's accounts receivable. The Bank also reserved the right to offset the balance of

RFBI's deposit accounts b y any amount due on the notes and to

accelerate amounts due on all three notes, should RFBI fail to meet

its obligations under any one of them. At that time, the Baudoins'

personal debt to the Bank was approximately $183,000. It, too, was

secured by the Lafayette and Grand Coteau properties.

One of RFBI's notes was due on August 23, 1985. Not having

received payment by August 30, the Bank offset an RFBI account by

approximately $120,000 and notified RFBI's debtors to forward

future payments directly to the Bank. Approximately one month

later, RFBI and the Baudoins, individually, filed for Chapter 7

bankruptcy.

For their personal bankruptcies, the Baudoins listed the Bank

as a secured creditor for slightly over $183,000 and an unsecured

creditor for an unknown amount. In the schedule of assets, under

the category "Property of any Kind not Otherwise Scheduled", they1 At that time, the trustee asked the Baudoins, inter alia

,

"Does anyone owe you any mo ney?", "Do you have any claims for

injuries or damages pending?", and "Do you have any law suits where

you are suing anyone pending?". They answered "no" to each

question and signed a sworn statement reflecting those answers.

2 The Baudoins waived their attendance at the discharge hearing,

stating that they had "no motions of a substantive nature to bring

before the court".

3 listed "Any possible claim against creditor for actions taken

against debtors prior to bankruptcy proc eeding" and assigned an

"undetermined" value.

The Baudoins' personal bankruptcies were consolidated; and on

October 1, 1985, W. Simmons Sandoz was appointed trustee for the

Baudoins and RFBI. The first meeting of the Baudoins' creditors

was held on November 7, 1985. 1 Though the record includes no

formal notice, it appears, pursuant to statements by Sandoz in the

state court record and responses given at oral argument before us,

that the Baudoins informed the trustee of their possible claim

against the Bank very early in the bankruptcy proceeding.

Approximately one month later, on motion of the trustee in the

personal bankruptcies, the two properties securing the Baudoins'

personal debt to the Bank, as well as the Bank's loans to RFBI,

were sold at a public auction in an effort to liquidate all of the

Baudoins' assets. The Bank purchased both tracts, not only bidding

in its mortgages, but also paying the claim of the first lienholder

on the Lafayette property. The Baudoins were discharged in January

1986 2 ; the auction sales were ratified and previous li ens and

mortgages cancelled in March and April of that year.3 Although named as a plaintiff in the state court Petition for

Damages, RFBI claimed no damages and sought no relief. In their

response to the Bank's exceptions, the Baudoins stated that RFBI

was "inadvertently included in the caption on plaintiffs' Petition

for Damages. RFBI is not a party to this action".

4 In the RFBI bankruptcy, the Bank filed two proofs of claim in

late 1985. In May 1986, a gain upon consent of the trustee

, the

a utomatic stay in the RFBI bankruptcy was modified, allowing the

Ban k to proceed with collection of RFBI's accounts receivable.

Three years later, in April 1989, the Bank's claim was allowed in

the amount of nearly $360,000. The RFBI bankruptcy remains open.

In March 1989, the month before the Bank's claim was allowed

in the RFBI bankruptcy and over three years after the Baudoins'

discharge, the Baudoins filed suit in Louisiana state court against

the Bank, seeking over $4,000,000 in damages for both breach of the

loan agreements and numerous related tort claims. 3 Their basic

contention was that the Bank's actions forced them an d their

company, RFBI, into bankruptcy. The Bank filed exceptions in state

court, as well as a separate federal action, seeking to enjoin the

state action and any attempted similar actions by the Baudoins or

RFBI.

In state court, the exceptions for prescription of the tort

claims and no right of action were sustained. The Baudoins were

given leave to either obtain an order o f abandonment or add the

trustee as a plaintiff; they chose the latter, adding him in late4 By affidavit, filed in state court in support of the Baudoins'

objections to the Bank's exceptions, the trustee sta ted that he

intended to abandon this claim to the debtors. A professed intent

to abandon cannot constitu te abandonment, as 11 U.S.C. § 554(a)

requires notice and a hearing prior to abandonment. Furthermore,

we do not consider the Baudoins' earlier mentioned, vague reference

to "Any possible claim against creditor for actions taken against

debtors prior to bankruptcy proceeding" in their schedule of assets

a suffi cient scheduling of their claim against the Bank to

constitute abandonment under § 554(c). In addition, we note that

the only debtors against whom wrongful pre-bankruptcy actions were allegedly taken were not the Baudoins, in whose bankruptcies this

disclosure was made, but the corporation, RFBI.

5 The role of "discretion" in this context is unclear. Perhaps

this refers to the bankruptcy judge's discussion of discretionary

abstention under 28 U.S.C. § 1334(a)(1). Although he mentioned

that doctrine, he did not base his decision upon it.

5 August 1989. 4 No ruling was made on the r es judicata exc eption;

instead, the state court withheld judgment pending this action.

Meanwhile, after the Bank's federal action was filed, the

Baudoins' personal bankruptcies were re-opened. The Bank's action

(this cas e) was then transferred to bankruptcy court, where both

sides moved for summary judgment. It was granted for the Baudoins

on the ground that the lender liability claim was not a "core"

matter and could not have been pursued earlier in the bankruptcy

court. Finding the bankruptcy court's decision "supported by the

evidence and well within the bounds of discretion", 5 the district

court affirmed in a two paragraph order, holding that the lender

liability claim was not a "core" proceeding and, therefore, not

barred by res judicata

.

II.

The Bank contends that the district court erred as a matter of

law in not holding the state court claim barred by either res6 The Bank also contends that the claim asserted in state court,

which arose before bankruptcy, belongs to the estate of either RFBI

or the Baudoins and thus, can be urged only by the tr ustee. The

Baudoins conceded this point at oral argument. Indeed, their

counsel s tated that the trustee had been "substituted" as party

plaintiff in state court. Our review of the record shows that the

trustee has been added as a plaintiff, but has not replaced the

Baudoins.

6 judicata or judicial estoppel. 6 For the reasons that follow, we

hold that the claim is precluded by the doctrine of res judicata ;

therefore, we need not reach estoppel.

A.

Our standard for reviewing a summary judgment i s more than

well settled. We conduct a d e novo review of the entire record and

determine whether there are any genuine issues of material fact.

Finding none, we next decide whether the prevailing party is

entitled to judgment as a matter of law. S tine v. Marathon Oil

Co. , 976 F.2d 254, 265 (5th Cir. 1992); Fed. R. Civ. P. 56.

Our review of the record in this case reveals no material fact

disputes. Moving to the second prong, we reach legal conclusions

contrary to those of the district court, and hold that the Bank,

not the Baudoins, is entitled to judgment as a matter of law.

B.

"This Court has previously recognized the important interest

in the finality of judgments in a bankruptcy case". H end rick v.

Avent

, 891 F.2d 583, 587 n.9 (5th Cir.), cert. denied

,

__ U.S.

__,

111 S. Ct. 64 (1990). In promoting that interest, we have applied

our traditional test for res judicata in the bankruptcy context:

"An arrangement confirmed by a bankruptcy court has the effect of7

a judgment rendered by a district court. Any attempt by the parties

to relitigate any of the matters that we re raised o r could have

been raised therein is barred under the doctrine of res judicata ."

Matter of Brady

, 936 F.2d 212, 215 (5th Cir.), cert . denied

, __

U.S.

__, 112 S. Ct. 657 (1991). As stated by the Second Circuit in

a case quite similar to this case, discussed infra

, "[r]estraining

litigious plaintiffs from taking more than `one bite of the apple'

has been our avowed purpose since the common law doct rine of res

judicata first evolved". S ure-Snap Corp. v. State Street Bank and

Trust Co.

, 948 F.2d 8 69, 870 (2d Cir. 1991). Of course, in the

bankruptcy context, especially a Chapter 7 liquidation, that bite

is to be taken as expeditiously and economically as possible, to

try to ensure, inter alia , that creditors get their share. After

all, it has long been the "general spirit and purpose" of

bankruptcy not only to release a bankrupt from the obligation to

pay his debts, but also to "secure a just distribution of the

bankrupt's property among his creditors". W ilson v. City Bank

, 84

U.S. (17 Wall

. ) 473, 480 (1872). In sum, the numerous and

substantial reasons for the doctrine of res judicata are too well

known, and obvious, to bear repeating. And, they are all the more

compelling today, especially for bankruptcy, and related,

proceedings. Because of spiraling litigation costs, increasingly

congested courts -- especially bankruptcy courts -- and expanding

theories of recovery, such as len der liability, it is more

imperative than ever that the doctrine of res judicata be applied

with unceasing vigilance.7 The appellees' motion, carried with the case, to strike

portions of the Bank's reply brief is DENIED

.

8 Thus, a bankruptcy judgment bars a subsequent suit if: 1)

both cases involve the same parties; 2) the prior judgment was

rendered by a court of competent jurisdiction; 3) the prior

decision was a final judgment on the merits; and 4) the same cause

of action is at issue in both cases. Latham v. Wells Fargo Bank,

N.A.

, 896 F.2d 979, 983 (5th Cir. 1990). The parties agree that

the first element is satisfied; they disagree on the other three. 7

We address them seriatim

.

1.

The Baudoins and RFBI (appellees) contend that the lender

liability suit is not a core proceeding and that, therefore, the

bankruptcy court lacked jurisdiction in the prior ban kruptcy

procee dings to entertain the lender liability claim they raised

later in state court. It is true that, if that claim was not

"core", the bankruptcy court could not have entered a final

judgment for it; instead, it could have only made proposed findings

of fact and conclusions of law subject to de novo review by the8 District courts, under 28 U.S.C. § 1334, have original

jurisdiction of "all civil proceedings arising under title 11, or

arising in or related to cases under title 11". Bankruptcy courts,

though arms of the district court , do not have full power to

adjudicate all matters over which the d istrict court has

jurisdiction. Bankruptcy courts have full judicial authority over

the bankruptcy petition itself and may "hear and determine

... all

core proceedings

... and may enter appropriate orders and

judgments" with reg ard to those proceedings. 28 U.S.C. §

157(b)(1). They also have the limited power to "hear a proceeding

that is not a core proceeding [and] submit proposed findings of

fact and conclusions of law to th e district court" for d e novo

review. 28 U.S.C. § 157(c)(1).

9 district court. 8 But, this does not mean that the bankruptcy court

lacked jurisdiction to entertain the claim.

The wide reach of jurisdiction under title 11 was recognized

in Matter of Wood , 825 F.2d 90, 92 (5th Cir. 1987):

Legislative history indicates that the phrase

[in 28 U.S. C. § 1334, s ee note 8 supra ], "arising

under title 11, or arising in or related to cases

under title 11" was meant, not to distinguish

between different matters, but to identify

collectively a broad range of matters subject to

the bankruptcy jurisdiction of federal courts.

Congress was concerned with the inefficiencies of

piecemeal adjudication of matters affecting the

administration of bankruptcies and intended to give

federal courts the power to adjudicate all matters

having an e ffect on the bankruptcy. Courts have

recognized that the grant of jurisdiction under the

1978 Act was broad.

(Footnotes omitted.) Indeed, pursuant to 28 U.S.C. § 157,

bankruptcy jurisdiction exists if the matter is simply "related to"

the bankrup tcy -- if "the outcome of that proceeding could

conc eivably have any effect on the estate being administered in

bankruptcy". Matter of Wood , 825 F.2d at 93 (quoting Pacor, Inc.

v. Higgins , 743 F.2d 984, 994 (3d Cir. 1984)) (emphasis added by9 The Wood court noted that references to proceedings "arising

under", "arising in a case under" (core) and "related to a case

under" (non-core) operate conjunctively to de fine the scope of

bankruptcy jurisdiction. W ood

, 825 F.2d at 93. 28 U.S.C. § 157(a)

allows a district court to refer any or all such cases to the

bankruptcy court. Core matters, those "arising under title 11, or

arising in a case under title 11" may be finally decided by the

bankruptcy court, 2 8 U.S.C. § 157(b)(1), and the district court

sits as an appellate court regarding thos e matters. 28 U.S.C. §

158.

Section 157(b)(2) reads in part:

Core proceedings include, but are not limited to

--

(A) matters concerning the administration of the

estate;

(B) allowance or disallowance of claims against

the estate ...;

(C) counterclaims by the estate against persons filing claims against the estate;

. . .

(O) other proceedings affecting the liquidation of

the assets of the estate or the adjustment of

the debtor-creditor

... relations hip, except

personal injury tort or wrongful death claims.

The bankruptcy judge is to determine whether a proceeding is core

or non-core, but "[a] determination that a proceeding is not a core proceeding shall not be made solely on the basis that its

resolution may be affected by State law". 28 U.S.C. § 157(b)(3).

10 the Wood court). 9 It cannot be reasonably argued that a $4,000,000

claim belonging to a bankruptcy estate could not have any

conceivable effect on that estate. In short, the bankruptcy court

had jurisdiction to hear the lender liability claim. Because, as

discussed next, we hold that the jurisdiction was "core" in this10 In Latham v. Wells Fargo Bank, N.A. , 896 F.2d 979 (5th Cir.

1990), this court held that neither confirmation of a corporation's

Chapter 11 plan nor an order authorizing the auction of another

corporation's lender liability claims in its Chapter 7 proceeding

barred a subsequent lender liability suit against creditors brought

by the non-bankrupt, sole shareholder, but only in his capacity as

co-borrower and guarantor of the corporations' loans. To the

extent that his claims were those of a shareholder, they were

barred. The court stated that "if [the shareholder's] personal

claims against the banks would not have presented a core proceeding

in [the corporations'] bankruptcy proceedings, his personal

interests could not have been properly placed before that court for

decision." I d

. at 984. It went on to say, however, that there was

a "strong argument" that if the shareholder had participated in the

auction or formulation of the Chapter 11 plan and "in the process

com promised his personal claims", the orders confirming the plan

and authorizing the auction may have barred his subsequent claims.

The Latham court was simply saying that the shareholder's personal

claims c ould not have been effectively litigated in the

corporations' bankruptcies. Nor do we read this to hold that

b ankruptcy jurisdiction must always be core in order to be

"competent" for res judicata purposes.

11 case, we need not decide whether it must be so in order to satisfy

this second prong of our res judicata analysis. 10

As quot ed in note 9, s upra

, 28 U.S.C. § 157(b)(2) is a nonexclusive list of matters which are "core". It includes

"counterclaims by the estate against persons filing claims against

the estate", § 157(b)(2)(C), and "other proceedings affecting the

liquidation of th e assets of the estate or the adjustment of the

debtor-creditor

... relationship", § 157(b)(2)(O). As hereinafter

discussed, the lender liability claim at issue would have been a §

157(b)(2) "core proceeding" in both prior bankruptcy actions: in

the corporate (RFBI) bankruptcy, under § 157(b)(2)(C), and in the

personal bankruptcies, under § 157(b)(2)(O).

In the RFBI bankruptcy, the Bank filed a proof of claim, based

on the loan s it made to the corporation. The Baudoins' lender11 As noted, the Bank did pay off the first lien on the Lafayette

property and may have paid a very small additional amount in cash.

12 liability suit alleges violation of these very loan agreements. If

it believed that the agreements had been breached, RFBI could, and

should, have filed an objection to that proof of claim, asserting

a lender liability "counterclaim". A response to a proof of claim

which is, in essence, a counterclaim, is a core proceeding under 28

U.S.C. § 157(b)(2)(C). See In re Bedford Computer Corp ., 61 B.R.

594 (Bankr. D.N.H. 1986); Interco nnect Telephone Services v.

Farren

, 59 B.R. 397 (S.D.N.Y. 1986); In re Bar M Petroleum Co.

, 63

B.R. 343 (Bankr. W.D. Tex. 1986).

In the personal bankruptcies, the Baudoins listed the Bank as

a creditor in their original Chapter 7 petition. The Bank filed no

proof of claim. The orders asserted here as carrying preclusive

effect are those ordering and confirming the sale of the Baudoins'

properties in Lafayette and Grand Coteau. The Bank held a first

mortgage on the latter and a second mortgage on the former. Both

tracts were purchased by the Bank for the "price" of cancellation

of the existing debt. 11 If the Baudoins were, as they allege in

their lender liability suit in state court, "forced" into

bankruptcy by the Bank, they could, and should, have asserted that

claim in their personal bankrupt cy by objecting to the Bank's

purchase of their property (by "trading in" its mortgages) and the

subsequent ratification of those sales. While we recognize that §

157(b)(2)(O) is to be narrowly construed, we are confident that the

Baudoins' claim is precisely the type which fits within the catch-12 We note, too, that, in a similar vein, the Eighth Circuit

recently affirmed a bankruptcy court's denial of a debtor's request

to file a fraud claim against one of its creditors in state court.

The fraud claim was held "core" to the bankruptcy, because it

"strikes at the heart of the debtor-creditor relationship". I n re

Tranel

, 940 F .2d 1168, 1174 (8th Cir. 1991) (citing H owell

Hydrocarbons, Inc. v. Adams , 897 F.2d 183 (5th Cir. 1990)).

13 There is disagreement about which judgments are at issue. The

Baudoins and RFBI present their case from the position that the

judgment claimed as preclusive by the Bank is that which modified

the automatic stay and allowed the Bank to foreclose on RFBI's

accounts receivable. The Bank, however, has never based its

preclusion claim on that judgment. Thus, we find inapplicable the

case relied on by the Baudoins, D-1 Enterprises, Inc. v. Commercial

State Bank

, 864 F.2d 36, 39 (5th Cir. 1989) ("The lender liability

claims asserted in the adversary proceeding at issue in this case

were not

... `direct defenses' that the debtor could or should have

litigated in response to the creditor's motion for relief from the

stay."). The Bank asserts, instead, that the Baudoins' claim is

barred by the judgments ordering and confirming the sale of real

estate in the Baudoins' personal bankruptcies, and allowing the

Bank's proof of claim in the RFBI corporate ban kruptcy. We will

13 all provision's narrow ambit. It would "affect[] the liquidation

of the assets of the estate or the adjustment of the debtorcreditor ... relationship" tremendously. See In re Branding Iron

Motel

, 798 F.2d 396, 399 n.3 (10t h Cir. 1986) (noting that a

controversy over a note and mortgage is "inextricably tied to the

bankruptcy proceeding because it affects the liquidation of assets"

and is, therefore, core). 12

We hold that the Baudoins' lender liability claim falls

squarely within the provisions of 28 U.S.C. § 157(b)(2) and, as

such, would have been a "core proceeding" in both the corporate and

personal bankruptcies.

2.

Continuing our res judicata analysis, we next look to the

finality of the prior judgments. 13 Our precedent clearlyanalyze only the preclusive effect of those judgments asserted by

the Bank as res judicata

.

14 As noted, the Baudoins' personal bankruptcies have been

reopened. And, the RFBI bankruptcy has remained open. (As aptly

n oted by Judge Jones for our court in M atter of Colley

, 814 F.2d

1008, 1009 (5th Cir.), cert. denied

, 484 U.S. 898 (1987), "old

bankruptcy cases, like old soldiers, never die".) This fact may

raise questions about the finality of the discharge order and the

order allowing the Bank's proof of claim. But, in any event, and

as discussed supra , the judgments ordering and confirming sale of

the estate's properties are, in and of themse lves, sufficient to

render the Baudoins' lender liability claim barred by res judicata

.

15 Colley is a Chapter 13 case. In the case before us, of

course, the judgments asserted as preclusive arose in the context

of Chapter 7 bankruptcies. However, the allowance of a proof of

claim in a Chapter 13 case is no more "final" than such allowance

in a Chapter 7, as the Code provisions governing proofs of claim,

11 U.S.C. §§ 501-02, apply equally to cases filed under Chapters 7,

11, 12 and 13. 11 U.S.C. § 103(a).

14 establishes that bankruptcy court orders authorizing the sale of

part of the estate or confirming such sale are final judgments on

the merits for res judicata purposes, "even though th e order

neither closes the bankruptcy case nor disposes of any claim".

Hendrick v. Avent , 891 F.2d at 586; see also Southmark Properties

v. Charles House Corp

., 742 F.2d 862, 870 (5th Cir. 1984). Though

perhaps less clearly, we read our prior holdings to establish that

an order allowing a proof of claim is, likewise, a final judgment. 14

See Matter of Colley

, 814 F.2d 1008, 1010 (5th Cir.), cert. denied

,

484 U.S. 898 (1987). 15

3.

Finally, we examine the identity of the causes of action.

This court has adopted the "trans actional test" for deciding

whether two cases involve the same cause of action for res judicata

purposes. Under this test, "the critical issue is ... whether ...15

the two actions [are based] on the same nucleus of operative

facts". Matter of Howe , 913 F.2d 1138, 1144 (5th Cir. 1990).

We consi der each prior judgment separately. First, the

bankruptcy court's orders authorizing and confirming the sale of

the properties securing the personal and corporate loans involved

the same facts at issue in the Baudoins' stat e court action. We

have previously held that a court ordered public auction where a

creditor is allowed to bid the full amount of its debt "necessarily

determine[s] not only that the amount bid [is] actually owing, but

also that the maturity of the debt has been validly accelerated".

Hendrick

, 891 F.2d at 587 (interpreting Southmark Properti es v.

Charles House Corp.

, 742 F.2d 862 (5th Cir. 1984)). In their

lender liability action, the Baudoins contend, inter alia

, that the

Bank wrongfully attempted to collect on notes which were not due.

If the Bank's actions to recover amounts owed by the Baudoins or

RFBI violated the loa n agreements, that position could, and most

certainly should, have been asserted in conjunction with the Bank

obtaining the property through the public auction. Of course, as

discussed earlier, a claim or defense which could have been, but

was not, asse rted is still the "same claim" for purposes of r es

judicata

. See Hendrick , 891 F.2d at 587.

The bankruptcy court's order allowing the Bank's proof of

claim in the RFBI bankruptcy also involved the "same claim" the

Baudo ins are asserting now in state court, because the lender

liability claim might have also been asserted in response to that

proof of claim. The Baudoins contend that the same "nucleus of16 In support of this distinction, the Baudoins contend that none

of their claims could have been asserted as defenses to the Bank's

foreclosure on the mortgages after modificati on of the automatic

stay. Again, this is a misstatement of the facts and of the Bank's

basis for its assertion of res judicata

. The Bank's acquisition of

the Grand Coteau and Lafayette properties did not result from

foreclosure and had nothing to do with modification of the stay.

Rather, the Bank purch ased those properties by "trading in" its

lien at a public auction which was conducted at the request of Mr.

Sandoz, the trustee. The automatic stay was modified after the

public auction and for the sole purpose of all owing the Bank to

foreclose on RFBI's accounts receivable.

16 operative facts" was no t addressed by the bankruptcy court in

allowing the Bank's claim, because the Baudoins are not challenging

their obligation to the Bank on RFBI's loans: "Instead, the

Baudoins claim that the bank breached its duty of good faith,

which, while not resulting in extinguishment of the Baudoins'

obligation to repay the indebtedness, makes Bank of Lafayette

liable to the Baudoins in damages". 16 But this begs the question.

The issue is not what effect the present claim might have had on

the earlier one, but whet her the same facts are involved in both

cases, so that the present claimcould have been effectively

litigated with the prior one. Here, the only remaining ground for

the Baudoins' lender liability suit is breach of contract. The

contracts at issue are the very loan agreements which were the

basis of the Bank's proof of claim in the prior bankruptcy. It is

difficult to imagine a more common nucleus of operative facts.

This distinction urged by the Baudoins is the very one

rejected by our court in Matter of Howe

, 913 F.2d 1138 (5 th Cir.

1990), and Eubanks v. F.D.I.C.

, 977 F.2d 166 (5th Cir. 1992).

Those cases both involved Chapter 11 debtors who filed lender17

liability claims against creditor banks after confirmation of the

Chapter 11 plans. In H owe

, t he claim was filed five years later

a nd alleged that the bank had driven Howe to financial ruin. In

Eubanks

, the claim was filed six months after confirmation and

alleged, i nter alia

, breach of a loan contract. As here, the

banks' loans to the debtors had been specifically addressed as

allowed claims in the respective bankruptcies. As here, the

debtors' lender liability claims had not been scheduled as assets

of the estate. The court noted in H owe

, as we do here, that "[t]he

loan transaction at the heart of the present litigation was also

the source of [the bank's] claimagainst the estate". H owe

, 913

F.2d at 1144. As such, both the Howe and Eubanks courts held the

lender liability claims to be the "same" as the bankruptcies for

purposes of res judicata

.

The Second Circuit also reached the same conclusion in the

Chapter 11 context in Sure-Snap Corp. , which relies in large part

on our court's decisions in Matter of Howe

, Southmark Properties

,

and Hendrick v. Avent

, and which is dis cussed at length in our

recent decision in Eubanks

, 977 F.2d at 171-72. The S ure-Snap

debtor brought lender liability claims against two creditor banks

one year after confirmation of the reorganization plan, and the

claims were held barred by res judicata

.

Like the Baudoins, the Su re-Snap debtor attempted to

distinguish the bankruptcy judgment as a decision addressing only

the credi tors' right to be paid. Calling this characterization

"excessively narrow", the Second Circuit held that the bankruptcy18

proceeding encompasses the entire debtor-creditor relationship: not

only the creation of that relationship through the initial loan but

also the bank's actions in calling that loan early

-- the act which

the debtor claimed "forced" him into bankruptcy. S ure-Snap

, 948

F.2d at 874-75. Thus, the debtor's "very allegation that the

banks' ... conduct negatively influenced their business's health,

makes it hard-pre ssed to explain how the two causes of action --

the plan of reorganization and the lender liability claims -- did

not comprise the same ess ential matter". I d. at 875. Likewise,

the Baudoins are "hard pressed" to distinguish their lender

liability claim from the prior judgments of the bankruptcy court.

In fact, they have been unable t o do so; and we hold that their

current claim is identical to those disposed of in the prior

bankruptcies.

III.

All elements for application of res judicata having been

established, the Baudoins' lender liability claim is barred by that

doctrine. Accordingly, the judgment is R EVERSED and, instead,

R ENDERED for the Bank; and this case is REMANDED to the district

court for entry of the appropriate injunctive or other relief.

REVERSED, RENDERED, and REMANDED.