United States Court of Appeals
FOR THE EIGHTH CIRCUIT

___________ No. 96-2752

___________ In re: Anderberg-Lund Printing * Co., also known as Lane * Envelope, also known as Great * Way Publications, * * Debtor. * *

_______________________ * * W.A. Lang Co., * * Appeal from the United States Appellant, * District Court for the * District of Minnesota. v. * * Anderberg-Lund Printing * Co., also known as Lane * Envelope, also known as Great * Way Publications, * * Appellee. *

___________ Submitted: February 10, 1997 Filed: April 7, 1997

___________ Before MAGILL, BEAM, and LOKEN, Circuit Judges.

___________ BEAM, Circuit Judge.The Honorable David S. Doty, United States Dis trict Judge for 1 the District of Minnesota. The Honorable Nancy C. Dreher, United States B ankruptcy Judge 2 for the District of Minnesota. -2- W.A. L ang Co. (“Lang”) appeals from the district court's 1 affirm ance of the bankruptcy court’s denial of Lang’s claim fo r 2 administrative expenses pursuant to 11 U.S.C. § 503(b). We affirm.

I. BACKGROUND Lang is a general insurance agency whose business includes t he sale of worker’s compensation insurance. Lang is a licensed agent of General Insurance Company of America (GICA). Under the agency agreement between Lang and GICA, Lang is allowed to chose between two types of billing for the GICA policies it sells. Under “direct bil ling,” insureds are billed by and pay premiums directly t o GICA’s parent company. Under “agency billing,” Lang pays to GICA the premiums due, and in turn collects the premium amount an d commissions from the insured. The Lang-GICA agency agreemen t obligates Lang to pay premiums due under “agency billing” policies whether or not Lang is paid by the insured.

In1993, Lang sold a GICA worker's compensation policy t o Anderberg-Lund Printing Company. Lang elected agency billing for this policy, which was to run for the term of July 1, 1993, to July 1, 1994. Later in 1993, Anderberg-Lund experienced financia l difficulti es, and failed to make payments to Lang. As it wa s obl igedto under the agency agreement, Lang continued to mak e payments on the policy to GICA. As a result of Anderberg-Lund' s delinq uencies, GICA issued at Lang’s request a notice o f cancellation for the policy on December 14, 1993.Section 503(b) a llows recovery from the bankruptcy estate of 3 "the actual, necessary costs a nd expenses of preserving the estate

. . . rendered after the commencement" of the bankruptcy case
. Adm inistrative expense claims under section 503(b) are firs t priorityclaims against the bankruptcy estate. 11 U.S.C. § -3- The next day, Anderberg-Lund f iled for Chapter 11 bankruptcy, and co ntinued to operate the business as a debtor-in-possession
. Pursuant to 11 U.S.C. § 108(b), cancellation of the GICA pol icy was deferred for sixty days. At the end of this period, Anderbe rg-Lund was able to secure a replacement policy. After the filing of the bank ruptcypetition, but before Anderberg-Lund obtained the ne w polic y, Lang made two more premium payments to GICA. These tw o payments totaled $22,364.68. Based upon a post-cancellationaudit, GICA determined that it had been entitled to an earned premium of $67,928.20 for the period the Anderberg-Lund policy had been in effect. GICA had, however, re ceived payments based on the estimated premium totalin g $89, 995.44. The difference, $22,067.24, was “unearned premium ” that the policy required GICA to refund. When both Anderberg-Lund andLang made demands for the unearned premium, GICA filed a n inte rpleader complaint as an adversary proceeding in Anderberg

Lund’s bankruptcy case. In separate answers to GICA’s complaint, both Anderberg-Lund and Lang laid claim to the unearned premium. Anderberg-Lund also asserted a cross-claim against Lang for damages under sectio n 362(h) of the bankruptcy code, based on Lang's alleged violations of the automatic stay. Most significant to this appeal, Lan g alleged as a cross-claim again st Anderberg-Lund that the two postpetitionpremium payments it had made to GICA on behalf o f Ande rberg-Lund were an administrative expense under 11 U.S.C. § 503(b). Lang claims that, deducting for that portion of the

3507(a)(1).

We will assume for purposes of this appeal that the $18,83 0 4 figure Lang puts forth correctly represents the post-petitio n premium payments, less the amount of the unearned premium al locable to those payments. -4- unea rnedpremium allocable to the post-petition payments, it i s entitl edto an administrative expense of $18,830, the earne d premiu mportion of the $22,364.68 it actually paid for post

peti tioncoverage. The adversary proceeding thus concerned tw o sums of money: (1) the unearnedpremium of $22,067.24 that G ICA had be enoverpaid over the course of the policy; and (2) the post

petiti on earned premium of $18,830 that Lang paid GICA afte r Anderberg-Lund filed for bankruptcy. 4
The bankruptcy court heard tes timony and accepted evidence in the adversary proceeding, and issued its findings, conclusio ns, and order on December 9, 1994. Th e bankruptcy court’s order had three compon ents: (1) it determined that the policy required that th e unearn edpremium amount interpleaded by GICA be refunded to th e insured, Anderberg-Lund; (2) it denied Anderberg-Lund’s cross

claims for damages; and (3) it ordered that “[t]he claims made by [Lang] are DISMISSED with prejudice on the merits.” No. 4-9 3-6995, Adv. 4-94-398, slip op. at 14 (D. Minn. Dec. 9, 1994).
Lang did not appeal from this order. On January 16, 1995 , however, Lang disregarding the adversary proceeding, filed amotion in the core proceeding seeking 503(b) administrative expense s based on its claim to the post-petit ion earned premiums. On January 26, the bankruptcy court summarily denied Lang’s motion. Lang a ppealed this denial to the district court, which concluded that th e bankruptcy court had denied th e 503(b) claim in its prior order in-5-

the adversary proceeding, and that res judicata prevented La ng from relitigating the claim by motion. Lang appeals.

II. DISCUSSION The binding effect of a former adjudication, often generical ly termed res judicata, can take one of two forms. Claim preclusion (t raditionallytermed res judicata or "merger and bar") “‘bar s reliti gationof the same claim between parties or their privie s where a final judgment has been rendered upon the merits by a court of competent jurisdiction.’” Plough v. West Des Moines Community Sc h. Dist. , 70 F.3d 512, 517 (8th Cir. 1995) (quoting Smith v
. Updegraff , 744 F.2d 1354, 1362 (8th Cir. 1984)). Issue preclusion (or "collateral estoppel") applies to legal or factual issue s "a ctuallyand necessarily determined," with such a determinatio n becoming "conclusive in subsequent suits based on a differen t cause of action involving a party to the prior litigation." Montana v. United States , 440 U.S. 147, 153 (1979). The principles of re s judi cata generally apply to bankruptcy proceedings. Katchen v
. Landy , 382 U.S. 323, 334 (1966). In this case the question is one of claim preclusion since t he administrative expense claim Lang brought by motion was identical to Lan g's cross-claim in the prior adversary proceeding. Clai m preclusionwill bar a subsequent suit when: "(1) the first sui t resulted in a final judgment o n the merits; (2) the first suit was based on proper jurisdiction; (3) both suits involved the sam e cause of action; and (4) both suits involved the same parties o r their privies." Lovell v. Mixon , 719 F.2d 1373, 1376 (8th Cir
. 1983). Furthermore, the party against whom res judicata i s asserted must have had a full and fair opportunity to litigate the-6-

matter in the proceeding that is to be given preclusive effect
. Plough , 70 F.3d at 517. There is no dispute that the t wo proceedings at issue in this case involved the same parties and the same cause of action
. Therefore, we need only determine: (1) whether the bankruptc y court had jurisdiction to decide the administrative expense claim in the adversary proceeding; (2) whether the bankruptcy court's order in the adversary proceeding was a final judgment on the merits; an d (3) whet her Lang had a full and fair opportunity to litigate th e administrative expense claim in the adversary proceeding.

A. The Bankruptcy Court's Jurisdiction

A claim for an administrative expense pursuant to sectio n 503(b) is a core proceeding for which the bankruptcy court ha s jurisd ictionunder 28 U.S.C. § 157(b)(2). Even when contested , however, a 503(b) claim is not properly brought in an adversar y proceedin g. See Fed. R. Bankr. P. 7001. Such claims ar e appropriately brought by motio n in the bankruptcy case, and relief is typically granted in contested claims only upon notice an d heari ng. Fed. R. Bankr. P. 9013, 9014; Minn. Bankr. Local Rul e 1201. Se e also Colandrea v. Union Home Loan Corp. ( In r e Col andrea ), 17 B.R. 568, 583 (Bankr. D. Md. 1982) (dismissin g 503(b) claim brought as a counterclaim in an adversary proce eding). Indeed, Lang's second administrative expense claim for the earned premium was made by motion in conformance with both the fede ral and local bankruptcy rules. Thus, Lang's initial assertion of its administrative expense claim as a cross-claim in the adversary proceeding was unusu al. We nonetheless conclude that the claim was properly before the court-7-

inthe adversary adjudication. Section 503(b) allows th e bankruptcy court to grant administrative claims "[a]fter not ice and a hearing." The bankruptcy code defines "after notice and a hearing" as "after such notice as is appropriate in the particular circumstances, and such opportunity for a hearing as is appr opriate inthe particular circumstances." 11 U.S.C. § 102(1)(A). Th e debtor against whom Lang brought its claim, Anderberg-Lund, was a partyto the adversary proceeding and thus had full notice o f Lang's claim. The factual and legal issues presented in th e litigation over the unearned p remium were closely related to those of the earned premium that was the subject of Lang's adminis trative ex pense claim. Given the bankruptcy court's flexibility unde r section 102(1)(A) to determine what procedures are appropriate for particular claims, we conclude that in this instance the ban kruptcy cou rt had jurisdiction to consider the claim in the adversar y proceeding.

B. Final Judgment on the Merits

Lan g argues that even though its claim was before th e bankruptcy court in the adversary proceeding, the court's or der was not a final judgment on the merits of that claim. Lang argu es that the bankruptcy court did not mention in its order th e administrative expense claim as an issue to be decided, that th e court's factual findings do not clearly address the claim, a nd that th e court's order does not expressly refer to the claim in it s di sposition. Lang argues that Rule 52 of the Federal Rules o f Civi l Procedure (which is incorporated by Bankruptcy Rule 7052 ) requires the court to "find the facts specially" with respect t o eachclaim before it in the adversary proceeding. Thus, Lang , asserts, the bankruptcy court's order in the adversary proceeding did not fully adjudicate the administrative expense claim, a nd was,-8-

therefore, not an appealable final order under Rule 54(b) of th e Rules of Civil Procedure. We agree with Lang that it is difficult to find any discussi on of the administrative claim inthe bankruptcy court's first order. We are reluctant, however, to conclude from this that the co urt did not cons ider or decide that question. Lang asserted that it wa s entitled to the earned premium as an administrative expense in its answ er and cross-claim, elicited testimony during the adversar y proceeding about the earned pr emium, and made express reference to the claim in its proposed findings, conclusions, and order. Th e claim was squarely before the bankruptcy court and was activel y litigated, and we cannot concl ude that the court simply ignored or neglected that claim in issuing its order. The bankruptcy cour t stated in its order that "[t]he claims made by [Lang] are DI SMISSED with pre judice on the merits," and we can only surmise from thi s tha t the court fully intended that its order terminate th e adversary proceeding in all of its manifestations. To the extent that the court's findings were ambiguous, Lang could have mo ved for an amen ded order or could have appealed. Whether or not th e court's holdings were as complete as we might have expected, w e find that its disposition was an unambiguous final adjudication on the merits of all issues before the court at that time.

C. Full and Fair Opportunity to Litigate Finally, we note that this is not a case in which Lang did n ot have a full and fair opportunity to litigate its administrativ e expense claim. Not only did Lang have the opportunity, but in fact fullylitigated the issue. As noted, Lang pleaded the 503(b ) claim, presented evidence relevant to the earned premium, an d submitted proposed findings and conclusions with regard to the-9-

claim. Lang actively pursued this claim in the adversar y proceeding, and fairness would not be served by allowing it t o relitigate this now settled ma tter, even though we think the issue may have been wrongly decided by the bankruptcy court. See Potter v. CNA Ins. Cos. ( In re MEI Diversified, Inc. ), 106 F.3d 829, 832 (8th Cir. 1997).

III. CONCLUSION

The district court correctly concluded that res judicat a barred Lang from relitigating the administrative expense claim it had previously asserted in the adversary proceedings. The j udgment of the district court, affirming the bankruptcy court's denial of Lang's subsequent motion for a grant of an administrative expense, is affirmed.
A true copy.

Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.