Opinion ID: 693409
Heading Depth: 3
Heading Rank: 1

Heading: The 1988 Judgment and Standing.

Text: 16 In 1988 the bankruptcy court entered a judgment in an interpleader action filed by Duck in which it appeared to order that money from the sale of the assets of GACC be distributed to creditors Wells Fargo and Credit Alliance Corporation. Northwestern claims that the judgment disposed of money from the sale of certain unencumbered vehicles which belonged to the business, and that deprives Walsh of standing. We disagree. 17 First, the record indicates that the parties to the stipulation which led to the judgment did not believe that the proceeds from the vehicle sale were included in the judgment. For instance, Duck wrote to Wells Fargo on February 23, 1987 informing it that the net balance of the auction was $216,342.11. The letter specifically mentioned that $62,960.00 of that money--proceeds from the sale of licenced vehicles--came from the sale of unsecured licensed vehicles. Attached to the letter was a [r]ecapitulation of GAAC's auction receipts. According to that document, the money available for properly secured creditors was $153,382.11. That specifically did not include the proceeds from the vehicles. In addition, when Duck sent Wells Fargo its check, he noted that [t]he total amount of money available for distribution was $153,382.11. There is no record of Wells Fargo's objection to Duck's assessment of the amount owed. If the judgment was truly meant to include the other funds, one would expect that Wells Fargo would have so stated. 18 If the 1988 judgment did not include the proceeds from the auction of the vehicles, then it has no bearing at all on the present litigation because it involves a different claim for separate funds. See, e.g., Blonder-Tongue Lab., Inc. v. University of Ill. Found., 402 U.S. 313, 323-24, 91 S.Ct. 1434, 1440, 28 L.Ed.2d 788 (1971) (res judicata requires the same claim, the same parties or their privies, and finality on the merits). 19 Second, if the 1988 judgment is binding on the present trustee, that conclusion does not aid Northwestern because that can only mean that the judgment ordered the trustee to distribute the money to certain creditors, not that the money must go unreimbursed by Duck or his surety. That would mean that Duck did not obey the order of the court and that he did not perform faithfully. It would also mean that the estate still owes money to Wells Fargo and that the court order continues to apply to Walsh, the new trustee. Since Walsh is the trustee, the money stolen by Duck should be returned to him. In addition, even if Wells Fargo has waived its entitlement to the vehicle proceeds, that does not bar Walsh's ability to sue for them now. The money belongs in the hands of Walsh, the current trustee, and the details of any later distribution to GACC, Wells Fargo, or others is not before us on this appeal. We need not parse the terms of the 1988 judgment, nor need we decide its current effect, beyond pointing out that whatever that might be, Walsh does have standing. As trustee, he can, indeed must, seek to maximize the value of the estate. Commodity Futures Trading Comm'n v. Weintraub, 471 U.S. 343, 353, 105 S.Ct. 1986, 1992-93, 85 L.Ed.2d 372 (1985). Were he to do less, he might well be held liable for breaching that duty. See In re Conchise College Park, Inc., 703 F.2d 1339, 1357 (9th Cir.1983); Restatement (Second) of Trusts Sec. 223(2)(a) (1959) (failure of successor trustee to take proper steps to redress a breach of trust committed by the predecessor). He had the authority to maintain this action. See 11 U.S.C. Sec. 1109(b); Bankr.R. 2010(b). He has wisely and properly exercised that authority. 20