Opinion ID: 2570567
Heading Depth: 1
Heading Rank: 5

Heading: Res Judicata/Collateral Estoppel/Judicial Estoppel

Text: [¶ 12] Initially, the Marksteins state that the district court disregarded the bankruptcy court order authorizing the sale of the property and the order approving the Stipulation Re License Claims. According to the Marksteins, these court orders established the terms and conditions of the Crescent H Ranch purchase and that Thornton and his successors purchased the ranch subject to the granted fishing and club use rights. Thus, the Marksteins assert that the bankruptcy court orders have the effect of a final judgment regarding the validity of the fishing and club use rights. The Marksteins also contend that the district court erred in not finding that Thornton and his successors had breached the Stipulation Re License Claims. [¶ 13] In replying to these arguments, appellees claim that the decision of the bankruptcy court to dismiss the avoidance action did not resolve the validity of the fishing and club use rights. Rather, the bankruptcy court simply dismissed this proceeding, finding that it was not justiciable. Thus, appellees conclude this order does not constitute a decision on the merits and, although Thornton and Countryside, L.L.C. may have agreed to be bound by the decision of the bankruptcy court concerning the fishing and club use rights involved in the avoidance action, the bankruptcy court never reached a decision on this issue. Appellees also argue that the sale order entered by the bankruptcy court specifically provided that Countryside, L.L.C. purchased Crescent H Ranch free of any RMA obligations, and Countryside, L.L.C. never agreed to accept assignment of the rights asserted absent a bankruptcy court determination that the rights were enforceable. [¶ 14] Upon our review of the bankruptcy court's order dismissing the adversary proceeding, we agree that such order did not resolve the validity or invalidity of the fishing and club use rights. That order discloses that the bankruptcy court recognized that the adversary complaint filed by the RMA bankruptcy trustee sought to avoid or set aside fishing and club use rights on the Crescent H Ranch, including those rights asserted by the Marksteins. [3] However, after acknowledging this fact, the bankruptcy court concluded that because the trustee had sold his avoidance powers along with the Crescent H Ranch to Thornton and his successors, there was no benefit to the bankruptcy estate in determining the claims asserted. The bankruptcy court stated: [The trustee] is exercising his avoidance powers to seek relief which will have no effect on the estate and which treats similarly situated lot owners differently. Yet, he has no cognizable interest in the outcome. Any ruling on the validity of the lot owners' rights will not control or alter the ultimate result, and will not change the circumstances of the parties. Thus, the bankruptcy court concluded that resolution of this issue effectively disposed of the adversary complaint in its entirety. [¶ 15] In Amoco Prod. Co. v. Board of County Comm'rs, 2002 WY 154, ¶ 12, 55 P.3d 1246, ¶ 12 (Wyo.2002) (quoting Eklund v. PRI Environmental, Inc., 2001 WY 55, ¶¶ 15-20, 25 P.3d 511, ¶¶ 15-20 (Wyo.2001)), we recognized that res judicata and collateral estoppel are related but distinct concepts. We noted that res judicata bars the relitigation of previously litigated claims or causes of action and that four factors are examined to determine whether the doctrine of res judicata applies: (1) identity in parties; (2) identity in subject matter; (3) the issues are the same and relate to the subject matter; and (4) the capacities of the persons are identical in reference to both the subject matter and the issues between them. Collateral estoppel bars relitigation of previously litigated issues and involves an analysis of four similar factors: (1) whether the issue decided in the prior adjudication was identical with the issue presented in the present action; (2) whether the prior adjudication resulted in a judgment on the merits; (3) whether the party against whom collateral estoppel is asserted was a party or in privity with a party to the prior adjudication; and (4) whether the party against whom collateral estoppel is asserted had a full and fair opportunity to litigate the issue in the prior proceeding. [¶ 16] As in both Amoco and Eklund, the doctrine of res judicata is inapplicable to the bankruptcy court's order because res judicata applies to claims or causes of action. The adjudication of the adversary complaint by the bankruptcy court involved a claim asserted by the RMA bankruptcy trustee against the Marksteins and others, while this action concerns a claim by the Marksteins against Thornton and his successors. While the two involve the same fishing and club use rights and the Crescent H Ranch, they are separate and distinct claims. In addition, we conclude that the doctrine of collateral estoppel cannot be applied in this instance because the bankruptcy court did not make a determination on the merits of the adversary complaint. [¶ 17] However, we reach a different conclusion than the district court upon our review of the other relevant documents involved in both the RMA bankruptcy and this action. Looking first at the purchase agreement entered into by the trustee of the RMA bankruptcy estate and Thornton concerning the sale of the Crescent H Ranch, it discloses that the transaction clearly included the sale of the trustees' avoidance powers. The purchase agreement provides for this transfer by stating that the transfer would include: 1.1.6 Avoidance Powers. All rights and power of the Trustee, whether under state law or the Bankruptcy Code (including, but not limited to, Sections 544 through 553 of the Bankruptcy Code), to set aside or avoid any interest in the Property. That document also goes on to define permitted exceptions regarding title as follows: 3.1 Title: Permitted Exceptions. The Debtor shall transfer all of its right, title and interest in the Property free and clear of all liens, claims and encumbrances pursuant to (a) section 363(f) of the Bankruptcy Code or (b) a confirmed plan of reorganization, subject to the exceptions, restrictions, liens and encumbrances as may be agreed upon by the parties following delivery of the Title Commitment referred to in Section 3.2, which shall then be attached hereto as Exhibit 3.1 (the Permitted Exceptions). [¶ 18] Exhibit 3.1 to the purchase agreement provides, in pertinent part, that the fishing and use licenses could constitute permitted exceptions specifying: