Opinion ID: 1380390
Heading Depth: 2
Heading Rank: 4

Heading: Kelson's Fundamental Fairness and Estoppel Arguments

Text: In the District Court, Kelson argued for the first time that it was entitled to a break-up fee as a matter of fundamental fairness, which Kelson interprets as a type of unjust enrichment claim. [14] But Kelson did not raise this claim in the Bankruptcy Court, and we will not consider new claims for the first time on appeal. Singleton v. Wulff, 428 U.S. 106, 120, 96 S.Ct. 2868, 2877, 49 L.Ed.2d 826 (1976). We are aware that Kelson argues that it did raise its break-up fee claim in Bankruptcy Court and that it is simply asserting a different basis for the same claim. See Yee v. City of Escondido, 503 U.S. 519, 534-37, 112 S.Ct. 1522, 1532-33, 118 L.Ed.2d 153 (1992) (permitting new argument in support of same claim). But we disagree with its view of the record for a break-up fee under section 503(b) is clearly a statutory claim, and a claim for a break-up fee as a matter of fundamental fairness is a claim that can be predicated only on the common law or a principle of equity. These statutory and common law or equitable claims, though seeking the same relief, are discrete, rather than being different arguments advancing the same claim. See B & T Masonry Constr. Co. v. Pub. Ser. Mut. Ins. Co., 382 F.3d 36, 40-41 (1st Cir.2004) (same distinction addressed). Kelson also argues that the Debtors are estopped from opposing its appeal because they supported the request for a break-up fee in Bankruptcy Court. But debtors-in-possession have a fiduciary duty to maximize the value of the estate, Official Comm. of Unsecured Creditors of Cybergenics Corp. v. Chinery, 330 F.3d 548, 573 (3d Cir.2003), and the Debtors here argue convincingly that if they adhered to their earlier position in the face of the changed circumstances they would harm the estate and violate their fiduciary duty. Overall, we are satisfied that the Debtors' opposition to Kelson's appeal is not unconscionable, does not undermine the integrity of the judicial system, and is not made in bad faith. Therefore, we reject Kelson's estoppel arguments. In any event, even if we disregarded the Debtor's arguments and entertained Kelson's appeal on an ex parte basis, we would reach the same result that we reach today. See supra note 12.