Court Opinion

ID: 9943825
Source: CourtListenerOpinion
Date Created: 2024-02-26 14:47:48.018577+00
Date Added: 2024-06-11T13:45:31.219171
License: Public Domain

Plaintiffs petition for rehearing asserting, in part, that a recent decision of the federal court of appeals casts doubt on our application of what we have called the Oneida Motor Freight
rule. In Ryan Operations G.P. v. Santiam-Midwest Lumber Co.
(3d Cir. 1996) 81 F.3d 355 [Dock. No. 95-3250], the court of appeals for the same circuit that rendered the Oneida MotorFreight decision held that judicial estoppel did not preclude the plaintiff from pursuing warranty actions against suppliers of defective materials that were not parties to a prior chapter 11 bankruptcy proceeding in which the plaintiff did not specifically disclose those causes of action. In reaching its decision the court conceded that it had never applied judicial estoppel in favor of a defendant who was not a party to the prior proceeding, but held that where the circumstances warrant the doctrine may be applied in favor of such a defendant. (81 F.3d at pp. 359-361.) The court also held that although some benefit to the plaintiff from its prior position may make application of the doctrine particularly appropriate, it is not a necessary precondition to the application of the doctrine. (Id. at p. 361.) Nevertheless, the court found the rule inapplicable because in that case the plaintiff neither affirmatively represented that it had no claims against the defendants nor misled the bankruptcy court about the existence and/or prosecution of the claims. (Id. at pp. 363-364.)
While plaintiffs attempt to bring themselves within the rationale of the Ryan Operations decision, we find the decision to be clearly inapposite for several reasons. First, in this case the defendant Bank was a creditor in the bankruptcy action and plaintiffs' listed their debt to the Bank as undisputed. Plaintiffs received the benefit of having their reorganization plan approved and the consequent deferral of the Bank's legal right to enforce its claims. And, in the present case the plaintiffs assert that the Bank's actions were the cause or catalyst of their bankruptcy petitions. These circumstances are in all important respects identical to the circumstances inOneida Motor Freight, and in Ryan Operations the court did not question the application of judicial estoppel in the OneidaMotor Freight circumstances. (81 F.3d at p. 363.) In our decision we referred to the Oneida Motor Freight rule but explained that the majority of the numerous federal courts that have applied the rule rely on *Page 162 
principles of res judicata rather than judicial estoppel. Consistent with principles of res judicata those courts have applied the rule only in favor of subsequent defendants who were parties or in privity with parties to a prior bankruptcy. Since in Ryan Operations the subsequent defendants had been neither parties nor in privity with parties to the prior bankruptcy proceeding, the res judicata aspect of the rule was inapplicable and the court had no occasion to address the rule as we have set it forth and applied it. Finally, as we noted in our decision, plaintiffs' claim, reduced to its essentials, was a "core proceeding" within the bankruptcy action and, under federal law wholly independent of the Oneida Motor Freight rule, principles of res judicata preclude subsequent litigation of a core proceeding that was not pursued in the bankruptcy court.
For these reasons we find nothing in the Ryan Operations
decision that casts doubt on the reasoning or conclusion of our decision in this case. Nothing else that plaintiffs have raised in their petition for rehearing requires comment. The petition for rehearing is denied.
Puglia, P.J., and Morrison, J., concurred.
A petition for a rehearing was denied May 7, 1996, and appellants' petition for review by the Supreme Court was denied August 5, 1996. Mosk, J., Baxter, J., and Chin, J., did not participate therein. Kennard, J., was of the opinion that the petition should be granted. *Page 163