Phillips, et al. v. Kelley, et al.


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Docket Number: 2010-CA-01266-SCT

Supreme Court: Opinion Link
Opinion Date: 10-27-2011
Opinion Author: Waller, C.J.
Holding: Affirmed

Additional Case Information: Topic: Bankruptcy court order - Trustee's authority - Res judicata
Judge(s) Concurring: Carlson and Dickinson, P.JJ., Randolph, Lamar, Chandler, Pierce and King, JJ.
Non Participating Judge(s): Kitchens, J.
Procedural History: Dismissal
Nature of the Case: CIVIL - OTHER

Trial Court: Date of Trial Judgment: 07-01-2010
Appealed from: Pike County Circuit Court
Judge: Michael M. Taylor
Disposition: Dismissed the action pursuant to a compromise and settlement order entered in bankruptcy court.
Case Number: 08-136-PCT

  Party Name: Attorney Name:   Brief(s) Available:
Appellant: Charles R. Phillips and RJK Investments, LLC




RONALD E. STUTZMAN, JR. EDUARDO A. FLECHAS JASON MARSH



 
  • Appellant #1 Brief
  • Appellant #1 Reply Brief

  • Appellee: Joey P. Kelley, Keith D. Templet, Pike County National Bank and Samuel C. Hall WAYNE SMITH WILLIAM C. BRABEC LINDSEY N. OSWALT JARED CARRUBBA  
    Appellee #2:  

    Synopsis provided by:

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    Topic: Bankruptcy court order - Trustee's authority - Res judicata

    Summary of the Facts: Charles R. Phillips, through RJK Investments, LLC, was the sole owner and manager of a Wings and Things restaurant franchise. After a fire damaged the restaurant, Joey P. Kelley, Keith D. Templet, Pike County National Bank, and Samuel C. Hall seized control of the restaurant franchise and certain property allegedly belonging to the plaintiffs. Phillips and RJK brought suit against the defendants, alleging conversion, fraud, misrepresentation, negligence, defamation, appropriation, false light, injurious falsehood, intentional interference with an existing contract, and intentional interference with prospective business relations in connection with the defendants’ seizure of certain property allegedly belonging to the plaintiffs. While this case was pending, Phillips, in his individual capacity, filed a Chapter 7 petition for bankruptcy in the United States Bankruptcy Court for the Southern District of Mississippi. Derek A. Henderson was appointed trustee of the bankruptcy estate. The trustee filed a Motion to Approve Compromise and Settlement in the bankruptcy court. Notice of the motion was given to counsel for Phillips and RJK, as well as Phillips himself. The bankruptcy court entered an order, a copy of which is attached to this opinion, granting the trustee’s motion, thereby approving the compromise and settlement. Pursuant to the order of the bankruptcy court, the trustee moved the Pike County Circuit Court to enter an Order of Dismissal in the present action. The circuit court found that the trustee had “complete authority to execute any and all releases concerning this cause of action.” The circuit court dismissed with prejudice the entire cause of action. Apparently unaware of the circuit court’s order, Phillips filed a Motion for Voluntary Dismissal in the present action, seeking to have his individual claims (and only his individual claims) dismissed pursuant to the bankruptcy court’s order. Pike County National Bank and Hall responded to Phillips’s motion, claiming his motion was moot due to the circuit court’s Order of Dismissal and objecting to Phillips’s characterization of the bankruptcy court’s order. Kelley and Templet joined in this response. Before the trial court could rule on Phillips’s Motion for Voluntary Dismissal, Phillips and RJK filed a Notice of Appeal from the circuit court’s Order of Dismissal.

    Summary of Opinion Analysis: Phillips and RJK argue that, by moving for the dismissal of RJK’s claims in the present action, the trustee exceeded the scope of his authority as granted by the bankruptcy court. They argue that RJK’s claims in the present action were not included in the bankruptcy court’s order, since only Phillips, and not RJK, filed for bankruptcy. However, the face of the bankruptcy court’s order contradicts the plaintiffs’ argument. The order plainly directed the trustee to execute an Order of Dismissal as to all claims in the present action. The order does not limit the Order of Dismissal to only the claims belonging to Phillips. Furthermore, the bankruptcy court was cognizant of RJK when it issued its order. Accordingly, the plaintiffs’ appeal is, in reality, a challenge to the bankruptcy court’s order, or a challenge to the bankruptcy court’s jurisdiction over RJK’s claims. However, the proper arena for the plaintiffs to challenge the bankruptcy court’s order is in bankruptcy court. As Phillips and RJK failed to avail themselves of procedures available in and through bankruptcy court, the Court is barred by the doctrine of res judicata from entertaining a collateral attack on the bankruptcy court’s order or its jurisdiction.


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