08-3917 & 09-1321 Matrix IV, Inc., v. American National Bank & Trust Co. of Chicago

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Civil Procedure
Issue preclusion

A party is barred by issue preclusion from relitigating, in a fraud action, issues previously resolve in bankruptcy court.
“Barnett keyed the claim-preclusive effect of bankruptcy-court orders to the core/noncore distinction, but the parties have not submitted Rule 28(j) letters on the effect of Stern on our reasoning in Barnett. As a general rule, resolving a conflict in circuit caselaw ought to be attempted only on full briefing and in a case in which the outcome depends on it. Because a narrower ground exists on which to resolve this case, we leave the resolution of the conflict for another day. By its terms, Barnett does not apply to collateral estoppel, 909 F.2d at 978 n.5, and here, the elements of collateral estoppel have plainly been satisfied. For the reasons we have already explained, the fraud allegations at issue in this case are the same as those that were actually litigated in the § 363 hearing and in the lien-priority adversary proceeding. The bankruptcy court was required to and did address them before entering its orders in those proceedings. Finally, Matrix was fully represented in the bankruptcy proceedings. Accordingly, Matrix is collaterally estopped from relitigating the very same issues here.”

Affirmed.

08-3917 & 09-1321 Matrix IV, Inc., v. American National Bank & Trust Co. of Chicago

Appeals from the United States District Court for the Northern District of Illinois, Norgle, J., Sykes, J.

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