Adler v. Frost (In the Matter of Gulf States Long Term Acute Care of Covington, L.L.C.)

No. 14-31109 (5th Cir. June 11, 2015) - Designated not for publication
Procedural context:
Appellant Adler appealed the district court’s order dismissing his common-law tort and contract claims against Frost and his law firm (BSW), due to Adler's lack of standing.
Debtor (Gulf States) filed a Chapter 11 petition. Frost and BSW represented Debtor pre-petition and were neither creditors nor retained professionals in the Chapter 11 case. Debtor's confirmed Chapter 11 plan contained a provision authorizing Debtor to pursue certain avoidance actions against a list of named defendants, which did not include Appellees. Adler was appointed to serve as the Debtor's disbursing agent to pursue claims on behalf of unsecured creditors. Adler subsequently filed suit against Appellees. The District Court withdrew the reference, and Appellees moved to dismiss for lack of standing. The District Court granted Appellees' Motion to Dismiss and denied Adler's Motion for Reconsideration, citing precedent that a plan reservation of rights must be "specific and unequivocal” and that "a “blanket reservation of ‘any and all claims’ is insufficient to preserve the debtor’s standing to sue." Since the plan's blanket reservation language did not "specifically and unequivocally" retain claims against Appellees and in any event, the adversary proceeding asserted common law claims, rather than avoidance actions. Accordingly, Adler lacked standing. The Court refused to rule on Adler's request for an exception to the United Operating holding (permitting blanket reservations against non-creditors under certain circumstances), because that issue was not properly raised in the lower court and therefore, not preserved for appeal.

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!

About us in numbers

3217 in the system

3097 Summarized

1 Being Processed