Myer’s Lawn Care Servs., Inc. v. Pryor
- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- 24-2345-bk (2nd Circuit, Oct 08,2025) Not Published
- Tag(s):
-
- Ruling:
- A bankruptcy court's holdings in a dischargeability adversary proceeding between a creditor and the debtor are not binding on the debtor's chapter 7 trustee unless the trustee is made a party to the litigation.
- Procedural context:
- Following an adversary proceeding that denied a creditor's nondischargeability claims against the debtor, the debtor's chapter 7 trustee objected to the creditor's claim. The bankruptcy court held that its holdings in the adversary proceeding did not act as res judicata with respect to the trustee's objection to the claim. Consequently, the bankruptcy court expunged the creditor's proof of claim.
The creditor appealed to the district court, which upheld the bankruptcy court. The creditor then appealed to the Court of Appeals.
- Facts:
- The debtor, Russell Fragala, owned a Russ Fragala Landscape Corporation (the "Corporation") before he filed his chapter 7 petition. The Corporation and Myer's Lawn Care Services, Inc. ("Myer's") were parties to several contracts. Myer's filed a proof of claim in Fragala's chapter 7 bankruptcy case, and the trustee, Robert L. Pryor, objected. The bankruptcy court expunged Myer's proof of claim.
In a separate adversary proceeding between Myer's and Fragala, the bankruptcy court had held that Myer's had an allowed claim because it was uncontested. However, the bankruptcy court also held that Myer's failed to meet its burden of proof that Fragala had made a false representation in order to cause the Corporation to defraud Myer's.
Myer's argued that, under res judicata, this holding was binding on Pryor, the chapter 7 trustee. The bankruptcy court disagreed because Pryor was not a party to that adversary proceeding.
- Judge(s):
- REENA RAGGI, GERARD E. LYNCH, MICHAEL H. PARK, Circuit Judges.
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