advantage, and unjust enrichment.
GM moved to
dismiss this lawsuit relying on principles international comity. The District Court granted
and dismissed all claims, America’s claims as a
characterizing strategy “to
collaterally process and
attack the entire Korean reorganization result.” Daewoo Motor America, Inc., v.
On appeal, the Eleventh Circuit Court of Appeals affirmed the dismissal of the claims asserted by Daewoo America, resting on principles of
international comity. court found that the
Specifically, the claims raised by
America “arise out of the same nucleus of
appellate Daewoo operative
facts considered by the Korean court” and “Daewoo America cannot now collaterally attack
order by bringing claims against the recipients of property transferred based on the approval of Korean court.” 459 F.3d 1249, 1259.
Although the Eleventh Circuit Court of Appeals did not engage in a traditional res judicata analysis, it clearly found that the Korean bankruptcy court necessarily considered and approved the entire agreement between GM and the debtor which encompassed not only the future distribution rights
but the purchase of Daewoo claims in Daewoo America’s
redistribute assets approval of the
previously transferred with the Korean court, the claims were
“inextricably intertwined” with the Korean court. 459 F.3d at
the order entered by 1260. The appellate
court specifically found that Daewoo America, actively participated in the bankruptcy case and
had knowledge of to timely object to
terms of the agreement, failed confirmation, and was forever
agreement between appellate court then
GM and Daewoo Korea. The found that our federal courts
should Korean comity.
and enforce this of the principles
decision of the of international
Because the terms of the agreement between GM and Daewoo Korea were critical and necessary to the debtor’s modified plan of reorganization, the Korean bankruptcy court necessarily considered and approved those terms when it confirmed the plan. The court did not specifically consider the impact of the implementation of the agreement on the debtor’s subsidiary, Daewoo America, because Daewoo America did not bring it to the court’s attention. Indeed, Daewoo America was fully aware that the debtor’s agreement with GM would shake the very core of Daewoo America’s future business, yet it made no attempt to protect its interests or to assert
any position in the bankruptcy case in regards to GM’s controlling the future vehicle distribution rights. Therefore, Daewoo America could not later collaterally attack this portion of the agreement in a different forum. The claim was barred.
The decision in Daewoo is similar in many to the two other decisions of the Eleventh
Circuit Court of Appeals in Atlanta Retail and Piper Aircraft, which both involved non-debtor parties based in the United States and which raised classic issues of res judicata. In both of these cases, the non-debtor party was suing another non-debtor party for a claim that was related to the earlier bankruptcy
proceeding. that in these
However, the significant difference is two cases, the claim asserted in the later
litigation was to the claims
only indirectly and tangentially related decided by the bankruptcy court. As
such, res judicata continuing.
In Atlanta Retail, the debtor operated a large retail camera and photographic supply business. Both Eastman Kodak Company and Wachovia Bank lent the debtor money. More significantly, Kodak had entered into two agreements with Wachovia, a
Subordination Agreement. In
Agreement and an Intercreditor a lawsuit filed after the bankruptcy
court confirmed a plan of debtor’s bankruptcy, Kodak
reorganization in the alleges that Wachovia
fraudulently $30 million
induced Kodak into lending the debtor on the eve of bankruptcy in violation of
the agreements between them. this post-confirmation litigation terms of the confirmation order.
Wachovia asserted was barred by the
The Eleventh Circuit Court of Appeals held that the bankruptcy case “did not involve the same nucleus of operative facts” presented in Kodak’s post-bankruptcy litigation and, further, that, even if Kodak could have raised its claims against Wachovia in the bankruptcy, “Kodak could not have received a
reaching this ruling, the appellate court the bankruptcy court never considered
explained that nor needed to
consider any breach Kodak and Wachovia.
the agreements such, the dispute
the two creditors bankruptcy forum.
The Eleventh Circuit Court of Appeals reached a similar conclusion in Piper Aircraft. In Piper, the major creditor of the Chapter 11 debtor, Teledyne Industries, Inc., entered into a Cooperation Agreement with Kaiser Aerospace and Electronics
Corp. to debtor’s
act as joint proponents of
a plan to buy the agreement, both