         IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT



                      No. 00-11097



IN THE MATTER OF: NATIONAL GYPSUM CO,

                                         Debtor,

NATIONAL GYPSUM CO,

                                         Appellee,

     versus


JEFF P. PROSTOK; NGC ASBESTOS DISEASE
AND PROPERTY DAMAGE SETTLEMENT TRUST,

                                         Appellants,

PETER C. BROWNING; EDWARD A. PORTER;
ALLAN v. CECIL; ROBERT M. PROKAY;
AUTINO O. MARAIA; GERALD P. CARROLL;
KENNETH L. BLOCK; CHARLES J. CELLA;
JOHN P. HAYES; JAMES B. HENDERSON;
BERNARD L. KASRIEL; LINDA MCFADIN SPAKE,
in her capacity as Co-Executrix of the
estate of Robert L. McFadin; BARBARA
MCFADIN BISHOP, in her capacity as
Co-Executrix of the Estate of Robert L.
McFadin; THE NORTHERN TRUST BANK OF TEXAS,
in its capacity as Co-Executrix of the
Estate of Reece A. Overcash; CYNTHNIA A.
HARTLEY,

                                         Appellees.


In the Matter of: NATIONAL GYPSUM CO.,

                                         Debtor,

PETER C. BROWNING; ALLAN V. CECIL;
EDWARD A. PORTER; ESTATE OF ROBERT
M. PROKAY; AUTINO O. MARAIA; GERALD
P. CARROLL; KENNETH L. BLOCK; CHARLES
J. CELLA; JOHN P. HAYES; JAMES B.
HENDERSON; BERNARD L. KASRIEL; BARBARA
MCFADIN BISHOP; LINDSEY MCFADIN SPAKE;
CHRISTA OVERCASH; NORTHERN BANK OF
TEXAS, NA; CYNTHIA A. HARTLEY,

                                         Appellees,

versus

JEFF P. PROSTOK; NGC ASBESTOS DISEASE
AND PROPERTY DAMAGE SETTLEMENT TRUST,

                                         Appellants.


In the Matter of: NATIONAL GYPSUM CO,

                                         Debtor,

NATIONAL GYPSUM CO,

                                         Appellee,

versus

JEFF P. PROSTOK; NGC ASBESTOS DISEASE
AND PROPERTY DAMAGE SETTLEMENT TRUST,

                                         Appellants.




     Appeals from the United States District Court
           for the Northern District of Texas
                      (3:98-CV-1355)

                      June 14, 2002




                            2
Before GARWOOD, WIENER, and CLEMENT,1 Circuit Judges.

GARWOOD, Circuit Judge:2

       Appellants Jeff P. Prostok (“Prostok”) and the NGC Asbestos

Disease and Property Damage Settlement Trust (“the Trust”) filed

adversary actions in the bankruptcy court seeking a declaratory

judgment       that     the     fee-shifting          provision       in    National        Gypsum

Company's Chapter 11 reorganization plan would not apply to their

pending suits against the officers and directors of National Gypsum

Company (NGC) and their financial advisor.                           The bankruptcy court

granted declaratory judgment in favor of the plaintiffs, but on

appeal the district court reversed.                         Prostok and the Trust now

appeal to this court.              We affirm the district court.

                                          Background

       NGC manufactures and supplies products and services to the

building and construction markets.                          Faced with liability from

asbestos lawsuits and debt from a mid-80s leveraged buyout, NGC and

its parent company Aancor Holdings, Inc. voluntarily filed for

Chapter 11 bankruptcy in 1990.                    The bankruptcy court approved the

debtor's proposed reorganization plan in 1993.                             This plan (and the

confirmation order) contained language that released the officers



       1
        Judge Edith Brown Clement participated by designation in the oral argument of this case as
a United States District Judge for the Eastern District of Louisiana. Since that time she has been
appointed as a Fifth Circuit Judge.
       2
        Pursuant to 5TH CIR. R.47.5 t he Court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

                                                  3
and directors of NGC and their agents and financial advisors from

liability   for    certain     good   faith    actions   taken   during   the

reorganization.     The reorganization plan also required that in any

lawsuit challenging the good faith of those released, the parties

would have to provide adequate assurance that the losing party

would be able to pay the winner's attorney's fees.          The bondholders

did not appeal the confirmation order, even though the plan had

been strenuously opposed by the committee representing the bond and

trade creditors.

     We have twice before considered the NGC reorganization.              See

In re National Gypsum Co., 118 F.3d 1056 (5th Cir. 1997); In re

National Gypsum Co., 219 F.3d 478 (5th Cir. 2000).               This appeal

does not concern those cases, but instead has its origin in a

subsequent lawsuit.     In 1995, Prostok filed a class action lawsuit

in Texas state court representing the class of junior bondholders

against the officers and directors of NGC and their financial

advisor during the reorganization, Donaldson, Lufkin & Jenrette

(“DLJ”). Prostok contended the defendants breached their fiduciary

duty and committed fraud because they concealed and failed to

disclose    a     planned     reduction       in   workforce     during   the

reorganization;     this     reduction,    Prostok   alleged,    would    have

provided more return to the junior bondholders by causing the

company to be valued more highly. The defendants asserted that the

fee-shifting provision of the reorganization plan applied to the


                                       4
lawsuit and thus Prostok should be required to post bond to

guarantee that he would be able to pay their attorneys' fees if he

lost.

      In   response,   Prostok   filed    an   adversary   action   in   the

bankruptcy court seeking a declaratory judgment that the fee-

shifting provision of the plan did not apply to his lawsuit.             The

state court defendants counterclaimed for declaratory judgment,

generally alleging that Prostok's claim was precluded by res

judicata and collateral estoppel.         In 1996, the bankruptcy court

affirmed the finality of the reorganization plan but declined to

consider any of the declaratory judgment actions.            On appeal in

1997, the district court likewise affirmed the finality of the Plan

but remanded to the bankruptcy court for further consideration of

the declaratory judgments.          The Trust, which liquidates and

resolves asbestos claims against NGC, then asked for expedited

consideration of the Prostok declaratory judgment because it was

contemplating an       action similar to Prostok's.        The bankruptcy

court declined to expedite the decision, and the Trust filed its

complaint as an adversary action in the bankruptcy court in 1997.



      On remand in 1998, the bankruptcy court addressed both Prostok

and the Trust's motions.     The court declared that the fee-shifting

language did not apply to their suits.         After some consideration,

the   bankruptcy   court   subsequently    chose   to   abstain   from   the



                                    5
defendants’   counterclaims   in   favor   the   ongoing   state   court

proceeding.   Thus, in May 1998 the bankruptcy court reiterated the

declaratory judgment in favor of the plaintiffs that the fee-

shifting provision did not apply to their suits, awarded final

judgment to that effect, and administratively closed the case.

     In April 1999, the state court granted the defendants' motion

for summary judgment against Prostok.      In October 2000, the United

States District Court for the Northern District of Texas reversed

the bankruptcy court's decision and held that the suits by Prostok

and the Trust were subject to the fee-shifting language.       Prostok

and the Trust now appeal that decision to this Court.       Since that

appeal, both the Trust and Prostok have settled with DLJ and this

court has dismissed DLJ from this appeal.

                              Discussion

I.   This Court Has Jurisdiction

     We requested the parties to provide further briefing as to

whether the bankruptcy court's order was final for purposes of

appeal under 28 U.S.C. § 158(d), citing the concerns raised in In

re Aegis Specialty Marketing Inc. of Ala., 68 F.3d 919 (5th Cir.

1995).   We are persuaded that we have jurisdiction.       The district

court remanded to the bankruptcy court, which then disposed of the

defendants’ counterclaims by abstaining in respect to them in favor

of the ongoing state court proceedings.      We are persuaded that the

bankruptcy court’s orders in connection with the abstention had the


                                   6
effect   of   investing   its   judgment   concerning    the   fee-shifting

provision with the requisite section 158(d) finality.            See Munich

American Reinsurance Co. v. Crawford, 141 F.3d 585, 589 (5th Cir.

1998).    Because this situation does not present the finality

concerns at issue in Aegis, we agree with the district court that

the bankruptcy court's decision was final and thus appealable under

28 U.S.C. § 158(d).

II.   The Fee-Shifting Language Applies to the Appellants' Suits

      The parties call upon us to decide the meaning of paragraph

fifty of the bankruptcy reorganization order.           This passage reads

as follows:

      Exoneration and Reliance. Pursuant to Section 5.22 of the
      Plan and provided that the respective affiliates, officers,
      directors, shareholders, members, representatives (including
      the Legal Representative), attorneys, financial advisors, and
      agents of the Debtors, Reorganized NGC, New NGC, the Legal
      Representative, and the Official Committees act in good faith,
      they shall not be liable to any Claimant or other party with
      respect to any action, forbearance from action, decision, or
      exercise of discretion taken during the period from the
      Petition Date to the Effective Date in connection with: (a)
      the operation of the Debtors, the Debtors’ Subsidiaries, New
      NGC, or Reorganized NGC; (b) the implementation of any of the
      transactions provided for, or contemplated in, the Plan or the
      Plan Documents, including the Assets Sale pursuant to the
      Assets Purchase Agreement, the NGC Asbestos Settlement Fund
      pursuant to the NGC Asbestos Settlement Fund Documents; or (c)
      the administration of the Plan or the assets and property
      (including any Cash distributed to the Claimants holding
      Claims which are classified in NGC Class 3) to be distributed
      pursuant to the Plan and the Plan Documents other than for
      willful misconduct or gross negligence.          The Debtors,
      Reorganized NGC, New NGC, the Official Committees, the Legal
      Representative, and their respective affiliates, officers,
      directors, shareholders, members, representatives, attorneys,
      financial advisors, and agents may rely upon the opinions of
      counsel, certified public accountants, and other experts or

                                       7
     professionals employed by the Debtors, Reorganized NGC, New
     NGC, the Official Committees, and the Legal Representative,
     respectively, and such reliance shall presumptively establish
     good faith.     In any action, suit or proceeding by any
     Claimant, Interestholder or other party in interest contesting
     any action by, or non-action of, Debtors, Reorganized NGC, New
     NGC, the Official Committees, the Legal Representative, or
     their    respective    affiliates,     officers,    directors,
     shareholders, members, representatives, attorneys, financial
     advisors, and agents as not being in good faith, the
     reasonable attorneys' fees and costs of the prevailing party
     shall be paid by the losing party and as a condition of going
     forward with such action, suit, or proceeding at the outset
     thereof, all parties thereto shall be required to provide
     appropriate proof and assurances of their capacity to make
     such payments of reasonable attorneys’ fees and costs in the
     event they fail to prevail.

     The first sentence of this passage (the “release provision”)

releases the debtor parties3 from liability for certain actions

taken in good faith during the period between the petition for

bankruptcy and the effective date of the proposed plan, with the

caveat that willful misconduct and gross negligence are never

released.    The third sentence (the “fee-shifting provision”)

applies to any lawsuit by an interestholder4 asserting a lack of

good faith in any action by the debtor parties, and requires the

losing party to pay the winner's attorneys' fees.       Under this

provision, all parties must provide assurance they will be able to

     3
       We will use the title “debtor parties” to refer to the group
described in the order as “the respective affiliates, officers,
directors, shareholders, members, representatives (including the
Legal Representative), attorneys, financial advisors, and agents of
the Debtors, Reorganized NGC, New NGC, the Legal Representative,
and the Official Committees.”
     4
       We will use the title “interestholder” to refer to the group
described in the Plan and order as “Claimant, Interestholder or
other party in interest.”

                                 8
pay those fees in the event their suit fails.

       The bankruptcy and district courts disagreed on the proper

interpretation of these two sentences.          The bankruptcy court began

its opinion by recognizing that the fee-shifting provision was

final and binding on the parties, but opined that it “may have

entered the order adopting the fee-shifting provision in error”,

citing Ashland Chemical, Inc. v. Barco, Inc., 123 F.3d 261 (5th

Cir. 1997), noted that “Congress has not expressly authorized the

fee-shifting provision” and concluded that therefore “the court

must construe and apply it narrowly.”            The court also stated in

this respect “considering that this fee-shifting provision violates

public policy, the court holds that it does not apply to claims

based on gross negligence or willful misconduct relating to the

confirmation process.”          Having thus restricted its view, the

bankruptcy court held that the fee-shifting provision only applied

to suits challenging those actions within the limited scope of the

earlier release provision.        Under this interpretation, therefore,

a litigant triggers the fee-shifting provision only if he asserts

bad faith in the operation, implementation or administration of

NGC,   yet   at   the   same   time   avoids   any   allegation   of   willful

misconduct or gross negligence.            The bankruptcy court then found

that the plaintiffs' suits would not come within the fee-shifting

provision for two reasons: the suits involved allegations of gross

negligence    and   the   suits   concerned     actions   relating     to   the



                                       9
confirmation process and not the three categories of actions listed

in the release provision.

     On appeal, the district court reversed.                The district court

began by finding that there was no reason to narrowly construe the

fee-shifting provision because Ashland Chemical did not apply and

there was no public policy against fee-shifting provisions in

specific case orders.        Moreover, the district court held that

Republic Supply Co. v. Shoaf, 815 F.2d 1046 (5th Cir. 1987)

required it to enforce the reorganization plan even if the plan's

provisions exceed the powers set forth in the Bankruptcy Code. The

district   court   held   that   the    fee-shifting        provision    was   not

coterminous with the release provision.              Under this reading, the

fee-shifting provision applies to any lawsuit by an interestholder

that can be characterized as a challenge to the good faith of the

debtor parties'    actions    in    relation    to    the    bankruptcy.       The

district court then found that the plaintiffs' suits could be

characterized as such, adding in the alternative that the suits

challenged the “operation” of NGC and thus should come within even

the bankruptcy court's reading of the fee-shifting language.

     Prostok and the Trust appeal from the decision of the district

court,   arguing   that   the      bankruptcy   court       made   the   correct

interpretation of the language at issue.             NGC and the Officers and

Directors urge us to affirm.        For the reasons explained below, we

agree with the district court.


                                       10
     A.    The Standard of Review

     We first turn to the proper standard of review to be applied

in this case.       The legal principles at work were set forth in an

earlier National Gypsum decision:

     [W]e should review de novo the purely legal issues--e.g., the
     effect of the documents on New-NGC's liability for Unknown
     Claims--but should defer to the bankruptcy court's reasonable
     resolution of any ambiguities in those documents. Because
     New-NGC is correct that the bankruptcy court's ultimate
     determination of the meaning of the Plan and Confirmation
     Order is a legal one, however, the documents must truly be
     ambiguous, even in light of other documents in the record,
     before we will defer. In re National Gypsum Co., 219 F.3d
     478, 484 (5th Cir. 2000).

Stated    another    way,   we     review      the   plan   de   novo    for   “true”

ambiguity, and if we find the language “truly . . . ambiguous” we

then normally defer to the bankruptcy court's interpretation of

that language.

     B.    There Is No Reason To Construe The Plan Narrowly

     The bankruptcy court did not determine that the fee-shifting

provision was ambiguous.           Nor did it expressly or inferentially

rely to any extent on its own intention or understanding respecting

that provision when it approved the Plan or on its understanding of

the then intentions of any of the parties in that regard or on its

general    familiarity      with    the     NGC      bankruptcy.        Rather,   the

bankruptcy court determined, in 1998, that the 1993 fee-shifting

provision “violates public policy” and that the court had likely

committed legal error in adopting it in 1993, and that therefore

the provision “must” be construed and applied “narrowly”.                      These

                                          11
legal conclusions were based on this Court’s 1997 decision Ashland

Chemical.         We hold, however, that the bankruptcy court erred in

those legal conclusions.5

       Ashland Chemical should be distinguished, however.                               That case

concerned a local rule contained in the Eastern District of Texas's

Civil Justice Expense and Delay Reduction Plan that altered the

traditional “American Rule” for all future civil cases in the

district by shifting the responsibility for fees onto the losing

party in certain circumstances depending on the outcome of the

case.      See id. at 262.              We began by examining Aleyska Pipeline

Service Co. v. Wilderness Society, 95 S.Ct. 1612 (1975) and its

progeny and noted that “these cases stand for the proposition that

substantive departures from the American rule and its traditional

exceptions must be authorized by Congress.”                           Id. at 264.         We found

that because the fee-shifting rule was based on the outcome of the

case and was imposed generally on all future cases, it was indeed

a substantive departure that required Congressional authorization.

Id. at 265.

       We do not reach the same conclusion here, however.                                         The

narrow scope of the fee-shifting provision is not the sort of

broad, generally applicable, “substantive departure” at issue in


       5
         Cf. In Re Mercer, 246 F.3d 391, 402 (5th Cir. 2001) (“the clear error standard does not
apply to findings of fact resulting from application of an incorrect legal standard”); Merritt-Campbell
Inc. v. RxP Production Inc., 164 F.3d 957, 961 (5th Cir. 1999) (trial court’s finding accepted “unless
clearly erroneous or influenced by an incorrect view of the law”).

                                                  12
Ashland Chemical, but is instead imposed by a specific order in one

pending case on a specific group of parties to that case in one

narrow circumstance.      Furthermore, a fee-shifting provision in a

reorganization plan resembles the traditional exceptions to the

“American Rule” far more than the substantive provisions criticized

in Ashland Chemical. Parties may circumvent the “American Rule” by

contracting otherwise. See, e.g., Bank One, Texas, N.A. v. Taylor,

970   F.2d   16,   35   (5th    Cir.     1992).      We     recognize    that   a

reorganization plan lacks some of the characteristics of the

classic contract, but we also note that such plans “should be

construed basically as a contract.”               In re Stratford of Texas,

Inc., 635 F.2d 365 (5th Cir. 1981).          Accordingly we find the fee-

shifting language does not violate the restrictions set forth in

Ashland Chemical.

      Indeed, we believe that this circuit's case law compels us to

enforce   the   order   as     written.      In    Shoaf,    we   held   that   a

reorganization plan no longer subject to challenge by appeal should

be enforced as written even though it arguably violated a general

provision of the Bankruptcy Code that discharge of a debtor does

not affect the liability of others for the debtor’s debts.               Id. 815

F.2d at 1050.      The bondholders of National Gypsum did not appeal

the bankruptcy plan, and the Plan doesn't violate the statutory

terms of the Bankruptcy Code.          We must therefore enforce the terms

of the plan against them.         The Trust contends that the district


                                        13
court's reading of the plan was unpredictable whereas Shoaf dealt

with a predictable challenge that could have been easily asserted

on appeal.      We disagree; the possibility that the fee-shifting

language    would   be     applied   to    “any    [suit]     by    any   [Claimant]

contesting any action by, or non-action of, [the debtor parties] as

not being in good faith” was apparent on the face of the document

and well within the power of the bondholders to challenge on

appeal.

      C.    There Is No Ambiguity In The Plan

      We find no ambiguity in the statement “[i]n any [suit] by any

[Claimant] contesting any action by, or non-action of, [the debtor

parties] as not being in good faith.”             By its plain terms, the fee-

shifting provision unambiguously applies to any and all suits in

which an interestholder alleges a lack of good faith by the debtor

parties in relation to the bankruptcy.              The fee-shifting language

simply does not restrict the types of activities to which it

applies, even though the repetition of terminology throughout the

paragraph strongly suggests that the drafters would have reiterated

any applicable restrictions.          Instead, the plan states that fee-

shifting    will    be   imposed     on   any     suit   by   an     interestholder

contesting any action by the debtor parties as lacking good faith.

We   also    note   that    the    bankruptcy      court      reasoned       that   its

interpretation came from reading paragraph 50 “as a whole,” but in

our view     that   only    highlights      the   contrasts        between    the   two


                                          14
sentences.      The broad scope of the words “any suit” by “any

Claimant” challenging “any action” lie in stark contrast to the

limitations set forth in the release language.

     The appellants advance various arguments why the scope of the

fee-shifting provision should be narrowed to match the release

provision, but we are not persuaded.                 The appellants first argue

that the use of the phrase “good faith” in both provisions requires

them to    be   read    identically,       but      we    reject    their   fallacious

reasoning.      The release provision does not purport to define “good

faith,” but rather incorporates that concept as one boundary of the

release afforded the debtor parties. That is, the release language

only purports to release the debtor parties from liability when

they (1) act in good faith, (2) act with regard to the three stated

categories,     and    (3)    act    without       willful   misconduct      or   gross

negligence.     Items (2) and (3) do not narrow the concept of “good

faith,” they narrow the scope of the release.                       In contrast, the

fee-shifting language encompasses all cases alleging a lack of

“good faith” without being further narrowed by items (2) and (3)

above.     The concept of “good faith” remains constant in both

provisions.     We thus find no reason to read the limitations of one

sentence   into    the       other   merely    because       they    use    the   same,

independently stated concept.

     The appellants also claim that absurd results arise from the

district court's       clear     reading      of    the    Plan    language.      These


                                         15
allegations arise from strained readings of the text, however,

because the fee-shifting language is limited in ways the appellants

do not admit.        First, fee-shifting only applies to suits that

allege a lack of good faith, which Black's defines inter alia as

“honesty in belief or purpose,” “faithfulness to one's duty or

obligation,”       and   “absence    of   intent   to   defraud    or    to   seek

unconscionable advantage.” BLACK'S LAW DICTIONARY (7th ed. 1999). The

fee-shifting provision thus applies only to cases alleging such

things as dishonesty, fraud, breach of fiduciary duty and deceit.

This limitation negates Prostok's attempt to argue that automobile

accidents    would       fall   within    the   scope   of   the   fee-shifting

provision.     Second, the fee-shifting provision only applies to

those parties to the NGC bankruptcy who are carefully enumerated in

the Plan.     The provision's scope therefore cannot go beyond the

scope   of   the    bankruptcy      and   reorganization.      Prostok    argues

hypothetically that the appellee's reading of this provision would

require him to post bond before suing NGC's general counsel for an

instance of slander unrelated to NGC business, but this is again a

strained interpretation.         The Plan limits the possible plaintiffs

and defendants to the parties enmeshed in the National Gypsum

reorganization, thereby demonstrating that the only reasonable

interpretation of the fee-shifting provision is that it only

applies to lawsuits against the officers and advisors in their

capacities as such in relation to the NGC bankruptcy.                   Prostok's


                                          16
hypothetical fails to take this limitation into account, and we

conclude that applying the Plan language as written does not give

rise to absurd results.

       We can find no ambiguity in the fee-shifting provision, and

thus we will enforce it as written with no deference to the

bankruptcy court's interpretation.

III.    The Fee-Shifting Provision Applies to The Appellants' Suits

       Having   determined   that        the   fee-shifting   provision

unambiguously applies to any suit by an interestholder asserting

that any action by any of the debtor parties (in their capacities

as such and in relation to the NGC bankruptcy) lacked good faith,

we turn to the question of whether the suits by Prostok and the

Trust come within the scope of that provision.        We conclude that

they do.

       The district court stated that the allegations of gross

negligence and intentional misdeeds “necessarily translate into

lack of good faith.”   Appellants argue that this statement renders

the final condition of the release provision redundant.            The

release provision only protects actions taken in good faith.      Yet,

the release provision then goes on to make clear that actions that

are “willful misconduct or gross negligence” will not be protected.

Appellants argue that unless the drafters of the reorganization

plan (and, by extension, the bankruptcy court in drafting the

order) intended this later limitation to be a needless redundancy,



                                    17
they must have contemplated that some actions taken in good faith

might     also   be   characterized    as     “willful    misconduct       or   gross

negligence.”6         Thus, it is claimed that the Plan distinguishes

these concepts from good faith, and thus an allegation of willful

misconduct or gross negligence cannot always automatically trigger

the fee-shifting provision.          However, a more reasonable reading of

the   release     provision    in    this    respect   is   that     its    “willful

misconduct or gross negligence” language is not any sort of a

negative definition of “in good faith”, but is rather merely

intended to foreclose possible argument that a given action, though

properly     found      to   constitute      willful     misconduct        or   gross

negligence, was nevertheless released because it was taken “in good

faith.”

      Appellants also claim that the fee-shifting provision cannot

apply to willful misconduct or gross negligence because those items

were not specifically listed.                We disagree; the fee-shifting

provision applies to all cases alleging a lack of good faith

regardless       of   what   other   labels    might     also   be   applied.       A

comparison is helpful in making this distinction.                     The release

provision begins with the scope of “good faith” and then is

narrowed through successive limitations like the exclusion of

“willful misconduct” and “gross negligence.” In contrast, the fee-

      6
        This possibility, while slender, is not unprecedented.
National Gypsum correctly points out that TEX. CIV. PRAC. & REM. CODE
§ 74.001(a) protects actions taken in good faith that are not
“wilfully or wantonly negligent.”

                                        18
shifting provision begins with the scope of “lack of good faith”

and then is not further narrowed.          This indicates that the only

relevant question is whether the suits can be characterized as

alleging a “lack of good faith;” while “willful misconduct and

gross negligence” may overlap with (or remain independent of) “good

faith,” those concepts are simply irrelevant.

     Regardless of whether the allegations in the Prostok and Trust

suits might also be characterized as “willful misconduct or gross

negligence,” we find that the suits are replete with accusations

that the defendants acted in bad faith.            The petitions contain

allegations of misrepresentation including an assertion that the

defendants made these representations “in bad faith with no intent

to act in accordance with the representations.”          (emphasis added).

Both plaintiffs also alleged fraud and breach of fiduciary duty

arising     out   of   “providing    false,   misleading      or   incomplete

information.”        The Trust also alleges the defendants committed

“actual . . . fraud” by intentional “misrepresentations” and by

failing to “disclose” the possible cost savings –- assertions

encompassing the dishonesty antithetical to good faith.                These

assertions of actual fraud, deceit, falsehood and betrayal of

fiduciary    trust     necessarily   challenge   the   good   faith   of   the

defendants.        Indeed, the very foundation of the appellants'

lawsuits is a fundamental lack of good faith by the defendants,

both in their particular allegations of conduct and in their



                                      19
theories of legal liability.   We therefore have no trouble holding

that these lawsuits “contest[] any action by, or non-action of,

[the debtor parties] as not being in good faith”, and we affirm the

district court.

IV.   The Lawsuits Challenge Bad Faith in the Operation of the
Debtors

     We need not rely solely on our own interpretation of the Plan

language.   We also conclude that the appellants' lawsuits allege

that the defendants lacked good faith in the operation of the

debtor companies. This places the appellants within the bankruptcy

court's restricted interpretation of the fee-shifting provision,

and provides a separate ground for affirming the district court's

opinion.

     The first of the three protected categories in the release

provision reads as follows:

     ...they shall not be liable to any Claimant or other party
     with respect to any action, forbearance from action, decision,
     or exercise of discretion taken during the period from the
     Petition Date to the Effective Date in connection with: (a)
     the operation of the Debtors, the Debtors’ Subsidiaries, New
     NGC, or Reorganized NGC . . . .

     Appellants characterize the “operation” of National Gypsum as

the manufacture and sale of gypsum wallboard, exclusive of actions

relating to the reorganization and bankruptcy.      The bankruptcy

court similarly distinguished between the reorganization and the

day-to-day business of the company.     This interpretation cannot

stand once the details of this provision are carefully examined,



                                 20
however.      The clause applies to both the debtors and “Reorganized

NGC.”   The clause is limited, though, to the time frame stretching

from the filing of the bankruptcy petition to the adoption of the

reorganization plan.         Because the reorganized NGC does not exist

until   the    reorganization     plan    is    adopted,   the   only      way   the

defendants could “operate” the reorganized NGC would be through the

bankruptcy and reorganization process.               Any other reading would

render the addition of “Reorganized NGC” mere surplusage.                         We

therefore     reject   the   appellants'        claims   that   the   concept     of

“operation” cannot include actions related to the bankruptcy and

reorganization         process.           The      allegations        of    fraud,

misrepresentation and breach of fiduciary duty contained in their

lawsuits fall within the scope of the release provision, and thus

the fee-shifting provision (even as interpreted by the bankruptcy

court) would apply to the appellants.

       Moreover, both appellants have challenged actions that are

squarely within even their own understanding of the concept of

“operation.”      They argue that the defendants did a poor job of

running National Gypsum because they failed to “ascertain” a

possible $30 million cost savings from a reduction in force.                     The

Trust went so far as to call this failure “gross negligence.”                    This

allegation clearly encompasses the day-to-day operations that the

appellants claim is the proper scope of the release provision.

This    second-guessing      of   NGC     management's      business       judgment



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necessarily implicates the release provision's protections for

“operation.”   We therefore find that even under the bankruptcy

court’s erroneously restrictive reading of the reorganization plan,

in which the fee-shifting provision is limited to non-bankruptcy

activity described in the release provision, the appellants are

still bound by the fee-shifting provision.

                            Conclusion

     We hold that the Prostok and Trust lawsuits fall within the

fee-shifting provision.   The decision of the district court is

therefore

                           AFFIRMED.




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