
USCA1 Opinion

	




          November 3, 1993                                [NOT FOR PUBLICATION]                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ___________________          No. 93-1592                                               LEON P. CHEMLEN,                                Plaintiff, Appellant,                                          v.                    BANK OF IRELAND FIRST HOLDINGS, INC., ET AL.,                                Defendants, Appellees.                                  __________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                   [Hon. Edward F. Harrington, U.S. District Judge]                                               ___________________                                 ___________________                                        Before                                 Breyer, Chief Judge,                                         ___________                         Torruella and Selya, Circuit Judges.                                              ______________                                 ___________________               Leon P. Chemlen on brief pro se.               _______________               Alan R. Hoffman and Lynch, Brewer, Hoffman & Sands, on brief               _______________     ______________________________          for appellee.                                  __________________                                  __________________                 Per Curiam. Appellant Leon Chemlen appeals the dismissal                 __________            of  his civil  action alleging  violations  of the  Racketeer            Influenced and Corrupt  Organization Act [RICO], 18  U.S.C.              1961  et seq.,  the  Massachusetts Consumer  Protection  Act,                  __ ___            M.G.L.  ch. 93A, and state and  federal civil rights statutes            by  appellees  Bank  of Ireland,  its  general  counsel, Joel            Brickman, the law firm of  Sheehan, Phinney, Bass & Green and            two  of its  employees,  and  Joseph  Schindler,  trustee  of            appellee's bankruptcy estate.  We affirm the dismissal.                                      Background                                      Background                 In October  1990, Chemlen  filed a  voluntary Chapter  7            petition in  the United  States Bankruptcy  Court.   Appellee            Joseph Schindler  was appointed  trustee of  the estate.   In            October 1991,  Schindler sought  approval from  the court  to            settle  two lawsuits  Chemlen had  brought against  Merchants            National  Bank  and  other defendants.1    Each  suit alleged            misconduct in  violation of the Fair Credit Reporting Act, 15            U.S.C.   1681 et seq.  Alleging misconduct by counsel for the                          __ ___            bank and  collusion  between counsel  for  the bank  and  the            trustee,  Chemlen  opposed  the   settlement  motion.     The            bankruptcy court granted the trustee's motion and denied that            of Chemlen.                                             ____________________            1.  Appellee  Bank of  Ireland  is the  parent  of First  New            Hampshire Bank, the successor to Merchants National Bank.                                         -2-                 In  January 1992, Chemlen  moved to remove  Schindler as            trustee of the estate.  He alleged that Schindler had engaged            in various  improprieties in regard to the  settlement of the            suits against the bank, including threatening appellant  with            criminal prosecutions if he continued to oppose settlement of            the suits, deceiving appellant, the court and creditors as to            the  settlements, and giving the appearance of collusion with            the bank in settlement negotiations.  This motion was denied.            Chemlen  later moved to enjoin the trustee from "interfering"            with his suits  against the bank and,  for a second  time, to            remove the trustee.  These motions too were denied.                   Finally,  Chemlen  appealed  the  order authorizing  the            trustee  to settle  the  suits against  the  bank, the  order            denying  his request to enjoin the  settlement, and the order            denying  his request  to remove  the trustee.    The district            court dismissed his appeal on these issues on the ground that            Chemlen lacked standing.  The court found that the settlement            proceeds were  part of  the estate and  that Chemlen  had not            shown  that a  successful appeal  would  create a  surplus of            assets  over liabilities for  the estate.   Chemlen therefore            lacked any direct  pecuniary interest in  the estate and  was            not a  "person aggrieved" by  the contested orders.   Chemlen            did not appeal the decision of the district court.                 Meanwhile,  in January 1993,  Chemlen filed  the instant            suit.  It repeats various factual allegations previously made                                         -3-            before  the bankruptcy  court.   However,  Chemlen now  seeks            relief  under  RICO,  federal  civil  rights  law  and  state            consumer protection and  civil rights law.   The gravamen  of            Chemlen's  complaint is that he suffered harm from appellees'            illegal actions depriving him of his property in the proceeds            of the  two lawsuits  settled by the  trustee.   The district            court dismissed  the complaint on  the ground that it  was an            improper attempt to relitigate issues already ruled on in the            bankruptcy court.  In  the alternative, the court  found that            the focus of  the complaint concerned communications  made in            connection  with judicial  proceedings, which  communications            were  absolutely privileged.    We  find  that the  case  was            properly  dismissed  on  the  ground  of  res  judicata  and,                                                      ___  ________            therefore,  do  not  reach  the  district  court's  alternate            ground.                                      Discussion                                      Discussion                 We have  recently placed  the doctrine  of res  judicata                                                            ___  ________            into workable perspective:                 The doctrine of  res judicata bars all  parties and                                  ___ ________                 their privies from  relitigating issues which  were                 raised  or could  have been  raised  in a  previous                            _____  ____ ____  ______                 action, once a  court has entered a  final judgment                 on  the  merits  in the  previous  action.   United                                                              ______                 States v.  Alky Enterprises, Inc.,  969 F.2d  1309,                 ______     _____________________                                         -4-                 1314  (1st Cir. 1992).   The essential  elements of                 res  judicata, or claim preclusion, are (1) a final                 ___  ________                 judgment on the merits in an earlier action; (2) an                 identity  of  the  parties or  privies  in  the two                 suits;  and (3) an identity of  the cause of action                 in  both  the earlier  and  later suits.    Kale v.                                                             ____                 Combined Insurance  Co. of America, 924  F.2d 1161,                 __________________________________                 1165 (1st Cir.), cert. denied, 112 S.Ct. 69 (1991).                                  ____  ______            F.D.I.C.  v. Shearson-American Express,  Inc., 996  F.2d 493,            _______      _______________________________            497 (1st  Cir. 1993)  (quoting Aunyx  Corp. v.  Canon U.S.A.,                                           ___________      _____________            Inc., 978 F.2d 3, 6 (1st Cir. 1992), cert. denied, 113  S.Ct.            ___                                  ____  ______            1416 (1993))  (emphasis in original).   "The normal  rules of            res judicata and  collateral estoppel apply to  the decisions            ___ ________            of the bankruptcy  courts."  Id.  (quoting Katchen v.  Landy,                                         __            _______     _____            382  U.S. 323,  334 (1966)).    "Generally, a  court-approved            settlement  receives  the  same  res  judicata  effect  as  a                                             ___  ________            litigated judgment."   In re Medomak  Canning, 922 F.2d  895,                                   ______________________            900 (1st Cir. 1990).                 We find  all the elements  of res judicata to  have been                                               ___ ________            met in this  case.  We consider the elements in reverse order            for the sake of clarity.                 First, the gravamen  of Chemlen's complaint both  in the            bankruptcy proceedings and  in the instant  suit is that  the            settlement of his suits against  the bank deprived him of his                                         -5-            rightful property.2   In his  motions to prevent and  then to            void the settlement,  Chemlen had the opportunity  to present            his  factual  allegations  of  wrongdoing  to the  bankruptcy            court.  Thus, even though the current suit is in the guise of            an  action under  RICO  and other  laws, it  is  in effect  a            collateral attack on  the judgment affirming the  validity of            the trustee's settlement of the  suits against the bank  and,            for purposes of res judicata, it  is the same cause of action                            ___ ________            as that  pursued in the  bankruptcy court.3  See  Hendrick v.                                                         ___  ________            Avent, 891 F.2d 583, 586-87 (5th Cir.), cert. denied 498 U.S.            _____                                   ____  ______            819  (1990) (appellant's RICO and securities claims which are            "directly inconsistent  with the  crux"  of bankruptcy  court            decision  are "same  cause  of action"  for  purposes of  res                                                                      ___            judicata); In  re Met-L-Wood Corp,  861 F.2d 1012,  1018 (7th            ________   ______________________            Cir. 1988), cert.  denied 490 U.S. 1006 (1989) (dismissing on                        ____   ______            res  judicata grounds  a RICO  suit  because "the  suit is  a            ___  ________            thinly  disguised collateral attack  on the judgment"  of the            bankruptcy court).                 Second, even though  the bank may not have  been a party            or a privy to a party in bankruptcy proceedings, it may still                                            ____________________            2.  Chemlen's  motion  to  dismiss  the  trustee  was  simply            another attempt to block the settlement.            3.  Allowing   a  collateral  attack  on  a  trustee's  court            approved  settlement  agreement   would  also  undermine  the            efficient administration of bankruptcy  estates which depend,            in part,  on the finality  of such agreements. In  re Medomak                                                           ______________            Canning, 922 F.2d at 901.            _______                                         -6-            estop  Chemlen   from  relitigating  his  challenge   to  the            settlements.    See  Blonder-Tongue  Laboratories,  Inc.   v.                            ___  __________________________________            University  of  Illinois  Foundation,  402  U.S.  313  (1971)            ____________________________________            (defendant  may invoke estoppel against plaintiff who lost on            same issue to  earlier defendant); Lynch  v. Merrell-National                                               _____     ________________            Laboratories,  Div.  of  Richardson-Merrell,  Inc., 830  F.2d            _________________________________________________            1190, 1192 (1st Cir. 1987) (same).                 Third, the order  approving the settlement of  the suits            is  a  final  order  within  the context  of  the  bankruptcy            proceedings.   In  bankruptcy proceedings,  "an  order  which            disposes of a 'discrete dispute  within the larger case' [is]            considered  final and appealable."   In re  American Colonial                                                 ________________________            Broadcasting  Corp.,  758  F.2d  794,  801  (1st  Cir.  1985)            __________________            (quoting In  re Saco Local  Development Corp., 711  F.2d 441,                     ___________________________________            444 (1st Cir. 1983)).  For purposes of this rule:                      A  final judgment is one which disposes of the                 whole  subject,  gives  all  the  relief  that  was                 contemplated, provides with reasonable completeness                 for  giving  effect  to  the  judgment  and  leaves                 nothing to be  done in the cause  save superintend,                 ministerially, the execution of the decrees.            Id. (quoting City of  Louisa v. Levi, 140 F.2d 512,  514 (6th            __           _______________    ____            Cir. 1944)).  The court order approving the settlement of the            suits fits this definition.   See In re Patel, 43 Bankr. 500,                                          ___ ___________            503 (N.D.  Ill. 1984)  ("bankruptcy court  order approving  a                                         -7-            settlement  is final  and  appealable  under  [28  U.S.C.]               1334(a) because  it determines the  rights of the  parties to            the settlement").                 Finally,  Chemlen  asserts  that  he  falls  within   an            exception  to the  usual  rules of  res judicata  because his                                                ___ ________            appeal was dismissed for lack of standing and thus was not an            appeal on the merits of  the bankruptcy court decision.  See,                                                                     ___            e.g.,  18  Wright,  Miller, &  Cooper,  Federal  Practice and            ___                                     _____________________            Procedure:  Jurisdiction      4433,  at  316  ("If   ordinary            ________________________            opportunities  to appeal are thwarted by the circumstances of            a  particular case  .  . .  preclusion  may prove  unwise.");            McCarney  v. Ford  Motor, Co.,  657 F.2d  230, 234  (8th Cir.            ________     _______________            1981)  (dismissal based upon  lack of standing  is ordinarily            not "on the merits" of the underlying substantive claims).                    The exception cited by Chemlen is not applicable in this            case.   Chemlen's  appeal of  the  settlement orders  to  the            district court  was dismissed  because the  court found  that            Chemlen did not meet  the standard for appellate  standing in            bankruptcy cases.  In this circuit, only "persons aggrieved,"            i.e.,  only  "those  persons whose  rights  or  interests are            ___            'directly and adversely affected pecuniarily'" by a contested            order in bankruptcy may appeal that order.  In re El San Juan                                                        _________________            Hotel,  809 F.2d  151, 154  (1st  Cir. 1987)  (quoting In  re            _____                                                  ______            Fondiller, 707 F.2d 441, 442  (9th Cir. 1983)).  The district            _________            court  found that  the rights  to the  two lawsuits  were the                                         -8-            property of the estate, not  of Chemlen, and that Chemlen had            failed to show that a  successful appeal would produce assets            for the estate in excess of its liabilities.  In other words,            the district  court's decision on  the issue of  standing was            predicated on  a factual finding  that Chemlen had  not shown            that he  had any property  interest in the settlement  of the            suits.   See  id. at  155 n.3  (whether appellant  is "person                     ___  __            aggrieved"  is finding  of fact  for district court).   Since            Chemlen's underlying claims  were predicated on his  property            interest in the settlement, this factual finding, even though            made in the context of  determining Chemlen's standing, was a            determination  of  the  merits of  those  claims.   Moreover,            Chemlen made no  attempt to appeal that finding  to the Court            of Appeals.  Chemlen was thus not deprived of the opportunity            to  appeal the determination of  the merits of the settlement            decision and does  not fall within an exception  to the usual            rules of res judicata.                     ___ ________                 The dismissal of appellant's claim is affirmed.                                                       ________                                         -9-
