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Mrozek v. Intra Financial Corp.6/9/2005
s in a court of competent jurisdiction resolved the first lawsuit. Kruckenberg v. Harvey, 2005 WI 43, , ___ Wis. 2d ___, 694 N.W.2d 879; Northern States Power, 189 Wis. 2d at 551. Claim preclusion is "'designed to draw a line between the meritorious claim on the one hand and the vexatious, repetitious and needless claim on the other hand.'" Northern States Power, 189 Wis. 2d at 550 (quoting Purter v. Heckler, 771 F.2d 682, 689-90 (3d Cir. 1985)). Key objectives of the doctrine of claim preclusion are to promote judicial economy and to "conserve the resources the parties would expend in repeated and needless litigation of issues that were, or that might have been resolved in a single prior action." Hanlon v. Town of Milton, 2000 WI 61, , 235 Wis. 2d 597, 612 N.W.2d 44 (citation omitted). At some point, litigation over a controversy must come to an end. DePratt v. West Bend Mut. Ins. Co., 113 Wis. 2d 306, 311, 334 N.W.2d 883 (1983).
Mallery's major argument for the application of claim preclusion centers on the third prong of the claim preclusion. It contends that because PMI's negligence claim was a "core proceeding" in the bankruptcy , the bankruptcy court's judgment closing the bankruptcy estate was a final judgment on the merits in a court of competent jurisdiction. Mallery also contends that even if PMI's claim was not a core proceeding, claim preclusion applies. PMI contends that its negligence claim against Mallery was not a core proceeding and even if it were, the claim was abandoned by the trustee in bankruptcy, which caused it to revert to PMI.
Bankruptcy courts have full judicial authority over the bankruptcy petition itself and may "hear and determine . . . all core proceedings . . . and may enter appropriate orders and judgments" with regard to core proceedings. 28 U.S.C. § 157(b)(1) (2002); see also Dunmore v. United States, 358 F.3d 1107, 1114 (9th Cir. 2004). They also have the limited power to "hear a proceeding that [is related to the bankruptcy but] is not a core proceeding submit proposed findings of fact and conclusions of law to the district court" for de novo review. 28 U.S.C. § 157(c)(1); see also Dunmore, 358 F.3d at 1114. However, unless the parties consent to an expansion of the bankruptcy court's authority, it is the district court that enters the final order and judgment in non-core proceedings. Id. The United States Code provides a non-exclusive list of what constitutes a core proceeding.
In this case, we need not decide whether PMI's claim is core because we conclude that PMI is correct in its contention that the bankruptcy trustee abandoned PMI's claim against Mallery for the negligent provision of legal services. 11 U.S.C. § 554 provides the statutory basis for abandonment of property by a bankruptcy trustee. It states in relevant part:
(a) After notice and a hearing, the trustee may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate.
(c) Unless the court orders otherwise, any property scheduled under section 521(l) of this title not otherwise administered at the time of the closing of a case is abandoned to the debtor . . . .
As the United States Court of Appeals for the Seventh Circuit has recently explained:
The Bankruptcy Code provides that "after notice and a hearing," the trustee, either on his own volition or under order by the bankruptcy court, "may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate." 11 U.S.C. § 554(a). In addition, property that the bankruptcy court orders the trustee to abandon is deemed abandoned, § 554(b
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