VICTOR ORTEGA CALDERON and DANA L ACOSTA QUINONES

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IN THE UNITED STATES BANKRUPTCY COURT FOR
THE DISTRICT OF PUERTO RICO
IN RE:
CASE NO. 02-07934 BKT
VICTOR 	ORTEGA CALDERON 	Chapter 11
DANA L ACOSTA QUINONES
XXX-XX-1395
XXX-XX-0751
FILED & ENTERED ON 04/06/2009
Debtor(s)
OPINION & ORDER
Before 	this 	Court 	is 	Debtor’s 	motion 	for 	reconsideration 	of 	the 	order
denying the objection to claim for lack of jurisdiction filed on March 6, 2009
[Dkt. No. 545]. 	This dispute involves a determination made by this court on
March 3, 2009, after briefs and oral argument, that there was no jurisdiction
under the doctrine of res judicata to proceed to adjudicate an objection to claim
filed by Debtor against Citimortgage on January 8, 2008, four months after the
order on confirmation became final and unappealable [Dkt. No. 451]. For the
reasons stated below we deny the Debtor’s motion for reconsideration.
On July 26, 2002, Debtor filed a voluntary petition for relief under the
provisions of 11 U.S.C. Chapter 11, and as of that date have been managing
their 	affairs and operating its business as a debtor in possession pursuant
to 11 U.S.C. § 1107 and 1108. After proper notice and a hearing, the plan in
this case was confirmed on September 12, 2007 [Dkt. No. 439]. How the debtor
is reorganized and how the property of the bankruptcy estate is distributed
under a chapter 11 plan are fundamental matters put at issue in the
confirmation proceeding and determined by the confirmation order. A
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confirmation order determines the distributive rights of the various creditors
to the property of the bankruptcy estate, property over which the bankruptcy
court has exclusive jurisdiction, 11 USC §§ 1129, 1141. 	As a result, claims
that affect the property of the bankruptcy estate or the distribution scheme
under a Chapter 11 plan are clearly put at issue, and even if they are not
contested, they are determined by the bankruptcy court in the confirmation
proceeding.
It has long been recognized that a bankruptcy court's order confirming a plan of
reorganization is given the same effect as a district court's judgment on the
merits for claim preclusion purposes. See Stoll v. Gottlieb, 305 U.S. 165, 170-
71, 59 S.Ct. 134, 137, 83 L.Ed. 104 (1938); Miller v. Meinhard-Commercial Corp.,
462 F.2d 358, 360 (5th Cir.1972) (“[a]n arrangement confirmed by a bankruptcy
court has the effect of a judgment rendered by a district court”) (citing In re
Constructors of Florida, Inc., 349 F.2d 595, 599 (5th Cir.1965), cert. denied sub
nom. Coral Gables First Nat'l Bank v. American Surety Co., 383 U.S. 912, 86 S.Ct.
886, 15 L.Ed.2d 667 (1966)); In re Justice Oaks II, Ltd., 898 F.2d 1544, 1550
(11th Cir.), cert. denied, 498 U.S. 959, 111 S.Ct. 387, 112 L.Ed.2d 398 (1990);
see also Shoaf, 815 F.2d at 1053. Section 1141(a) of the Bankruptcy Code clearly
provides that all parties to a confirmed plan are bound by its terms. In cases
under the Bankruptcy Code, the doctrine of res judicata applies to confirmation
orders. 	Whatever claims were distinctly put at issue in the proceeding for
confirmation of a Chapter 11 plan and determined by the bankruptcy court are
forever barred by the confirmation order and cannot be collaterally attacked in a
subsequent suit between parties to the confirmation proceeding and their privies-
-so long as the confirmation order itself remains unmodified.
In their motion for reconsideration of this Court’s order, Debtor cites two cases
to support their argument that this Court erred in finding that no jurisdiction
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existed to hear the objection to claim against Citimortgage. The first, Medina v.
Chase 	Manhattan 	Bank, 	N.A., 	737 	F. 	2d 	140 	(1 st
. 	Cir. 	1984), 	recognized 	six
exceptions to the doctrine of res judicata under Puerto Rico law. The Debtor
cites three of these exceptions; fraud, a miscarriage of justice and public
policy 	concerns 	as 	applicable. 	The 	second, 	Archer 	v. 	Warner, 	538 	U.S. 	314
(2003), determined that res judicata could not be applied when looking at a
dischargeability claim for fraud. 	The Court finds that neither case is relevant
to the matter at hand. 	There has been no allegation of fraud in how the order to
confirm the plan itself was obtained. 	The court’s lack of jurisdiction in this
matter stems from the effect of res judicata of the order confirming the plan.
Debtor’s argument and allegation of fraud regards a specific claim.
In Eubanks v. F.D.I.C., 977 F.2d 166 (5 th Cir. 1992), The Court determined that
the Debtor could have or should have raised claims against a bank for violation
of Louisiana Blue Sky Law, breach of fiduciary duty, fraud, and breach of loan
contract in a proceeding for confirmation of a 	Chapter 11 plan. Therefore the
doctrine of res judicata barred the debtor from subsequently pursuing such claims
against banks because the debtor knew of these claims prior to confirmation of
his plan, yet failed to bring those claims to attention of bankruptcy court or
creditors as mandated by Bankruptcy Code and Rules under 11 U.S.C.A. § 1127(a).
Similarly in the case at hand, this Court concluded at the March 3, 2009 hearing,
that the res judicata effect of the confirmation order divested this Court of
jurisdiction over any matter regarding a claim dispute. In its opinion issued at
the hearing, this Court cited three examples in the record of the case where
Debtor was provided with knowledge that there was a discrepancy in the terms of
the 	loan 	all 	prior 	to 	the 	date 	the 	confirmation 	order 	was 	entered. 	[See,
Transcript of proceeding, pgs. 18-20, 22 Dkt. No. 552]. 	The Debtor had ample
knowledge and opportunity to litigate this particular claim prior to the order
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confirming the plan becoming final, yet failed to do so.
For the reasons discussed above, the court concludes that the doctrine of res
judicata applies to the confirmation order entered on September 12, 2007. The
motion for reconsideration is therefore DENIED.
IT IS SO ORDERED.
Ponce, Puerto Rico, this 06 day of April, 2009.
Brian K. Tester
U.S. Bankruptcy Judge
CC: 	DEBTOR(S)
CARMEN D CONDE TORRES
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