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Thomas G. Gialamas v. Fiduciary Partners Trust Company and Old Sauk Trails Park Limited Partnership (In re Thomas G. Gialamas)

18-13341 (Western District of Wisconsin), 20-00062
In this adversary proceeding, the Debtor sought declaratory judgment that claims he may have in his capacity as primary beneficiary of a spendthrift trust were outside the scope of a broad waiver and release of claims contained in the confirmed chapter 11 plan. The parties filed cross-motions for judgment on the pleadings under Fed. R. Civ. P. 12(c), with both sides arguing that the material facts were not in dispute and judgment could be entered.

In granting judgment in favor of Defendants, the court found that (1) the complaint failed to plausibly allege any facts that would show that the court was without subject matter jurisdiction to confirm a plan with the waiver and release provision, noting that section 1123(b)(3) expressly authorizes settlement of claims of the debtor; and (2) the complaint, which provided little detail about the supposed claim or claims the Debtor was trying to raise in state court, failed to plausibly state a claim for determination of any particular claim as beyond the scope of the waiver and release. The court further noted that an action for declaratory judgment does not furnish a plaintiff with a second bite at the proverbial apple or a backdoor route to evade the procedural requirements and deadlines for appeal or reconsideration of a judgment, and that the Debtor also failed to explain why the state court would not have subject matter jurisdiction to rule on whether claims brought before it had been waived or terminated.

Tuesday, March 30, 2021