[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

F O R THE ELEVENTH CIRCUIT

FILED

U.S. COURT OF APPEALS

ELEVENTH CIRCUIT

N o . 05-12327

JULY 18, 2006

THOMAS K. KAHN

CLERK

D .C . Docket Nos. 03-3269-CV-CAP-1

0 1 -8 3 4 7 0-B K C -C R

In Re:

ATLANTA RETAIL, INC.,

f.k.a. Wolf Camera, Inc.,

Debtor.

E A S T M A N KODAK COMPANY,

Plaintiff-Appellant,

versus

ATLANTA RETAIL, INC., f.k.a. Wolf

Camera, Inc., etc.

W A C H O V IA BANK, NATIONAL ASSOCIATION,

Defendants-Appellees.

A p p e al from the United States District Court

fo r the Northern District of Georgia

(J u ly 18, 2006)

B e fo r e BIRCH and CARNES, Circuit Judges, and TRAGER*, District Judge.

*Honorable David G. Trager, United States District Judge for the Eastern District of New York

sitting by designation.

T R A G E R , District Judge: T h is appeal raises the question: under what circumstances will a creditor be b a r re d from later bringing an action against a co-creditor based upon state law claim s if, during the pendency of a bankruptcy, it failed to raise such claims.

D efen d an t-ap p ellan t Eastman Kodak Company ("Kodak") appeals the d e c is io n of the United States District Court for the Northern District of Georgia, w h ic h affirmed an August 22, 2003 order of the Bankruptcy Court. That order en jo in ed Kodak from continuing to seek relief against Wachovia Bank f/k/a First U n io n National Bank ("Wachovia") in the United States District Court for the W estern District of New York for violations of state law ("New York action").

The bankruptcy court held, and the district court affirmed, that Kodak was p reclu d ed from bringing the New York action by the doctrine of res judicata as a resu lt of orders issued by the bankruptcy court in a bankruptcy filed by Atlanta R etail, Inc., f/k/a Wolf Camera, Inc., et al. ("Wolf" and "Wolf bankruptcy").

We hold that res judicata does not bar the New York action because Kodak c o u ld not have received a full remedy in the contested Wolf bankruptcy p ro ceed in g s and because the same nucleus of operative fact was not presented in th e two actions. Moreover, res judicata does not require a creditor to raise an in d e p e n d e n t state law claim against a co-creditor in an adversary bankruptcy p r o c e e d in g unless the resolution of that claim explicitly becomes an essential part o f the bankruptcy plan. Here, Kodak's claim against Wachovia in no way impacted o n the confirmation of the Wolf bankruptcy plan. Accordingly, the judgment of th e district court is reversed and the injunction is vacated.

Background (1 ) K o d ak had a long-standing business relationship with Wolf, supplying film a n d other photography-related goods. In the 1990's Kodak provided financing as secu red lender to enable Wolf to expand, thereby increasing Kodak's sales.

In September 1998, Kodak and Wachovia, which acted as another secured le n d e r to Wolf, entered into an agreement ("the Subordination Agreement") under w h ich Kodak's loans were subordinated to Wolf's other secured creditors including W a ch o v ia ("pre-petition lenders"). At the same time, Wachovia and Kodak made a sep arate agreement ("the Intercreditor Agreement") to use their best efforts to p r o m p tly notify each other of occurrences "which may significantly affect the other S ecu red Creditor with regard to the ability of [Wolf] to meet its obligations . . .." In late 1999 Kodak began discussions with Wolf about an additional $30 m illio n loan for a further expansion of the business. Like Kodak's other loans, it w as contemplated that this new loan was also to be subordinated to the loans of the o th e r pre-petition lenders. In its pleadings in the New York action, Kodak alleges th at Wachovia was aware of these negotiations and their stated purpose and, in d eed , that it encouraged the loan. However, Wachovia did so without disclosing its plan that Wolf would use the money to meet its financial obligations to W a c h o v ia .

Kodak also claims that it was not aware at the time that Wolf was nearing a b reach of its financial obligations with Wachovia and the other pre-petition le n d e r s. Kodak alleges that on March 2, 2000, Wachovia and Wolf's other prep etitio n lenders entered into an agreement with Wolf under which Wolf's covenant d efau lts would be forestalled until the Kodak loan was completed, unless Wolf failed to receive the loan by April 2000, at which point the defaults would accrue.

Kodak further alleges that it was never informed of this agreement as well ­ as r eq u ir ed by the Intercreditor Agreement ­ and only became aware of the alleged b reach of the Intercreditor Agreement during the pendency of the bankruptcy.

Wachovia did not share this information, Kodak alleges, because Wachovia knew th at Kodak would never have loaned the money to Wolf for the purpose of paying W ach o v ia's loan, rather than for expansion purposes.

In March 2000, Kodak did make the $30,000,000 loan to Wolf with the e x p r e ss condition that the loan fund the development of Wolf's business. Included in the loan agreement was the following clause: W o lf covenants to Kodak that it will use the proceeds of the New T erm Loan to fund new photo retail store development, new photo retail store acquisitions and upgrading the capability of existing and acq u ired photo retail stores.

(S eco n d Am. and Restated Loan and Purchase Agreement, dated Mar. 14, 2000, b etw een Kodak and Wolf, ¶ 3.3).

On March 28, 2000, the money was transferred from Kodak to Wolf. On the sam e day, in accordance with the alleged secret agreement between Wolf and the p re-p etitio n lenders, the money was transferred again, this time to Wachovia and th e other pre-petition lenders in order to pay some of Wolf's debts. It appears to be u n d isp u ted that none of the money was used to finance an expansion of the b u sin ess as contemplated in the loan agreement.

O n June 21, 2001, Wolf voluntarily filed for Chapter 11 bankruptcy. On the s am e date, Wolf also filed an emergency debtor in possession motion ("DIP M o tio n " ), requesting permission to receive financing from Wachovia and the other p re-p etitio n lenders in the amount of $10,000,000, permission to continue to use th e cash collateral from the loans from the pre-petition lenders, and for the court to p ro v id e protection to the pre-petition lenders. Kodak did not file an objection to th is motion, but the Official Committee of Unsecured Creditors ("Unsecured C r ed ito r s ") did object. Thereafter, Wachovia filed proofs of claim and included b o th the Subordination Agreement and the Intercreditor Agreement as evidence th at Kodak's claims were subordinate to those of the pre-petition lenders.

T h e bankruptcy court granted the DIP motion ("Final Order"). Wolf b o rro w ed approximately $8,000,000 from Wachovia and the other pre-petition len d ers. The court granted this loan first priority, and also granted a superior se cu rity interest to the pre-petition lenders compared to the remainder of Wolf's c re d ito r s , which included Kodak. Wolf owed these pre-petition secured creditors ap p ro x im ately $77,600,000 in addition to the amount it owed Kodak.

On August 23, 2001, Wolf filed a motion seeking approval for Ritz Camera C en ters, Inc. ("Ritz") to purchase nearly all of Wolf's assets ("Sale Motion").

Approximately a month later on September 13, 2001, Wolf and Wachovia filed an A m en d ed Joint Motion to Approve Stipulation with Respect to Distribution of P r o c ee d s from Sale of Assets of Debtors ("Stipulation Motion"). The Unsecured C r ed ito r s objected to both the Sale and Stipulation Motions. Kodak only opposed th e Sale Motion.

K o d a k did not object to the fact that its claims were subordinate to the prep etitio n lenders. Instead Kodak argued that Wolf could not sell its assets to Ritz "free and clear" of its liens. See 11U.S.C. § 363(f)(3). Kodak argued that because th e proposed sale price of $84,700,000 could not cover the combined claims of W ach o v ia and Kodak that the sale could not be considered free and clear if the s ta tu te was read to require the repayment of the face value of all liens rather than th e ir market value. The bankruptcy court rejected this argument, holding that K o d ak waived its right to object to the sale in the Intercreditor Agreement. The b a n k r u p tc y court also rejected Kodak's legal argument holding that the market d e te rm in e d the value of the liens. As Kodak's claims were subordinate and there w e re insufficient funds to pay the priority claims, the bankruptcy court found that K o d ak 's claims were in fact valueless.

In addition, the bankruptcy court also found against the Unsecured Creditors an d granted the Stipulation Motion ("Stipulation Order"). It also gave permission f o r the sale ("Sale Order"). Under the Sale Order, the proceeds of the sale were d istrib u ted first to the post-petition lenders, then $20,000,000 for pre-petition d eb ts, and then $25,000,000 for administrative expenses, with any balance to the rem ain d er of the pre-petition debts.

After the sale, which was approved by the bankruptcy court on September 2 1 , 2001, the Unsecured Creditors filed an adversary action challenging W ach o v ia's and the other pre-petition lenders' claims, arguing that certain of their lien s in Wolf's assets were not perfected. Kodak did not take part in this action. R ath er, Kodak filed one of its own in the United States Bankruptcy Court for the W estern District of New York. Kodak filed this proceeding against Wachovia alo n e, arguing that Wachovia and the other pre-petition lenders' claims should be eq u itab ly subordinated to Kodak's claims. It also filed claims for breach of c o n tr ac t, fraud and tortious interference with a contract. All of these claims were b a s ed on Kodak's claim that it was fraudulently induced by the pre-petition lenders to provide the $30,000,000 loan to Wolf even though they knew, and so contracted w ith Wolf, that the loan would be used to pay their loans rather than for the co n tem p lated expansion. Wachovia and the pre-petition lenders filed a motion to d is m is s .

I n the meantime, the Unsecured Lenders, Wolf and the pre-petition lenders h a d agreed on the terms of a settlement of the Unsecured Lenders' adversary p ro ceed in g . A motion was filed under Rule 9019 of the Federal Rules of B a n k r u p tc y Procedure for approval of this settlement. Kodak made a limited o b jectio n to this motion, but did not object to the settlement itself. Kodak only o b je cte d "to the extent the language of the Stipulation could be construed as b arrin g any and all claims against the Pre-Petition Lenders, including claims held b y third parties independent of the Debtors or their estates[.]" A t the July 16, 2002 hearing on the Rule 9019 motion the debtor argued that all questions of subordination, including Kodak's adversary proceeding, had to be reso lv ed in the bankruptcy court in order for the settlement to stand. Kodak did n o t use this forum to raise the allegations it made in the New York action. It did arg u e that the fraud claims in the New York action were based on newly d isco v ered evidence that had not been available at the time of the earlier orders.

T h e bankruptcy court granted the Rule 9019 motion, approving the settlement ("S ettlem en t Order").

After this hearing, on August 2, 2002, rather than responding to Wachovia's m o tio n to dismiss the case in the Bankruptcy Court for the Western District of New Y o rk , Kodak voluntarily dismissed the action. On the same day, Kodak filed a n ew case ("New York action") in the New York Supreme Court, alleging the same state law claims as in its prior suit, but excluding the equitable subordination claim.

On Wachovia's motion, the case was removed to the U.S. District Court for the W estern District of New York on diversity grounds.

Wolf filed its Disclosure Statement and Plan of Liquidation on August 30, 2 0 0 2 . The bankruptcy court endorsed the plan on January 7, 2003. The plan did c o n f ir m that Kodak's loans were subordinate to the pre-petition lenders. However, th e plan did not prohibit any suits against third parties ­ only against the debtor. A lth o u g h the record provided does not show the specific amounts that each p arty received, it is undisputed that Kodak did not receive any portion of its $30 m illio n loan from the distribution. While Wachovia and the other pre-petition cred ito rs did receive some amount (at oral argument an estimate of $23 million w as suggested), there is no question that Wachovia's recovery was less than the to tal amount owed to Kodak. Therefore, even if Kodak had taken Wachovia's p lace through equitable subordination, it would not have received the full amount so u g h t in the New York action.

(2 ) O n October 11, 2002, Wolf and Wachovia filed suit against Kodak in the G eo rg ia bankruptcy court seeking an injunction against Kodak's New York action o n the basis of res judicata and ­ a now abandoned argument ­ of collateral e sto p p e l. The bankruptcy court entered an order barring the suit on the basis of res ju d ic ata on August 22, 2003. The bankruptcy court rejected Kodak's argument that th e New York action was only an intercreditor dispute and instead focused on the c o n tr ac tu a l relationships between Kodak, Wachovia and Wolf. It framed the New Y o rk action as an attack on its previous orders and an attempt to make the S u b o rd in atio n Agreement unenforceable. The bankruptcy court stated that the S u b o rd in atio n Agreement was found enforceable "in the process of determining th e validity, extent and priority of the claims against the Debtors." In re Atlanta R e ta il, Inc., 297 B.R. 299, 305 (Bankr. N.D. Ga. 2003). The bankruptcy court id en tified the orders approving the sale of Wolf to Ritz, the order approving the R u le 9019 motion, and the order approving the final plan of liquidation as the prior o rd ers, as having a preclusive effect. Id. The order was affirmed by the U.S.

D istrict Court for the Northern District of Georgia. Eastman Kodak Co. v. Atlanta R etail, Inc. et al, 03-cv-3269 (N.D. Ga. Mar. 25, 2005).

In appealing this order, Kodak makes five arguments, only three of which n eed be addressed.1 First, Kodak argues that this is not the same "cause of action" b e c au s e the bankruptcy court did not consider the evidence relevant to its state law claim ; in particular, Wachovia's withholding of information about the revision of its debt agreement with Kodak. Kodak relies on this court's decision in Kaiser A ero sp ace & Elec. Corp. v. Teledyne Indus., Inc. (In re Piper Aircraft Corp.), 244 F .3 d 1289, 1297-1301 (11th Cir. 2001) for this point, arguing that the bankruptcy an d district courts did not properly apply the case. Kodak argues that the b an k ru p tcy court did not, and was not required, to consider whether a breach of co n tract between the two lenders had occurred when it made its rulings and, th erefo re, Kaiser is controlling.

S eco n d , Kodak argues that it could not have brought its state claims against W a ch o v ia in the bankruptcy court because its breach of contract was not "related to " the underlying bankruptcy claim ­ the resolution of Wolf's estate. Therefore, th e bankruptcy court lacked jurisdiction to hear the case.

Third, again relying on Kaiser, Kodak argued that it lacked an adequate p r o c e d u r a l vehicle to bring the state breach of contract claim before the bankruptcy co u rt. 244 F.3d at 1303-04. Kodak further claims that all of the bankruptcy court's o rd ers were issued on contested matters rather than as adversary proceedings.

Kodak argues that because the procedural framework for each type of proceeding is different, the orders issued as contested matters could not preclude Kodak's claim s, which would have had to have been raised as adversary proceedings.

Kaiser, 244 F.3d at 1304.

In response, Wachovia agrees with Kodak that Kaiser is controlling, but f o c u s on its differences from the case at hand. In particular, it cites the contractual relatio n sh ip s between Kodak, Wachovia and Wolf in comparison to the absence of an y relationship between Kaiser and the debtor in the Piper bankruptcy. Wachovia arg u es that this court in Kaiser relied on this lack of any relationship between the d eb to r and the plaintiff in finding that Kaiser did not have standing to raise the co n tested claims in the bankruptcy proceeding. Wachovia argues that, here, the d istrict court was correct in finding that Kodak was sufficiently involved and the c o n tr ac tu a l relationships were sufficiently discussed in the bankruptcy that Kodak w a s required to bring its state law claims during the bankruptcy. It also argues that th e fact that Kodak originally filed its case as an adversary action in the Western D is tr ic t of New York was essentially an admission that the case could be tried b efo re a bankruptcy court.

Wachovia further argues that the bankruptcy court's orders were final orders d e s er v in g of the application of res judicata. It argues that Kodak could have raised its objections during the course of the litigation of these orders and its tactical refu sal to raise its fraud claim does not protect it from the effects of res judicata.

Wachovia further argues that the bankruptcy court properly exercised its discretion in granting the injunction.

Lastly, Wachovia asks the court to rely on equitable and judicial estoppel to en jo in the action if the lower court is not upheld. D isc u s s io n (1 ) R e s Judicata R es judicata, or more properly claim preclusion, is a judicially made d o ctrin e with the purpose of both giving finality to parties who have already litig ated a claim and promoting judicial economy; it bars claims that could have b een litigated as well. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 (1979).

Questions of law raised by the application of res judicata are reviewed de novo.

Kaiser Aerospace & Elec. Corp. v. Teledyne Indus., Inc. (In re Piper Aircraft C o rp .), 244 F.3d 1289, 1295 (11th Cir. 2001) (applying de novo review to a b an k ru p tcy court's decision based on res judicata); In re Justice Oaks II, Ltd., 898 F .2 d 1544, 1550 (11th Cir. 1990). In order to establish that a case is barred under th e doctrine of res judicata, this court has held that all four of the following elem en ts must be present: F ir st, the prior judgment must be valid in that it was ren d ered by a court of competent jurisdiction and in acco rd an ce with the requirements of due process.

Second the judgment must be final and on the merits.

Third, there must be identity of both parties or their p riv ies. Fourth, the later proceeding must involve the s am e cause of action as involved in the earlier p r o c e e d in g .

In re Justice Oaks II, 898 F.2d at 1550 (internal citations omitted). "When all of th e requirements of claim preclusion are satisfied, 'the judgment or decree upon the m e rits in the first case is an absolute bar to the subsequent action or suit between th e same parties . . . not only in respect of every matter which was actually offered an d received to sustain the demand, but also as to every [claim] which might have b een presented.'" Justice Oaks II, 898 F.2d at 1552 (quoting Baltimore S.S. Co. v. P h illip s, 274 U.S. 316, 319, 47 S.Ct. 600, 602 (1927).

As in Kaiser, there is no real question that the bankruptcy court was a court o f competent jurisdiction 2 and that, at the very least, its confirmation order was f in a l and on the merits. See Justice Oaks II, 898 F.2d at 1549 (finding order e n d o r sin g confirmation plan final, but order confirming settlement not to be final a n d on the merits). However, it is clear that res judicata does not apply because at least two of the elements are lacking here.3 Kodak could not have received full relief in the first action, and the contested bankruptcy proceeding and the state co u rt claim do not involve the same nucleus of operative fact or "transaction or o ccu rren ce." See Ragsdale v. Rubbermaind, Inc., 193 F.3d 1235, 1239, n. 8 (11th C ir. 1999) (applying a transactional approach to determining the nucleus of o p erativ e fact in each action), citing Restatement (Second) of Judgments § 24. a. R es Judicata and the Availability of Relief in Contested Proceedings U n d er the most basic principles of res judicata, Kodak did not have to sue W a ch o v ia in a forum where it could not receive full relief. Kaiser, 244 F.3d at 1 3 0 3 ; see also Restatement (Second) of Judgments § 26 (1)(c). Wachovia has arg u ed that Kodak could have raised its claims regarding Wachovia's alleged fraud in the context of one of the five contested proceedings before the bankruptcy court b y challenging the enforcement of the Subordination Agreement. It urges that the b an k ru p tcy court could have decided to grant equitable subordination of Kodak's c la im at any point while considering these motions. This argument fails here b ecau se Kodak could not have received its full requested relief under any of these o rd ers.

A s in Kaiser, it is not clear that Kodak's challenge to any of the orders would h a v e resulted in any additional benefit to Kodak. Thus, in Kaiser, it was found that th e plaintiff did not have to raise objections to the bankruptcy plan's confirmation b ecau se, even if successful, the objections would only have resulted in defeating th e confirmation, not providing the relief Kaiser sought under state law. 244 F.3d at 1303. Likewise, here, if Kodak had challenged any of the five motions, it would h av e done Kodak little good. The result would only be their denial, not the eq u itab le subordination of Wachovia's claims to Kodak.

In each of the five orders, either the relief was not available within the co n tex t of the claims, or the contested proceeding was not the appropriate p r o c e d u r a l device to achieve any kind of relief. The Settlement Order, which a p p r o v e d the final resolution of the Unsecured Creditor's claims, did not touch u p o n Kodak's claims and specifically stated that it did not resolve the claims in the N e w York action. The four remaining orders, the Final Order (confirming the DIP p lan ), the Sale and Stipulation Orders (endorsing the sale to Ritz and the division o f profits) and the final confirmation order, did endorse the Subordination A g reem en t by setting the priority of the lenders. As Kodak does not challenge the v alid ity or enforcement of the Subordination Agreement itself, but instead alleges a v io latio n of it, the only conceivable means for Kodak to receive relief under these o r d e r s would be to seek equitable subordination of the parties.4 However, in order to receive such relief, a party must file an adversary proceeding unless the plan itself provides for subordination. Fed. R. Bankr. P. 7001 (8). The plan here did n o t allow for subordination. Therefore, filing objections at the contested p ro ceed in g s would not have provided Kodak with the requested relief.

More significantly, even if equitable subordination were available, the a m o u n t Wachovia received from the bankruptcy would not be sufficient to meet K o d ak 's losses. When Kodak filed suit, all of the pre-petition lenders had only receiv ed $21.7 million. Wachovia was only entitled to a fraction of this amount.

Although the full record of the current distribution amount is not before this court, b o th sides conceded in oral argument that the total amount that Wachovia itself receiv ed from the bankruptcy as one of the many pre-petition lenders was not s u f fic ie n t to satisfy Kodak's claim. In other words, even if Kodak had taken W ach o v ia's place in the bankruptcy through equitable subordination, its claim ag ain st Wachovia would not have been satisfied.

In addition, not only would Kodak not be made whole by equitable su b o rd in atio n of Wachovia's claims, Kodak also could not have been granted state law damages in the context of the contested proceedings. Any suit Kodak filed to "reco v er money or property" against a person other than the debtor would have to b e filed as an adversary proceeding, rather than be raised within the context of a c o n te ste d proceeding. Fed. R. Bankr. P. 7001 (1). Here, as in Kaiser, "the defeat o f the plan . . . would not necessarily have resolved . . . claims for damages ­ in clu d in g potential consequential and punitive damages." 244 F.3d at 1303-04.

We reach the same conclusion as the court in Kaiser: that objections to the various m o tio n s in the contested proceeding context did not provide "an adequate vehicle to assert fully the claims it raises in the state court action." Id. The most basic p rin cip les of res judicata require that full relief must have been available in the first actio n in order for the second action to be barred. See Restatement (Second) of J u d g m e n ts § 26 (1)(c). Therefore, res judicata cannot apply to the contested m a tte r s . b . Res Judicata and the Adversary Proceedings.

Wachovia argues that, nevertheless, res judicata should apply despite the f ac t that full relief was not available in the contested proceedings because Kodak c o u ld have filed an adversary action within the context of the bankruptcy. Kodak d isp u tes that the bankruptcy court would have had jurisdiction over such an action, claim in g that the state law action was not "related to" the bankruptcy. See 28 U .S .C . § 157(c)(1). Kodak also claims that preclusion of such claims on the basis o f the bankruptcy court's judgment resulting from only a contested proceeding w o u ld raise Seventh Amendment concerns.5 B an k ru p tcy courts have jurisdiction, by reference from the District Courts, o v er "all cases under Title 11 and all core proceedings arising under Title 11, or a ris in g in a case under Title 11." 28U.S.C. 157(a), 157(b)-(c). Neither party has c ite d a case in this circuit that indicates that the bankruptcy court would have had ju r is d ic tio n over a claim between two creditors when the outcome would not affect th e amount of money available in the bankruptcy estate. However, the bankruptcy co u rt would have had jurisdiction over a claim for equitable subordination as a c o r e proceeding determining the priority of the liens. 28U.S.C. 157 (b)(2)(K). If K o d ak had brought an equitable subordination claim, it would appear that the b a n k r u p tc y court would then have had jurisdiction over the state law claims as claim s "related to" the equitable subordination claim, at least where they would d irectly affect the bankruptcy plan. This issue need not be addressed because the c as e turns not on whether Kodak could, but whether it was required to bring an ad v ersary proceeding in the bankruptcy to resolve its state law claims.

A g ain , assuming the bankruptcy court would have had jurisdiction over the s ta te claims in an adversary proceeding, it does not follow that the New York a ctio n would have been precluded. The sweeping limits of jurisdiction do not set th e boundaries of res judicata. Wachovia is correct in asserting that res judicata ap p lies not only to claims which were actually brought before the previous court, b u t also to those claims "which could have been raised in that action." Kaiser, 244 F .3 d at 1296. However, res judicata only requires a litigant to raise the claims in th e first proceeding "if the later litigation arises from the same cause of action." In re Justice Oaks II, 898 F.2d at 1550 (internal citations omitted).

Both parties have suggested that we look to the Third Circuit to determine w h ic h claims to compare to the second litigation. We do not think that the Third C ircu it decisions help Wachovia because as we read the cases the inquiry is n arro w ed in the context of two creditors in a bankruptcy proceeding to comparing o n ly the claims which were actually brought against a co-creditor to the claims in th e later litigation. See Eastern Minderals & Chemicals Co. v. Mahan, 225 F.3d 3 3 0 , 337-338 (3d Cir. 2000); Corestates Bank, N.A., v. Hulls America, Inc., 176 F .3 d 187, 202 (3d Cir. 1999). In any case, in this circuit, we have not narrowed the an alysis, instead looking at all the previous bankruptcy orders, regardless of w h eth er there were claims between the creditors during the proceedings leading to th o s e orders. See Kaiser, 244 F.3d at 1299-1300; In re Justice Oaks II, 898 F.2d at 1 5 5 1 . We follow that approach in this case.

In order to determine whether the two proceedings are based on the same cau se of action, the test is whether they "arise[] out of the same nucleus of o p e ra tiv e fact, or [are] based upon the same factual predicate." Kaiser, 244 F.3d at 1 2 9 7 . In order to compare the actions, it is necessary to look not only at the facts th a t were before the bankruptcy court, but also the factors which the bankruptcy c o u r t was required by statute to consider in making its previous decisions. Id. at 1 2 9 9 . This is "'premised on the notion that the bankruptcy court has addressed in th e confirmed plan and order only those issues that are properly within the scope of th e confirmation hearing.'" Kaiser, 244 F.3d at 1290, quoting In re Seidler, 44 F.3d 9 4 5 , 948 (11th Cir. 1995) (emphasis added in Kaiser).

If the evidence crucial to the second action was never raised before the court in the first action, it is "powerful evidence" that the two cases are not based on the sam e nucleus of operative fact. Kaiser, 244 F.3d at 1297. The New York action a d d r e ss es the facts surrounding negotiation of Kodak's $30 million loan to Wolf. It relies on evidence of Wachovia's alleged bad faith in failing to tell Kodak that it h ad encouraged Wolf to enter the loan so that it may pay its debts to Wachovia and th e other pre-petition lenders. While the Subordination Agreement and the In tercred ito r Agreement were before the bankruptcy court, neither Kodak's alleg atio n s of the breach of the "good faith" clause of the Intercreditor Agreement, n o r any evidence in support of these allegations, were ever placed before the b an k ru p tcy court. The two documents were before the bankruptcy court solely for th e purpose of establishing the priorities of the creditors. If Wachovia believed the facts alleged in the New York action were relevant, it could have raised them by seek in g a declaratory judgment as to those allegations. See Fed. R. Bankr. 7004 (9 ). Indeed, as the bankruptcy unfolded, Kodak and Wachovia were not truly ad v ersarial, and their interests, if not aligned, were certainly not in opposition.

This, together with the fact that the evidence concerning the state law claims was n e v e r raised as a serious issue, is powerful evidence that the claims are not based o n the same nucleus of operative fact. Kaiser, 244 F.3d at 1297.

As the facts that form the basis of Kodak's New York action were never b efo re the bankruptcy court, we turn to each of the orders and evaluate whether the ev id en ce would have had, as a matter of law, to have been considered by the b a n k r u p tc y court in the course of determining the outcome of the orders. Kaiser, 2 4 4 F.3d at 1299.

The bankruptcy court's first order confirmed the DIP plan at the beginning of th e bankruptcy. This plan allowed Wolf to borrow money and continue to use ex istin g cash to run its business. In evaluating whether to allow this plan, the b an k ru p tcy court had to make the determination that the debtor was not able to receiv e unsecured credit and that the only available credit was from a creditor who in sisted on having priority over all other creditors, including administrative ex p en ses. 11U.S.C. § 364 (c)(1); (d)(1). The order also gave a limited schedule fo r all claims against pre-petition creditors that were in the debtor's interest. The o r d e r did not touch upon claims between co-creditors. Clearly, none of the issues b efo re the court in this proceeding required the court to consider the allegations of frau d by one co-creditor (Kodak) against another (Wachovia). Therefore, this o rd er and the New York action are not based on the same nucleus of operative fact; n o r do they constitute the same cause of action.

T h e second order, the Sale Order, held that Wolf could sell its business to R itz . In determining whether to allow the sale, the bankruptcy court was required to consider whether the sale was fair and agreed to by the secured creditors (1 1U.S.C. § 363 (b)) and whether the price was greater than the value of Wolf's lie n s (11U.S.C. § 363 (f)). The court also made a legal ruling that Kodak waived its right to object to the sale in the Intercreditor Agreement. Again, these rulings d id not require the evaluation of the alleged fraud by Wachovia prior to the b a n k r u p tc y .

T h e third order, the Sale Proceeds Order, endorsed a stipulation made by the p arties as to the distribution of the sale to Ritz. This proposed order did set the p rio rity of who would receive the proceeds of the sale. However, Kodak and the o th er unsecured lenders were neither parties to nor bound by the stipulation. The rig h ts of unsecured lenders were specifically reserved, subject to the restrictions in th e Final Order. Again, none of the determinations in the Sale Proceeds Order req u ired the consideration of the alleged fraud.

T h e fourth order, the Settlement Order, has already been found not to be a ju d g m e n t subject to res judicata. Justice Oaks II, 898 F.2d at 1549 (holding that th e authorization of a settlement is not a final decision on the merits). The only case Wachovia cited to the contrary, Cristo v. Padgett, 223 F.3d 1324, 1339 (11th C ir. 2000), specifically stated that while a settlement could be a final judgment for th e purposes of collateral estoppel as to issues pertaining to the confirmation of the settlem en t, such an order was not final for the purposes of res judicata.

Finally, there is the confirmation order which was a final judgment. Kaiser, 2 4 4 F.3d at 1299; Justice Oaks II, 898 F.2d at 1549-50. In this order, the b a n k r u p tc y court made the final determination of the priority of the lenders. In d o in g so, it was required to consider the factors set out in 11U.S.C. 1129 (a). See K a is er , 244 F.3d at 1299. This section requires the bankruptcy court to consider th e fairness of the plan to all classes of creditors and whether they have either accep ted the plan or received a fair benefit from it. Id. In making an evaluation of th e plan's fairness, the statute did not require and the bankruptcy court would not h av e been aided in making that evaluation if it had the allegations of Wachovia's frau d before it. The Confirmation Order did set the priorities of the creditors to the r em a in d e r of Wolf's assets. However, the confirmation plan itself only purported to resolve the claims against the debtor.

I n some cases, confirmation plans have included releases as to third parties a n d among creditors, to much criticism as potentially violating § 524(e) which states that "discharge of a debt of the debtor does not affect the liability of any o th e r entity on, or the property of any other entity for, such a debt." See In re C o n tin e n ta l Airlines, 203 F.3d 203, 214 (3d Cir. 2000) (rejecting plan that released n o n - d e b to r s ' claims against other non-debtors without consent); cf. In re Master M o rtg . Inv. Fund, Inc., 168 B.R. 930 (Bankr. W.D. Mo. 1994) (allowing such a r ele as e with certain factors including alignment of interests of the released third p arty and debtor, benefit to the debtor, agreement of the class and substantially c o m p le te payout of all claims). Although there was no such release in this case, th e bankruptcy court articulated one of the common justifications for allowing th e m : a reward for creditors such as Wachovia who cooperate with the bankruptcy an d accept less than their initial secured loans. In re Atlanta Retail, Inc., 297 B.R. at 307. Here, however, no such release was even contemplated. Wachovia should n o t receive more repose from the other creditors in the bankruptcy than it would h av e received through a release, which while legally questionable, would at least h a v e the advantage of providing notice to Kodak. Participation in a bankruptcy can n o t relieve a creditor of allegations of its own fraud in another context.

In sum, the same nucleus of operative facts are not present in both cases.

The focus of the bankruptcy court, and rightly so, was the equitable distribution of th e debtor's funds and the administration of the estate. Its orders did apply the S u b o r d in a tio n and Intercreditor Agreements in that Kodak's claims were su b o rd in ated to those of Wachovia and the other pre-petition creditors according to th o se agreements. However, Kodak does not contest the validity or the en fo rcem en t of these agreements. Kodak has instead brought an entirely separate f ra u d claim. The evidence in support of this fraud claim, Wachovia's alleged in d u cem en t of the loan from Kodak to Wolf, was not required to be considered in a n y of the hearings before the bankruptcy court and was not. Therefore, res ju d icata does not apply.

(3 ) J u d ic ia l and Equitable Estoppel W ach o v ia's final arguments involve the application of judicial and equitable e sto p p e l. Wachovia cannot expect to receive benefit from the doctrines of judicial o r equitable estoppel. Equitable estoppel provides relief for parties who have been in d u c e d into behavior through another party's false representation; judicial estoppel p r e v e n ts a party from later raising completely unknown claims. See In re C o laru sso , 280 B.R. 548, 559 (Bankr. Mass. 2002); DeLeon v. Comcar Indus., 321 F .3 d 1289, 1291 (11th Cir. 2003). Here, Kodak did not hide its intention to sue W ach o v ia under tort law. At the time of the Rule 9019 hearing, Kodak had already f ile d suit in the Bankruptcy Court for the Western District of New York and argued d u rin g the hearing that it had the right to continue its equitable subordination claim . Wachovia had notice of Kodak's claims at the time of the resolution of the b an k ru p tcy. It could have filed for a declaratory judgment to resolve any concerns reg ard in g Kodak's claims but chose not to do so.

C o n clu s io n C o n s id e r in g that Kodak could not have received full relief in the contested b an k ru p tcy proceedings and the New York action did not have the same nucleus of o p erativ e facts as any of the issues raised in the contested proceedings, we reverse th e bankruptcy and district court's decision to preclude the New York action on the b asis of res judicata and vacate the injunction issued against Kodak proceeding w ith the New York action.

REVERSED.

1 Kodak also argues that the bankruptcy court should not have granted the injunction because res judicata should have been raised as an affirmative defense before the state court. See Alabama v. United States Army Corps of Engineers, 424 F.3d 1117 (11th Cir. 2005), petition for cert. filed, 74 U.S.L.W. 3517 (U.S. Mar. 6, 2006) (limiting the court's powers under the All Writs Act). Since we now decide that the bankruptcy and district courts' decision to enjoin Kodak's state law claim should be reversed, there is no need to address Kodak's alternative argument that the defense of res judicata would have been more properly raised before the state court. Kodak further argues that the "same party" requirement of res judicata was not met because Kodak never filed an action directly against Wachovia. See discussion infra note 3.

2 Wachovia argues that Kodak challenged the jurisdiction of the bankruptcy court in its brief. It did not. Rather, Kodak addressed a separate issue: whether it could have brought the claim before the bankruptcy court. This issue is discussed below.

3 As previously mentioned Kodak argues that the identity of parties requirement is also lacking. Kodak challenges the district court's characterization of the claims among the creditors as interpleader suits. Rather, Kodak argues, its claim against co-creditor Wachovia more properly should be analogized to a permissive cross claim rather than a compulsory counterclaim. As we conclude that res judicata is not applicable on other bases, there is no need to discuss this point.

4 Wachovia now argues that the bankruptcy court determined that the Subordination Agreement could not be further contested. This is not at all clear from the record. The bankruptcy judge stated: So any effect of the order, as I read this stipulation, I'm not making any comment about the suit . . . in Rochester. I'm not making any comment about whether the venue was appropriate. I'm not making any comment about whether it's timely. It's simply not before the Court this morning. And at some point in time, there's going to be a hearing in Rochester or here, and the Court will . . . hear you out fully . . . in any position with regard to that litigation when it comes before this Court. It may be that [it is heard in Rochester] but that's simply not before the Court this morning. (RB-874-27, 34 (Tr. 07-16-02)). The Bankruptcy Judge's subsequent order banning the New York action was based more on the argument that Kodak's claims could have been raised during the Wolf bankruptcy. In re Atlanta Retail, Inc., 297 B.R. 299 (Bankr. N.D. Ga. 2003). Nevertheless, as stated, the issue is not the validity of the Subordination Agreement, which Kodak does not contest, but whether Wachovia violated it as well as the Intercreditor Agreements.

5 Kodak argues that even if the claims were within the court's jurisdiction they would have been non-core proceedings requiring de novo review by a district court. See 28U.S.C. § 157 (b)(2). The circuits disagree as to whether a decision in a core contested hearing can ever have a preclusive effect over issues which can only be tried in a non-core adversary proceeding. See e.g. Howell Hydrocarbons, Inc. v. Adams, 897 F.2d 183 (5th Cir. 1990) (finding that a bankruptcy court's confirmation plan could not preclude a later RICO claim because the bankruptcy court would not have jurisdiction over that claim); Barnett v. Stern, 909 F.2d 973 (7th Cir. 1990) (holding that the confirmation plan could only preclude a later claim if the later claim were within the bankruptcy court's core jurisdiction and could be heard in a contested proceeding); compare Sanders Confectionary Products Inc. v. Heller Financing Inc., 973 F.2d 474 (6th Cir. 1992), cert. denied 506 U.S. 1079 (1993) (holding that core bankruptcy proceedings can preclude non-core proceedings); Sure-Snap Corp. v. State Street Bank Trust Co., 948 F.2d 869 (2d Cir. 1991) (holding that core proceedings can preclude on the basis of res judicata non-core proceedings before the bankruptcy court). This circuit, however, has addressed this issue only in dicta. See I.A. Durbin v. Jefferson National Bank, 793 F.2d 1541, 1548 n.8 (11th Cir. 1986) (assuming without deciding that a contempt proceeding had res judicata effect, but noting that if it were non-core, it would have to be reviewed by the district court and "such proposed findings would not be entitled to res judicata effect in subsequent litigation because there would have been no final judgment on the merits"). It is not necessary to reach this issue because, as discussed later, the New York action was not based on the same cause of action as the Wolf bankruptcy and, therefore, res judicata does not apply.