REASONS FOR DECISION

ELIZABETH W. MAGNER, Bankruptcy Judge.

On October 1, 2012, the Court held a hearing on the Motion for Relief under 11 U.S.C. § 1144 and for Clarification of the Third Amended Plan1 filed by David V. Adler, Disbursing Agent for the reorganized debtor, Gulf States Long Term Acute Care of Covington, L.L.C. (hereafter "Debtor" will refer to both the pre-confirmation and reorganized debtor). After the conclusion of the hearing, the parties were allowed time to file supplemental briefs. Upon filing of the briefs, the matter was taken under advisement.

Adler seeks:

Objections were filed by Maurin; Jamestown, Inc.; Jamestown Gaming, L.L.C.; Gulf States Meadows, LP; Gulf States Healthcare Properties of Dallas, L.L.C.; New Braunfels Healthcare Properties, L.L.C.; Frost; and Breazeale, Sachse & Wilson LLP.2

The parties do not dispute that the Plan gave Adler standing to pursue any claims sufficiently reserved by the Plan.

I. Facts

Debtor owned a long-term healthcare facility in Covington, Louisiana. It leased the facility from MPT of Covington, L.L.C. ("MPT").

Debtor was a limited liability company whose members were Team Rehab of Covington, L.L.C. ("Team Rehab") (56.25%); Jamestown Healthcare Properties, L.L.C. (18.75%); Apex Group, II, L.L.C. (10%); David Tran, M.D. (5%); John Simon, M.D. (5%); and Craig Parker, M.D. (5%). Prior to filing for bankruptcy relief, Debtor was co-managed by Gulf States Health Services, Inc. ("GSHS") and Team Rehab.

GSHS also managed several other healthcare facilities located throughout Louisiana and Texas. Many of these were owned in whole or in part by entities affiliated with GSHS.3

Prepetition, Gemino Healthcare Finance, L.L.C. ("Gemino") issued a line of credit to Debtor, GSHS, and other entities. Although Debtor was an obligor on the loan and pledged its accounts receivable as collateral, during the administration of its case, John Simon, M.D., a member of Debtor, alleged that Debtor did not receive any funding from Gemino.4

On March 17, 2009, Simon, filed suit against Debtor; GSHS; Gregory M. Walker; Robert A. Maurin; Team Rehab; Jamestown Healthcare Properties, L.L.C.; Gulf States Health Services Management Co., L.L.C.; and Gulf States Staffing and Professional Services, L.L.C. alleging mismanagement, misappropriation of funds, breach of contract, fraud, breach of fiduciary duty and duty of loyalty, and breach of the Louisiana Unfair Trade Practices and Consumer Protection Law Act ("Derivative Action").5 The suit sought monetary damages and injunctive relief.

On March 31, 2009, pursuant to a consent order issued by the Twenty-Second Judicial District Court, GSHS and Team Rehab withdrew as co-managers, and the Court appointed Richard Daughdrill and Robert A. Maurin as new co-managers of Debtor.

On April 20, 2009, MPT filed suit against Debtor seeking a declaration that the lease terminated due to non-monetary defaults ("MPT suit").6

On the same day, Debtor filed a petition for relief under Chapter 11 of the Bankruptcy Code ("Petition Date"). As a result, the Derivative Action and the MPT suit were stayed.

Shortly after the Petition Date, a Joint Motion to Dismiss the Bankruptcy Case7 was filed by MPT; Craig Parker, M.D.; David Turner, M.D.; and John Simon, M.D. alleging that the bankruptcy petition was filed without the requisite authority8 and in bad faith.9 On August 27, 2009, a hearing on the Joint Motion to Dismiss was held concurrently with a hearing on MPT's Motion for Relief from Stay and Debtor's Motion to Use Cash Collateral and Assume Lease.10 Counsel for Debtor, MPT, Gemino, Capital One, Craig Parker, David Turner, and John Simon all appeared at the hearing.11 After the hearing, the parties were given a briefing schedule. However, the parties contacted the Court a few days later to request mediation before Hon. Douglas D. Dodd.12 The record reflects that counsel for the unsecured creditors committee ("UCC") notified Judge Dodd of the UCC's intent participate in the mediation.13 The mediation resulted in a settlement.14 Accordingly, the Court entered an Order denying the Joint Motion to Dismiss.15

The Third Amended Disclosure Statement was approved by the Court on December 17, 2009, and provides:

The Third Amended Plan with Immaterial Modification ("Plan") was approved by the Court on February 22, 2010.17

II. Claims Dismissed by the U.S. District Court

On March 5, 2012, U.S. District Judge Jane Milazzo dismissed Adler's claims against Gregory Frost; Breazeale, Sachse & Wilson, LLP; Jamestown, Inc.; Jamestown Gaming, L.L.C.; Gulf States Meadows, LP; Gulf States Healthcare Properties of Dallas, L.L.C.; and New Braunfels Healthcare Properties, L.L.C.18 The ruling is binding on the parties and this Court and cannot be collaterally attacked.19 The request by Adler to bring claims against these parties is denied.

III. Claims against Maurin

Debtor unequivocally released claims against Maurin. Section 6.05 of the Plan entitled "Release of Claims" provides:

Adler seeks to withdraw Debtor's release of claims against Maurin on the basis of fraud. Section 1144 of the Bankruptcy Code provides that if an order of confirmation was procured by fraud, it can be revoked within 180 days of entry of the confirmation order. The Plan was confirmed nearly three years ago, and as a result, Adler's motion is untimely. Further, Federal Rule of Civil Procedure 60, is unavailable as it does not apply to a complaint to revoke a confirmation order.22

Adler also avers that the Court can unwind the settlement between Maurin and Debtor because doing so would not upset the Plan. This assertion is inconsistent with the position taken by Debtor at confirmation. The Plan specifically states, "The Debtor believes the best interest of the estate is served through these settlements, negotiated during the mediation which formed the basis of the Plan."23

Judicial estoppel "generally prevents a party from prevailing in one phase of a case on an argument and then relying on a contradictory argument to prevail in another phase."24 Courts invoke judicial estoppel "to prevent the party from playing fast and loose with the courts, and to protect the essential integrity of the judicial process."25 Accordingly, Debtor is judicially estopped from now taking the inconsistent position that the settlement with Maurin was unnecessary to the Plan.26

However, out of an abundance of caution, Adler's assertion that the Settlement was obtained by fraud will be addressed. As with any obligation or agreement, fraud may vitiate consent to settlement.27 However, "fraud does not vitiate consent" where the party "could have ascertained the truth without difficulty, inconvenience, or special skill."28 In making this determination, it is proper for a court to consider the "commercial sophistication" of the parties.

Debtor, MPT, Team Rehab, GSHS, Gemino, Capital One, Craig Parker, David Turner, John Simon, Pam II, and the UCC were involved in the mediation.29 Each of the participants was represented by counsel and was entitled to avail itself to the benefits of discovery. The parties are knowledgeable and sophisticated. Debtor was represented by counsel and employed professional accountants during the course of the negotiations and the administration of the case. In addition, a UCC was represented by counsel and participated in the settlement negotiations. The Derivative Action was well-known to the partners and alleged that Debtor's funds were misappropriated through diversion by GSHS to other entities. This created certain causes of action for malfeasance against its officers and directors and possible causes of action against the entities receiving the funds. The allegations were repeated in the Motion for Relief from Stay filed by MPT.30 The Motion for Relief from Stay also includes an allegation that even after Maurin and Daughdrill were appointed co-managers of Debtor by the state court, $450,000 of Debtor's funds were diverted to other entities.31 Debtor had an obligation to determine the facts through discovery before entering into a broad release of claims. The same applies to the UCC who not only participated in the settlement, but orally withdrew its objection to the Plan at the confirmation hearing. Sophisticated parties who neglect to ascertain all the facts before entering into a settlement cannot have the settlement set aside when new facts, not to their liking, emerge.32

For the reasons stated above, Debtor's claims against Maurin were released.

Adler avers that the Plan only released claims against Maurin in the Derivative Action. In the first paragraph of section 6.05 of the Plan, entitled "Release of Claims," Debtor provided that all claims against Maurin would be "deemed released on the Effective Date." The section describes the known claims of Debtor against Maurin as, "[A]ny and all claims asserted or which could have been asserted against Maurin in the Derivative Action." The next paragraph asserts that Debtor knows of no other claims against Maurin. The description of known claims does not limit the release initially provided. Further, the release of all claims that "could have been asserted"33 in the Derivative Action encompass more than the claims actually asserted.

Derivative actions are state law claims. Louisiana law provides that "[a] plaintiff may cumulate against the same defendant two or more actions even though based on different grounds" as long as 1) jurisdiction and venue are proper, and 2) the actions are "mutually consistent and employ the same form or procedure."34

Any cause of action that Debtor could have asserted against Maurin falls into this category, and was, thus, released by the Plan.

Because Debtor was unaware that certain claims existed at confirmation, Adler asserts they were not released. Adler also avers that claims that arose post-petition, but pre-confirmation, were not released. Section 6.05, paragraph one, contains a general release.

Debtor did not exclude unknown claims in its release, nor did it limit the claims released to prepetition causes of action. Thus, any claim that existed, whether or not it was known to Debtor, was released.

Several defendants were not included in the Plan release. However, some of these defendants are allegedly owned or controlled by the released parties. Adler asserts that because the released parties failed to observe corporate formalities, he may assert claims against third parties and include the defendants based on veil piercing theories of recovery.

Specifically, Adler indicates that he will sue Maurin under a veil piercing theory in relation to claims for fraudulent transfer against Gulf States Health Services, Inc., Team Rehab, and Gulf States Long Term Acute Care of New Orleans, L.L.C. which were specifically reserved in the Plan.37 Due to the specific and unequivocal reservation of fraudulent transfer claims against Gulf States Health Services, Inc., Team Rehab, and Gulf States Long Term Acute Care of New Orleans, L.L.C., Adler may sue them on such claims. To the extent successful, collection may be enhanced through a veil piercing theory of recovery.

Using the alter ego doctrine to pierce the corporate veil is an equitable remedy, not an independent cause of action.38

The relief Adler seeks is not a cause of action against a released defendant but a means of collection against a third party controlled by the defendant. Because a veil piercing remedy is not an independent cause of action against Maurin, it was not released and is not precluded by the Plan. The general release was in favor of Maurin. It specifically reserved causes of action for fraudulent conveyance against Team Rehab; Gulf States Health Services, Inc.; Team Rehab of Covington, LLC; Gulf States Health Services Management Company, L.L.C.; Gulf States Staffings and Personnel Services, L.L.C.; Gulf States Long Term Acute Care of Denham Springs, L.L.C.; Gulf States Long Term Acute Care of New Orleans, L.L.C.; Gulf States LTAC of New Braunfels, L.L.C.; Gulf States of Morgan City Holdings, L.L.C.; Gulf States of Nevada, L.L.C.; and Gregory Walker, and therefore, any means to collect on those claims.

IV. Jamestown Healthcare Properties, L.L.C.

The Immaterial Modifications to the Plan,40 which were approved by the Court,41 contain a modification to the Cooperation and Transfer Agreement that release both Maurin and Jamestown Healthcare Properties, L.L.C. "from any causes of action in favor of, or from direct, indirect or derivative liability to, any and all of the Debtor Parties."42 The release of claims against Jamestown Healthcare Properties, L.L.C. is specific and unequivocal, and the Immaterial Modifications were confirmed in the Order confirming the Plan.43 Therefore, Debtor's claims against Jamestown Healthcare Properties, L.L.C. were released, and Adler may not pursue them.

V. Avoidance Actions

Adler asserts that the Plan contains a specific reservation of avoidance actions. The Plan provides:

Plans are subject to general rules of contract interpretation.45 "The language of these documents taken as a whole, if unambiguous, is the controlling expression of these parties' intentions."46 There is no indication that the retention of "[a]ll such claims and causes of actions" refers to anything but the potential fraudulent conveyance actions which precede it. Therefore, the Court finds that preference actions were not specifically retained by the Plan.

VI. Fraudulent Transfer Claims against Gregory Walker

The Plan specifically and unequivocally reserved fraudulent transfer claims against Gregory Walker.47

Therefore, Adler may pursue fraudulent conveyance actions against Walker.

VII. All Claims against Gulf States of Dallas Holdings, L.L.C.; B & G Healthcare Properties, L.L.C.; Jamestown Healthcare Properties of Dallas, L.L.C.; and Damage Claims against Gregory Walker

The Plan does not release Gulf States of Dallas Holdings, L.L.C.; B & G Healthcare Properties, L.L.C.; Jamestown Healthcare Properties of Dallas, L.L.C. or Gregory Walker. The Plan does contain a general reservation of "[a]ny and all claims and causes of action which may have been asserted by the Debtor prior to the Effective Date, other than those released by the Debtor under the terms and conditions of the Plan ..."49

Any analysis regarding the sufficiency of a reservation of claims provision begins with an examination of the status of the party affected. If a debtor seeks to assert a claim against a creditor, the reservation is examined vis-a-vis the plan's treatment of the claim. The description of the reserved claim must be sufficiently clear so as to put the creditor on notice that its treatment under the plan might be affected by the pursuit of the reserved claim. A clear reservation of a cause of action provides the creditor with the information necessary to vote for or against the plan. However, if the claim is against a nonvoting, nonclaimant, disclosure of the claim is not critical to the vote on confirmation because a third party noncreditor is not involved in the administration of the case.

Because the reservation of a claim against a third party enures to the benefit of general creditors, the details of its nature are presumably less than critical to a decision to vote for or against a plan. Certainly the party against whom a claim is reserved cannot complain of a debtor's right to sue. Therefore at the outset, it is important to note that Gulf States of Dallas Holdings, L.L.C.; B & G Healthcare Properties, L.L.C.; Jamestown Healthcare Properties of Dallas, L.L.C.; and Gregory Walker are not creditors of Debtor's estate.

Dynasty Oil and Gas, L.L.C. v. Citizens Bank, et al. (In re United Operating, L.L.C.)50 involved the reservation of Bankruptcy Code Chapter 5 avoidance actions against a creditor. The plan did not, however, reserve state law fraud claims. The defendant was the primary creditor of the debtor, and prior to confirmation, all Chapter 5 claims were settled with this creditor. Under these circumstances, the Fifth Circuit had little difficulty finding that the debtor's failure to reserve state law causes of action released them.

In In re Texas Wyoming Drilling Inc.,51 the disclosure statement described reserved claims as those against "[v]arious pre-petition shareholders of the Debtor" for "fraudulent transfer and recovery of dividends" of approximately $4 million.52 The Fifth Circuit found the reservation in the disclosure statement put the shareholders on sufficient notice of "the existence of the Avoidance Actions, the possible amount of recovery to which they would lead, the basis for the actions, and that the reorganized debtor intended to pursue the claims."53

In Compton v. Anderson, et al. (In the Matter of MPF Holdings U.S. LLC, et al.),54 the Fifth Circuit found the following reservation of Chapter 5 avoidance actions sufficient:55 "all Causes of Action, including but not limited to, (1) any Avoidance Action that may exist against any party identified on Exhibits 3(b) and (c) of the Debtor's statements of financial affairs." While the defendants were listed on Exhibits 3(b) and (c), the debtor had previously settled preference claims against the defendants as part of a bankruptcy court sale. Further, in the course of its administration, the debtor had also assumed the defendants' prepetition executory contracts, in effect releasing any potential Chapter 5 claims.

In MPF Holdings, the Fifth Circuit clarified its holdings in National Benevolent Association of the Christian Church (Disciples of Christ) v. Weil, Gotshal & Manges, LLP (In re National Benevolent Association of the Christian Church (Disciples of Christ))56 by explaining that not every ambiguity in a reading of a reservation of claims will enure to the benefit of the defendant. Plans are subject to reasonable interpretation under the rules of contract.

In MPF Holdings, the Court found that the plan specifically excluded released claims from those reserved. Since the prior authorized court sale and the assumption of prepetition executory contracts released the Chapter 5 causes of action against the defendant/creditors, no claims were reserved.

Each of these cases involved creditor/defendants rather than third parties. In each case, the sufficiency of the reservation affected the treatment of the claimant. In each case, the plan's language appeared to exclude any claims against the defendant/creditor, and presumably, this led each to vote for confirmation.

This case involves non-creditor parties. Therefore releases do not impact the votes of creditor/defendants. Instead, these third parties seek to gain an advantage by claiming ambiguity exists in the Plan's reservation of claims against them.

If non-creditor third parties were allowed to claim ambiguity, Adler would have no right to pursue these causes of action, the assets would be lost, and distributions to creditors would be reduced.

Even the Bankruptcy Rules do not require that noncreditors such as Gulf States of Dallas Holdings, L.L.C.; B & G Healthcare Properties, L.L.C.; Jamestown Healthcare Properties of Dallas, L.L.C.; and Gregory Walker receive notice of the hearings to consider approval of the disclosure statement and plan or of the deadline to file objections to the disclosure statement or plan.60 Only "a party in interest" has standing to object to confirmation of a plan.61 Generally, noncreditor third parties lack standing to object to confirmation of a plan.62 If they could not object to the plan prior to its approval by the Court, it follows that they cannot now object that the plan is ambiguous. Plans are confirmed as being in "the best interest of creditors." "As its name implies, the best interest of the creditors test only applies to creditors."63

Therefore, the Plan's general reservation of "[a]ny and all claims and causes of action which may have been asserted by the Debtor prior to the Effective Date, other than those released by the Debtor under the terms and conditions of the Plan..."64 sufficiently reserved causes of action against Gulf States of Dallas Holdings, L.L.C.; B & G Healthcare Properties, L.L.C.; Jamestown Healthcare Properties of Dallas, L.L.C.; and Gregory Walker. Adler may pursue any of Debtor's claims against these parties and any means to collect on those claims.

VIII. Conclusion

For the reasons assigned above, the Court finds that Adler may not pursue any claims against Maurin; Gregory Frost; Breazeale, Sachse & Wilson, LLP; Jamestown, Inc.; Jamestown Gaming, L.L.C.; Gulf States Meadows, LP; Gulf States Healthcare Properties of Dallas, L.L.C.; Gulf States of Dallas Holdings, L.L.C.; New Braunfels Healthcare Properties, L.L.C. However, Adler is entitled to pursue Debtor's claims against Gulf States of Dallas Holdings, L.L.C.; B & G Healthcare Properties, L.L.C.; Jamestown Healthcare Properties of Dallas, L.L.C.; and Gregory Walker. Adler may also pursue, if successful on any retained causes of action, all means of collection, including, but not limited to, the assertion of veil piercing or alter ego theories of recovery against Maurin. Accordingly, the Motion for Relief under 11 U.S.C. § 1144 and for Clarification of the Third Amended Plan65 is granted in part and denied in part. A separate Order will be entered in accord with these Reasons.