Second Circuit Holds Bankruptcy Court Order Allowing an Uncontested Proof of Claim Constitutes a “Final Judgment” for Purposes of Res Judicata

Per EDP Medical Computer Systems, Inc. v. U.S., 2007 WL 706925 (2nd Cir. Mar. 09, 2007):

Plaintiff-appellant EDP Medical Computer Systems, Inc. (“EDP”), brought this lawsuit seeking refund of a tax liability paid by the bankruptcy trustee after EDP had filed for bankruptcy protection. The United States District Court for the Eastern District of New York (Frederic Block, Judge ) granted defendant-appellee United States' motion for summary judgment because, inter alia, EDP's claim was barred by res judicata. The question this case presents is whether a bankruptcy court order allowing an uncontested proof of claim constitutes a final judgment on the merits that can be a predicate for res judicata. We hold that it does and affirm.

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Although we have not had occasion to decide whether a bankruptcy court order allowing an uncontested proof of claim is a “final judgment” for res judicata purposes, the Fifth Circuit has held that it is. See Baudoin, 981 F.2d at 742. Moreover, the Ninth Circuit has held that a bankruptcy court's allowance of an uncontested proof of claim, even without a separate order, is a final judgment for res judicata purposes. See Siegel v. Fed. Home Loan Mortgage Corp., 143 F.3d 525, 528-31 (9th Cir.1998) (citing Baudoin with approval). We now join these two circuits in holding that a bankruptcy court order allowing an uncontested proof of claim constitutes a “final judgment” and is thus a predicate for res judicata.