Sanders v. City of Brady (In re Brady, Texas, Municipal Gas Corp.)

THORNBERRY, Circuit Judge:

The bankruptcy court confirmed a municipal gas corporation’s plan of reorganization that rejected a farm-out agreement with the appellants but gave them the right to pursue a damage claim against the debt- or for breaching the agreement. Rather than remaining in the federal court, the appellants proceeded against the debtor and its successor-in-interest in a Texas state court, which ruled that the bankruptcy court’s confirmation of the debtor’s reorganization plan collaterally estopped the appellants from pursuing their damage claim against the debtor and its…