D-1 ENTERPRISES, INC., Et Al., Plaintiffs-Appellants, v. COMMERCIAL STATE BANK, Defendant-Appellee

GEE, Circuit Judge:

The issue in this debtor’s bankruptcy appeal is whether an agreed order lifting a stay and abandoning certain assets of the debtor to a creditor, entered in a “contested proceeding,” is res judicata of various tort claims against that creditor for bad faith acceleration of a note, wrongful foreclosure and the like and, if not, whether these were compulsory counterclaims to the creditor’s motion to lift the stay. Concluding that neither is the case, we reverse.

Facts and Prior Proceedings

Plaintiffs-appellants, related corporations in the security equipment business, owed…