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Bankruptcy Law Click here for the full text of this decision FACTS: The appellee, U.S. Specialty Insurance Co., served as insurer to the appellant, Forex Ltd., hiring an attorney to represent the company in a wrongful-death suit. A subsequent potential conflict of interest led Forex to file a declaratory judgment action with the trial court, attempting to obtain the right to choose its own counsel to be paid for by U.S. Specialty. Shortly thereafter Forex filed a suggestion of bankruptcy and had the U.S. Bankruptcy Court appoint new counsel. U.S. Specialty filed a motion for summary judgment with the trial court, ignoring the bankruptcy court’s order and refuting Forex’s right to choose its own counsel. The trial court granted U.S. Specialty’s motion, finding that U.S. Specialty held the exclusive right to choose counsel for Forex and had no duty to pay for attorneys’ fees beyond those covered in the insurance policy. Forex now appeals the trial court’s order granting the summary judgment. HOLDING: Affirmed. Examining the language of 11 U.S.C. �327(e), it appears as though there are three requirements necessary for the bankruptcy court to approve of counsel employed to represent the estate for a specified special purpose: 1. the attorney must have previously represented the debtor; 2. hiring the attorney must be in the best interest of the estate; and 3. the attorney must not hold an interest adverse to the debtor or estate with respect to the matter on which such attorney is to be employed. 11 U.S.C. �327(e)(2002); In re NWFX Inc., 267 B.R. 118 (Bankr. W.D. Ark. 2001). According to the legislative history behind the statute, Congress intended for trustees and debtors-in-possession to use this provision to avoid the interruption and delay that could occur if a debtor were required to switch attorneys during an active suit because of an intervening bankruptcy filed by that debtor. Although Texas law speaking directly to the issue of choice of counsel with regard to an insured bankrupt estate is scarce, looking at the law of pre-emption it seems as though the bankruptcy court’s order would pre-empt any state court order with regard to choice of counsel if that order served as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. Utilizing the stated legislative purpose iterated above, it appears as though the representation of Sinkin and Barretto actually caused rather than prevented a delay in litigation. This delay was caused by Forex’s refusal to accept the attorney hired by U.S. Specialty, Wade Shelton, who was defending Forex in the wrongful-death suit. In fact, the dispute created litigation in the form of the declaratory judgment action filed by Forex. The state court’s order, then, does not serve as an obstacle to the full purposes and objectives of Congress and is, thus, not pre-empted by the bankruptcy court’s order. In its second issue, Forex asserts the trial court erred in granting the summary judgment motion because the bankruptcy court’s order collaterally estops the trial court from deciding the issue in question. The doctrine of collateral estoppel, or issue preclusion, prohibits the relitigation of identical issues of fact or law that were actually litigated and essential to the judgment in a prior suit. Once an essential issue is actually litigated and determined, that issue is considered to be conclusive in a subsequent action between the same parties. Van Dyke v. Boswell, O’Toole, Davis & Pickering, 697 S.W.2d 381 (Tex. 1985). Although the bankruptcy court appointed Sinkin and Barretto as counsel for Forex, it did not actually decide either issue raised in the declaratory judgment action. The bankruptcy court did not decide whether Forex had a right to determine who would serve as its counsel or whether U.S. Specialty had a duty to pay for any outside counsel obtained by the insured, Forex. In addition, U.S. Specialty was not a party in the bankruptcy action. Issue preclusion is, therefore, inapplicable. Additionally, U.S. Specialty cites the case of In Re Vouziana,250 B.R. 478 (E.D. N.Y. 2000), aff’d 259 F.3d 103, (2nd Cir. 2001), in which the bankruptcy court found that the appointment of counsel is a limited grant of authority and does not give the bankrupt estate the ability to interfere with a pre-bankruptcy personal injury cause of action. In its third issue, Forex claims the trial court erred in granting U.S. Specialty’s motion for summary judgment because 11 U.S.C.�327 dictates the bankruptcy court must be the entity to appoint counsel for a bankrupt estate. The wording of the statute, however, employs the use of the phrase, “with the court’s approval, may employ. . . .” The statute, itself, does not preclude another method of selecting counsel and does not limit the selection of counsel strictly to the bankruptcy court. Moreover, Forex fails to cite any authority for its position. Because Forex fails to include the proper authority for its argument, it has failed to present an issue for review. OPINION: Green, J.; Green, Angelini and Marion, JJ.

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