Justia U.S. 5th Circuit Court of Appeals Opinion Summaries

CULS appealed the dismissal of its petition for involuntary bankruptcy filed against Green Hills under 11 U.S.C. 303. Congress has made clear that a claimholder did not have standing to file an involuntary petition if there was a bona fide dispute as to liability or amount of the claim. The court affirmed the bankruptcy court's dismissal on the alternative ground that CULS lacked standing to bring the involuntary petition where CULS' claim was subject to a bona fide dispute. The court denied Green Hills' motion for sanctioning CULS for filing a frivolous appeal and concluded that sanctions were not appropriate in this case where CULS' contentions, while not ultimately meritorious, were not entirely unreasonable. Accordingly, the court affirmed the bankruptcy court's dismissal, granted CULS' motion for judicial notice of an order denying in part another motion by CULS for summary judgment, and denied Green Hills' motion for sanctions. View "Credit Union Liquidity Servs. v. Green Hills Dev. Co." on Justia Law

This dispute arose out of a complicated bankruptcy proceeding. On appeal, Lender challenged the district court's judgment which, in relevant part, disallowed Lender's claim for a contractual prepayment consideration. Applying Colorado law, a lender was not entitled to a prepayment penalty when the lender chooses to accelerate the note. Absent a clear contractual provision to the contrary or evidence of the borrower's bad faith in defaulting to avoid a penalty, a lender's decision to accelerate acts as a waiver of a prepayment penalty. In this instance, the plain language of the contract plainly provided that no Prepayment Consideration was owed unless there was an actual prepayment, whether voluntary or involuntary. Accordingly, the acceleration of the Note due to GCMM's default by nonpayment under Article 4 did not trigger the obligation to pay the Prepayment Consideration under Article 6. View "Bank of New York Mellon v. GC Merchandise Mart, L.L.C., et al." on Justia Law

Acting as receiver, the FDIC conveyed substantially all of WaMU's assets and liabilities to JPMorgan Chase, including certain long-term real-estate leases. At issue was whether the owners of the leased tracts could enforce the leases against Chase by virtue of the FDIC's conveyance. The court held that, in the interest of maintaining uniformity in the construction and enforcement of federal contracts, the landlords did not qualify as third-party beneficiaries. The court concluded, however, that the landlords have "standing" to prove the content of the Agreement and that the Agreement, properly construed, was a complete "assignment" sufficient to create privity of estate under Texas law. Accordingly, the court affirmed the judgment of the district court. View "Excel Willowbrook, L.L.C., et al. v. JPMorgan Chase Bank, N.A., et al." on Justia Law

Over the creditor's protests, the trustee sought to settle the claims at issue, and the creditor ultimately re-acquired them at auction. The bankruptcy court then found that the creditor had paid the trustee's attorney's fees even after the two had become adverse over the settlement issue, and dismissed the adversary proceeding based on its inherent power to sanction a party for abuse of judicial process. The district court affirmed and the creditor appealed. The court concluded that the bankruptcy court had constitutional authority to enter final judgment in this adversary proceeding; because the creditor failed to file a timely motion requesting the bankruptcy court to abstain, and because the claims at issue were "core" in nature, the district court's decision not to abstain was proper; and because the bankruptcy court failed to find by clear and convincing evidence that the creditor acted in bad faith, it erred in invoking its inherent sanction power. Accordingly, the court reversed and remanded for further proceedings. View "Cadle Co. v. Moore, III, et al." on Justia Law

Energytec, owner and operator of gas pipelines, filed for bankruptcy relief under Chapter 11 in 2009. The bankruptcy court authorized a sale of a pipeline system to Red Water Resources, but reserved for later determination whether the sale was free and clear of Newco's right to certain fees and other interests in the pipeline. A year after the sale, the bankruptcy court ruled that Newco's rights were not covenants running with the land and that the sale of the pipeline system was free and clear of Newco's interests. The district court affirmed. The court vacated, however, concluding that Newco's interests, including a transportation fee, security interest, and right to consent to assignments, were covenants running with the land. The court remanded for further proceedings. View "Newco Energy v. EnergyTec, Inc., et al." on Justia Law

The bankruptcy court ordered debtor's counsel to return all consideration he received, but in so doing it imposed an additional sanction beyond return of compensation. A bankruptcy judge may regulate attorney compensation by ordering debtor's counsel to return to the estate excessive compensation, 11 U.S.C. 329(b). Separately, a bankruptcy judge has authority to discipline attorneys who violate the disclosure requirements of the Bankruptcy Code and Rules. In this case, the court reversed and remanded the bankruptcy court's order because a bankruptcy judge's reach under the plain language of section 329(b) was limited to attorney compensation. View "Baker v. Cage" on Justia Law

The Gartleys filed an adversary proceeding in bankruptcy court against their former business partner, debtor, and his wife, co-debtor. The court concluded that In re Strangel remained good law, and the failure to file a timely notice of appeal in the district court leaves the district court without jurisdiction to hear the appeal. Because the district court did not have jurisdiction to hear debtor's appeal, the court dismissed the appeal for lack of jurisdiction, vacated the decision of the district court, and remanded with instructions to dismiss the appeal. View "Smith v. Gartley" on Justia Law

Appellant was involved in two lawsuits with appellees and both lawsuits resulted in sanctions against him and an award of attorney's fees in favor of appellees. After appealing, appellant filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code. At issue was whether defensive appellate rights were considered property under Texas law. The court affirmed the district court's determination that defensive appellate rights were property under Texas law and saleable by the bankruptcy estate. View "Croft v. Lowry, et al." on Justia Law

BPRE filed for Chapter 11 bankruptcy relief and then filed an adversary complaint in the bankruptcy court alleging various state-law tort and contract claims against RML. The bankruptcy court entered a final judgment denying relief and the district court affirmed. In Stern v. Marshall, the Supreme Court determined that the bankruptcy court lacked the constitutional authority to enter final judgment on the debtor's state-law counterclaim even thought the statute conferred such authority. Although the strict holding in Stern limited bankruptcy-court authority in one isolated respect and the question presented was a narrow one, its sweeping reasoning was broad and logically must be applied to BPRE's claims here. Therefore, the court vacated the district court's judgment and remanded, concluding that the bankruptcy court lacked Article III standing to enter final judgment on BPRE's claims. View "BP RE, L.P. v. RML Waxahachie Dodge, L.L.C., et al." on Justia Law

After South Louisiana Ethanol filed for bankruptcy, CHS filed suit contending that South Louisiana Ethanol's option contract with Plaquemines constituted the assignment of a litigious right under Louisiana law, entitling CHS to redeem the litigious right by reimbursing Plaquemines for the cost of the option contract plus interest. The district court granted Plaquemines's motion to dismiss. The court concluded that the sale fit within the statutory judicial-sale exception to redemption, as described by Bluefields S.S. Co. v. Lala Ferreras Cangelosi S.S. Co. and its predecessors. Accordingly, the court affirmed the judgment of the district court, holding that the law at issue did not apply to judicial sales. View "CHS, Inc. v. Plaquemines Holdings, L.L.C." on Justia Law