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

In a bankruptcy adversary proceeding, Capco brought claims of fraud and various business torts against Ryder, Tana, TRT, and Tristone. The claims arose out of a transaction in which Capco purchased from Tana certain oil and gas reserves located in the Gulf of Mexico (the Properties). The bankruptcy court granted summary judgment in favor of Ryder, Tana, TRT, and Tristone and dismissed the claims. The court held that Capco failed to present evidence to demonstrate a genuine issue of material fact about whether Ryder was contracted to provide an independent reevaluation of the Properties and advice at the meeting regarding Capco's decision to close on the Properties. The court also held that because the purchase and sale agreement contained a clear intent to disclaim reliance, the lower courts correctly held that Capco was unable to claim fraudulent inducement based on the prior representations of Tana, TRT, and Tristone. Accordingly, the judgment was affirmed.

IFS and 17 affiliated organizations (collectively, Interamericas) were debtors in a series of Chapter 7 cases. This appeal arose from eight collective adversary proceedings, which a trustee of IFS brought against appellants for avoidance of fraudulent transfers under Chapter 5 of the Bankruptcy Code and Chapter 24 of the Texas Business and Commerce Code. Appellants appealed the district court's affirmance of the bankruptcy court judgment of over $3 million in favor of the trustee. The court held that control could be sufficient to show ownership of what was ultimately a fact-based inquiry that would vary according to the peculiar circumstances of each case. The court also held that the lower courts' findings of ownership were not clearly erroneous and, moreover, comported with precedent and the court's holding today where IFS exercised control over the accounts at issue such that it had de facto ownership over the accounts, as well as the funds contained. The court further held that the record supported the lower courts' findings of fraudulent transfer. Specifically, IFS faced pending lawsuits and mounting debts just as it liquidated nearly all Interamericas' assets and evidence that IFS operated as a fraudulent enterprise at the time of transfer supported this finding of fraudulent intent. Accordingly, the judgment was affirmed.

Brian and Debra Spurlin were convicted of concealment of bankruptcy estate assets, for knowingly and fraudulently withholding their interests in certain properties from their bankruptcy filings, and false oaths and statements in bankruptcy for a false answer they gave on a bankruptcy questionnaire. Mr. Spurlin was also convicted of bankruptcy fraud for filing bankruptcy to effect and conceal a fraudulent scheme whereby he took money he was supposedly holding in escrow for a company with whom he was doing business. Mr. Spurlin did not appeal his conviction of concealment, but the Spurlins appealed all other convictions. The court affirmed the conviction of Mrs. Spurlin on all counts; affirmed Mr. Spurlin's convictions of concealment of bankruptcy estate assets and of bankruptcy fraud; but reversed Mr. Spurlin's conviction of false oaths and statements in bankruptcy for insufficient evidence. Accordingly, the court vacated Mr. Spurlin's sentence and remanded for resentencing.

Spencer Committee appealed two orders of the district court: (1) the denial of the Spencer Committee's appeal of the bankruptcy court's confirmation order of the reorganization plan (Plan) by debtor on the grounds of equitable mootness and (2) the denial of the Spencer Committee's motion for a new trial de novo of its fraud claims. The court concluded that, (1) the Spencer Committee appeared before the bankruptcy court and did not obtain a stay, (2) the Plan had been substantially consummated, and (3) the Spencer Committee's requested relief would adversely impact the success of the Plan or the rights of third parties not before the court. Accordingly, on the grounds of equitable mootness, the court affirmed the district court's order granting debtor's motion to dismiss.

This case stemmed from SL Management's Chapter 11 bankruptcy petition where Texas Capital appeared as a creditor in SL Management's bankruptcy suit. During the pendency of SL Management's bankruptcy case, Texas Capital filed an action in Texas state court to enforce guarantee agreements between it and plaintiff, a member of SL Management. The Texas state court entered a default judgment against plaintiff and Texas Capital initiated collection proceedings against plaintiff in Louisiana state court and registered the Texas judgment. In response to the collection action, plaintiff filed the instant action seeking a declaration that SL Management's debt to Texas Capital was fully satisfied by the surrender of collateral. The court subsequently held that the Rooker-Feldman doctrine was not implicated and proceeded to consider whether plaintiff's claim for declaratory relief was barred by res judicata. The court held that res judicata barred the assertion of plaintiff's claims for declaratory judgment. Accordingly, the court reversed the judgment of the district court and rendered judgment in favor of Texas Capital.

Spencer Committee appealed two orders of the district court: (1) the denial of the Spencer Committee's appeal of the bankruptcy court's confirmation order of the reorganization plan (Plan) by Idearc on the grounds of equitable mootness and (2) denial of the Spencer Committee's motion for a trial de novo of its fraud claims. The court held that the Spencer Committee appeared before the bankruptcy court and did not obtain a stay; the Plan had been substantially consummated; and the Spencer Committee's requested relief would adversely impact the success of the Plan or the rights of third parties not before the court. Accordingly, on the grounds of equitable mootness, the court affirmed the district court's order granting Idearc's motion to dismiss the Spencer Committee's appeal of the Confirmation Order of the Plan.

In the Chapter 13 case of appellees, Countrywide sought the recovery of attorney's fees incurred in connection with the bankruptcy as well as a determination that compliance with Federal Bankruptcy Procedure 2016 was not necessary for the recovery of such fees. The bankruptcy court held that Countrywide was not entitled to recover its attorney's fees and determined that there was no justiciable issue to resolve regarding the applicability of Bankruptcy Rule 2016 because Countrywide had already complied with the rule. The district court affirmed. The court held that the bankruptcy court and district court misconstrued the provision of the contract governing the availability of attorney's fees and that Countrywide was entitled to recover the fees sought in its Fee Application. Like the bankruptcy and district courts, however, the court declined to address whether Bankruptcy Rule 2016 applied. Accordingly, the court reversed and remanded for further proceedings.

Bankruptcy trustee and nondebtor spouse appealed the bankruptcy court's grant of summary judgment to H.D. Smith. The trustee and spouse argued that the bankruptcy court erred in holding that H.D. Smith had an enforceable lien against the proceeds of the sale of the debtor's homestead property in excess of the homestead exemption. The court held that, regardless of whether the lien attached prior to the bankruptcy proceedings, the trustee took the property with the state-law character it had in the debtor's hands: a property with an unenforceable lien. Therefore, the court reversed the district court's grant of summary judgment. The court also held that because it concluded that H.D. Smith's lien was unenforceable, it need not consider whether enforcing the lien would violate 11 U.S.C. 362 or 11 U.S.C. 549. The court also did not consider the issues that the spouse argued in her briefing regarding homestead rights.

The bankruptcy court issued an order that authorized the debtor to reimburse qualified bidders for expenses incurred in connection with the sale of a substantial asset of the debtor's estate. Debtor and debtor's parent companies subsequently appealed the bankruptcy court's reimbursement order. As a preliminary matter, the court held that it had jurisdiction over the appeal where, in settling this "discrete dispute," the reimbursement order was sufficiently separable from the rest of the bankruptcy proceeding to be appealable as a "final" order under 28 U.S.C. 158(a) and (d). The court also held that, based on the record, the bankruptcy court did not err in issuing the reimbursement order under the business judgment standard in section 363(b) of the Bankruptcy Code. Accordingly, the judgment of the district court was affirmed.

This case arose when debtor, a former firefighter, and his wife, filed a Chapter 7 bankruptcy petition, but failed to disclose on their bankruptcy schedules either his judgment against the City of Arlington (an asset of the estate) or his associated legal fees (a liability of the estate). At issue was whether judicial estoppel barred a blameless bankruptcy trustee from pursuing a judgment that the debtor, having concealed the judgment during bankruptcy, was himself estopped from pursuing. The court held that it did not. The court concluded that this result upheld the purpose of judicial estoppel, which in this context was to protect the integrity of the bankruptcy process, by adhering to basic tenets of bankruptcy law and by preserving the assets of the bankruptcy estate for equitable distribution to the estate's innocent creditors.