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

Articles Posted in Trusts & Estates
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Michael Daniel drove a truck for Cryogenic Transportation to a plant owned by Airgas Carbonics. Upon exiting the Airgas plant, Daniel fatally collided with a passing train operated by Illinois Central Railroad Company. Illinois Central filed suit against Cryogenic Transportation and Michael Daniel's widow, Clydine Daniel, as representative of Michael's estate, seeking recovery for damage to its property resulting from the collision. Clydine filed a counterclaim sounding in negligence and added Airgas as a counterclaim defendant, seeking recovery for damages resulting from Michael's death. The district court dismissed the counterclaim against Airgas for failure to state a claim, concluding that Airgas owed no duty to Michael at the time of the collision. The Fifth Circuit Court of Appeals affirmed, holding that after Michael exited Airgas's plant, Airgas did not owe him a duty under Mississippi tort law. View "Ill. Cent. R.R. Co. v. Cryogenic Transp., Inc." on Justia Law

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ACS and FKI appealed the district court's decision to dismiss their suit for equitable relief under section 502(a)(3) of the Employee Retirement Income and Security Act of 1974 (ERISA), 29 U.S.C. 1132(a)(3)(B), for lack of jurisdiction. ACS and FKI argued that the district court: (1) erroneously interpreted two Supreme Court cases as requiring dismissal of their claims; (2) abused its discretion in denying their motion for a default judgment against one of the defendants; (3) should have concluded that Chapter 142 of the Texas Property Code was preempted by ERISA; and (4) should have deferred to the FKI Plan administrator's determination of liability. Pursuant to the three-part test in Bombardier Aerospace Emp. Welfare Benefit Plan v. Ferrer, Poirot, & Wansbrough, the court affirmed the district court's decision to dismiss the ERISA claims against Larry Griffin, Judith Griffith, Willie Earl Griffin (the Trustee), and the Larry Griffin Special Needs Trust for lack of jurisdiction. Accordingly, the court found it unnecessary to address the remaining arguments. View "ACS Recovery Services, Inc., et al. v. Griffin, et al." on Justia Law

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This case arose when debtors inherited an IRA worth $170,000. When debtors filed for bankruptcy, they sought to exempt the inherited IRA from the bankruptcy estate pursuant to 11 U.S.C. 522(d)(12). The Chapter 7 trustee objected to the exemption, arguing that inherited IRAs did not qualify for exemption under section 522(d)(12). After the bankruptcy court ruled for the trustee, the district court reversed the bankruptcy court. Because the court held that inherited IRAs were exempt from the bankruptcy estate, upon de novo review, pursuant to section 522(d)(12), the court affirmed the district court's judgment.

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This appeal arose from the settlement of a class action where defendant paid substantial sums for res judicata protection from the claims of persons assertedly injured by the toxic emissions of an industrial plant. The monies were allocated among three subclasses, one of which was to receive medical monitoring. Upon the monitoring program's completion, substantial sums remained unused. The district court denied the settlement administrator's request to distribute the unused medical-monitoring funds to another subclass of persons suffering serious injuries. Instead, the district court repaired to the doctrine of cy pres and ordered that the money be given to three charities suggested by defendant and one selected by the district court. The court held that the district court abused its discretion by ordering a cy pres distribution in the teeth of the bargained-for-terms of the settlement agreement, which required residual funds to be distributed within the class. The court reversed the district court's order distributing the unused medical-monitoring funds to third-party charities and remanded with instructions that the district court order that the funds be distributed to the subclass comprising the most seriously injured class members.

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The Estate of Mable Dean Bradley (Estate) filed suit against defendants, excess insurers, in federal district court seeking recovery for defendants' alleged bad faith failure to indemnify the Mariner defendants in an underlying state lawsuit and settlement. At issue was whether the district court properly denied the Estate's motion for summary judgment against both insurers, finding as a matter of law that defendants' respective policies did not require them to defend or indemnify Mariner in the lawsuit. The court held that because the actual facts giving rise to liability in the underlying suit occurred outside of defendants' policies, neither excess insurer had a duty to indemnify Mariner for the judgment or settlement in the underlying state suit. Therefore, there could be no breach of denying coverage. The Estate's bad faith action failed as a matter of law. Accordingly, summary judgment was affirmed.

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This case stemmed from the Chapter 11 bankruptcy filing of a family-owned oil and gas drilling business. The Nancy Sue Davis Trust ("Trust") filed a motion to revoke a confirmation order from the Chapter 11 bankruptcy filing for fraud and alleged that it had recently become aware that former advisers of the family and various representatives of the purchasing entities had engaged in fraud that enabled them to buy out the family's interests far below market value. At issue was whether the plan of reorganization and confirmation order barred the assertion of fraud claims against defendants. The court held that all family members, including the Trust, were continuously represented by sophisticated counsel and could have elected zealously to pursue their remedies under Chapter 11 rather than succumb to the hasty process that occurred. Accordingly, the judgment of the bankruptcy court denying the Trust's motion to pursue its claims against appellees was affirmed.

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Debtor filed for Chapter 7 bankruptcy protection, having never made any withdrawals from a trust with a spendthrift provision that was created by his grandmother. Appellee, debtor's bankruptcy trustee, sought to bring funds of the trust into the bankruptcy estate, free of trust. At issue was whether debtor was entitled to acquire any of the trust's assets by virtue of its withdrawal provision. The court held that debtor's grandmother was the sole settlor of the trust; that the grandmother was living on debtor's 30th birthday, so his withdrawal right "at age 30" never accrued; that the grandmother's death after debtor's 30 birthday, but before his 35th birthday, satisfied the condition precedent to the accrual of debtor's withdrawal right "at age 35"; even though debtor never exercised his age-35 withdrawal right before he filed for bankruptcy protection at age 37, he remained entitled to withdraw assets worth one-half of the value of all trust principal on hand, calculated as of his 35th birthday; and debtor's bankruptcy trustee was therefore entitled to withdraw the trust principal that remained in trust on trustor's 35th birthday. Therefore, the court affirmed the judgment of the district court to the extent it reversed the bankruptcy court and authorized appellee to exercise debtor's right to withdraw a portion of the trust's principal and remanded for further proceedings.