United States District Judge, Western District of Texas, sitting by designation. *

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Nos. 08-30341 & 

08-30343

In the Matter of:

CANOCO INC; MERFIN INC; MINORA CORPORATION INC

Debtors

AVRAM CIMERRING

Appellant

v.

ORIX CAPITAL MARKETS, LLC, as special servicer for Wells Fargo Bank

NA, Trustee, also known as Wells Fargo Bank NA, as trustee for certificate

holders under that certain pooling service agreement dated and effective

11/1/99, related to the mortgage pass-through certificates series 1999-C1

Appellee

Appeal from the United States District Court 

for the Western District of Louisiana

USDC No. 5:07-CV-670

Before JONES, Chief Judge, JOLLY, Circuit Judge, and MONTALVO, District

Judge.

*

United States Court of Appeals

Fifth Circuit

F I L E D

April 14, 2009

Charles R. Fulbruge III

Clerk
Nos. 08-30341 & 08-30343

 Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not **

be published and is not precedent except under the limited circumstances set forth in 5TH CIR.

R. 47.5.4.

2

EDITH H. JONES, Chief Judge:**

To date Avram Cimerring has not made a payment on the approximately

$6.6 million, plus interest, he owes on a 2003 Virginia deficiency judgment

arising from his guarantee of a defaulted mortgage. The mortgage is held in a

securitized pool of mortgages for which Wells Fargo is the trustee and ORIX is

the special servicer. Part of ORIX’s duties in that role is to collect on defaulted

loans. To this end, ORIX attempted to collect on this judgment by suing

Cimerring, his wife, Cindy, and three entities wholly owned by Cindy Cimerring

in Louisiana court. The three entities, Canoco, Inc., Minora Corporation, Inc.,

and Merfin, Inc. (Debtors), filed Chapter 11 consolidated bankruptcy cases in the

Western District of Louisiana in July 2006, and the state court litigation was

stayed. 

ORIX filed a proof of claim on behalf of the Trust in the bankruptcy

proceedings. Avram Cimerring objected and moved for summary judgment. The

Trust filed a cross motion for summary judgment. Cimerring argued that the

judgment against him is not res judicata and asserted various reasons why the

judgment should be disregarded or reduced. Treating these motions as a

contested matter, the bankruptcy court allowed the Trust’s claim, granted its

motion for summary judgment, and denied Cimerring’s motion for summary

judgment in three identical orders numbered 229, 230, and 231. The court ruled

the judgment against Cimerring is res judicata and, alternatively, that his

arguments regarding why he is not liable on the judgment are wrong on the

merits. Cimerring appeals these three orders in the appeal numbered 08-30341.
Nos. 08-30341 & 08-30343

3

The Debtors and the first mortgagee also filed objections. In an additional

order numbered 226, the bankruptcy court granted in part and denied in part

these objections, subordinating the Trust’s claim to both secured and unsecured

creditors and estimating the claim’s value for voting purposes during plan

confirmation. Cimerring also appeals this order in the appeal numbered 08-

30343.

On appeal, the district court affirmed both of these orders on the grounds

stated orally by the bankruptcy court. In appeal No. 08-30341, Cimerring raises,

in essence, four issues. We need address only two issues, however, because we

do not reach the other two merits-related contentions. First, he argues that the

bankruptcy court did not have the authority to grant summary judgment outside

of an adversary proceeding. We review the bankruptcy court’s application of the

bankruptcy rules for harmless error. In re Tex. Extrusion Corp., 844 F.2d 1142,

1153-54 (5th Cir. 1988). 

The bankruptcy court did not err. Cimerring’s objection to the Trust’s

proof of claim, although it did not initiate an adversary proceeding, created a

contested matter under Bankruptcy Rule 9014. See Notes to Bankr. R. 3007.

Bankruptcy courts can render summary judgment in contested matters. Bankr.

R. 9014(c) (incorporating Bankr. R. 7056). 

Second, Cimerring asserts that the Virginia judgment is not res judicata

against him. If it is not res judicata against him, the judgment would not be

preclusive against the debtors. We apply the same standards of review the

district court applied to the bankruptcy court’s ruling by reviewing factual

findings for clear error and questions of law de novo. In re OCA, Inc., 551 F.3d

359, 366 (5th Cir. 2008). Federal courts apply the preclusion law of the state

that rendered judgment. Marrese v. Am. Acad. of Orthopaedic Surgeons,

470 U.S. 373, 380, 105 S. Ct. 1327, 1332 (1985); Conn. Bank of Commerce v.

Republic of Congo, 309 F.3d 240, 248 (5th Cir. 2002); see 28 U.S.C. § 1738.
Nos. 08-30341 & 08-30343

4

Accordingly, Virginia preclusion law applies to the deficiency judgment against

Cimerring rendered in a Virginia state court. Under Virginia law, a judgment

is res judicata if “the prior adjudication was between the same parties or their

privies and a valid final judgment was entered which resolved the claim on its

merits.” Waterfront Marine Constr., Inc. v. N. End 49ers Sandbridge Bulkhead

Groups A, B, and C, 468 S.E.2d 894, 902 (Va. 1996). 

On June 26, 2002, a Virginia court found Cimerring personally liable on

the defaulted mortgage. On February 18, 2003, the court entered a deficiency

judgment, which Cimerring did not appeal. This was a final judgment on the

merits, and under Virginia law, a judgment, when entered and no appeal is

taken, is conclusive even if erroneous. Patterson v. Saunders, 74 S.E.2d 204, 207

(Va. 1953); Slagle v. Slagle, 398 S.E.2d 346, 349 (Va. Ct. App. 1990).

Under certain circumstances, final judgments may be set aside. See

Charles v. Precision Tune, Inc., 414 S.E.2d 831 (Va. 1992). In September 2005,

Cimerring filed a separate suit in Virginia seeking to set aside the deficiency

judgment, and on May 3, 2006, the trial court denied relief. Cimerring’s appeal

to the Virginia Supreme Court was granted and a decision was still pending

when the bankruptcy court ruled in February 2007. Cimerring claims this

granted appeal renders the original judgment not final. He is wrong, because

a judgment is entitled to preclusive effect until it is set aside. Mayes v. Mann,

180 S.E. 425, 430 (Va. 1935) cited in 8B Michie’s Jurisprudence, Former

Adjudication or Res Judicata § 10, (2007). In any event, on September 14, 2007,

the Virginia Supreme Court denied Cimerring relief in an unpublished order.

The original deficiency judgment is therefore unquestionably res judicata

against Cimerring. Consequently, we affirm the district court’s affirmance of the

bankrupcty court’s orders numbered 229, 230, and 231 appealed in this court’s

No. 08-30341. Because res judicata protects even erroneous judgments, we

decline to address yet another attempt to set aside this deficiency judgment, and
Nos. 08-30341 & 08-30343

5

accordingly, we do not address Cimerring’s substantive arguments regarding the

judgment’s alleged infirmity.

In the appeal numbered 08-30343, Cimerring appeals the order numbered

226, in which the bankruptcy court ruled on objections to claims filed by the

Debtors and the first mortgagee and ORIX’s opposition to those objections.

Cimerring does not have standing to assert the rights of these unrelated parties.

See Bonds v. Tandy, 457 F.3d 409, 416 n.11 (5th Cir. 2006). Consequently, the

appeal numbered 08-30343 is dismissed for lack of jurisdiction.

For the foregoing reasons, the appeal numbered 08-30341 is AFFIRMED

and the appeal numbered 08-30343 is DISMISSED.