REVISED September 2, 2014

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 13-10752

U.S. BANK NATIONAL ASSOCIATION, Litigation Trustee of the Idearc, 

Inc., et al, Litigation Trust,

Plaintiff – Appellant

v.

VERIZON COMMUNICATIONS, INCORPORATED; GTE CORPORATION; 

JOHN W. DIERCKSEN; VERIZON FINANCIAL SERVICES, L.L.C.,

Defendants – Appellees

Appeal from the United States District Court

for the Northern District of Texas

Before KING, HAYNES, and GRAVES, Circuit Judges.

KING and HAYNES, Circuit Judges:

Idearc, Inc. is a Delaware corporation that was spun-off from its parent 

corporation, Verizon Communications, Inc., in 2006. In March 2009, in the 

throes of the recession that began in 2008, Idearc filed for bankruptcy

protection pursuant to Chapter 11. The confirmed plan of reorganization 

created a litigation trust to pursue, inter alia, Idearc’s fraudulent transfer 

claims against Verizon and related parties. The Trustee, U.S. Bank National 

Association, filed this lawsuit against Verizon and two of its subsidiaries, GTE 

Corporation and Verizon Financial Services, L.L.C., and against former Idearc 

United States Court of Appeals

Fifth Circuit

FILED

July 30, 2014

Lyle W. Cayce

Clerk

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director John W. Diercksen, alleging various federal and state law claims in 

connection with the spin-off. 

The Trustee requested a jury trial, but the district court struck the jury 

demand and bifurcated the trial into two phases. For the first phase, the 

district court held a ten-day bench trial on a single fact issue: the value of 

Idearc following the spin-off transaction. The district court found that Idearc 

was solvent on the date of the spin-off, and it ordered the Trustee to show cause 

as to why the district court should not enter judgment against the Trustee on 

all of its remaining claims. After the parties submitted briefing, the district 

court issued its conclusions of law and entered judgment against the Trustee. 

The Trustee now appeals: the order striking the jury demand; evidentiary 

rulings before and during the trial; the findings of fact; the conclusions of law;

and several pre-trial rulings on dispositive motions. For the following reasons, 

we AFFIRM the judgment of the district court.

I. Factual and Procedural Background

In 2005, the board of directors of Verizon Communications, Inc. 

(“Verizon”) decided to spin-off Verizon’s domestic print and electronic 

directories business into an independent company pursuant to 26 U.S.C. § 355. 

As a spin-off under § 355, the formation of the business would be tax-free to 

Verizon and its shareholders. To effectuate the spin-off, Verizon created 

Idearc, Inc. (“Idearc”), a Delaware corporation. Verizon chose John W.

Diercksen, head of Verizon’s strategic planning and former head of Bell 

Atlantic’s yellow pages business, to lead the spin-off for Verizon and serve as 

the “pre-spin” director of Idearc. 

On June 20, 2006, the certificate of incorporation for Idearc was filed, 

authorizing one hundred shares of common stock. The bylaws initially

required that the corporation have a two-member board of directors and 

provided that those two members would constitute a quorum. Only Diercksen 

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was originally appointed to the board of directors. Diercksen appointed Kathy 

Harless, who had previously run Verizon’s directory business, as President of 

Idearc. Diercksen then authorized Harless to issue one share of common stock 

and to sell that share to Verizon. Idearc continued basically as a shell 

corporation until the consummation of the spin-off. 

Verizon hired JP Morgan and Bear Sterns to conduct due diligence on 

the directories business and develop the proposed capital structure. JP 

Morgan and Bear Sterns estimated that Idearc’s initial value would be 

between $11.7 and $12.5 billion, and they recommended that the capital 

structure include $9.1 billion in debt, some of which was to be held by Verizon 

and some of which was to be publicly held. Comprehensive disclosures of the 

risks associated with Idearc post-spin-off were made in documents filed with 

the Securities and Exchange Commission and in the offering documents for the 

publicly-held debt. Those disclosures included risks associated with the tax 

sharing agreement with Verizon, which was imposed to protect the tax-free 

status of the spin-off. 

The spin-off occurred on November 17, 2006. Under the terms of the 

spin-off, Idearc received Verizon’s print and online domestic directory 

business. In exchange, Verizon received 145,851,861 shares of common stock 

to be distributed to Verizon stockholders, $7.115 billion in Idearc debt, and $2.5 

billion in cash. Idearc incurred a total of $9.1 billion in debt, which included 

the debt issued to Verizon. This debt comprised: (1) a $1.515 billion secured 

Term Loan A; (2) a $4.75 billion secured loan (“Tranche B debt”); and (3) $2.85 

billion in 8% Senior Notes due in 2016 (“Unsecured Notes”). Idearc also 

received commitments from financial institutions to lend it up to $250 million 

through a revolving credit facility. On the day of the spin-off, Idearc’s stock, 

which was trading on the New York Stock Exchange (“NYSE”), closed at $26.25 

per share. 

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Following the spin-off, Idearc was an independent, publicly traded 

company. It paid quarterly dividends of approximately $50 million in 2007 and 

the first quarter of 2008. Six months after the spin-off, Idearc’s shares traded 

at a high of $37.66 per share. In October 2008, Idearc acquired another 

company by using cash from its ongoing operations. The corporation also made 

every interest payment on its debt through March 2009.

Idearc’s business, heavily dependent on revenues from the sale of 

advertising, was adversely affected during the recession that began in 2008. 

In March 2009, Idearc filed for Chapter 11 bankruptcy. The Bankruptcy Code 

authorizes a plan of reorganization to “provide for . . . the retention and 

enforcement by the debtor, by the trustee, or by a representative of the estate 

appointed for such purpose, of any . . . claim or interest.”1 Pursuant to that 

authorization, Idearc’s Plan of Reorganization (the “Plan”), confirmed in late 

December 2009, created a litigation trust (the “Litigation Trust”) as the

representative of Idearc to evaluate independently a variety of claims owned 

by Idearc, including claims against its officers and directors and fraudulent 

transfer claims against Verizon and its affiliates, and to pursue those claims 

thought promising for the benefit of holders of Idearc’s unsecured claims. U.S. 

Bank National Association was appointed the trustee (the “Trustee”) of the 

Litigation Trust.

On September 15, 2010, the Trustee filed this action in federal district 

court against Verizon; two of its subsidiaries, GTE Corporation (“GTE”) and 

Verizon Financial Services, L.L.C. (“VFS”); and Idearc director John W. 

1 11 U.S.C. § 1123(b)(3)(B) (emphasis added). Under § 1123, a plan may transfer legal 

claims to a litigation trust, even when the debtor remains in possession of all of its other 

assets. Compton v. Anderson (In re MPF Holdings US LLC), 701 F.3d 449, 453 (5th Cir. 

2012); McFarland v. Leyh (In re Tex. Gen. Petroleum Corp.), 52 F.3d 1330, 1335 (5th Cir. 

1995). After a plan is confirmed by the bankruptcy court, a debtor will not have standing to 

bring claims that were transferred to a litigation trust. In re MPF Holdings, 701 F.3d at 454.

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Diercksen (collectively, “Appellees”). According to the Trustee, Verizon created 

Idearc as a receptacle to place its “obsolete” directory, or “yellow pages,” 

business and “load it up” with over $9 billion of Verizon’s debt. According to 

Appellees, Idearc was a successful business that became insolvent during the 

2008 financial crisis. The Trustee’s second amended complaint contained a 

jury demand and eleven counts, summarized ever so briefly as follows: (1) &

(2) fraudulent transfer against Verizon and VFS in connection with the spinoff; (3) breach of fiduciary duty against Diercksen; (4) aiding and abetting a 

breach of fiduciary duty against Verizon and VFS; (5) fraudulent transfer 

against Verizon and VFS in connection with a loan made by Idearc’s subsidiary 

to Idearc; (6) fraudulent transfer against GTE and Verizon in connection with 

the “GTW distribution”; (7) fraudulent transfer against Verizon in connection 

with the interest payments subsequent to March 31, 2007; (8) unlawful 

dividend against Diercksen and Verizon; (9) promoter liability and breach of 

fiduciary duty; (10) unjust enrichment; and (11) alter ego. 

On March 21, 2012, upon a motion by Appellees, for the reasons more 

fully discussed below, the district court struck the Trustee’s jury demand. The 

Trustee moved to reconsider the order striking the jury demand, which the 

court denied. On September 17, 2012, the Trustee petitioned this court for a 

writ of mandamus, seeking review of the district court’s orders striking the 

jury demand and denying the motion to reconsider. The motions panel denied 

the petition on September 27, 2012. 

On July 31, 2012, the district court granted in part and denied in part 

Appellees’ motion to dismiss the amended complaint. It dismissed in part 

Counts One and Two for fraudulent transfer with respect to the Unsecured 

Notes and Tranche B debt. The district court also dismissed Count Ten for 

unjust enrichment and Count Eleven for alter ego insofar as it alleged a standalone claim.

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Less than a month later, the district court issued a trial management 

order that bifurcated the four-week trial into two phases. The order stated 

that following the first phase, the court would decide Idearc’s value at the time 

it was spun-off from Verizon in November 2006. The district court planned to 

make any other necessary factual determinations during the second phase of 

the trial, which was left unscheduled at the time of the order. 

On September 14, 2012, the district court ruled on three pending motions 

for summary judgment. Among other things, the court’s order limited the 

Trustee’s recovery on its breach of fiduciary duty claim against Diercksen 

(Count Three) to the available insurance unless the Trustee could show that 

Diercksen engaged in willful misconduct or gross neglect, and it entered partial 

summary judgment in Appellees’ favor as to Counts One and Two for 

fraudulent transfer with respect to the $2.5 billion in cash paid to Verizon and 

Count Eight for unlawful dividend with respect to the cash.

From October 15 to 26, 2012, the district court conducted Phase I of the 

bench trial in order to resolve a single factual issue: the value of Idearc as of 

the date of the spin-off. On January 22, 2013, the district court issued a 

Memorandum of Decision containing its factual findings. After reviewing the 

testimony and exhibits, the district court found that the value of Idearc as of 

the spin-off date, November 17, 2006, was at least $12 billion. The same day 

that it issued its factual findings, the district court ordered the Trustee to file 

a brief explaining whether its remaining legal claims were viable in light of the 

valuation finding. The Trustee complied and submitted a brief arguing that 

almost all of its remaining claims were still viable. 

On June 18, 2013, the district court issued its conclusions of law, holding 

that, based on its factfinding on Idearc’s value as of November 2006, none of 

the Trustee’s remaining claims could be maintained. The district court held 

that Phase II of the trial was no longer necessary, and it entered judgment in 

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Appellees’ favor. The Trustee timely appealed the following: the order granting 

the motion to strike the jury; the evidentiary rulings before and during the 

bench trial; the factual findings following the bench trial; almost all of the 

district court’s conclusions of law following the bench trial; aspects of the

district court’s order dismissing some of the Trustee’s claims; and aspects of its 

order granting partial summary judgment for Appellees. 

II. Right to a Jury Trial

The Trustee appeals the district court’s order striking the jury demand, 

claiming that it was entitled to a jury trial under the Seventh Amendment. 

The district court held that the Trustee’s constitutional right to a jury trial was

extinguished because the resolution of its fraudulent transfer claims was part 

of the equitable claims-allowance process. We agree with the district court.

A. Applicable Law

Whether a party is entitled to a jury trial is a legal question that is 

reviewed de novo. Provident Life & Accident Ins. Co. v. Sharpless, 364 F.3d 

634, 639 (5th Cir. 2004).

The Seventh Amendment provides that “[i]n Suits at common law, where 

the value in controversy shall exceed twenty dollars, the right of trial by jury 

shall be preserved.” U.S. Const. amend. VII. The Amendment’s reference to 

“Suits at common law” denotes suits brought to determine legal rights, as 

opposed to equitable rights. See Granfinanciera, S.A. v. Nordberg, 492 U.S. 

33, 41 (1989). To determine whether a claim is legal or equitable, courts first 

compare the action in question to those actions of the Eighteenth Century that 

were brought in the courts of law and equity, and, second, consider whether 

the remedy sought is legal or equitable in nature. Id. at 42. The second prong 

is generally considered the more significant of the two. Id. Typically, actions 

to recover preferential or fraudulent transfers are considered suits at common 

law and are eligible for a jury trial under the Seventh Amendment. Id. at 48.

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However, the right to a jury trial on a fraudulent transfer claim may be 

extinguished in certain circumstances in the bankruptcy context. It is wellsettled that “when Congress creates new statutory ‘public rights,’ it may assign 

their adjudication to an administrative agency with which a jury trial would 

be incompatible, without violating the Seventh Amendment’s injunction that 

jury trial is to be ‘preserved’ in ‘suits at common law.’” Id. at 51 (quoting Atlas 

Roofing Co., Inc. v. Occupational Safety & Health Review Comm’n, 430 U.S. 

442, 455 (1977)). Public rights include “seemingly ‘private’ right[s]” that are 

created by Congress, “acting for a valid legislative purpose pursuant to its 

constitutional powers under Article I, . . . that [are] so closely integrated into 

a public regulatory scheme as to be a matter appropriate for agency resolution 

with limited involvement by the Article III judiciary.” Id. at 54 (quotation 

marks and citation omitted). Bankruptcy is an example of an area involving 

“public rights,” since Congress has

[E]stablish[ed] uniform laws on the subject of bankruptcy, [which]

convert[] the creditor’s legal claim into an equitable claim to a pro 

rata share of the res. . . . As bankruptcy courts have summary 

jurisdiction to adjudicate controversies relating to property over 

which they have actual or constructive possession, and as the 

proceedings of bankruptcy courts are inherently proceedings in 

equity, there is no Seventh Amendment right to a jury trial for 

determination of objections to claims[.]

Katchen v. Landy, 382 U.S. 323, 336–37 (1966) (internal citations omitted); see 

also N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 71 (1982).

In Granfinanciera, the Supreme Court considered whether the publicrights doctrine transformed a fraudulent conveyance claim into an equitable 

claim when the claim had been brought by a debtor against a creditor. See 492 

U.S. at 36–37, 51–55. The creditor-defendant requested a jury trial, but the 

bankruptcy court denied the motion and held a bench trial. Id. at 37. The 

Court held that a creditor triggers the process of “allowance and disallowance 

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of claims” when it files a claim against the bankruptcy estate, which in turn 

subjects the creditor to the equitable power of the bankruptcy court. Id. at 58–

59 & 59 n.14 (citing Katchen, 382 U.S. at 336). Because the creditor-defendant 

in Granfinanciera had not submitted proofs of claim against the bankruptcy 

estate, the creditor had not subjected itself to the equitable power of the 

bankruptcy court and triggered the public-rights exception. Id. at 58. 

Therefore, the creditor-defendant was entitled to a jury trial. Id. at 58–59. 

One year after Granfinanciera, the Supreme Court decided Langenkamp 

v. Culp, 498 U.S. 42 (1990) (per curiam). In Langenkamp, creditors submitted 

a claim against a bankruptcy estate, and the bankruptcy trustee later sued the 

creditors to recover preferential transfers. See id. at 42–43. The Court held 

that unlike Granfinanciera, the creditor-defendants were not entitled to a jury 

trial because the proof of claim and trustee’s action became “integral to the 

restructuring of the debtor-creditor relationship through the bankruptcy 

court’s equity jurisdiction.” Id. at 44 (citing Granfinanciera, 492 U.S. at 57–

58).

More recently, Stern v. Marshall, --- U.S. ---, 131 S. Ct. 2594, 2617 (2011)

reaffirmed Langenkamp. Stern clarified that “Langenkamp . . . explained . . . 

that a preferential transfer claim can be heard in bankruptcy when the 

allegedly favored creditor has filed a claim, because then the ensuing 

preference action by the trustee become[s] integral to the restructuring of the 

debtor-creditor relationship.” Id. But, in Stern, “there was never any reason 

to believe that the process of adjudicating [the creditor’s] proof of claim would 

necessarily resolve [the debtor’s] counterclaim.” Id. Additionally, the debtor’s 

counterclaim was “in no way derived from or dependent upon bankruptcy law; 

it is a state tort action that exists without regard to any bankruptcy 

proceeding.” Id. at 2618. Thus, the Court held that Article III precluded the 

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bankruptcy court from finally resolving the state law counterclaim. Id. at 

2618. 

B. Analysis

At issue before us is whether a litigation trust for a bankruptcy estate 

has a right to a jury trial on a fraudulent transfer claim against a creditor when 

the creditor has filed a proof of claim in the bankruptcy proceedings and the

bankruptcy court is required, before disposing of that claim, to determine 

whether, under 11 U.S.C. § 502(d), property of the creditor is recoverable as a 

fraudulent transfer. The district court held that the Trustee was not entitled 

to a jury trial under Langenkamp because the resolution of the debtor’s 

fraudulent transfer claims against Verizon was integral to the resolution of 

Verizon’s claims against the debtor and therefore integral to the restructuring 

of the debtor-creditor relationship. In order to determine whether 

Langenkamp applies to the present matter and extinguishes the Trustee’s 

right to a jury, we must consider: (1) whether the creditor (here Verizon) has 

filed proofs of claim in the bankruptcy proceeding; (2) whether the proofs of 

claim have been resolved, and, if not, whether their resolution will necessarily 

require the resolution of the debtor’s fraudulent transfer claims (asserted by 

the Trustee) against Verizon; (3) whether a debtor, as opposed to a creditor, is 

bound by Langenkamp; (4) whether a litigation trust, succeeding to the rights 

of the debtor, has a right to a jury trial when the debtor itself would have no

such right; and (5) whether Stern requires a jury trial in this case. We address 

each issue in turn.

1. Proofs of Claim

Verizon filed four proofs of claim in the Idearc bankruptcy litigation: one 

on August 10, 2009 (No. 1779) (pre-petition breaches of contract), and three on 

December 31, 2009 (Nos. 2448, 2450, 2451) (contracts rejected under the Plan). 

ROA 21344, 21357. While the avoidance and recovery claims for fraudulent 

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transfers under §§ 544 and 550 of the Bankruptcy Code were transferred to the 

Litigation Trust simultaneously with the confirmation of the Plan, the claimsallowance process continued in the bankruptcy court as contemplated by the 

Plan. On June 17, 2011, Idearc objected to all four proofs of claim under 11 

U.S.C. §§ 105 and 502, and asserted that the claims should be disallowed until 

Verizon “has paid the amount, or turned over the property, for which it is 

liable, if any, under [§§] 544 and 550.”2 ROA 21342, 21348, 21349, 21350.3 

The Trustee argues that Idearc did not have the authority to object to 

the proofs of claim because Idearc filed its objection after the Plan had been 

confirmed, creating the Litigation Trust and transferring the right to pursue 

Idearc’s §§ 544 and 550 claims against Verizon. Even assuming that the 

Trustee is correct, and that Idearc lacked such authority, this is irrelevant in 

light of the way that § 502(d) is worded:

[T]he [bankruptcy] court shall disallow any claim of any entity 

from which property is recoverable under section . . . 550 . . . of this 

title or that is a transferee of a transfer avoidable under section . . 

. 544 [or] . . . 548 of this title, unless such entity or transferee has 

paid the amount, or turned over any such property, for which such 

entity or transferee is liable under section . . . 550 . . . of this title.

11 U.S.C. § 502(d) (emphasis added). Verizon filed proofs of claim, and under 

the mandatory language of § 502(d), the bankruptcy court could not resolve

those claims in favor of Verizon if Verizon had been the transferee of a 

fraudulent transfer. At the time Idearc objected, the Trustee had already filed 

2 Sections 544 and 550 are the Bankruptcy Code’s avoidance and recovery statutes, 

and the Trustee brought four claims under these sections in its amended complaint. ROA 

6093, 6094, 6096, 6098.

3 Idearc had initially objected to all four of Verizon’s claims on June 29, 2010, but on 

different grounds. See In re Idearc Inc., No. 09-31828 (BJH) (Bankr. N.D. Tex. June 29, 2010) 

(Doc. 2173) (arguing the claims had been fully satisfied). On June 17, 2011, Idearc amended 

its objections to include its argument that the claims should be disallowed because Verizon 

had been the recipient of a fraudulent transfer. ROA 21342, 21348, 21349, 21350.

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this case in district court and was vigorously pursuing its fraudulent transfer

claims. The validity of Idearc’s objections does not alter the fact that the 

bankruptcy court was required to consider the fraudulent transfer issue as a 

component of the claims-allowance process. Thus, we reject the Trustee’s 

argument. 

2. Resolution of the Proofs of Claim

Claim No. 2450 appears to be provisionally resolved, and Idearc is 

specifically authorized to reopen the claim following the outcome of this 

litigation.4 On December 29, 2011, the bankruptcy court entered a stipulated 

order on Idearc’s objections to all four of Verizon’s claims. See In re Idearc Inc., 

No. 09-31828 (Bankr. N.D. Tex. Dec. 29, 2011) (Doc. 3019). The order 

acknowledged that this lawsuit was pending in the district court. Id. at 3. The 

bankruptcy court provisionally disposed of Claim No. 2450, which it called the

“Distribution Agreement Claim,” as follows:

Determination of Distribution Agreement Claims. With the 

exception of the . . . § 502(d) Objections, the allowance and amount 

of Verizon’s Distribution Agreement Claims may be determined in 

the Litigation Trust/Verizon Lawsuit. To the extent those claims

are so determined and allowed, such determination and allowance 

shall be binding on the Reorganized Debtors, except that the . . . 

§ 502(d) Objections shall be preserved. In such event, if (i) a 

judgment is entered in the Litigation Trust/Verizon Lawsuit 

against Verizon for actual or constructive fraudulent transfer, or 

for any cause of action brought by the Litigation Trust premised 

on fraud, including but not limited to promoter fraud or alter ego, 

and (ii) the Reorganized Debtors’ Bankruptcy Cases have been 

closed pursuant to section 350 of the Bankruptcy Code, within 60 

days following the completion, including all appeals, of the 

Litigation Trust/Verizon Lawsuit, the Reorganized Debtors, at 

4 Additionally, Claim No. 1779 was “withdrawn with prejudice except to the extent of 

Verizon’s claims under the Distribution Agreement [Claim No. 2450].” In re Idearc Inc., No. 

09-31828 (Bankr. N.D. Tex. Dec. 29, 2011) (Doc. 3019 at 4). Since Claim No. 2450 may be reopened should the Trustee prevail in this litigation, it is possible that Claim No. 1779 could 

be impacted by this litigation as well. 

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Verizon’s request, shall file an agreed motion to re-open the 

Bankruptcy Cases for the sole purpose of determining the . . . 

§ 502(d) Objections to the Verizon Proofs of Claim. If the allowance 

and amount of Verizon’s Distribution Agreement Claims are not 

determined in the Litigation Trust/Verizon Lawsuit, then the 

agreed motion to re-open the Bankruptcy Cases shall be for the 

purpose of determining the allowance and amount of Verizon’s 

Distribution Agreement Claims and resolving . . . § 502(d) 

Objections to the Verizon Proofs of Claim.

Id. at 5 (emphasis added). 

The resolution of the fraudulent transfer claims in this lawsuit and 

Claim No. 2450 in the bankruptcy proceeding are interconnected. The 

bankruptcy court has expressly permitted Verizon to re-open Claim No. 2450

depending on the outcome of this litigation. Thus, the resolution of the 

fraudulent transfer claims before us will directly impact the claims-allowance 

process.5 

The Trustee asserts that Verizon’s proofs of claim are “irrelevant” to the 

Trustee’s jury rights. It argues that the fraudulent transfer claims would not 

“necessarily have been resolved in the course of allowing or disallowing the 

claims against” Idearc, since Claim No. 2450 relates to a limited 

indemnification in a distribution agreement for misrepresentations in 

financing and registration documents. However, the Trustee’s argument 

misconstrues what it means for a claim to have necessarily been resolved in 

the course of the claims-allowance process. This inquiry does not consider the 

basis for the underlying claim against the bankruptcy estate; it turns on the 

merits of the § 502(d) objection.

5 As discussed above, even absent the bankruptcy court’s express order, it is clear that 

the resolution of Claim No. 2450 in the bankruptcy court would have required the resolution 

of the Trustee’s fraudulent transfer claim.

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3. Langenkamp Applies to Debtors

Next, we consider whether the rule in Granfinanciera and Langenkamp

applies to a debtor, even though Langenkamp considered the jury rights of a 

creditor. This court considered a similar question in In re Jensen, 946 F.2d 369

(5th Cir. 1991), abrogated on other grounds, In re El Paso Elec. Co., 77 F.3d 

793, 794 (5th Cir. 1996). There, a debtor sought a jury trial on its pre-petition 

state law claims. Id. at 370. The court held that the debtor was entitled to a 

jury trial because “the debtors’ claims do not here ‘arise as part of the process 

of allowance and disallowance of claims.’ Nor are they ‘integral to the 

restructuring of debtor-creditor relations.’” Id. at 374 (quoting Granfinanciera, 

492 U.S. at 58) (internal citation omitted). Relevant to our inquiry is that In 

re Jensen framed the right to a jury trial in terms of the nature of the claims, 

placing no importance on the fact that the debtor, as opposed to the creditor, 

sought a jury trial. In fact, in resolving this issue, In re Jensen agreed with 

the Seventh Circuit’s decision in In re Hallahan, which “reasoned that if 

creditors lose their jury trial rights by presenting claims against the estate, 

‘debtors who initially choose to invoke the bankruptcy court’s jurisdiction to 

seek protection from their creditors cannot be endowed with any stronger 

right.’” Id. (quoting In re Hallahan, 936 F.2d 1496, 1505 (7th Cir. 1991)). Thus, 

under In re Jensen, a creditor and a debtor alike are bound by the rule in 

Langenkamp. 

4. Langenkamp Applies to Litigation Trusts

Since a debtor would be bound by Langenkamp, Idearc would not have a 

right to a jury trial on its fraudulent transfer claims against Verizon. Yet, the 

Trustee claims that, as a representative of the Litigation Trust, it has a right 

to a jury trial where the debtor would have none. 

To evaluate this claim, we consider the precise rights transferred to the 

Litigation Trust under the Plan. See, e.g., Torch Liquidating Trust ex rel. 

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Bridge Assocs. L.L.C. v. Stockstill, 561 F.3d 377, 387 (5th Cir. 2009) (“To show 

standing based on the plan’s effectuation of such a transfer, the trustee must 

show: ‘(1) that it has been appointed, and (2) that it is a representative of the 

estate.’” (quoting In re Tex. Gen. Petroleum Corp., 52 F.3d at 1335)). The Plan 

transferred “to the Litigation Trust the Litigation Trust Rights, with good, 

clean title to such property, free and clear of all liens, charges, Claims, 

encumbrances and interests, to be pursued by the Litigation Trustee for the 

benefit of [unsecured creditors].”6 ROA 7406. The purpose of the Litigation 

Trust, as defined by the Plan, was to “prosecut[e] the Litigation Trust Rights 

and distribut[e] the proceeds thereof in accordance with the Plan and the 

Litigation Trust Agreement, with no objective to continue or engage in the 

conduct of a trade or business.” ROA 7406. The Plan defines “Litigation Trust 

Rights” as the 

Litigation Rights of the Debtors and the Debtors’ Estates 

consisting of claims or causes of action, including applicable 

privileges, (i) arising under or pursuant to Chapter 5 of the 

Bankruptcy Code, which include, but are not limited to, actions 

involving . . . preferences and fraudulent transfers . . . , and (ii) 

belonging to the Debtors and the Debtors’ Estates against the 

Debtors’ officers or directors . . . . Unless otherwise released or 

enjoined by the Plan, compromise approved by the Bankruptcy 

Court, or other order of the Bankruptcy Court, Litigation Trust 

Rights shall also include all claims and causes of action of the 

Debtors and the Estates, including applicable privileges, against 

Verizon . . . and other Persons relating to the spinoff of the Debtors 

from Verizon, including, without limitation, avoidance causes of 

action under Bankruptcy Code sections 544, 547, 548, 550 and 551

and claims and causes of action for (a) breach of fiduciary duty, (b) 

fraud, (c) fraud in the inducement, (d) aiding and abetting a breach 

6 The “unsecured creditors” mentioned in the Plan are the: “Allowed Unsecured Note 

Claims, Allowed Unsecured Credit Facility Claims[,] and Allowed General Unsecured Claims 

(to the extent the holders of such Allowed General Unsecured Claims have elected treatment 

under Sub-Class 1 of Class 4 of the Plan) as provided in the Plan and Litigation Trust 

Agreement.” ROA 7406.

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of fiduciary duty, (e) illegal dividends, (f) unjust enrichment, and 

(g) violations of state and federal securities laws or other 

applicable state or federal law. 

ROA 7389 (emphasis added). 

The confirmed plan clearly transferred Idearc’s §§ 544 and 550 claims to 

the Litigation Trust, without modification. In so doing, Idearc lost standing to 

pursue these claims on behalf of the estate. In re MPF Holdings, 701 F.3d at 

454. As contemplated by § 1123(b)(3)(B) of the Bankruptcy Code, the 

Litigation Trust is the representative of Idearc in pursuing these claims. Thus, 

the district court correctly observed that the Trustee stands in the shoes of 

Idearc. Since the Trustee is effectively Idearc for the purposes of this litigation, 

and since Idearc would have no Seventh Amendment right to a jury trial, the 

Trustee also lacks such a right.

The Trustee, ignoring the text of the Plan and § 1123(b)(3)(B) of the 

Bankruptcy Code, challenges the conclusion that a litigation trustee will 

generally stand in the shoes of the debtor. It argues that the Trustee acts

instead for the beneficiaries, here unsecured creditors,7 and its right to a jury 

trial should not be extinguished even if Idearc would have lacked such a right. 

The Trustee relies heavily on Crescent Resources Litigation Trust v. Duke 

Energy Corp., No. A-12-CA-009-SS, 2013 WL 1865450 (W.D. Tex. May 2, 2013). 

In Crescent, the debtors entered into bankruptcy, and the bankruptcy court 

confirmed the debtor’s plan of reorganization which, inter alia, created a 

litigation trust to “pursue causes of action which the Debtor could have 

asserted, including avoidance actions and other claims arising outside of the 

ordinary course of business of the Debtors.” Id. at *2. The litigation trust 

7 Unsecured creditors, of course, are exactly for whom Idearc would have been acting 

if the fraudulent transfer claims had not been transferred to the Litigation Trust and had 

been, instead, pursued by Idearc post confirmation.

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brought a fraudulent conveyance action against two creditors in district court. 

Id. at *3. The trust demanded a jury trial, but one creditor sought to strike the 

jury. Id. The creditor argued that the right was extinguished because the 

defendants filed proofs of claim in the bankruptcy proceeding, and the debtor 

objected to the proofs of claim on the basis of fraudulent conveyance under

§ 502(d). Id. 

Crescent agreed with the trust, holding that Langenkamp did not apply 

to litigation trusts and explicitly disagreeing with the district court’s holding 

in this case. Id. at *4. In so doing, Crescent relied on a Seventh Circuit decision 

that differentiated between a liquidation trust and a debtor. Id. (quoting Grede 

v. Bank of New York Mellon, 598 F.3d 899, 902 (7th Cir. 2010)). According to 

the Seventh Circuit in Grede, 

Although the terms of the Bankruptcy Code govern the permissible 

duties of a trustee in bankruptcy, the terms of the plan of 

reorganization (and of the trust instrument) govern the 

permissible duties of a trustee after bankruptcy. A liquidation 

trust is no different in this respect from a reorganized debtor. . . . 

People are tempted to assume that bankruptcy is forever and that 

the Code continues to regulate the conduct of former debtors. We 

have held otherwise. The . . . Liquidation Trust is a postbankruptcy vehicle[.] 

Grede, 598 F.3d at 902 (internal citations omitted). Crescent acknowledged 

that Grede considered a different issue than the one before the court, but it 

believed that Grede’s “holding that the strictures of the Bankruptcy Code do 

cut off at some point, and actions by a liquidation trust, post-plan 

confirmation[,] is after that point, is helpful here in determining whether the 

holdings of Granfinanciera and Langenkamp are applicable to . . . a post-plan 

litigation trust.” Crescent, 2013 WL 1865450, at *5 n.1. Therefore, Crescent 

concluded that Langenkamp was limited to bankruptcy trustees and did not 

apply to litigation trustees. Id. at *5.

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Crescent’s reliance on Grede is misplaced, since the Seventh Circuit 

answered a different legal question than the one at issue in Crescent and here. 

Grede concerned the authority of a litigation trustee to bring claims on behalf 

of third parties (as well as the debtor).8 598 F.3d at 900. Grede acknowledged 

that, under the Supreme Court’s decision in Caplin, 406 U.S. at 428, a 

bankruptcy trustee does not have the authority to sue third parties on behalf 

of investors who believed that the third party’s act had injured them and the 

debtor jointly. Id. However, the court distinguished Caplin, explaining that 

none of the concerns raised in Caplin applied to a suit by a liquidation trustee 

on assigned claims from third parties. Id. at 902. 

Returning to the present issue (and the issue before the Crescent court),

we must consider the nature of the claim brought by the Trustee, and whether 

that claim is legal and entitled to a jury trial, or equitable because of its 

connection with the resolution of the claims-allowance process. Grede was 

concerned with a liquidation trustee’s authority to bring the assigned claims of 

third parties. We have no quarrel with Grede’s conclusion that a postbankruptcy liquidation trust established by a confirmed plan would be 

governed by the plan itself (as distinguished from the Bankruptcy Code). But 

Grede did not hold that a claim that is by law integral to the resolution of the 

8 In Grede, Sentinel Management Group, Inc., entered bankruptcy, the bankruptcy 

court confirmed a Chapter 11 reorganization plan, and the bankruptcy court appointed a 

liquidation trustee. See 598 F.3d at 900. Many of Sentinel’s customers believed that Sentinel 

had defrauded them along with the Bank of New York Mellon, which was Sentinel’s clearing 

bank, lender, and depository for investment pools. Id. As part of the reorganization plan, 

Sentinel’s fraudulent conveyance claims against the Bank had been transferred to a

liquidation trust. Id. Although the investors’ claims against the Bank did not belong to 

Sentinel and were not part of the bankruptcy estate, the terms of the liquidation trust also 

permitted investors to assign their claims to the trust for collection, which many investors 

did. Id. The trustee filed a fraudulent conveyance action in federal court to pursue the 

investors’ claims. The Bank objected to the trustee’s authority to bring the action on the 

ground that the trustee lacked authority to pursue the investors’ claims under Caplin v. 

Marine Midland Grace Trust Co., 406 U.S. 416 (1972). Id. 

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claims-allowance process is no longer integral to that process when it is 

pursued by a litigation trustee. Since Grede is not on point, and since the 

Trustee has presented us with no authority to support its position, we cannot 

say that a litigation trustee would have a right to a jury trial where the debtor, 

whose claims it is pursuing, would have none. Thus, we reject the Trustee’s 

argument that Langenkamp does not apply to a litigation trustee pursuing the 

debtor’s fraudulent transfer claims.

5. Stern Did not Overrule Langenkamp

The Trustee’s final argument relies on Stern, --- U.S. ---, 131 S. Ct 2594,

to assert that the fraudulent transfer action must be tried by an Article III 

court before a jury, irrespective of the proofs of claim filed in the bankruptcy 

court. The Trustee concludes that Langenkamp is simply inapplicable under 

Stern. However, Stern is not as broad as the Trustee suggests; in fact, Stern 

both distinguished and explicitly preserved Langenkamp. See 131 S. Ct. at 

2617–18. 

In Stern, a creditor filed a proof of claim in the bankruptcy proceeding

seeking recovery from the estate on a state law defamation claim. Id. at 2601.

The debtor later filed a counterclaim against the creditor for fraudulent 

inducement. Id. The bankruptcy court entered final judgment in the debtor’s 

favor on the counterclaim. Id. The issue before the Supreme Court was 

whether the bankruptcy court had jurisdiction to hear the counterclaim. Id. 

The Court held that the debtor’s counterclaim was a core proceeding under the 

plain text of 28 U.S.C. § 157(b)(2)(C), which states that “counterclaims by the 

estate against persons filing claims against the estate” are “core proceedings.” 

Id. at 2604–05 (internal quotation marks omitted). However, Stern also 

declared that § 157(b)(2)(C) was unconstitutional to the extent that it 

permitted bankruptcy courts to enter final judgments in state law 

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counterclaims that would not necessarily be resolved in the process of ruling 

on a creditor’s proof of claim. Id. at 2620.

In reaching its holding, Stern addressed the debtor’s argument that the 

bankruptcy court had the authority to adjudicate its counterclaim under 

Langenkamp because the creditor had filed a proof of claim in the bankruptcy 

proceedings. Id. at 2615–16. Stern distinguished Langenkamp, explaining 

that, under Langenkamp, 

[A] preferential transfer claim can be heard in bankruptcy when 

the allegedly favored creditor has filed a claim, because then “the 

ensuing preference action by the trustee become[s] integral to the 

restructuring of the debtor-creditor relationship.” If, in contrast, 

the creditor has not filed a proof of claim, the trustee’s preference 

action does not “become[] part of the claims-allowance process”

subject to resolution by the bankruptcy court. 

Id. at 2617 (quoting Langenkamp, 498 U.S. at 44, 45) (internal citation

omitted) (alterations in original). Unlike Langenkamp, the debtor’s 

counterclaim against the creditor was not part of the claims-allowance process

in Stern. The Court explained that the bankruptcy court made several factual 

and legal determinations in ruling on the counterclaim that were not 

dispositive of the creditors’ claim against the estate. Id. Despite some 

similarity between the debtor’s counterclaim and the creditor’s defamation 

claim, “there was never any reason to believe that the process of adjudicating 

[the creditor’s] proof of claim would necessarily resolve [the debtor’s]

counterclaim.” Id. Likewise, while in Langenkamp “the trustee bringing the 

preference action was asserting a right of recovery created by federal 

bankruptcy law,” in Stern, the debtor’s counterclaim was “in no way derived 

from or dependent upon bankruptcy law; it is a state tort action that exists 

without regard to any bankruptcy proceeding.” Id. at 2618.

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After distinguishing Langenkamp, Stern analogized the debtor’s

counterclaim to the fraudulent conveyance action in Granfinanciera, which 

had been entitled to a jury trial. Id. The Court explained that

Granfinanciera’s distinction between actions that seek “to 

augment the bankruptcy estate” and those that seek “a pro rata 

share of the bankruptcy res,” reaffirms that Congress may not 

bypass Article III simply because a proceeding may have some 

bearing on a bankruptcy case; the question is whether the action 

at issue stems from the bankruptcy itself or would necessarily be 

resolved in the claims allowance process.

Id. (quoting Granfinanciera, 492 U.S. at 56) (internal citation omitted).

It is clear from Stern that Langenkamp is still good law. Stern did not 

displace Langenkamp; in fact, it took great care to distinguish the facts before 

it from the facts in Langenkamp. Moreover, the claim at issue here is 

analogous to the one in Langenkamp and distinguishable from the debtor’s 

counterclaim in Stern. As previously discussed, resolution of Verizon’s proof of 

claim will require ruling, under § 502(d), on whether Verizon was the recipient 

of a fraudulent transfer. This involves the same factual and legal 

determinations made by the district court in this case in resolving the 

fraudulent transfer claim by the Trustee, the debtor’s representative, against 

Verizon. Also, unlike the debtor’s counterclaim in Stern, here the Trustee’s 

claim is derived, in part, from bankruptcy law (§§ 544 and 550). 

The Supreme Court very recently revisited Stern in Executive Benefits 

Insurance Agency v. Arkison, 134 S. Ct. 2165, --- U.S. --- (2014). Executive 

Benefits describes Stern’s core inquiry as whether Article III of the 

Constitution prohibits a bankruptcy court from finally adjudicating certain 

types of claims but noted that Stern “did not, however, decide how bankruptcy 

or district courts should proceed when a ‘Stern claim’ is identified.” Id. at

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2168.9 Executive Benefits resolved how courts should proceed in adjudicating 

a “Stern claim” and held that while a bankruptcy court may not enter a final 

judgment on a “bankruptcy-related claim,” a bankruptcy court may issue 

proposed findings of fact and conclusions of law to be reviewed de novo by the 

district court. Id. In reaching this conclusion, Executive Benefits did not 

discuss the right to a jury trial.10 In light of the Supreme Court’s recent 

clarification of Stern, we reject the Trustee’s argument that Stern requires that 

its fraudulent transfer claim against Verizon be heard by a jury.

In sum, the Trustee’s fraudulent transfer claims against Verizon are

“integral to the restructuring of the debtor-creditor relationship through the 

bankruptcy court’s equity jurisdiction.” See Langenkamp, 498 U.S. at 44. 

Resolution of Verizon’s proof of claim in the bankruptcy court would 

necessarily resolve the fraudulent transfer issue. In fact, in this specific case, 

the bankruptcy court entered an order that provisionally disposed of the claim 

subject to the outcome of this very litigation, thus clarifying that the claims in 

this court are indeed related to the restructuring of the debtor-creditor 

relationship. Additionally, while it is no problem, it is also of no import, that 

a litigation trustee has brought this claim, since a Langenkamp inquiry focuses

on the nature of the claim and not on who has brought the claim. See, e.g., In 

9 Executive Benefits defined a “Stern claim” as “a claim designated for final 

adjudication in the bankruptcy court as a statutory matter, but prohibited from proceeding 

in that way as a constitutional matter.” 134 S. Ct. at 2170. 

10 The Court’s only mention of a jury trial in Executive Benefits was in the procedural 

background, when it commented that there had been some dispute in the district court as to 

whether the trustee’s claims should proceed before a jury in district court. 134 S. Ct. at 2169. 

The trustee ultimately moved for summary judgment, indicating that the matter of a jury 

trial was not relevant to the legal issue presented to the Supreme Court. Id. Additionally, 

the Court briefly summarized the holding of Granfinanciera in a footnote, which mentioned 

the right to a jury trial. Id. at 2169 n.3. 

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re Jensen, 946 F.2d at 374. Accordingly, we affirm the district court’s order 

granting the motion to strike the jury. 

C. Waiver

On appeal, the Trustee raises numerous challenges to the district court’s 

ruling that have been waived. This court will typically not consider an issue

or a new argument raised for the first time in a motion for reconsideration in 

the district court. Lincoln Gen. Ins. Co. v. De La Luz Garcia, 501 F.3d 436, 442 

(5th Cir. 2007); Leverette v. Louisville Ladder Co., 183 F.3d 339, 342 (5th Cir.

1999) (per curiam). Additionally, “[i]t is not enough to merely mention or 

allude to a legal theory” in order to “raise an argument.” United States v. 

Scroggins, 599 F.3d 433, 446 (5th Cir. 2010) (citing McIntosh v. Partridge, 540 

F.3d 315, 325 n.12 (5th Cir. 2008)). Rather, “a party must press its claims,” 

which entails “clearly identifying a theory as a proposed basis for deciding the 

case—merely intimat[ing] an argument is not the same as pressing it.” Id. at 

447 (internal quotation marks and citation omitted) (alteration in original). 

The Trustee raised its arguments concerning a right to a jury trial on its 

non-fraudulent-transfer claims and claims against Diercksen for the first time 

in its motion for reconsideration of the district court’s order striking the jury. 

Although the Trustee made a brief reference to its breach of fiduciary duty and 

aiding and abetting claims in its response in opposition to the motion to strike, 

this is insufficient to preserve the Trustee’s arguments.11 Scroggins, 599 F.3d 

11 The Trustee’s only reference to its non-fraudulent transfer claims is contained in a 

footnote that reads:

[Appellees] erroneously argue that [the Trustee] is not entitled to a jury trial 

on its breach of fiduciary duty and aiding and abetting breach of fiduciary duty 

because such claims are “equitable.” Because [the Trustee] seeks monetary 

relief for its fiduciary duty breach claims, the claims are “legal” rather than 

equitable and are protected by the Seventh Amendment.

ROA 21597 n.8 (internal citation omitted). This footnote only states that the breach of 

fiduciary duty and aiding and abetting claims are legal claims; it in no way asserts that these 

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at 446. Accordingly, in its order denying reconsideration, the district court 

concluded that these arguments had been waived.12 U.S. Bank 

(Reconsideration), 2012 WL 3034707, at *4. We agree. Since the arguments 

concerning the right to a jury trial on the non-fraudulent-transfer claims and 

on the claims with respect to Diercksen have been waived, we will not consider 

them here.13

claims are not part of the equitable claims-allowance process, which is at issue here. 

Additionally, it does not discuss Diercksen, nor does it allege that the claims against 

Diercksen should be treated differently for jury trial purposes. The district court, in its order 

denying reconsideration, commented that the Trustee “only alluded to its claims of breach of 

fiduciary duty and aiding and abetting breach of fiduciary duty” in its briefing on the motion 

to strike, so the court concluded that the Trustee’s discussion of these claims in its motion for 

reconsideration constituted the presentation of a new argument. U.S. Bank Nat. Ass’n v. 

Verizon Commc’ns Inc., 3:10-CV-1842-G, 2012 WL 3034707, at *4 (N.D. Tex. July 25, 2012) 

(hereinafter “U.S. Bank (Reconsideration)”). We agree. This footnote alone cannot be said to 

have sufficiently presented the legal issues to the district court for review. 

12 The Trustee mischaracterizes the district court’s and Appellees’ discussion of 

waiver, and claims that it never waived its right to a jury trial. However, the discussion of 

waiver is limited to arguments that were not properly raised before the district court.

13 The Trustee also contends that the district court granted relief on grounds not 

raised by Appellees since Appellees’ motion to strike the jury demand did not address all of 

the Trustee’s claims. This argument is unavailing. Appellees’ motion to strike incorporated 

all of the Trustee’s claims. ROA 1866 (“its claims are part of the claims[-]allowance process”), 

1869 (discussing “its fraudulent transfer and other claims”). Additionally, the motion was

clearly labeled as a motion to strike the jury. ROA 1843, 1866–69. Appellees did not move 

to strike the jury for only portions of the trial. The district court correctly concluded that the 

motion sought to strike a jury as to all claims contained in the complaint. The Trustee bore 

the burden of rebutting the motion to strike by raising all of the reasons entitling it to a jury 

trial. The Trustee is represented by sophisticated counsel, and the record indicates that the 

district court routinely permitted additional briefing and enlarged the page limits to 

accommodate the parties. Thus, the Trustee was afforded ample opportunity to raise its 

arguments before the district court. However, the Trustee only raised arguments concerning 

the fraudulent transfer claims with respect to Verizon in its response and sur-reply in 

opposition to the motion to strike. In so doing, it waived its arguments concerning its claims 

against Diercksen and its non-fraudulent transfer claims against Verizon. Lincoln Gen., 501 

F.3d at 442.

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III. Subsidiary Issue

During summary judgment, the district court found that Idearc was a 

wholly-owned subsidiary of Verizon prior to the spin-off, and the court later 

referenced this finding as part of its evidentiary rulings, findings of fact, and 

conclusions of law. Thus, in challenging many of the district court’s rulings, 

the Trustee frequently argues that the district court erred in part because 

Idearc was not Verizon’s wholly-owned subsidiary. Accordingly, we will 

address Idearc’s subsidiary status separately since the matter is raised 

throughout the appeal.

In its September 14, 2012 order granting in part and denying in part 

summary judgment, the district court addressed the subsidiary issue. See U.S. 

Bank Nat’l Ass’n v. Verizon Commc’ns Inc., 892 F. Supp. 2d 805, 817–18 (N.D. 

Tex. 2012) (hereinafter “U.S. Bank (Summary Judgment)”). Diercksen moved 

for summary judgment on the Trustee’s breach of fiduciary duty claim, arguing 

that his fiduciary duties were owed to Verizon because Idearc was a whollyowned subsidiary of Verizon.14 Id. The court noted that the parties disputed 

whether Idearc was a wholly-owned subsidiary of Verizon, and, after 

considering the evidence presented by both parties, held that “no reasonabl[e] 

factfinder could conclude that Idearc was not a wholly-owned subsidiary of 

Verizon.” Id. at 818. However, because Diercksen would owe Idearc fiduciary 

duties if the corporation was insolvent on the day of the spin-off, and since 

there was a fact dispute as to the value of Idearc on that date, the district court 

denied summary judgment on the claim. Id. at 814, 818.

14 Diercksen’s argument was based on the Delaware Supreme Court’s ruling in 

Anadarko Petroleum Corp. v. Panhandle E. Corp., 545 A.2d 1171, 1174 (Del. 1988). Anadarko 

will be discussed at length in Sections VI.D. and VI.E.

 

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Following the bench trial, the Trustee re-raised its argument that Idearc 

was not a wholly-owned subsidiary in its response to the district court’s order 

to show cause. The district court interpreted the Trustee’s arguments as a 

belated request to reconsider its subsidiary finding in the summary judgment 

order. See U.S. Bank Nat’l Ass’n v. Verizon Commc’n, L.L.C., No. 3:10-cv-1842-

G-BK (N.D. Tex. June 18, 2013) (Doc. 671 at 18) (hereinafter “Conclusions of 

Law”). Since the Trustee offered no new evidence that was not available to it 

during the summary judgment phase, and since there was no intervening 

change in the law, the district court declined to reconsider its holding that 

Idearc was a wholly-owned subsidiary. Id. 

On appeal, the Trustee argues that the district court’s reliance on its 

summary judgment subsidiary statement was improper because the statement

was dictum.15 We disagree. “A statement is dictum if it could have been 

deleted without seriously impairing the analytical foundations of the holding 

and being peripheral, may not have received the full and careful consideration 

of the court that uttered it.” Int’l Truck & Engine Corp. v. Bray, 372 F.3d 717, 

721 (5th Cir. 2004) (internal quotation marks and citation omitted). However, 

if the statement is “necessary to the result or constitutes an explication of the 

15 The Trustee also claims that under Federal Rule of Civil Procedure 56(g), the 

“subsidiary statement” was not binding because: (1) Appellees did not request a finding on 

this fact; (2) the district court did not refer to Rule 56(g) or state that any facts would be 

treated as established in this case; and (3) the fact was “irrelevant” to the denial of summary 

judgment. The Trustee’s Rule 56(g) argument is unavailing. Under Rule 56(g), “[i]f the court 

does not grant all the relief requested by the motion, it may enter an order stating any 

material fact . . . that is not genuinely in dispute and treating the fact as established in the 

case.” Fed. R. Civ. P. 56(g) (emphasis added). The Rule’s use of the word “may,” as opposed 

to “shall,” indicates that district courts are not required to enter a separate order under Rule 

56(g). Further, the Trustee has not presented us with Fifth Circuit caselaw that interprets 

Rule 56(g) in such a manner. More importantly, the Trustee did not raise its Rule 56(g) 

argument before the district court in its response to the order to show cause, and it only 

briefly mentioned the Rule for the first time in its reply brief. Thus, this argument has been 

waived. Jones v. Cain, 600 F.3d 527, 541 (5th Cir. 2010).

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governing rules of law,” it is not dictum. Id. Here, whether Idearc was a 

wholly-owned subsidiary was squarely before the court, and it was considered 

as part of the analysis of the breach of fiduciary duty claim. Diercksen had 

argued that because Idearc was a wholly-owned subsidiary of Verizon, it owed 

no fiduciary duties to Idearc. U.S. Bank (Summary Judgment), 892 F. Supp. 

2d at 817. The Trustee countered that Idearc was not a wholly-owned 

subsidiary. Id. The district court necessarily analyzed this issue in order to 

determine the legal duties owed by Diercksen to Idearc, and it concluded that 

there was no genuine issue of material fact as to Verizon’s sole ownership of 

Idearc. Id. Thus, the district court’s statement was not dictum since it was 

necessary to its final breach of fiduciary duty analysis. 

Next, the Trustee appeals the district court’s refusal to reconsider its 

summary judgment ruling in light of the “undisputed evidence” that Verizon 

did not validly own stock.16 The undisputed evidence has two components. 

First, the Trustee focuses on the failure of Verizon to properly form Idearc’s 

board. Idearc’s bylaws created a two-member board of directors and a quorum 

also required two members. The Trustee argues that since Diercksen was the 

only board member, all of his unilateral actions were illegal and void, including 

his resolution issuing stock. Second, the Trustee claims that Verizon never 

validly owned Idearc stock because the resolutions issuing one share of stock 

and authorizing Harless to sell that share did not list a price. According to the 

Trustee, Verizon consequently did not pay for the stock, so it never owned the 

stock.

16 The Trustee briefly argues that the district court’s summary judgment order failed 

to “take into account the evidence that Idearc never validly issued shares”; however, the 

Trustee does not specifically appeal this aspect of the summary judgment order. The Trustee 

did appeal other elements of the summary judgment order, but did not identify the subsidiary 

finding as one of the issues on appeal. Rather, the focus of the Trustee’s appeal appears to 

be on the denial of reconsideration. 

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We review the district court’s denial of a request to reconsider a 

summary judgment ruling for abuse of discretion. Templet v. HydroChem Inc., 

367 F.3d 473, 477 (5th Cir. 2004). “[A] district court has considerable 

discretion in deciding whether to reopen a case in response to a motion for 

reconsideration, [but] such discretion is not limitless.” Id. at 479. The court 

must balance two competing interests in ruling on a motion to reconsider: “1) 

the need to bring litigation to an end; and 2) the need to render just decisions 

on the basis of all the facts.” Id. When a party requests reconsideration of a 

summary judgment order and submits evidentiary materials in support of its 

motion that were not previously provided to the court, the court may consider 

the following factors:

1) [T]he reasons for the moving party’s default; 2) the importance 

of the omitted evidence to the moving party’s case; 3) whether the 

evidence was available to the non-movant before it responded to 

the summary judgment motion; and 4) the likelihood that the nonmoving party will suffer unfair prejudice if the case is reopened. 

Id. at 482 (citing Lavespere v. Niagara Machine & Tool Works, Inc., 910 F.2d 

167, 174 (5th Cir. 1990), overruled on other grounds, Little v. Liquid Air Corp.,

37 F.3d 1069 (5th Cir. 1994)). However, a request to reconsider a non-final, 

non-appealable partial summary judgment order “remains within the plenary 

power of the district court to revise or set aside in its sound discretion without 

any necessity to meet the requirements of Fed. R. Civ. P. 60(b).” Avondale 

Shipyards, Inc. v. Insured Lloyd’s, 786 F.2d 1265, 1269 (5th Cir. 1986).

Here, the Trustee did not file a formal motion for reconsideration 

following the entry of the district court’s summary judgment order. Months 

later, after the trial, the Trustee included a request to reconsider the 

subsidiary issue in its response to the order to show cause. The district court 

made note of the Trustee’s request to reconsider its subsidiary finding in its 

conclusion of law, but it declined to do so. According to the district court, 

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reconsideration of the subsidiary issue was inappropriate because the Trustee 

had not requested reconsideration of the summary judgment order, cited no 

intervening change in the law, and had access to all the evidence on which it 

relied to reargue this point during the summary judgment stage. Conclusions 

of Law at 18–19. 

The subsidiary finding at summary judgment was not a final judgment 

on a claim, so it is not subject to the strict requirements of Rule 60. See 

Avondale Shipyards, 786 F.2d at 1269. Yet, the decision to reconsider the 

finding is nonetheless left to the sound discretion of the district court. Id. The 

district court did not abuse its discretion. The request for reconsideration was 

untimely and the evidence presented by the Trustee in response to the order 

to show cause was available at the summary judgment stage. The Trustee does 

not dispute this. Due to the size of the record and the number of extensions 

granted by the district court throughout the proceedings, it is unclear why the 

Trustee failed to timely raise its arguments. 

Additionally, we are not persuaded that the Trustee’s arguments have 

merit, specifically because the Trustee does not claim that any other person or 

entity owned Idearc before the spin-off (a fact that, if it were true, would affect 

Diercksen’s fiduciary duties). Likewise, the Trustee does not argue that Idearc 

or its board owed fiduciary duties to non-Verizon shareholders prior to the 

spin-off. The Trustee only cursorily responds that Delaware law does not 

require that a corporation issue stock in order to exist. See Del. Code Ann. tit. 

8, § 106 (West 2014). However, this one-sentence explanation only raises more 

questions, none of which the Trustee answers. As a practical matter, if no one 

owned Idearc, then to whom did Diercksen owe fiduciary duties before the spinoff? At that time, Idearc was a shell corporation, with no assets, that existed 

only on paper. To base a $9.1 billion claim for damages on Diercksen’s alleged 

breach of fiduciary duties owed solely to an empty shell corporation is, to say 

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the least, problematic. At minimum, this is an issue that deserves more than 

one sentence in a lengthy brief. Moreover, the Trustee failed to argue before 

the district court in its response to the order to show cause that Idearc could 

exist without shareholders, even though the district court had also noted at 

summary judgment that the Trustee had failed to indicate who may have

owned Idearc. U.S. Bank (Summary Judgment), 892 F. Supp. 2d at 818 

(holding that the Trustee “has not put forth any evidence that any other entity 

owned Idearc at the time leading up to the spin-off”). 

Because the request to reconsider was untimely, based entirely on 

evidence that was available at the summary judgment stage, and lacks merit, 

we affirm the district court’s denial of reconsideration.

IV. Evidentiary Rulings

The Trustee raises two challenges to the district court’s evidentiary 

rulings. First, the Trustee claims that the district court erroneously admitted 

hundreds of allegedly irrelevant exhibits prior to the Phase I trial. Second, it

contests the court’s exclusion of supposedly relevant evidence and testimony

during the trial. We reject these arguments. 

This court reviews evidentiary rulings for abuse of discretion. Gabriel 

v. City of Plano, 202 F.3d 741, 745 (5th Cir. 2000). “[A] trial court has broad 

discretion in determining the admissibility of evidence based on relevance and 

materiality, and that determination will be overturned only when the abuse of 

that discretion is clearly shown from the record.” United States v. Collins, 690 

F.2d 431, 438 (5th Cir. 1982) (emphasis added). Even when evidence is 

relevant, it may be excluded “if its probative value is substantially outweighed 

by a danger of one or more of the following: unfair prejudice, confusing the 

issues, misleading the jury, undue delay, wasting time, or needlessly 

presenting cumulative evidence.” Fed. R. Evid. 403.

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If the district court has abused its discretion in excluding or admitting 

evidence, “[w]e reverse judgments for improper evidentiary rulings only where 

the challenged ruling affects a substantial right of a party. The burden of 

proving substantial prejudice lies with the party asserting error.” Gabriel, 202 

F.3d at 745 (internal quotation marks and citations omitted); see also First 

Nat’l Bank of Louisville v. Lustig, 96 F.3d 1554, 1574 (5th Cir. 1996). A ruling 

has affected the substantial rights of the party if, when considering all of the 

evidence presented at trial, the ruling had a substantial effect on the outcome 

of the trial. See United States v. Limones, 8 F.3d 1004, 1008 (5th Cir. 1993). 

However, if the error was harmless, it will be excused. See United States v. 

Hart, 295 F.3d 451, 454 (5th Cir. 2002).

Turning to the Trustee’s first challenge, the allegedly irrelevant exhibits

at issue were exhibits initially identified by the Trustee and included on its

exhibit list, without objection from Appellees. At the pre-trial conference, the 

district court informed the parties that, given the large number of exhibits that 

would be presented at trial, the court would admit evidence from the exhibit 

lists in groups if there was no objection from the opposing party. ROA 16259. 

After the pre-trial conference and only a week before trial, the Trustee sought 

to exclude 315 of its own exhibits from the trial. The district court ultimately 

admitted all the exhibits, believing that the attempt to exclude them was “a 

tactic on behalf of the [Trustee].” ROA 16335. 

On appeal, the Trustee has not discussed the content of the admitted 

documents, nor has it explained why these documents were irrelevant. Absent 

even a description of the documents, we cannot conclude whether the court’s 

decision to admit them was an abuse of discretion. Collins, 690 F.2d at 438. 

Additionally, the Trustee has not shown how the admission of these documents 

affected its substantial rights, so any error would not be reversible. Gabriel, 

202 F.3d at 745. 

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The Trustee’s second challenge is to the district court’s refusal to admit 

evidence of Idearc’s alleged corporate deficiencies. This includes the following: 

testimony that no board of Idearc was ever appointed; testimony that the 

issuance of Idearc stock was “false”; evidence that Idearc never properly issued 

any stock, so it could not have been a wholly-owned subsidiary; evidence that 

Idearc’s corporate records, including a stock certificate, were backdated; and a 

memo “demonstrat[ing] that the backdated stock certificates and secretary 

certificates . . . were not sent to [directors] for signature until . . . after the 

private letter ruling issued.” The Trustee claims that the errors affected the 

court’s valuation finding and conclusions of law, particularly with respect to 

the court’s holding that Idearc was a wholly-owned subsidiary.

The Trustee’s challenge fails for two reasons. First, the district court 

had previously ruled, at summary judgment, that Idearc was a wholly-owned 

subsidiary of Verizon. See U.S. Bank (Summary Judgment), 892 F. Supp. 2d 

at 817–18. Later, while ruling on a motion in limine, the district court noted 

that the Trustee had failed to show that the failure to observe corporate 

formalities prior to the spin-off “significantly affected the underlying 

fundamentals of the company.” ROA 13631. Idearc’s subsidiary status had 

already been decided, and that decision had gone unchallenged up to that 

point. Even if the Trustee’s proffered evidence had been relevant to the 

valuation issue (and it is not clear that it is), the court did not abuse its 

discretion by declining to hear more evidence on a matter that had already 

been decided. See Fed. R. Evid. 403.

Assuming that the district court did err in excluding the evidence, it is 

unclear how it impacted the Trustee’s substantial rights. See Limones, 8 F.3d 

at 1008. The Trustee conclusorily states that the evidence was relevant to the 

valuation finding, but does not discuss how each specific piece of evidence was 

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likely to affect the outcome of the trial, in light of all the evidence presented. 

Id. Accordingly, we affirm the district court’s evidentiary rulings. 

V. Valuation Finding

Next, the Trustee appeals the district court’s findings of fact following 

the ten-day bench trial, arguing that the court erred in concluding that Idearc 

was worth more than $12 billion on the date of the spin-off. 

We review findings of fact made by a district judge during a bench trial 

for clear error. Dickerson v. Lexington Ins. Co., 556 F.3d 290, 294 (5th Cir. 

2009). “A finding is ‘clearly erroneous’ when there is no evidence to support it, 

or if the reviewing court, after assessing all of the evidence, is left with the 

definite and firm conviction that a mistake has been committed.” Baldwin v. 

Taishan Gypsum Co., Ltd. (In re Chinese-Manufactured Drywall Prods. Liab. 

Litig.), 742 F.3d 576, 584 (5th Cir. 2014). When “the district court’s account of 

the evidence is plausible in light of the record viewed in its entirety, the court 

of appeals may not reverse it even though convinced that had it been sitting as 

the trier of fact, it would have weighed the evidence differently.” Anderson v. 

City of Bessemer City, 470 U.S. 564, 573–74 (1985). If we determine that “there 

are two permissible views of the evidence,” then we may not conclude that the 

court’s choice between them was clearly erroneous. Id. 

Following the bench trial, the district court issued a sixty-six page 

Memorandum of Decision that carefully discussed the exhibits and testimony 

presented at trial. See U.S. Bank Nat’l Ass’n v. Verizon Commc’ns Inc., 3:10-

CV-1842-G, 2013 WL 230329 (N.D. Tex. Jan. 22, 2013) (hereinafter “U.S. Bank 

(Findings of Fact)”). The district court found, based on exhibits and the 

testimony of witnesses, that the value of Idearc on November 17, 2006, was at 

least $12 billion. Id. at *1. The district court first considered the testimony of 

the Trustee’s expert witness, Carlyn Taylor. Id. at *2. While the court found 

her highly qualified to offer an expert opinion, it ultimately concluded that her 

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valuation of Idearc at $8.15 billion was unpersuasive. Id. at *3, *9. The court 

considered the three valuation calculations Taylor performed to arrive at the 

$8.15 billion figure, but it rejected them because: (1) they did not include all 

available information, such as the trading price for Idearc on NYSE; (2) the 

financial projections on which she relied were unreliable; and (3) there were 

“multiple instances of double counting that infected both Taylor’s . . . analysis 

and her overall conclusions.” Id. at *7–9. In coming to this conclusion, the 

district court relied on the expert testimony of Mark Hopkins, an expert 

witness for Appellees, and on the market evidence of the value of Idearc at the 

time of the spin-off. Id. at *6.

Contrary to the Trustee’s claims, the district court found that the

evidence of Idearc’s value based on the market price of Idearc stock was a 

reliable indicator of Idearc’s value because the market was not misled. Id. at 

*10. Upon careful consideration of the evidence, the district court concluded 

that the information that the Trustee alleged was withheld from the market 

was actually disclosed or, if not disclosed, was not material. Id. at *10–29. 

There is no clear error in the district court’s factual findings. We reject 

the Trustee’s assertion that the district court valued Idearc without 

considering the clouds on its value. Clouds, such as questions regarding 

ownership or the ability to convey an asset, are material and can impact the 

value of an asset. However, the district court had previously concluded that 

there were no clouds on Idearc’s value prior to trial, and it did not need to 

reconsider this finding.17 The Trustee has not appealed these earlier rulings. 

17 See U.S. Bank (Summary Judgment), 892 F. Supp. 2d at 818 (holding that Idearc 

was a wholly-owned subsidiary of Verizon); ROA 13631 (order denying the Trustee’s motions 

in limine, and holding that the Trustee had not shown that the corporate formalities in the 

spin-off and in the issuance of Idearc stock and debt significantly affected the underlying 

fundamentals of the company). 

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Likewise, the Trustee’s argument that the district court erroneously

relied on Idearc’s stock price at the date of the spin-off lacks merit. We must 

affirm the factual finding of a district court when its interpretation of the 

evidence is plausible after viewing the record as a whole. Anderson, 470 U.S. 

at 573–74. The district court made lengthy findings concerning the 

information that was and was not disclosed and the impact of that information

on the market value of Idearc. We have reviewed those findings and the 

massive record, and we believe that the district court’s conclusion that Verizon 

sufficiently disclosed the risks associated with a directory business is plausible 

in light of the record as a whole. 

The Trustee’s final challenge is that the district court erred by not 

sufficiently crediting Taylor’s expert testimony and using her valuation 

finding. However, Taylor was heavily criticized by Hopkins, another expert 

witness. Although Taylor was “qualified,” Hopkins was also qualified,18 and 

he noted numerous errors in her methodology. The trial record also contained 

ample evidence with which to challenge Taylor’s methods and conclusions. At 

minimum, Taylor’s valuation and Hopkins’s criticism of her methodology 

presented “two permissible views”; we cannot reverse the district court for 

adopting one permissible view over the other. Id. 

18 The Trustee states that Hopkins was not qualified to criticize Taylor’s valuation 

because he had never done a yellow pages valuation. “[T]he only question for the trial court 

is whether the expert is generally qualified to render an opinion on the question in issue.” 

Christophersen v. Allied–Signal Corp., 939 F.2d 1106, 1110 (5th Cir. 1991) (en banc)

(emphasis added). The court has wide discretion in determining whether an expert is 

qualified. Moore v. Ashland Chemical, Inc., 151 F.3d 269, 274 (5th Cir. 1998). Hopkins has 

worked as a financial advisor and has performed many solvency and valuation analyses in 

the media, telecommunications, and energy industries. U.S. Bank (Findings of Fact), 2013 

WL 230329 at *6. Thus, the district court did not abuse its discretion in believing Hopkins 

was sufficiently qualified to offer an opinion on Taylor’s valuation methodology.

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There is evidence in the record to support the district court’s factual 

findings, so we conclude that the court’s finding that Idearc was worth at least 

$12 billion on the date of the spin-off is not clearly erroneous. See In re ChineseManufactured Drywall Prods. Liab. Litig., 742 F.3d at 584. 

VI. Conclusions of Law

The same day the district court issued its factual findings, it also ordered 

the Trustee to show cause “why any (or all) of its legal claims are viable in light 

of the court’s finding on Idearc’s value,” and to “identify any disputed fact 

issues that remain for resolution in a second phase of trial.” The Trustee 

complied, and after reviewing the briefs submitted by the parties, the district 

court disposed of the Trustee’s remaining claims and entered judgment in favor 

of Appellees. The Trustee now challenges the use of the order to show cause 

as a vehicle to enter judgment on behalf of Appellees, as well as aspects of the 

court’s legal conclusions with respect to its claims for fraudulent transfer, 

breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, 

promoter liability, unlawful dividend, and alter ego. We will discuss each 

challenge in turn. 

A. Standard of Review

This court reviews conclusions of law made pursuant to Federal Rule of 

Civil Procedure 52 de novo. Bursztajn v. United States, 367 F.3d 485, 489 (5th 

Cir. 2004). We review challenges to a district court’s docket management and 

trial procedure for abuse of discretion. Garcia v. Woman’s Hosp. of Tex., 143 

F.3d 227, 229 (5th Cir. 1998) (per curiam).

B. Procedural Challenge

The Trustee first attacks the procedures of the district court, claiming 

that its use of the show-cause order following the Phase I bench trial was 

inappropriate because there were outstanding fact issues and the Trustee was 

not afforded the opportunity to “marshal its proof” on the remaining claims.

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We interpret this as a challenge to the district court’s case management 

procedures, and we find that the district court did not abuse its discretion in 

utilizing an order to show cause to provide the Trustee with a final opportunity 

to address its claims before issuing conclusions of law. 

Under the Federal Rules of Civil Procedure, following an action tried 

without a jury, “the court must find the facts specially and state its conclusions 

of law separately. The findings and conclusions may be stated on the record 

after the close of the evidence or may appear in an opinion or a memorandum 

of decision filed by the court.” Fed. R. Civ. P. 52(a)(1). Once a party has been 

heard on an issue during a bench trial, “the court may enter judgment against 

the party on a claim or defense that, under the controlling law, can be 

maintained or defeated only with a favorable finding on that issue.” Fed. R. 

Civ. P. 52(c). 

Here, the district court issued an extensive memorandum opinion 

discussing its factual findings following the bench trial in accordance with Rule 

52(a). On the same day it issued its factual findings, it entered the show-cause 

order, indicating that the court was prepared to enter judgment in favor of 

Appellees on all of the claims, but that it wished to provide the Trustee with

an additional opportunity to demonstrate whether factual issues remained, 

necessitating a Phase II trial. 

On appeal, the Trustee accuses the district court of failing to disclose its 

intended procedures, suggesting that it was unaware that the court would 

require it to provide evidence of its claims. The lack of notice purportedly

violated the Trustee’s due process rights under the Fifth Amendment. 

Admittedly, the district court did not unequivocally state that the 

Trustee had to present the court with evidence necessary to establish that

there remained disputed issues of material fact warranting a second phase of 

the trial. Nonetheless, the order to show cause did specify that the Trustee 

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had to identify such disputed issues in order to save its claims. Also, the court 

had announced a tentative conclusion that the Trustee could not meet its 

burden of proof on these claims, signaling that the Trustee needed to present 

the court with evidence to meet its burden on each claim. Accordingly, we 

conclude that under the circumstances presented here, the district court’s 

order provided sufficient notice that the Trustee had to “marshal its proof” and 

demonstrate the need to proceed to Phase II of the trial. See, e.g., Am. Airlines, 

Inc. v. Allied Pilots Ass’n, 228 F.3d 574, 578 (5th Cir. 2000) (“The district court 

need not anticipate every action to be taken in response to its order, nor spell 

out in detail the means in which its order must be effectuated.”). 

Not only was the order sufficient, but there are situational factors that 

indicate that the Trustee was on notice that it was expected to present evidence 

in support of its remaining claims. Discovery had closed, motions for summary 

judgment had been filed and ruled upon, and a trial had concluded. By that 

stage, the Trustee would have been fully aware of all evidence that supported 

its claims. 

Finally, as will be discussed in more detail below, the district court did 

not impermissibly rule on disputed fact issues. While it noted the absence of 

evidence on some elements of the Trustee’s claims, it did not resolve factual 

issues in its conclusions of law. Therefore, we find no error in the district 

court’s case management procedures. 

C. Actual Fraudulent Transfer Claim

The Trustee’s complaint alleged that the transactions effectuating the 

spin-off amounted to fraudulent conveyances, both “actual” (made with intent 

to hinder, delay, or defraud creditors) and “constructive” (made for less than 

reasonably equivalent value at a time of the transfer or was rendered insolvent

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or undercapitalized).19 See, e.g., In re Soza, 542 F.3d 1060, 1064 (5th Cir. 2008); 

Tex. Bus. & Com. Code Ann. § 24.005 (West 2013). Given Idearc’s solvency at 

the time of the spin-off, it was clear that the Trustee’s constructive fraud claim 

would fail. However, the Trustee maintained that its actual fraudulent 

transfer claim would survive; the district court disagreed.

According to the district court, for the Trustee to establish that the 

transfers Idearc made as part of the spin-off were fraudulent, the Trustee 

would need to produce evidence to show that Appellees had actual intent to 

hinder, delay, or defraud a creditor. See Conclusions of Law at 5. The district 

court held that the Trustee had not “presented specific direct evidence of 

[Appellees’] fraudulent intent, nor has it pointed to any such evidence that it 

may yet present.” Id. Additionally, the district court held that the weight of 

the evidence on intent was negated by the valuation finding. Id.

The district court first considered whether the Trustee had proffered 

direct evidence regarding fraudulent intent, but held that the Trustee had only 

made general allegations concerning Appellees’ intent and that there was no 

“specific evidence” contained in the “many briefs it has submitted in this case.” 

Id. at 5–6. In the absence of any testimony, communications, or other evidence 

that tended to reveal the state of mind of the Verizon officers, the district court 

was left to consider whether the Trustee had pointed to circumstantial 

evidence of intent. Id. at 6. 

Under Texas law, there are eleven indicators of fraudulent intent, called 

“badges of fraud.” In re Soza, 542 F.2d at 1066; Tex. Bus. & Com. Code Ann. 

§ 24.005(b). The Trustee had argued that there was evidence of five of the 

19 The Trustee alleged numerous fraudulent transfer claims against Verizon, GTE, 

and VFS involving various transfers of cash and debt. Aspects of some of the Trustee’s 

fraudulent transfer claims were disposed of during pre-trial motions. The remaining claims 

were grouped together in the district court’s conclusions of law and are discussed collectively 

on appeal. 

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eleven badges; however, the district court noted that the factual finding that 

Idearc was worth at least $12 billion negated two of those badges. Conclusions 

of Law at 6 (citing Tex. Bus. & Com. Code Ann. §§ 24.005(b)(8) (reasonably 

equivalent value) & 24.005(b)(9) (solvency)). The remaining three badges were 

transfer to an insider, concealment, and transfer shortly before a substantial 

debt was incurred. Tex. Bus. & Com. Code Ann. § 2405(b)(1), (3), & (10). The 

district court held that because it found that a “plethora of material 

information relating to the spin[-]off was actually disclosed to the market,” the 

Trustee had not established “concealment.” Conclusions of Law at 6. Thus, 

the only remaining badges were transfer to an insider and transfer shortly 

before a substantial debt was incurred. The district court explained that these 

two badges alone could not support a finding of intent in a spin-off since they 

“are a feature of every spin[-]off transaction that involves debt.” Id. at 7. 

Additionally, the district court held “that the presence of so few badges, in such 

a context, is insufficient as a matter of law to support a finding of actual intent 

to hinder, delay or defraud.” Id. (citing MFS/Sun Life Trust-High Yield Series 

v. Van Dusen Airport Servs. Co., 910 F. Supp. 913, 935 (S.D.N.Y. 1995); Tex. 

Custom Pools, Inc. v. Clayton, 293 S.W.3d 299, 314 (Tex. App.—El Paso 2009, 

no pet.)). Thus, it entered judgment in Appellees’ favor on the actual 

fraudulent transfer claims. Id.

The Trustee only briefly challenges the district court’s determination 

that it failed to present specific direct evidence of fraudulent intent by claiming 

that the court “waded into factual disputes outside the scope of Phase I by 

making a sua sponte determination that there was” insufficient evidence. 

Notably, the Trustee does not argue that it had presented the district court 

with any direct evidence of fraudulent intent in its response to the order to 

show cause. However, the district court did not resolve or decide a factual 

issue; rather, it noted that Appellees had not provided any direct evidence of 

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fraud, so it had to consider the available circumstantial evidence. As 

previously discussed, under the circumstances in this case, the Trustee should 

have been well aware that it needed to present the district court with any direct 

evidence of fraud in its response to the order to show cause. Yet, the Trustee 

failed to do so. The district court’s comment that it had not been presented 

with direct evidence of fraud constitutes an observation of the lack of evidence, 

which is permissible. 

Additionally, the Trustee does not challenge the district court’s badge-offraud analysis, nor does it claim that there was sufficient circumstantial 

evidence to create an issue of fact concerning Appellees’ intent to defraud. In 

the absence of such an argument, we affirm the district court’s entry of 

judgment in favor of Appellees on the fraudulent transfer claims. 

D. Breach of Fiduciary Duty Against Diercksen and Aiding and 

Abetting Against Verizon

Counts Three and Four in the Trustee’s amended complaint allege that 

Diercksen breached his fiduciary duty to Idearc and that Verizon and VFS 

aided and abetted that breach of fiduciary duty. Following the bench trial, the 

district court entered judgment in favor of Appellees on these counts, relying 

in part on its prior ruling that no reasonable factfinder could conclude that 

Idearc was not Verizon’s wholly-owned subsidiary. Conclusions of Law at 16. 

The Trustee appeals on the grounds that Idearc was not a wholly-owned 

subsidiary and that the court misapplied Delaware law.

Under Delaware law, a corporate parent owes its wholly-owned 

subsidiary no fiduciary duties, other than a duty not to take actions that cause 

it to be unable to meet its legal obligations. See Anadarko, 545 A.2d at 1174. 

Likewise, a director of a wholly-owned subsidiary, such as Diercksen, owes the 

subsidiary only the duty to manage it in the best interest of the corporate 

parent so long as the subsidiary is able to meet its legal obligations. Trenwick 

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Am. Litig. Trust v. Ernst & Young, L.L.P., 906 A.2d 168, 200–01, 203 (Del. Ch. 

2006), aff’d, 931 A.2d 438 (Del. 2007)). Since Idearc was solvent on the date of 

the spin-off, the district court held, “it cannot be argued plausibly that Verizon 

or Diercksen caused it to be unable to meet its legal obligations.”20 Conclusions 

of Law at 8. It also dismissed the Trustee’s “titillating allegations concerning 

Verizon and Diercksen’s conduct in connection with the spin[-]off,” commenting 

that these allegations could not “be said to have caused Idearc to be unable to 

meet legal obligations.” Conclusions of Law at 8–9. 

Even if Idearc were not a wholly-owned subsidiary and Diercksen did 

owe the company fiduciary duties, the district court still believed that the 

Trustee’s breach of fiduciary duty claim would fail. The district court held that 

the Trustee had failed to show how the $9 billion in damages sought for this 

claim was “‘logically and reasonably related to the harm’ for which 

compensation is sought.” Conclusions of Law at 9 (quoting In re J.P. Morgan 

Chase & Co. S’holder Litig., 906 A.2d 766, 774 (Del. 2006)).21 The district court 

found that the Trustee had not explained “how Diercksen’s alleged breaches or

Verizon’s supposed knowledge could possibly have damaged Idearc’s creditors 

20 The Trustee argues that whether Verizon or Diercksen caused Idearc to fail to meet 

its duties is an issue of fact that warranted a second phase of trial. We disagree. The district 

court’s comments amount to an observation of a lack of evidence on causation.

21 In In re J.P Morgan Chase & Co., 906 A.2d at 776, the shareholder plaintiffs alleged 

that J.P. Morgan Chase (“JPMC”) overpaid for Bank One, and in so doing, the JPMC directors 

breached their fiduciary duties, including their duty of disclosure, owed to the shareholders 

of JPMC. The shareholders sought $7 billion in damages, which represented the alleged 

overpayment. The Delaware Supreme Court explained that the damage amount “ignores the 

fundamental principle governing entitlement to compensatory damages, which is that the 

damages must be logically and reasonably related to the harm or injury for which 

compensation is being awarded.” Id. at 773. Although the alleged damages “would be a 

logical and reasonable consequence (and measure) of the harm caused to JPMC for being 

caused to overpay for Bank One, that $7 billion figure has no logical or reasonable 

relationship to the harm caused to the shareholders individually for being deprived of their 

right to cast an informed vote.” Id. (emphasis in original).

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(particularly in so great an amount) in light of the court’s valuation and 

solvency findings.” Conclusions of Law at 10. Thus, the court entered 

judgment in Diercksen’s favor. 

Because a claim for aiding and abetting a breach of fiduciary duty 

requires a showing of an underlying breach in the fiduciary duty, see Gotham 

Partners, L.P. v. Hallwood Realty Partners, L.P., 817 A.2d 160, 172 (Del. 2002), 

this claim also failed, and the district court entered judgment in Verizon’s 

favor. Conclusions of Law at 10. 

Since we have already affirmed the district court’s reliance on its 

summary judgment ruling that Idearc was a wholly-owned subsidiary of 

Verizon, we move directly to the Trustee’s contention that the solvency finding 

does not “relieve” Diercksen of his fiduciary duties to Idearc. The Trustee

contends that Diercksen still had a duty of loyalty to Idearc, which required

Diercksen to establish the “entire fairness” of the spin-off in order to show that 

Diercksen did not breach his duty. However, Anadarko expressly rejected such 

a claim. Anadarko noted that “[i]t is a basic principle of Delaware General 

Corporation Law that directors are subject to the fundamental fiduciary duties 

of loyalty and disinterestedness. Specifically, directors cannot stand on both 

sides of the transaction nor derive any personal benefit through self-dealing.” 

545 A.2d at 1174. Immediately after acknowledging this general rule, the court 

explained that “in a parent and wholly-owned subsidiary context, the directors 

of the subsidiary are obligated only to manage the affairs of the subsidiary in 

the best interests of the parent and its shareholders.” Id. Additionally,

Trenwick, 906 A.2d at 200, applied the rule in Anadarko to a director, 

explaining that a director does not owe a fiduciary duty to a subsidiary 

corporation, except to the extent that the director does not cause the 

corporation to breach its legal duties. Since Idearc was solvent, Diercksen 

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fulfilled any fiduciary duty that he had to Idearc. Thus, the district court did 

not need to inquire into the entire fairness of the transaction. 

Because we find that the district court properly relied on the solvency 

finding and its previous finding that Idearc is a wholly-owned subsidiary, we

also affirm its judgment in favor of Appellees on the breach of fiduciary duty 

and aiding and abetting counts. See Gotham Partners, 817 A.2d at 172.

E. Promoter Liability and Breach of Fiduciary Duty Against Verizon

In Count Nine of the Trustee’s amended complaint for “Promoter 

Liability and Breach of Fiduciary Duty,” the Trustee alleges that Verizon and 

Diercksen, as promoters of Idearc, owed fiduciary duties to Idearc and that 

they breached those duties. ROA 6107–08. Following the district court’s 

valuation findings, the district court entered judgment in favor of Appellees on 

these claims. The Trustee now appeals both the district court’s interpretation 

of the underlying facts and the application of the law with respect to its 

promoter liability claim against Verizon. 

Under Delaware law, the promoters of a corporation have a fiduciary 

relationship with the corporation itself. Gladstone v. Bennett, 153 A.2d 577, 

582 (Del. 1959); see also Bailes v. Colonial Press, Inc., 444 F.2d 1241, 1244 (5th 

Cir. 1971) (“[P]romoters of a corporation stand in a fiduciary relation to the 

corporation, charged with the duty of good faith as in cases of other trusts. The 

fiduciary relation continues until the plan or scheme of promotion has been 

accomplished.”). As previously explained, a wholly-owned subsidiary generally

is not owed fiduciary duties by its corporate parent in the absence of minority 

shareholders. See Trenwick, 906 A.2d at 191–92; Westlake Vinyls, Inc. v. 

Goodrich Corp., 518 F. Supp. 2d 918, 938–39 (W.D. Ky. 2007) (holding that a 

promoter-parent owed no fiduciary duty to its wholly-owned subsidiary). 

There is an exception to this rule, under which a parent owes fiduciary duties 

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to a subsidiary when that subsidiary is insolvent. See N. Am. Catholic Educ. 

Programming Found., Inc. v. Gheewalla, 930 A.2d 92, 101–02 (Del. 2007). 

Based on its subsidiary finding during summary judgment and its

solvency finding after the bench trial, the district court concluded that this case 

was “squarely within the holdings articulated in both Anadarko . . . and 

Westlake Vinyls.” Conclusions of Law at 16. Because Idearc was a whollyowned subsidiary, Verizon and Diercksen, as promoters, did not owe Idearc

fiduciary duties. Since Verizon did not owe Idearc any fiduciary duties, the 

court also concluded that “judgment should be entered for the defendant on the 

[Trustee’s] promoter liability claim.” Id. at 17.

Just as it did with the fiduciary duty count and the aiding and abetting 

count, the district court explained that even if it were to conclude that Idearc 

was not a wholly-owned subsidiary, the Trustee could not prevail on the 

promoter claim. According to the district court, the Trustee could not show, in 

light of the solvency finding, how Idearc or its creditors were damaged by the 

actions enumerated in the complaint, motions for summary judgment, 

responses to motions for summary judgment, the proposed findings of fact and 

conclusions of law, and the joint pretrial order. Id. at 19. The district court 

explained that the Trustee had previously argued that Diercksen and Verizon 

schemed in the promotion of Idearc to accomplish a tax-free debt-for-debt 

exchange, which would relieve Verizon of a significant debt burden and load 

Idearc with debt that it could not support. Id. at 20. Thus, the Trustee had 

claimed that Diercksen and Verizon were liable for the “unsustainable debt 

with which they saddled Idearc”; however, this theory failed because the 

district court found that Idearc was not “saddled” with unsupportable debt. Id. 

It was after subsequent events, including the “Great Recession,” that Idearc 

became unable to support its debt, and these “intervening events . . . sever any 

causal link between Verizon and Diercksen’s actions and Idearc’s bankruptcy.” 

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Id. The district court held that the Trustee had not even attempted to show 

how, given Idearc’s solvency, any damage to Idearc’s creditors could be logically 

related to the alleged breaches of duty by Verizon and Diercksen. Therefore, 

the district court entered judgment in favor of Verizon on Count Nine.22 

On appeal, the Trustee again argues that the district court was factually 

wrong as to its subsidiary finding and that the district court was legally wrong 

because Anadarko does not extinguish the fiduciary duties of a promoter.23

Since we previously affirmed the district court on the subsidiary issue, 

we move to the Trustee’s Anadarko argument. The Trustee claims Anadarko 

does not apply to this case, arguing that the holding is limited to corporate 

parents and their wholly-owned subsidiaries, but that here, Verizon is more 

than a parent—it is a promoter. The Trustee explains that in Anadarko, the 

parent corporation spun-off a subsisting subsidiary that already had a sevenmember board and separate legal counsel, making the parent only an owner 

and not a promoter. In support of its limited approach to Anadarko, the 

Trustee points to language which states that the case should be “confined to 

its specific facts.” 545 A.2d at 1177. Although a federal district court applied 

Anadarko to a parent-promoter in Westlake Vinyls, the Trustee claims that 

Westlake Vinyls’s holding is flawed since Anadarko did not involve promoters. 

22 The Trustee argues that the district court’s comment that the Great Recession 

constituted an intervening event was a finding of fact that warranted a second phase of trial. 

However, the Trustee mischaracterized the comment. We construe this comment as pointing 

to a lack of evidence to support causation.

23 The Trustee also comments that it is entitled to “its day in court” on the promoter 

liability claim. It explains that the “economic reality” of the spin-off was that “through the 

unlawful actions of Verizon’s officer, Diercksen[,] . . . Verizon helped itself to $2.5 billion in 

cash and got the full benefit of the $7.1 billion in Idearc debt.” Because Idearc had no board, 

and because the unlawful board paid illegal dividends, the Trustee maintains that it is 

entitled to a trial on the promoter liability claim. We have previously addressed the issue of 

a jury trial, as well as the propriety of the procedure used by the district court in addressing 

the Trustee’s claims following the bench trial. 

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However, it offers no caselaw to suggest that a parent-promoter falls outside 

the ambit of Anadarko. 

We disagree with the Trustee, as the distinction between a parent and a 

parent-promoter is a distinction without a difference. First, Verizon’s role as 

promoter did not change its status as the sole owner of Idearc. Second, the 

Trustee has not offered any argument for why a parent-promoter should be 

treated differently than a parent in terms of defining its duties to its whollyowned subsidiary. Third, the Trustee has not provided any caselaw to support 

its theory, whereas at least one other court has applied Anadarko to a parentpromoter. See Westlake Vinyls, 518 F. Supp. 2d at 938–39.

Verizon’s role as a promoter does not change the fact that it was the

promoter of its own wholly-owned subsidiary. Thus, to the extent Verizon owed 

duties to Idearc as a promoter, those duties overlapped with the duties it owed 

its wholly-owned subsidiary, so Anadarko applies. Under Anadarko, Verizon 

does not owe Idearc fiduciary duties, so we affirm the judgment of the district 

court on Count Nine.24 

F. Unlawful Dividend

Count Eight of the amended complaint alleges that Diercksen, as 

Idearc’s sole director, approved an unlawful dividend for the benefit of Verizon, 

24 Despite the numerous arguments on this point, the Trustee has failed to challenge 

the district court’s conclusion that, even if Idearc was not a wholly-owned subsidiary and 

Appellees had breached their fiduciary duties, the Trustee had not shown that the breach 

resulted in harm to the creditors. See Conclusions of Law at 19 (holding that the “problem 

for [the Trustee]” is that it “cannot show, in light of the court’s solvency finding, how Idearc 

or its creditors were damaged by the specific actions” about which [the Trustee] complained). 

This was offered as an independent reason for its entry of judgment for Appellees on this 

count. When an appellant challenges only one of the district court’s alternative holdings, any 

argument that the alternative holding was in error is waived. See R.R. Mgmt. Co., L.L.C. v. 

CFS La. Midstream Co., 428 F.3d 214, 220 n.3 (5th Cir. 2005). The Trustee waived any 

challenge to the district court’s alternative holding entering judgment in favor of Verizon on 

Count Nine, so its appeal to Count Nine necessarily fails.

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and that both Diercksen and Verizon are liable for an unlawful dividend claim 

under Delaware law. The district court entered judgment in Appellees’ favor, 

concluding that Idearc had sufficient surplus to issue a dividend and that its 

failure to follow corporate formalities was an insufficient basis on which to hold 

that the dividend was unlawful.25 We agree with the district court. 

Delaware law permits the directors of a corporation to “declare and pay 

dividends . . . [from] its surplus . . . or . . . out of its net profits for the fiscal year 

in which the dividend is declared[.]” Del. Code Ann. tit. 8, § 170(a). Delaware

law describes the process by which a corporation may declare dividends, and 

the relevant section begins with the admonition: “No corporation shall pay 

dividends except in accordance with this chapter.” Id. § 173. Under § 173,

“Dividends may be paid in cash, in property, or in shares of the corporation’s 

capital stock.” Id. Directors may be held liable for a “wilful or negligent 

violation of § 160 or § 173 . . . to the corporation, and to its creditors in the 

event of its dissolution or insolvency, to the full amount of the dividend 

unlawfully paid[.]” Id. § 174.

Delaware law is silent as to whether technical infractions as to the 

declaration of a dividend are sufficient to render a dividend unlawful. 

Similarly, the cases on which the Trustee relies are silent as to whether an 

unlawful dividend claim may rest on these infractions alone. The Trustee

points to Pereira v. Cogan, 294 B.R. 449 (S.D.N.Y. 2003), vacated and 

remanded, 413 F.3d 330 (2d Cir. 2005), in support of its proposition that a 

dividend is illegal when it is not declared by the board in accordance with

25 According to the Trustee, the district court refused to address fact issues relating to 

the violation of corporate formalities, so judgment was not authorized under Federal Rule of 

Civil Procedure 52(a). However, the district court did not address these issues because it 

proceeded under the assumption that Idearc had not properly observed corporate formalities, 

but it found that the failure to follow formalities was legally irrelevant. Thus, the district 

court did not err. 

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Delaware law. However, this overstates the holding of Pereira, which found 

that a dividend was illegal because the dividend was not declared by the board 

in accordance with § 170 and it was issued when the corporation was insolvent. 

Id. at 539–40. Pereira does not state that the failure of the board to declare a 

dividend in accordance with § 170 alone was sufficient to warrant a legal 

remedy. 

The Trustee also argues that because the dividend was declared before 

the spin-off was finalized (and before Idearc had a surplus from which to issue 

a dividend), the dividend was in violation of Delaware law. Again, the Trustee 

relies on a case that is not squarely on point.26 In Vogtman v. Merchants’ 

Mortgage and Credit Co., 178 A. 99, 102 (Del. 1935), the Delaware Supreme 

Court considered whether a corporation had sufficient surplus to declare a 

dividend. The court held that “whether a dividend was rightfully made, the 

transaction must be viewed as of the time when it was declared.” Id. at 102 

(emphasis added). The Trustee relies heavily on this statement, reasoning 

that, as a matter of law, a dividend is unlawful if there was insufficient surplus 

on the date it was declared, irrespective of whether there was sufficient surplus 

on the date on which the dividend was actually paid. However, the actual 

analysis performed by the Vogtman court indicates that the truly relevant 

inquiry is whether the surplus existed on the date of payment. Notably, the 

opinion does not state the date on which the dividend was declared. Rather, 

the court extensively reviews the corporation’s balance sheet as of December 

31, 1932, the day immediately prior to the payment of the dividend. Id. at 102–

03. The court held that the dividend was to be “disregarded” because there 

were insufficient assets from which to pay the dividend on the day before the 

26 Idearc declared the dividend on October 31, 2006. At that time, Idearc had no 

assets, since the spin-off (and thus the transfers of property from Verizon to Idearc) did not 

occur until November 17, 2006.

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dividend was paid. Id. at 103. Given the fact that Vogtman was ultimately 

concerned with the state of the company’s balance sheet immediately prior to 

the payment of the dividend, we reject the Trustee’s contention that Vogtman 

requires that the surplus be available on the precise date it is declared. Since 

there was undoubtedly sufficient surplus on the date the dividend was paid, 

we find that the requirements in Vogtman have been satisfied. 

The Trustee’s final argument is that the dividend was illegal because 

Idearc’s board did not determine whether a surplus actually existed prior to 

declaring the dividend.27 It attacks the district court’s reliance on Klang v. 

Smith’s Food and Drug Centers, Inc., 702 A.2d 150, 152, 156 (Del. 1997), for 

the proposition that “perfection in [the] process [of revaluing assets] is not 

required,” and that “[a] mistake in documenting [a] surplus will not negate the 

substance of the action, which complies with the statutory scheme.” However,

additional caselaw suggests that a violation of corporate formalities when 

issuing a dividend is not enough to substantiate a tort claim when there was 

in fact sufficient surplus for the dividend, thus indicating that the district 

court’s interpretation of Klang is likely correct. 

In Paramount-Richards Theatres, Inc. v. Commissioner of Internal 

Revenue, 153 F.2d 602 (5th Cir. 1946), this court reviewed the decision of a tax 

court denying deductions claimed by a Delaware corporation and two 

shareholders. Id. In addressing the tax issue, Paramount-Richards considered 

whether dividends were issued, concluding, 

Corporate earnings may constitute a dividend notwithstanding 

that the formalities of a dividend declaration are not observed; that 

the distribution is not recorded on the corporate books as such; 

27 In support of this argument, the Trustee cites a lone statement from Diercksen’s 

deposition testimony. ROA 27687. Diercksen was asked if he had ever “tried to ascertain 

whether there was adequate capital and surplus with which to declare such a dividend,” and 

he responded in the negative. Id. Diercksen then immediately asked if the Trustee’s attorney 

could repeat the question because he thought he “answered it way too fast.” Id. 

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that it is not in proportion to stockholdings, or even that some of 

the stockholders do not participate in its benefits.

Id. at 604; see also Fletcher Cyclopedia of the Law of Corporations § 5350 (West 

2011) (“Courts have recognized . . . that a distribution to shareholders may 

amount to a legal dividend without formal vote and resolution of directors, 

even though it was not designated as a dividend by the directors.” (citing 

numerous non-Delaware cases) (internal footnote omitted)). Given that this 

court has acknowledged that a corporation can declare a dividend without 

observing formalities, it would be counterintuitive to simultaneously require 

strict adherence to those formalities to avoid liability for allegedly unlawful

dividends when there was sufficient surplus to fund the dividends. 

Such an interpretation of Paramount-Richards is consistent with the 

Delaware Supreme Court’s statements in Klang. Although Klang is 

distinguishable in that the board of directors there did perform some 

investigation into the corporation’s available assets, the court still spoke 

generally about the need to consider the underlying purpose of Delaware law

when applying it to corporate transactions. See 702 A.2d at 152, 154. This 

functional approach coincides with Paramount-Richards’s “constructive” 

dividend holding. Delaware law is written to prevent the payment of a 

dividend when there are insufficient funds; here, Idearc was solvent, so the 

dividend did not violate the purpose of the law. Accordingly, we affirm the 

district court’s decision with respect to the unlawful dividend claim. 

G. Alter Ego 

Count Eleven of the amended complaint for alter ego alleges that the 

court should “pierce Idearc’s corporate veil and hold Verizon liable for all of

Idearc’s debts, including all debt and other obligations incurred by Idearc in 

connection with or because of the [s]pin-off.” Before the trial, the district court 

had explained that “alter ego” is not a separate cause of action but a remedy to 

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enforce a substantive right. U.S. Bank Nat’l Ass’n v. Verizon Commc’ns Inc., 

3:10-CV-1842-G, 2012 WL 3100778, at *16 (N.D. Tex. July 31, 2012) (citing 

Western Oil & Gas JV, Inc. v. Griffiths, 91 F. App’x 901, 903–04 (5th Cir. 2003) 

(unpublished); In re Grothues, 226 F.3d 334, 337 (5th Cir. 2000)). In its order 

granting in part and denying in part the motion to dismiss, the district court 

did not dismiss the alter ego claim to the extent that it could be used as a theory 

of recovery on the other claims. Id. At summary judgment, the district court 

again stated that it had “already dismissed the plaintiff’s alter ego claim, but 

only to the extent that it is pled as a separate cause of action.” U.S. Bank 

(Summary Judgment), 892 F. Supp. 2d at 829. Following the bench trial, the 

court necessarily found that the alter ego claim failed since the Trustee had 

not prevailed on any of the other claims. Conclusions of Law at 21.

According to the Trustee, “regardless of whether the alter ego is a ‘claim’ 

or a ‘remedy,’ the district court’s dismissal was improper in the bankruptcy 

context” because the Trustee is empowered to sue Verizon based on the

underlying claims of the creditors. The Trustee argues that the alter ego claim 

was independent of a valuation determination and that it should be tried 

before a jury. However, under Texas law, while alter ego theory is a means to 

pierce the corporate veil, it still relies on an underlying claim. In re Grothues, 

226 F.3d at 337–38. Since we affirm the district court’s entry of judgment in 

favor of Appellees on the other claims, we affirm the district court on the alter 

ego claim.

VII. Moot Issues (Motion to Dismiss and Summary Judgment)

The Trustee also appeals aspects of the district court’s orders on 

dispositive motions. Specifically, the Trustee challenges the dismissal of its

unjust enrichment claim; the dismissal of its fraudulent transfer claims with 

respect to the Unsecured Notes and Tranche B debt; the entry of summary 

judgment in Appellees’ favor on the fraudulent transfer and unlawful dividend 

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claims relating to the transfer of $2.5 billion in cash from Idearc to Verizon; 

and the summary judgment ruling limiting the Trustee’s potential recovery on 

the breach of fiduciary duty claim. Appellees argued that these issues are moot

in their response brief, since any error at the motion to dismiss and summary 

judgment stage would be harmless based upon the district court’s findings of 

fact and conclusions of law. The Trustee did not refute this point in its reply 

brief. 

We agree that these claims are moot. First, because the district court 

found that Idearc received reasonably equivalent value for the cash it 

transferred and the debt issued to Verizon, the Trustee’s unjust enrichment 

claim would have failed on the merits even if it survived the motion to dismiss. 

Second, the district court found that the Trustee could not demonstrate the 

necessary fraudulent intent in order to establish actual fraudulent transfer, 

and the solvency finding barred recovery for constructive fraudulent transfer; 

thus, it is moot that the district court disposed of some of the fraudulent 

transfer claims. Third, the district court entered judgment in favor of 

Appellees on the breach of fiduciary duty claim, so any limitations on the 

Trustee’s potential recovery are irrelevant. Since these issues are moot, we 

will not consider the merits of the Trustee’s arguments.

VIII. Conclusion

We find no reversible error in the district court’s case management

decisions, factual findings, and legal conclusions. Accordingly, we AFFIRM the 

judgment of the district court. 

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