IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

IN RE: §

§

CARROLL THOMAS HARKNESS, §

§

Debtor. §

______________________________ §

§

NCI BUILDING SYSTEMS, LP., §

§

Appellant, §

§

VS. § NO. 4:05-CV-402-A

§

CARROLL THOMAS HARKNESS, §

§

Appellee. §

MEMORANDUM OPINION

and

ORDER

This action comes before the court as an appeal from an

order of the United States Bankruptcy Court for the Northern

District of Texas, Fort Worth Division, the Honorable Russell

Nelms presiding. The court, having considered the briefs of

appellant, NCI Building Systems, LP, and appellee, Carroll Thomas

Harkness (hereinafter "debtor"), the record on appeal, and

applicable authorities, finds that the bankruptcy court's order

should be affirmed.

I.

Jurisdiction

This is an appeal from an order made in conjunction with a

judgment confirming a Chapter 13 plan, finding that appellant's

claims against the debtor were unliquidated under 11 U.S.C. §

 

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The parties refer to a hearing conducted March 2, 2005, but a

transcript of that hearing is not part of the appeal record. 

Moreover, the bankruptcy court's order on debtor's objection to

claims does not reflect that a hearing was held, but merely that the

matter came on for consideration "[o]n this day." The order was

signed March 21, 2005.

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109(e). This court's jurisdiction exists pursuant to 28 U.S.C. §

158.

II.

Underlying Proceedings

Appellant filed a state court lawsuit against debtor, a

former employee, alleging that he had embezzled monies from

appellant. Appellant asserted causes of action for breach of

fiduciary duty, conversion, constructive trust, embezzlement, and

misappropriation. Days before his summary judgment response in

the state court was due, debtor filed his petition for relief

under Chapter 13 of the United States Bankruptcy Code.

Appellant filed a proof of claim, subsequently amended on

two occasions, ultimately claiming unsecured debt in the amount

of Two Hundred Thousand and 00/100 Dollars ($200,000.00) and

secured debt in the amount of One Million One Hundred EightyEight Thousand Two Hundred Ninety-Nine and 97/100 Dollars

($1,188,299.97). R. at 238. Debtor filed his objection to

appellant's claims, arguing that they were contingent and

unliquidated. Id. at 54-57. The bankruptcy court sustained

debtor's objections and finding that appellant's claims were both

unliquidated and contingent. Id. at 91-92.1 Appellant filed a

motion for reconsideration to which debtor responded. On April

 

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Appellant describes the bankruptcy court's rulings and

rationale for same, but the record does not contain a transcript of

the hearing or any order making such rulings or findings.

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21, 2005, the bankruptcy court heard the motion for

reconsideration, found "no basis for the relief requested" and

denied the motion. Id. at 120.2 From the order, appellant

appeals.

III.

Issue on Appeal

The sole issue on appeal is whether appellant's claims for

misappropriation of corporate opportunity were liquidated, so as

to disqualify debtor from proceeding under Chapter 13.

IV.

Standard of Review

To the extent the appeal presents questions of law, the

bankruptcy court's judgment is subject to de novo review. 

Pierson & Gaylen v. Creel & Atwood (In re Consolidated

Bancshares, Inc.), 785 F.2d 1249, 1252 (5th Cir. 1986). Findings

of fact, however, will not be set aside unless clearly erroneous. 

Bankr. R. 8013; Memphis-Shelby County Airport Authority v.

Braniff Airways, Inc. (In re Braniff Airways, Inc.), 783 F.2d

1283, 1287 (5th Cir. 1986). A finding is clearly erroneous,

although there is evidence to support it, when the reviewing

court on the entire evidence is left with a definite and firm

conviction that a mistake has been committed. Id. The mere fact

that this court would have weighed the evidence differently if

sitting as the trier of fact is not sufficient to set aside the

 

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bankruptcy court's order if that court's account of the evidence

is plausible in light of the record viewed in its entirety. 

Anderson v. City of Bessemer City, 470 U.S. 564, 573-74 (1985).

V.

Discussion

At the time debtor filed his Chapter 13 petition, only an

individual with regular income who owed, on the date of the

filing of the petition, non-contingent, liquidated, unsecured

debts of less than Two Hundred Fifty Thousand and 00/100 Dollars

($250,000.00) and non-contingent, liquidated, secured debts of

less than Seven Hundred Fifty Thousand and 00/100 Dollars

($750,000.00) could be a debtor under Chapter 13. 11 U.S.C.

§ 109(e). Appellant takes the position that debtor did not

qualify for Chapter 13, because appellant's claims are not

contingent or unliquidated. The burden was on appellant to show

that debtor did not meet the § 109 debt limit. In re Horne, 277

B.R. 320, 322 (Bankr. E.D. Tex. 2002).

Courts agree that a debt is liquidated if the amount of the

claim has been ascertained or can readily be calculated, whether

contested or not. Id. at 323. Specifically:

A debt is liquidated if the amount due and the date on

which it was due are fixed or certain, or when they are

ascertainable by reference to (1) an agreement or (2)

to a simple mathematical formula.

Id. (quoting In re Visser, 232 B.R. 362, 364-65 (Bankr. N.D. Tex.

1999)). If, however, judgment, discretion, or opinion is

required to determine the amount of the claim, it is

unliquidated. Id. at 325-26. The Fifth Circuit has recognized

 

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that debts based on tort are generally unliquidated until

resolved by judicial decree or otherwise, because the plaintiff's

damages are not fixed. Denham v. Shellman Grain Elevator, Inc.,

444 F.2d 1376, 1380 (5th Cir. 1971); In re Pulliam, 90 B.R. 241,

246 (Bankr. N.D. Tex. 1988). In the case at hand, as in In re

Robertson, 143 B.R. 76 (Bankr. N.D. Tex. 1992), appellant has the

burden of proving factual predicate for its claims. Thus, they

are unliquidated. Appellant has not shown that the bankruptcy

court erred in its rulings.

VI.

Order

For the reasons discussed herein,

The Court orders that the order of the bankruptcy court from

which appeal is taken be, and is hereby, affirmed.

SIGNED August 18, 2005.

 /s/ John McBryde 

JOHN McBRYDE

United States District Judge

 

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