* Pursuant to 5 TH C IR

. R. 47.5, the Court has determined

that this opinion should not be published and is not precedent

except under the limited circumstances set forth in 5 TH C IR

. R.

47.5.4. UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_____________________

No. 97-10517

Summary Calendar

_____________________

LAWRENCE E. STEINBERG

Plaintiff-Counter Defendant-Appellee,

versus

CINEMA N’ DRAFTHOUSE SYSTEMS, INCORPORATED; JOHN J. DUFFY; JAMES

T. DUFFY; NORMA S. DUFFY

Defendants,

CINEMA N’ DRAFTHOUSE SYSTEMS, INCORPORATED

Defendant-Counter Claimant-Appellant.

Appeal from the United States District Court

for Northern District of Texas

(3:91-CV-1044-R)

December 23, 1997

Before WIENER, BARKSDALE, and EMILIO M. GARZA, Circuit Judges.

PER CURIAM: *

Our court has already twice visited the dispute between these

parties. See Steinberg v. Cinema N’ Drafthouse Systems, Inc., 28

F.3d 23 (5th Cir. 1994)( S teinberg I ); Steinberg v. Cinema N’- 2 -

Drafthouse S

ystems, Inc. , No. 95-11222 (5th Cir. July 12, 1996)

( Steinberg II ).

Steinberg is owner and holder of a note g iven by Cinema and

guaranteed by the Duffys (the latter are not parties to this

appeal). Cinema contends that the district court erred by

dismissing on the merits its counterclaim against S teinberg, by

which Cine ma sought to recover any losses incurred by it as a

result of indemnifying the Duffys. Needless to say, we review

findings of fact for clear error; legal co nclusions, d e novo

.

E.g., Phillips Petroleum Co. v. Best Oilfield Servs., Inc.

, 48 F.3d

913, 915 (5th Cir. 1995).

Cinema contends init ially that the district court erred

because, according to Cinema, the primary basis for dismissal was

that it was required by Steinberg I

, discussed below. The district

court did note that a successful counterclaim against Steinberg

would conflict with this court’s mandate in Steinberg I. H owever,

the court did not dismiss the counterclaim on that basis.

Cinema, as maker, executed a note evidencing a $100,000

loan from a bank. The Duffys each guaranteed payment of the entire

loan. Security for the loan was given by way of a collateral

pledge of Cinema’s st ock in its wholly owned subsidiaries.

Steinberg, having executed a take out commitment, became the owner

and holder of the note, guaranties and collateral pledge when the

loan was not paid at maturity. Steinberg foreclosed on the- 3 -

collateral by public sale and became the purchaser for $5,000.

Steinberg then sued Cinema and the Duffys for the deficiency.

Both Cinema and the Duffys defended the action on the basis

that the sale was not conducted in a commercially reasonable

manner, and that under Texas law, Cinema, as the primary obligor,

and the Duffys, as guarantors, were discharged from liability for

the deficiency. The district court rendered a take nothing

judgment against Steinberg, finding that the sa le had been

commercially un reasonable and that neither Cinema nor the Duffys

could waive the right to a commercially reasonable sale.

O n appeal, our court reversed in part, holding th at the

Duffys, as guarantors, could and had waived their right to a

commercially reasonable sale. Steinberg v. Cinema ‘n’ Drafthouse

Systems, Inc. , 28 F.3d 23 (5th Cir. 1994) ( Steinberg I ).

On remand to the district court, Cinema and the Duffys moved

to amend their answers to assert counterclaims. Cinema sought to

assert a counterclaim against Steinberg to recover as damages under

T EX

. B US

. & C OMM

. C ODE § 9.507 all amounts wh ich it is obligated to

pay to the Duffys by way of reimbursement for the amounts paid by

them in satisfaction of Steinberg’s judgment. The Duffys also

sou ght leave to assert a counterclaim against Steinberg for the

amounts which they were obligated to pay Steinberg on his judgment

and were unable to reco ver from Cinema because Cinema was

discharged due to the sale being commercially unreasonable. The- 4 -

district court denied leave to amend finding that the counterclaims

were untimely.

In an unpublished opinion , our court affirmed the denial of

leave to amen d as to the Duffys, but reversed as to Cinema.

Steinberg v. Cinema N’ Drafthouse Systems, Inc., No. 95-11222 (5th

Cir. July 12, 1996) ( Steinberg II ). The panel allowed Cinema to

assert their counterclaim because Cinema’s cause of action did not

accrue until the Duffys demanded indemnification, whi ch occurred

after the decision in Cinema I.

On remand, leave to amend was granted; and the district court

considered Cinema’s counterclaim on the merits. The dismissal of

that counterclaim by the district cou rt is now before us in this

third appeal.

Cinema’s counterclaim was premised on the fact that it would

have a legal obligation to reimburse the Duffys. As discussed in

the district court’s comprehensive opinion, that court determined

correctly that the only possible claim the Duffys would have

against Cinema is one for equitable subrogation. M .D. Fleetwood v.

Med Center Bank

, 786 S.W.2d 550, 553-54 (Tex.Ct.App. 1990). The

court also determined correctly that t his claim would fail.

Guillot v. Hix

, 838 S.W.2d 230, 232 (Tex. 1992). Consequently,

Cinema’s counterclaim against Steinberg would necessarily fail.

St. Paul Mercury Ins. Co. v. Lexington Ins. Co.

, 78 F.3d 202, 208-

09 (5th Cir. 1996). In sum, the court determined that Cinema would- 5 -

not be ob ligated to reimburse the Duffys, and consequently, any

counterclaim for reimbursement against Steinberg was without merit.

The district court also dismissed the counterclaim on a second

basis, that Cinema’s damages on its counte rclaim would not be

recoverable because they are consequent ial and precluded by Tex.

Bus. & Comm. Code § 1.106(a). We need not address this issue.

AFFIRMED