### IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 13

- 10468

In the Matter of: R.E. LOANS, L.L.C.; R.E. FUTURE, L.L.C.; CAPITAL SALVAGE, a California Corporation,

Debtors

WELLS FARGO CAPITAL FINANCE, L.L.C.,
Appellant

v. GORDON NOBLE; ARLENE DEA DEELEY ; FREDRIC C. MENDES; NANCY RAPP; PHILLIP CANTOR; JOHN EMANUELE; IRENE LEE; DAVID NOLAN,
Appellees

Appeal from the United States District Court for the Northern District of Texas U

. S

. D

. C

. No. 3:12

- cv
- 3513

Before REAVLEY , PRADO, and OWEN, C ircuit Judges

. PER CURIAM: * Before the Court is Defendants

– Appellees’ Motion to Dismiss the Appeal
as Moot . For the reasons stated herein, we grant the motion and dismiss the appeal as moot.

* 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 R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5 TH C IR .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 Fifth Circuit 

### FILED February 5, 2014

Lyle W. Cayce Clerk Case: 13-10468 Document: 00512523153 Page: 1 Date Filed: 02/05/2014No. 13

- 10468
I. FACTUAL AND PROCEDUR AL BACKGROUND Defendants

– Appellees Gordon Noble, Arlene Dea Deeley, Fredric C. Mendes, Nancy Rapp, Phillip Cantor, John Emanuele, Irene Lee, and David Nolan (the “ Class Plaintiffs ”) filed a consoli dated putative class action complaint (the “Consolidated Complaint”) in California state court against Plaintiff

–

Appellant Wells Fargo Capital Finance, L.L.C. (“Wells Fargo”). The present appeal stems from Wells Fargo’s attempt to attack the Consolidated Complaint through an action in the United States Bankruptcy Court for the Northern District of Texas

. The Class Plaintiffs are former investors in R.E. Loans, LLC (“REL”).
REL is a hard

- money lender that raised funds to make real estate secured
loans to r eal estate developers . Suffering from a liquidity shortage, REL entered into a senior secured credit facility with Wells Fargo in July 2007. Later, in November 2007, REL and its member

– investors, including the Class Plaintiffs, entered into a transaction (the “Exchange Offering”) wherein the
member

– investors exchanged their equity interest in REL for junior secured notes issued by REL. As the real estate market worsened, so did REL’s financial condition. Ultimately, REL filed for bankruptcy in the Unite d States Bankruptcy Court for the Northern District of Texas . U nder its Chapter 11 Plan of Reorganization, the REL estate released all claims against Wells Fargo that were property of the REL estate on the effective date of the plan

. In their Consolidated Complaint, the Class Plaintiffs allege that they
were induced into participating in the Exchange Offering through misrepresentations the managers of REL made to them, and that Wells Fargo provided assistance in the managers’ misrepresentations. Wells Far go, in turn, commenced an adversary proceeding in the bankruptcy court , and moved therein to enjoin prosecution of the Consolidated Complaint on the ground that
the asserted causes of action were property of the REL estate and that the REL 2 Case: 13-10468 Document: 00512523153 Page: 2 Date Filed: 02/05/2014No. 13

- 10468 estate had released all claims against Wells Fargo. Specifically, Wells Fargo argued that the Consolidated Complaint sought recovery for harm to REL and

t hat the Class Plaintiffs’ injuries w ere derivative of, and secondary to, the
harm REL allegedly suff ered. The bankruptcy court denied the motion and dismissed the adversary proceeding. On appeal, the United States District Court for the Northern District of Texas affirmed in part and reversed in part. The district court considered the facial allegation s in the Consolidated Complaint and affirmed the denial of an injunction as to the cause of action stemming from the Class Plaintiffs’ entry into the Exchange Offering. The district court reasoned that the cause of action sought to recover for personal in jury to the Class Plaintiffs and, thus, was not property of the REL estate

. The district court reversed as to the other causes of action. Wells Fargo appeals the affirmance

. II. THE CLASS PLAINTIFFS ’ MOTION TO DISMISS On August 2, 2013, after Wells Fargo fil ed its opening brief, the Class Plaintiffs filed a Motion to D ismiss the Appeal as Moot . Mootness “is ‘the doctrine of standing in a time frame. The requisite personal interest that must exist at the commencement of litigation (standing) must continue th roughout its existence (mootness).’” Ctr. f or Indiv

. Freedom v. Carmouch , 449 F.3d 655, 661 (5th Cir. 2006) (quoting U.S. Parole Comm’n v. Geraghty , 445 U.S. 388, 397 (1980)). A case may become moot when “an intervening factual event

. . . causes the pla intiff to no longer have a present right to be vindicated or a stake or interest in the outcome.” Dailey v. Vought Aircraft Co. , 141 F.3d 224, 227 (5th Cir. 1998). However, “[a] case should not be declared moot ‘[a]s long as the parties maintain a “concrete interest in the outcome” and effective relief is available to remedy the effect of the violation.’” Envtl. Conservation Org . v. City of Dall

. , Tex. , 529 F.3d 519, 527 (5th Cir. 2008) (quoting Dailey , 141 F.3d at 227). 3 Case: 13-10468 Document: 00512523153 Page: 3 Date Filed: 02/05/2014No. 13

- 10468 According to the Class Plaintiffs, Wells Fargo’s appeal seeks review of the district court’s interpretation of the facial allegations in the Consolidated Complai nt. However, the Class Plaintiffs argue, because the Consolidated Complaint has been superseded in California state court by a “significantly amended” complaint (the “Third Amended Complaint”) and because the Third Amended Complaint is not before this Cou rt , 1 the present appea l should be dismissed as moot. Though conceding that the Third Amended Complaint is “different in several respects from the Consolidated Complaint,” Wells Fargo responds that “the Third Amended Complaint does not abandon the claims at issue in this appeal” involving the Exchange Offering. Therefore, Wells Fargo argues, it has a concrete interest in the outcome and effective relief is available because the Consolidated Complaint and the Third Amended Complaint “allege the
same theori es of harm in connection with the Exchange Offering.” We disagree. The crux of this appeal, and of the underlying adversary proceeding, challenges “ [w] hether a specific cause of action belongs to a bankruptcy estate [

— ] a matter of law that [the reviewing court will] decide by reference to the facial allegations in the complaint.” In re Seven Seas Petroleum, Inc. , 522 F.3d 575, 583 (5th Cir. 2008) (citing In re Educators Gr p

. Health Trust , 25 F.3d 1281, 1285 (5th Cir. 1994)). In the adversary proceeding
b elow, Wells Fargo challenged only the allegations in the Consolidated Complaint. Similarly, on appeal, Wells Fargo has raised only the causes of
action asserted in the Consolidated Complaint.
T he Consolidated Complaint , however, is no longer the operative complaint and has no legal effect because the Third Amended Complaint has

1 Wells Fargo is currently challenging the Third Amended Complain t in a ne wly filed adversary proceeding in the United States Bankruptcy Court for the Northern District of Texas. 4 Case: 13-10468 Document: 00512523153 Page: 4 Date Filed: 02/05/2014No. 13

- 10468 superseded it and does not incorporate the Consolidated Complaint

. See, e.g. , King v. Dogan , 31 F.3d 344, 346 (5th Cir. 1994) (“An amended complaint supersedes the original complai nt and renders it of no legal effect unless the amended complaint specifically refers to and adopts or incorporates by reference the ea rlier pleading.”); Foreman & Clark Corp. v. Fallon , 3 Cal. 3d 875, 884 (1971) (“ It is well established that an amendatory pleading supersedes the original one, which ceases to perform any function as a pleading .” (citing Meyer v. State B d. of Equalization , 42 Cal. 2d 376, 384 (1954))). We need not decide whether the amendment of the complaint, alone, is sufficient to moot

t his appeal. I t suffices to hold that the facts alleged in the Third Amended Complaint are sufficiently different from those the bankruptcy court and
district court reviewed below . The differences between the two complaints are such that Wells Fargo no lo nger has a right to be vindicated or a stake in the outcome of the Consolidated Complaint. Wells Fargo’s appeal is moot.
III. C ONCLUSION Accordingly, we GRANT the Class Plaintiffs’ motion to dismiss the appeal and DISMISS Wells Fargo’s appeal as moot.

5 Case: 13-10468 Document: 00512523153 Page: 5 Date Filed: 02/05/2014