Opinion ID: 523612
Heading Depth: 2
Heading Rank: 1

Heading: Dismissal of bulk transfer claim

Text: 7 As indicated, the district court dismissed Pharmacy's claim under the Bulk Transfers Act because the court concluded that PAM was a necessary party to the action. The district court concluded that without PAM, complete relief could not be afforded because Stone's Pharmacy could not perfect its breach of contract claim against PAM. In addition, the court was concerned that PAM's trustee in bankruptcy, acting on behalf of all of PAM's creditors, might have an interest in the transferred assets which interest could not be protected if Stone's Pharmacy were allowed to proceed with its claim against the transferred assets without PAM or the trustee as a party. 8 The court also concluded that, due to the imposition of the automatic stay of 11 U.S.C. Sec. 362 (Supp. IV 1986), PAM was no longer a party to the action and could not become a party until the bankruptcy proceedings had concluded. Thus, because an indispensable party was unavailable, the action was dismissed. 9 The purpose of the Bulk Transfers Act is to protect a transferor's creditors by requiring the transferee to give notice of the transfer of assets. This allows creditors to make whatever arrangements are necessary to protect any rights the creditors may have in the assets which are to be transferred. If a creditor is not given the required notice, then the Act gives the creditor the opportunity to protect his interests in the property even after the transfer has occurred. The Act, however, does not set forth the nature of the remedies which are available to creditors if the requirements of the Act are not met. It states only that the bulk transfer is ineffective against any creditor of the transferor who does not receive notice of the transfer. Tex.Bus. & Com.Code Ann. Sec. 6.105. Under Texas law, if the creditor has a judgment against the transferor then he has the same rights to levy upon the property as he would have if the property were still in the possession of the transferor. Anderson & Clayton Co. v. Earnest, 610 S.W.2d 846, 848 (Tex.Civ.App.1980). If the creditor does not have a judgment against the debtor the creditor may seek a judgment from the debtor and also seek to have the bulk sale set aside, further transfers enjoined, and a receiver or trustee appointed or designated to gather the assets and preserve them for distribution pro rata among the creditors. Id. (citing Southwestern Drug Corp. v. McKesson & Robbins, Inc., 172 S.W.2d 485, 486 (Tex.1943)). 10 Although Stone's Pharmacy does not have a judgment against PAM, it may still proceed in its claim under the Act against FoxMeyer without PAM as a party to the action. Pharmacy's claim against FoxMeyer is simply that the transfer of the assets from PAM to FoxMeyer was made in violation of the Act. PAM is not necessary to make that determination. Consequently, we remand this case to the district court to resolve the factual issues that the earlier panel of this court directed the district court to resolve, i.e., (a) what part of PAM's assets was transferred, (b) whether it was a major part as required by the Act, and (c) whether the exception of section 6.103(3) applies. Stone's Pharmacy I, 812 F.2d at 1066-67. If the district court finds that a violation of the Bulk Transfers Act did occur, it should order a gathering of the assets (or their value) to be held until the rights of PAM's creditors, including Stone's Pharmacy, have been determined in the appropriate forum.
11 The district court also held that Pharmacy's cause of action under the Bulk Transfers Act should be dismissed because the claim is property of the bankruptcy estate and can be brought only in bankruptcy proceedings. The court based this conclusion, in part, on the analysis of the Fifth Circuit in In re MortgageAmerica Corp., 714 F.2d 1266 (5th Cir.1983). 12 In In re MortgageAmerica, the Fifth Circuit determined that the creditor's claims against the sole shareholder of a debtor corporation were subject to the automatic stay because the claims themselves were property of the debtor corporation or involved property of the corporation. Id. at 1277. Using the Fifth Circuit's analysis, the district court determined that the Bulk Transfers Act claim was property of PAM's bankruptcy estate and concluded that the claim was subject to the automatic stay and should be dismissed. 13 We disagree that the Fifth Circuit's analysis in In re MortgageAmerica is applicable to Pharmacy's claim against FoxMeyer. Pharmacy's claim under the Act, at least as limited by this opinion, is separate from any claim Stone's Pharmacy has against PAM and therefore PAM's bankruptcy and the automatic stay do not affect the continuation of this action. We agree that Stone's Pharmacy cannot reduce its claim against PAM to judgment in this action without the permission of the bankruptcy court. And, from the rulings previously made by the bankruptcy court, it appears that Pharmacy's claim against PAM will be litigated in the bankruptcy proceedings. Such litigation, however, does not extinguish the rights of Stone's Pharmacy to seek to assemble the transferred assets for proper distribution when all interests are determined, especially since the record indicates that the bankruptcy trustee has apparently chosen not to pursue the bulk transfers claim in the bankruptcy proceeding or otherwise.