Opinion ID: 2655125
Heading Depth: 2
Heading Rank: 3

Heading: The Present Cause of Action

Text: The present action began as an adversary proceeding by Tembec in the bankruptcy case. Tembec filed a “Complaint to Determine Validity, Priority and/or Extent of Real Estate Mortgage, Security Agreement of Leases and Rents” against Amzak in August 2010. Tembec’s complaint alleged, in relevant part, that the Amzak mortgage was ineffective, because it had no property description, and the mortgage act of correction was ineffective. Amzak filed its 1 Prior to this sale, the Official Committee of Unsecured Creditors (the “Committee”) in WFA’s bankruptcy sued Amzak to have its mortgage invalidated. When the Committee’s claims were heard in November 2010, WFA’s bankruptcy had been converted from a Chapter 11 case (involving the Committee) to a Chapter 7 case (involving a trustee and no creditors committee). The bankruptcy court dismissed the Committee’s claims because the Committee ceased to exist. The bankruptcy court also dismissed the trustee’s claims asserting the rights of the Committee on the grounds (i) the trustee was bound, as WFA’s successor, by WFA’s release of Amzak in the DIP order, and (ii) the trustee was the successor of the debtor and not of the Committee and could not assert the rights of the Committee. 5 Case: 13-30675 Document: 00512546787 Page: 6 Date Filed: 02/27/2014 No. 13-30675 answer and third-party complaint, requesting a jury trial, against STG and STL. They answered. Amzak also filed a motion for summary judgment on all counts and prevailed. The bankruptcy court dismissed Tembec’s complaint entirely and that ruling was certified as final. Tembec did not appeal. Amzak moved to transfer the case from bankruptcy court to the district court. The district court granted Amzak’s motion to withdraw the reference of the adversary proceeding. Amzak timely filed its amended third-party complaint, still requesting a jury, adding Admiral Insurance Company (“Admiral”) as a third-party defendant and amending its claims and damages against STG, STL, and Admiral (collectively, “defendants”). Amzak’s claims against defendants included: (a) its claim for its loan loss of $10.4 million due to the title defect and (b) its claim for reimbursement of fees and expenses of $347,668 incurred during the bankruptcy case. Its claims were grounded in breach of contract under the title policy against STG and in negligence against all defendants. The parties filed cross-motions for partial summary judgment relating to the loan loss claim. The district court rejected Amzak’s contract and negligence claims but never decided the issue of the validity or invalidity of the title of the mortgage. In May 2013, the district court entered its judgment under Rule 54(b). 2 Amzak timely appealed. 2 After the district court entered this judgment against Amzak on the title claim and the negligence claim, Amzak filed a Motion to Designate Judgments Final and for Stay or Continuance of Case Pending Appeal. The remaining claim involved attorney’s fees, and Amzak argued that the fees claim should be subsumed by the rulings dismissing Amzak’s other claims. The district court disagreed and found that fact issues remained regarding the fees claim and the claim for statutory penalties, and as a result, the remaining claims would be stayed pending appeal. 6 Case: 13-30675 Document: 00512546787 Page: 7 Date Filed: 02/27/2014 No. 13-30675