Court Opinion

ID: 62389
Source: CourtListenerOpinion
Date Created: 2010-04-26 04:43:43+00
Date Added: 2024-06-11T11:50:25.454867
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                   FOR THE FIFTH CIRCUIT United States Court of Appeals
                                                  Fifth Circuit

                                                                      FILED
                                                                     June 3, 2008

                                     No. 07-40385                Charles R. Fulbruge III
                                                                         Clerk

In the Matter of: JAMES H MAPLES; VIRGINIA KATHLEEN MAPLES

                                         Debtors

-------------------------

JAMES H MAPLES; VIRGINIA KATHLEEN MAPLES; TEXAS STATE
BANK

                                         Appellees
v.

JOHNNY PARTAIN

                                         Appellant

                      Appeal from the United States District Court
                           for the Southern District of Texas

Before REAVLEY, JOLLY, and GARZA, Circuit Judges.
PER CURIAM:
        The opinion issued in this case on May 30, 2008, is withdrawn and this
revised opinion is substituted therefor.
        Appellant Johnny Partain, proceeding pro se, raises twenty-seven issues
in this appeal from the district court’s affirmance of the bankruptcy court’s final
judgment in this adversary proceeding.             After considering the briefs and
                                        No. 07-40385

reviewing the record, we find no reversible error in the district court's judgment.
The judgment of the district court is therefore AFFIRMED.1
      The dissent raises two issues and, as to these issues, enunciates general
principles. We do not so much disagree with the statements of general principles
as with the certainty of the dissent that they have a precise fit in this case. This
case is poorly briefed, and the record is incomplete. The majority is therefore
unwilling to say anything other than that the district court committed no
reversible error in affirming the bankruptcy court. We would observe that, in
our opinion, it is not pellucid that Mr. Partain’s charge of conspiracy between
Texas State Bank (“TSB”) and the debtor and/or the debtor’s estate to deprive
him of his counsel does not allege and relate to liability on the part of the
debtor’s estate in connection with this adversary proceeding. Thus, based on
what is before us, we will not say flatly that the bankruptcy court had no
jurisdiction to address this claim. The claim, in any event, is patently meritless.
Second, it is uncertain whether, at some point, the bankruptcy court may have
acquired jurisdiction over the assets of the corporation given that the stock of the
corporation is now solely controlled by the bankruptcy trustee, who apparently
had control over the assets at all the relevant times herein. The record and law
are clear, however, that Mr. Partain never had any interest in these assets at
any time relevant to these proceedings. We are therefore satisfied simply to
AFFIRM.
                                                                              AFFIRMED.

      1
          This opinion is published on the request of the dissenting judge.

                                               2
                                   No. 07-40385

EMILIO M. GARZA, Circuit Judge, concurring in part and dissenting in part:
      I find it ironic that the majority states that my dissenting opinion merely
“enunciates general principles,” while resting its own decision (which includes
no citation to legal authority) on the fact that the majority is simply “uncertain”
as to the “precise fit” of these principles to the case at hand. These “general
principles,” which the majority fails to enunciate, are nothing other than the
foundational principles of bankruptcy jurisdiction. While I admit that the
briefing is poor, this difficulty does not authorize the majority’s abdication of any
meaningful review of the jurisdictional issues raised below. Therefore, I concur
in the majority’s affirmance except as to the following.
      First, the bankruptcy court did not have subject matter jurisdiction over
Partain’s counterclaim against Texas State Bank (“TSB”) in which Partain
alleged that TSB intentionally created a conflict of interest with Partain’s
attorney in a prior case. The law is certainly pellucid))even if the majority
believes a claim to be “patently meritless”))that the bankruptcy court must
have subject-matter jurisdiction before reaching the merits of a claim. See Steel
Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-95 (1998). “[B]ankruptcy courts
are not courts of general jurisdiction and do not have jurisdiction over an action
between non-debtors . . . unless that action is ‘related to’ the bankruptcy.” In re
Prescription Home Health Care, Inc., 316 F.3d 542, 547 (5th Cir. 2002); see 28
U.S.C. § 1334(b). “[A]n action is related to bankruptcy if the outcome could alter
the debtor’s rights, liabilities, options, or freedom of action (either positively or
negatively) and . . . in any way impacts upon the handling and administration
of the bankrupt estate.” In re Walker, 51 F.3d 562, 569 (5th Cir. 1995) (internal
quotation marks omitted). Any liability that might arise from this claim would
be borne individually by TSB. Nothing in the record suggests that TSB’s
potential exposure would impact the Mapleses’ bankruptcy estate. Because this
claim between third parties has no conceivable effect on the bankruptcy estate,

                                         3
                                           No. 07-40385

the bankruptcy court improperly resolved this claim over which it lacked subject-
matter jurisdiction. See In re Zale Corp., 62 F.3d 746, 753 (5th Cir. 1995).
       Secondly, the bankruptcy court exceeded its statutory grant of jurisdiction
over property when it placed Global Limo’s corporate assets into the individual
bankruptcy estate of the Mapleses. The bankruptcy court’s jurisdiction over
property is limited to “property, wherever located, of the debtor as of the
commencement of such case, and [] property of the estate.”                                28 U.S.C.
§ 1334(e)(1). The Mapleses’ property interests, unless otherwise dictated by the
bankruptcy code, are determined by reference to state law. See Butner v. United
States, 440 U.S. 48, 54-55 (1979).                 Even though the Mapleses were sole
shareholders of Global Limo, they never owned Global Limo’s corporate assets.
See Trott v. Flato, 244 S.W. 1085, 1088 (Tex. Civ. App. 1922) (collecting cases).
Despite forfeiture of its charter, the corporation still existed at the time the
Mapleses filed for bankruptcy. See Humble Oil & Ref. Co. v. Blankenburg, 235
S.W.2d 891, 893-94 (Tex. 1951). The forfeiture of Global Limo’s corporate
charter did not provide the Mapleses with any new ownership interest in Global
Limo’s property. As such, the Mapleses were never more than shareholders of
Global Limo; and they did not have a property interest in Global Limo’s
corporate assets at the time they filed for bankruptcy.1                           Nor could the
bankruptcy court have placed corporate assets into the Mapleses’ estate through
an avoided preference under 11 U.S.C. § 547(b). Any transfer of Global Limo’s
assets was not a transfer of a property interest held by the Mapleses. See In re
Kelton Motors, Inc., 97 F.3d 22, 25 (2d Cir. 1996) (Under § 547(b), a trustee “may
only seek those legal or equitable interests that the debtor would have held at

       1
          The only argument raised by the Mapleses to address this issue on appeal is that they became
“beneficial owners” of Global Limo’s corporate assets when the charter was forfeited. As noted above,
the forfeiture of Global Limo’s charter did not change the Mapleses’ ownership interest in Global Limo’s
assets. Courts and leading treatises have recognized that a debtor’s equitable or beneficial interest as
a shareholder is insufficient to allow corporate assets to be placed in the debtor’s bankruptcy estate.
See Fowler v. Shadel, 400 F.3d 1016, 1018-19 (7th Cir. 2005) (collecting sources).

                                                   4
                                  No. 07-40385

the time of the petition but for the debtor’s transfer of those interests.”).
Accordingly, Global Limo’s corporate assets were neither property of the
Mapleses at the time of filing nor property of the estate. To the extent that it
placed Global Limo’s corporate assets into the Mapleses’ bankruptcy estate, the
bankruptcy court exceeded the limits of its jurisdiction under § 1334(e)(1).
      For the foregoing reasons, I would vacate the district court’s judgment to
the extent the bankruptcy court lacked jurisdiction under § 1334(b) and
§ 1334(e)(1). As such, I respectfully dissent from the majority’s decision to affirm
the district court judgment in its entirety.

                                         5