Court Opinion

ID: 4407953
Source: CourtListenerOpinion
Date Created: 2019-06-19 00:00:21.316661+00
Date Added: 2024-06-11T14:52:46.405851
License: Public Domain

Case: 18-50554      Document: 00515000687         Page: 1    Date Filed: 06/18/2019

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

                                    No. 18-50554                            FILED
                                  Summary Calendar                      June 18, 2019
                                                                       Lyle W. Cayce
                                                                            Clerk
BURTON MAURICE KAHN, an Individual,

                                                 Plaintiff-Appellant

v.

ROBERT RIPLEY, an Individual,

                                                 Defendant-Appellee

                   Appeal from the United States District Court
                        for the Western District of Texas
                             USDC No. 5:17-CV-784

Before JOLLY, COSTA, and HO, Circuit Judges.
PER CURIAM: *
       This case is the latest round in a long-running dispute between former
officers of Helvetia Asset Recovery, a Texas corporation that buys land and
then sells it to developers. Plaintiff Burton Maurice Kahn was the company’s
president for about four years until he was ousted in 2013. Defendant Robert
Ripley is the owner of the Bahamian corporation that is the sole shareholder
of Helvetia. The prior court proceedings involve state court civil litigation filed

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
    Case: 18-50554    Document: 00515000687      Page: 2   Date Filed: 06/18/2019

                                  No. 18-50554

by both sides, a state criminal charge (later dropped) against Kahn, and Kahn’s
Chapter 7 bankruptcy in which all his nonexempt assets, including causes of
actions, were sold to Helvetia.
      The district court dismissed this latest lawsuit at the pleading stage
under Rule 12. It concluded that the prior litigation and bankruptcy sale
meant that Kahn did not have standing to assert economic injuries based on a
supposed property interest in assets that other courts have already held he no
longer owns. The court relatedly held that res judicata bars Kahn’s claims like
conversion that seek to recover property whose ownership was resolved in
earlier cases. That left only Kahn’s claim for personal injuries like mental
anguish that he alleged resulted from Ripley’s lying to law enforcement in
violation of Texas Penal Code § 37.08. See United States v. Basey, 816 F.2d
980, 989 n.13 (5th Cir. 1987). Although the earlier litigation did not bar this
claim, the district court concluded that Kahn did not allege enough details to
state a plausible claim.
      We agree in all respects.      First, the district court did not err in
determining that Kahn lacked standing to pursue most of the claims. The
court correctly concluded that (1) Kahn’s current claims relating to ownership
of certain assets were interrelated to the claims decided against him in the
prior state court proceedings and (2) that he sold his claims and interests in
Helvetia to that company during his bankruptcy. Because Kahn did not have
any legal interest in Helvetia, he could not show that he suffered any economic
injury due to Ripley’s alleged conversion of property. See Crane v. Johnson,
783 F.3d 244, 251 (5th Cir. 2015).
      Much of the same analysis supports the district court’s additional
conclusion that res judicata bars Kahn’s attempt to revive claims related to
those rejected in state court. Although res judicata is an affirmative defense

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                                  No. 18-50554

generally not suited to resolution on the pleadings, dismissal under Rule
12(b)(6) is appropriate if the res judicata bar is apparent from the pleadings
and judicially noticed facts. See Test Masters Educ. Servs., Inc. v. Singh, 428
F.3d 559, 570 n.2 (5th Cir. 2005); see also Cinel v. Connick, 15 F.3d 1338, 1343
n.6 (5th Cir. 1994). The district court was allowed to take judicial notice of the
public records in the three prior state court proceedings. See Taylor v. Charter
Med. Corp., 162 F.3d 827, 829 (5th Cir. 1998); Cinel, 15 F.3d at 1343 n.6. It is
apparent from those state court records that the earlier rulings preclude
Kahn’s current claims. See Citizens Ins. Co. of Am. v. Daccach, 217 S.W.3d
430, 449 (Tex. 2007).
          That leaves Kahn’s claim for false reporting of a crime that seeks
compensation for personal injuries he allegedly suffered. We agree that the
complaint does not allege sufficient detail to support a plausible claim for that
relief.
          Accordingly, we AFFIRM the judgment of the district court. Kahn’s
motion for sanctions is DENIED.         Ripley’s motion for sanctions is also
DENIED. But whether to sanction Kahn is a close call, so Kahn is advised
that further frivolous litigation may result in substantial sanctions under
Federal Rule of Appellate Procedure 38 or this court’s inherent authority and
may include monetary sanctions and restrictions on access to federal courts.

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