Court Opinion

ID: 19484
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:24:51+00
Date Added: 2024-06-11T15:04:48.023092
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                              FOR THE FIFTH CIRCUIT

                                     No. 99-30494

BILLY R. VINING, TRUSTEE; JANET OCHS NORRIS;
JAMES ALLAN NORRIS, JR.; TOMMYE CONNER NORRIS;
and JOHN GRAHAM NORRIS, JR., M.D.,

                                                                       Appellees,

versus

JOHNSON & PLACKE; DON H. JOHNSON;
ALLAN L. PLACKE,

                                                                       Appellants.

                            --------------------
               Appeal from the United States District Court
                   for the Western District of Louisiana
                                 (96-CV-312)
                            --------------------

                                 November 26, 1999

Before POLITZ, WIENER, and BENAVIDES, Circuit Judges.

PER CURIAM:*

       This        appeal   arises   from   a   bizarre    and   acrimonious   fact

situation with which the parties hereto are all too familiar and

from       which    considerable     litigation,    both    criminal   and   civil,

evolved.       The instant appeal involves one aspect of bankruptcy

proceedings emanating from the real-life soap opera that provides

the historical background of this case.               Specifically, Appellants

consist of a Monroe, Louisiana law firm and its two current

partners (collectively “Appellants”) who are judgment creditors of

       *
        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that this opinion should not be published and is not precedent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.
Appellee James Allan Norris, Jr., attorney at law (“Debtor”), the

debtor in the subject bankruptcy, who is also the non-discharged

judgment debtor and former partner of Appellants. Appellees Tommye

Conner Norris and John Graham Norris, Jr., M.D. (collectively

“First Mortgagees”) are, respectively, the now-deceased mother and

the cousin of the Debtor, to whom they loaned money and from whom

they accepted as collateral special mortgages on property of the

Debtor.   The First Mortgagees’ special mortgages were obtained and

duly recorded before Appellants obtained and recorded their money

judgment against   the    Debtor   and   before   they   put   Debtor   into

involuntary bankruptcy.

     Appellants have contended all along that the First Mortgagees

colluded with the Debtor to put his assets beyond the reach of his

creditors by participating with him in the mortgage transactions

referred to above, insisting that the mortgages and the first liens

they create on the property of the Debtor should be disallowed for

purposes of his bankruptcy, the result of which would be to make

Appellants’ judicial mortgages first in rank among encumbrances on

the properties of the Debtor that he mortgaged to the First

Mortgagees.

     Specifically, the instant appeal arises from an adversary

proceeding that was instigated by Appellee Billy R. Vining, Trustee

(the “Trustee”) in the bankruptcy court for the Western District of

Louisiana against the First Mortgagees. The Trustee sought to have

the mortgages on the property of the Debtor voided as collusive.

The adversary proceeding was removed from the bankruptcy court to

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the district court when, because of a jury trial request, the

reference was withdrawn.

       The district court conducted a full-blown, two-day jury trial

which the district court terminated and dismissed, after the case

had gone to the jury, on joint motion of the Trustee and the First

Mortgagees who reached a settlement and compromise of the issues

before the court:       Perceiving the likelihood that the jury would

find the First Mortgagees credible and hold in their favor, the

Trustee advocated and the First Mortgagees accepted a settlement

proposal that would recognize the validity of the mortgages and

cause title to the mortgaged properties to be conveyed by the

Trustee to the First Mortgagees —— free and clear of all junior

encumbrances    ——   in    satisfaction       of   their   secured     claims,   in

consideration of payment of $205,000 by the First Mortgagees to the

Trustee for the benefit of the bankruptcy estate of Debtor and the

waiver of some $40,000 in fees and commissions by the Trustee,

which would be paid to Appellants.                 The court was prepared to

approve the settlement and compromise and authorize the sale but

Appellants     objected.       Before        approving     the   settlement      and

authorizing the sale, therefore, the district court conducted a

hearing on October 1, 1998, at which Appellants were ordered to

file   their   expert     reports   on       the   valuation     of   the   subject

properties by or before November 13, 1998. The expert reports were

in fact submitted on December 11, 1998 and, according to the

district court, were given full consideration along with all other

evidence and pleadings.          Concluding that, notwithstanding the

                                         3
opposition    and   expert   evidence     submitted    by   Appellants,   the

proposed amicable disposition was fair and reasonable, the court

approved the compromise and settlement and authorized the sale on

the terms and conditions set forth in the settlement agreement.

Even though a result of the compromise and sale was to produce an

additional $205,000 for the estate of the Debtor, Appellants

remained dissatisfied, primarily because the subject properties

would be conveyed to the First Mortgagees free and clear of

Appellants’ judicial mortgage that resulted from the filing and

recording    of   their   judgment   against   the    Debtor.     This   would

eliminate the security of the Appellants in those properties. They

therefore sought a new trial, which the district court denied.

This appeal ensued.

     The sole claim of reversible error advanced to this court by

Appellants is the purported failure of the district court to comply

with 11 U.S.C. § 363 before approving the sale of the subject

property free and clear of Appellants’ judicial mortgage.                  In

particular, Appellants contend that the district court violated 11

U.S.C. § 363(f) by authorizing the sale of the property under §

363(b) or (c) free and clear of Appellants’ encumbrance without

conducting a hearing to determine if one or more of subsections (1)

through (5) of § 363(f) applied.

     After reviewing the record on appeal, and the facts and the

applicable law, and considering the arguments of the parties as set

forth in their respective appellate briefs, we are satisfied that

the district court committed no reversible error.               Following the

                                      4
filing of Appellants’ opposition, the district court conducted a

hearing on October 1, 1998.      Appellants requested and received a

continuance for the purpose of obtaining and submitting property

appraisals. After Appellants obtained and filed the expert reports

and appraisals, the court on November 20, 1998 held a status

conference.    Only after conducting that conference and receiving

all pleadings and other filings of the parties did the court grant

the requested authority to settle the claims being litigated and

allow the Trustee to sell the properties free and clear of all

inferior encumbrances. Again, from the record and from the court’s

Memorandum Ruling and Order on April 9, 1999, it is clear that, in

letter and in spirit, the district court complied with 11 U.S.C. §

363(f).   It is equally clear that the court seriously considered

all facts, including expert reports, and all legal arguments of the

parties, after which it concluded, “[e]ven accepting [Appellants’]

evaluation of the assets...the compromise was fair and equitable.”

The   court   even   expressed   that   the   series   of   hearings   and

considerations it had conducted constituted compliance with 11

U.S.C. § 363 —— and we agree.     The court committed no legal error;

its findings of fact were not clearly erroneous; and it did not

abuse its discretion in concluding that the compromise as a whole

and the particular aspect of that compromise that provides for the

sale of the encumbered properties free and clear of Appellants’

judicial mortgage is fair and equitable and in the best interest of

the estate and its creditors.     The rulings of the district court,

therefore, are affirmed in all respects.

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AFFIRMED.

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