Court Opinion

ID: 9325451
Source: CourtListenerOpinion
Date Created: 2022-12-14 01:00:18.738755+00
Date Added: 2024-06-11T17:15:00.240105
License: Public Domain

Case: 22-10495        Document: 00516576835             Page: 1      Date Filed: 12/13/2022

             United States Court of Appeals
                  for the Fifth Circuit
                                                                              United States Court of Appeals
                                                                                       Fifth Circuit
                                      No. 22-10495
                                    Summary Calendar                                 FILED
                                                                             December 13, 2022
                                                                                Lyle W. Cayce
   Weslease 2018 Operating, L.P.,                                                    Clerk

                                                                     Plaintiff—Appellee,

                                            versus

   Innovative Sand Solutions, L.L.C.; Linda Behan; Bull
   Moose Pipeline, L.L.C.; Dale Behan,

                                                               Defendants—Appellants.

                     Appeal from the United States District Court
                         for the Northern District of Texas
                               USDC No. 4:20-CV-776

   Before King, Higginson, and Willett, Circuit Judges.
   Per Curiam:*
         After a bench trial, the district court entered judgment in favor of
   Plaintiff Weslease 2018 Operating, LP (“Weslease”), against Defendants
   Innovative Sand Solutions, LLC (“Innovative Sand”), Bull Moose Pipeline,
   LLC (“Bull Moose”), Dale Behan, and Linda Behan. We AFFIRM.

         *
             This opinion is not designated for publication. See 5th Cir. R. 47.5.
Case: 22-10495      Document: 00516576835            Page: 2   Date Filed: 12/13/2022

                                      No. 22-10495

                                           I
          Dale and Linda Behan owned and operated Innovative Sand and
   sought to purchase sand-processing equipment for the company. So, in 2016,
   Linda Behan and Innovative Sand signed a lease agreement (“Finance
   Lease”) with the Weslease Income Growth Fund, L.P. (“WIGF”), the
   predecessor in interest of Weslease, to facilitate the acquisition of the
   equipment. The parties agreed that the lease in question was a finance lease
   as defined in Article 2A of the Uniform Commercial Code. Under the terms
   of the agreement, WIGF was to supply $400,000 to Linda Behan and
   Innovative Sand for the purchase of equipment from a third-party supplier,
   Blanco Sands. In exchange, Innovative Sand would pay back the principal
   plus interest over a set period of time.
          WIGF disbursed $200,000 to Innovative Sand. Upon receiving that
   disbursement, Innovative Sand forwarded the money to Blanco Sands. Four
   months later, however, Blanco Sands returned the $200,000 to Innovative
   Sand and refused to deliver the equipment. Instead of repaying WIGF,
   Innovative Sand quickly transferred the $200,000 to Bull Moose, another
   LLC owned and operated by the Behans, which then used the money to pay
   off unrelated debts. The transfer rendered Innovative Sand insolvent and
   prevented the return of the $200,000 to WIGF. WIGF was never repaid,
   in either principal or interest.
          Weslease, the successor in interest to WIGF, sued Innovative Sand,
   Bull Moose, and the Behans in federal district court under the court’s
   diversity jurisdiction, seeking damages under the Finance Lease. See 18
   U.S.C. § 1332(a). After a bench trial, the district court entered judgment for
   Weslease, holding Defendants jointly and severally liable.
          Defendants appealed the judgment.

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Case: 22-10495         Document: 00516576835              Page: 3      Date Filed: 12/13/2022

                                          No. 22-10495

                                               II
         “The standard of review for a bench trial is well established: findings
   of fact are reviewed for clear error and legal issues are reviewed de novo.”
   Deloach Marine Servs., LLC. v. Marquette Transp. Co., 974 F.3d 601, 606 (5th
   Cir. 2020) (quoting Luwisch v. Am. Marine Corp., 956 F.3d 320, 326 (5th Cir.
   2020)). On appeal, Defendants raise several arguments, none of which are
   convincing.
         First, Defendants argue that the Finance Lease is not enforceable
   because WIGF did not deliver the equipment for which Innovative Sand
   sought financing. But under the parties’ arrangement, WIGF was to finance
   the equipment, not supply it (Blanco Sands was the intended supplier). The
   agreement expressly provides that “[t]he parties agree that this lease is a
   ‘Finance Lease’ as defined by ARTICLE 2A of the Uniform Commercial
   Code.” See also Tex. Bus. & Com. Code § 2A.103(a)(7) (defining
   finance leases under Texas’s version of the Uniform Commercial Code); 1 4C
   Anderson U.C.C. § 2A-103:18 (3d ed.) (“A finance lease is really a loan of
   capital from a finance company to an equipment purchaser[.]”).
   Defendants’ argument therefore fails.
         Second, Defendants contend that the Finance Lease is unenforceable
   under the statute of frauds because WIGF did not sign the contract. Under
   Texas law, however, only the party against whom enforcement is sought
   must have signed the contract.              See Tex. Bus. & Comm. Code
   § 2A.201(a)(2).       Here, the contract is sought to be enforced against
   Defendants, not WIGF or its successor.

         1
             The parties agree that Texas law governs the issues in this appeal.

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Case: 22-10495       Document: 00516576835         Page: 4   Date Filed: 12/13/2022

                                    No. 22-10495

          Third, Defendants contend that WIGF orally modified the contract
   to permit Innovative Sand to transfer the $200,000 to Bull Moose. But the
   parties agreed in writing that no oral modification or waiver would be
   effective, and we honor their agreement. See Tex. Bus. & Com. Code
   § 2A.201(a)(2) (statute of frauds); Tex. Bus. & Com. Code § 2A.208(b)
   (no-modification clauses in signed lease agreements are enforceable).
          Finally, Defendants argue that the district court should not have
   pierced the corporate veil to impose liability jointly and severally upon Dale
   Behan. But Texas law permits veil piercing when a defendant abuses the
   corporate structure to perpetuate a fraud or evade an existing obligation for
   his own benefit. See SSP Partners v. Gladstrong Invs. (USA) Corp., 275
   S.W.3d 444, 454 (Tex. 2008); see also Matter of Ritz, 832 F.3d 560, 567–68
   (5th Cir. 2016) (describing Texas law). Here, the district court found that
   Dale moved nearly all of the assets from Innovative Sands to Bull Moose,
   both of which were under his control, with the intent to defraud and avoid
   repaying WIGF, for his own personal benefit. We are satisfied that the
   record evidence supports the district court’s factual finding, and Defendants
   fail to identify any evidence sufficient to overcome the deferential standard
   of review. We therefore conclude that the court did not err in piercing the
   corporate veil.
          AFFIRMED.

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