Court Opinion

ID: 21153
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:41:57+00
Date Added: 2024-06-11T15:04:34.485176
License: Public Domain

UNITED STATES COURT OF APPEALS
                         FOR THE FIFTH CIRCUIT

                             No. 00-10066
                           Summary Calendar
                    Civil Action No. 5:99-CV-297-C

                In The Matter of: TRUETT DAVID REEVES

                                                    Debtor.
          -------------------------------------------------

                          TRUETT DAVID REEVES,

                                                           Appellant,

                                     v.

         JULIA E. VAUGHN; WALTER STEELE; ALBERT WITCHER; and
                             BRUCE WYATT,

                                                           Appellees.

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

                              June 23, 2000

Before JOLLY, JONES, and BENAVIDES, Circuit Judges.

PER CURIAM:*

            Truett David Reeves (“Reeves”) appeals the dismissal of

his suit seeking injunctive relief against the Appellees, who are

all members of the Board of Law Examiners (“BLE”) for the State of

Texas. Reeves relies on Ex parte Young to argue that the Appellees

     *
            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opinion should not be published and is not precedent except under the limited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.
lost their 11th Amendment immunity from suit by violating the anti-

discrimination and automatic stay provisions of the Bankruptcy

Code, 11 U.S.C. §§ 525(a) and 362(a), in the course of denying his

application for a law license.       Having carefully reviewed the

briefs and record, this court finds that Reeves has failed to show

an ongoing violation of federal law as required by Ex parte Young.

This court, therefore, affirms the dismissal of Reeves’s claim on

11th Amendment grounds.

          Reeves, a former attorney in the state of Nevada, is an

unsuccessful applicant for a Texas law license.    Although Reeves

passed the February 1999 Texas Bar Examination, Reeves was required

to attend a BLE hearing to determine whether he possessed the

present good moral character required to be licensed to practice

law in Texas.   See Tex. Gov’t Code Ann. § 82.004(c) (Vernon 1998).

During the hearing, the Appellees questioned Reeves about: (1) his

admission that he had engaged in the unauthorized practice of law

without a license in Texas; (2) his failure to maintain a separate

account for client trust funds while an attorney in Nevada; and (3)

his credit, debt, and tax histories.      Reeves objected to these

lines of questioning. According to Reeves, since he had previously

filed a Chapter 13 bankruptcy petition, any inquiry into his past

financial problems was precluded by the anti-discrimination and

                                 2
automatic stay provisions of the Bankruptcy Code.1                   The panel

denied Reeves’s application without prejudice to his right to

reapply for a license after one year.

              Instead of appealing the panel’s decision to the state

district court,2 Reeves filed suit in bankruptcy court seeking to

enjoin the Appellees from considering the evidence offered at the

hearing.      The bankruptcy court dismissed the suit on Eleventh

Amendment grounds. On appeal, the district court affirmed, holding

that Ex parte Young did not support injunctive relief in the

present case because Reeves failed to show that there was an

ongoing violation of federal law that the court could enjoin.

              Suits seeking declaratory or injunctive relief against

state officials are not automatically barred.              See Ex parte Young,

209 U.S. 123, 28 S.Ct. 441 (1908).                A state official is not

entitled      to   the    Eleventh    Amendment   protection     afforded    the

sovereign when an individual seeks an injunction “in order to

remedy    a   state      officer’s   ongoing   violation    of   federal   law.”

Seminole Tribe, 517 U.S. 44, 73, n.16, 116 S.Ct. 1114, 1132 n.16

      1
            The district court held that Reeves had waived his automatic stay
argument under § 362(a) by failing to brief the issue. Reeves once again raises
the § 362(a) issue on appeal but does not explain how the Appellees violated that
provision beyond saying that “it is the position of the Appellant that the
aforesaid penalty constitutes a violation of § 362(a)(3), and that the exception
contained in 11 U.S.C. § 362(b)(4) is not applicable.” The issue is, therefore,
waived.   See United States v. Beaumont, 972 F.2d 553, 563 (5th Cir. 1992)
(“Failure of an appellant to properly argue or present issues in an appellate
brief renders those issues abandoned.”).
      2
            Rule 15(j) of the Texas Rules governing Admission to the Bar permits
applicants to obtain judicial review of the BLE’s decisions by appealing to the
district courts of Travis County, Texas.

                                         3
(1996)(citing Ex parte Young, 209 U.S. 123 (1908)); see also Idaho

v. Coeur d’Alene Tribe of Idaho, 521 U.S. 261, 269-70, 117 S.Ct.

2028, 2034-35 (1997).

            In order to make his case fit within Ex parte Young,

Reeves contends that the Appellees are violating 11 U.S.C. §

525(a), which prohibits governmental agencies from discriminating

against   debtors    in   bankruptcy       “solely    because”   a   debtor   is

insolvent, has failed to pay a dischargeable debt, or has filed

bankruptcy.3    In order to show a violation of § 525(a), Reeves must

show that the alleged discrimination was caused exclusively by the

plaintiff’s status as a debtor: “Only discrimination based solely

upon the debtor’s status is precluded.”              Exquisito Servs. Inc. v.

United States (In re Exquisito Servs.), 823 F.2d 151, 153 (5th Cir.

1987). The prohibition against discrimination “‘does not extend so

far as to prohibit examination of the factors surrounding the

bankruptcy, the imposition of financial responsibility rules if

they are not imposed only on former bankrupts, or the examination

of prospective financial condition or managerial ability.’” Id. at

154 (citation omitted).       Provided that the governmental agency has

a reason for denying a license other than the debtor’s status, §

525(a) does not prevent the agency’s considering other factors

      3
            Section 525(a) states in relevant part: “[A] governmental unit may
not deny, revoke, suspend or refuse to renew a license, permit, charter,
franchise, or other similar grant to ... [or] discriminate with respect to such
a grant against ... a person that is or has been a debtor under this title ...
solely because such bankrupt or debtor is or has been a debtor under this title
..., has been insolvent ..., or has not paid a debt that is dischargeable in the
case under this title....”

                                       4
surrounding an applicant’s bankruptcy or financial condition.4

              In   the   present   case,     the   BLE   panel    clearly    had   a

permissible, non-bankruptcy related reason for denying Reeves’s

application -- Reeves’s admission that he practiced law without a

license.      The panel’s Order focuses exclusively on this admission

and   makes    no    reference     to   Reeves’s    status   as    a     debtor    in

bankruptcy.        At the hearing, the panel questioned Reeves about his

handling of client trust funds while practicing law in Nevada as

well as his financial history and future financial responsibility.

But, under Exquisito, the panel is permitted to examine “the

factors    surrounding       the    bankruptcy”      as    well     as    Reeves’s

“prospective financial condition or managerial ability.”                          Id.

Reeves’s failure to establish a trust account relates directly to

his fitness to practice law in Texas; furthermore, the potential

claims of an out-of-state bar association against Reeves shed light

on his future financial condition.

              Since Reeves has failed to show that the Appellees

violated § 525(a) (yet alone establish an ongoing violation as

      4
            See also Laracuente v. Chase Manhattan Bank, 891 F.2d 17 (1st Cir.
1989)(to recover under § 525, debtor had to show her bankruptcy status was the
sole reason for her termination; bank had reasons for discharging the debtor
other than her bankruptcy status); Duffey v. Dollison, 734 F.2d 265, 273 (6th
Cir. 1984)(recognizing that § 525 does not prevent governmental agencies from
considering factors surrounding the bankruptcy as long as the agency does not
differentiate between debtor and non-debtor); Housing Authority v. James (In re
James), 198 B.R. 886, 888 (Bankr. E.D. Pa. 1996)(“It is not enough to show that
[the debtor’s] bankruptcy filing played a ‘substantial role.’ Section 525(a) is
not violated, even if one of the grounds enumerated therein is present, so long
as the governmental unit also has a bona fide reason other than those enumerated
therein for taking action against the debtor.”).

                                         5
required by Seminole Tribe), Reeves cannot use Ex parte Young to

get around the Appellees’ Eleventh Amendment immunity. This court,

therefore, affirms the dismissal of Reeves’s claim.

AFFIRMED.

                                6