Court Opinion

ID: 9964462
Source: CourtListenerOpinion
Date Created: 2024-04-30 00:00:41.791445+00
Date Added: 2024-06-11T08:25:30.510224
License: Public Domain

Case: 23-10831           Document: 50-1         Page: 1      Date Filed: 04/29/2024

          United States Court of Appeals
               for the Fifth Circuit
                                  ____________
                                                                            United States Court of Appeals
                                                                                     Fifth Circuit
                                   No. 23-10831
                                 Summary Calendar                                   FILED
                                 ____________                                  April 29, 2024
                                                                              Lyle W. Cayce
In the Matter of Daniel Wilfred Mijares                                            Clerk

                                                                                   Debtor,

Daniel Wilfred Mijares,

                                                                             Appellant,

                                         versus

Jordan Pastorek,

                                                                                  Appellee.
                  ______________________________

                  Appeal from the United States District Court
                      for the Northern District of Texas
                           USDC No. 3:22-CV-2603
                  ______________________________

Before Davis, Willett, and Oldham, Circuit Judges.
Per Curiam: *
      Debtor-Appellant, Daniel Wilfred Mijares, appeals the district court’s
judgment affirming the bankruptcy court’s judgment in favor of Plaintiff-

      _____________________
      *
          This opinion is not designated for publication. See 5th Cir. R. 47.5.
Case: 23-10831       Document: 50-1        Page: 2   Date Filed: 04/29/2024

                                 No. 23-10831

Appellee, Jordan Pastorek, in this adversary proceeding. For the reasons set
forth below, we AFFIRM.
                                      I.
       From January 2013 to April 2019, Mijares and Pastorek practiced
internal medicine as equal members of MD Request, PLLC (“MD
Request”), a Texas professional liability company. The physicians were
parties to a written agreement appointing each of them as a “Manager” of
the company. They agreed orally that their respective compensation from
MD Request would be calculated by deducting fifty percent of the authorized
expenses incurred by the company from the collections the company
received from the doctors’ respective patients.
       In September 2019, Mijares commenced a Chapter 7 bankruptcy
proceeding. Pastorek subsequently filed this adversary proceeding against
Mijares, asserting, inter alia, that Mijares was personally liable to him for
underpayment of his compensation from the company due to unnecessary or
improper expenses Mijares deducted from Pastorek’s patient collections.
Pastorek contended that the funds owed to him should be excepted from
bankruptcy discharge under 11 U.S.C. § 523(a)(2)(A) because they were
obtained by “false pretenses, a false representation, or actual fraud.”
       After conducting a bench trial, the bankruptcy court rendered
judgment in favor of Pastorek for $39,682.55. It determined that this amount
was nondischargeable under 11 U.S.C. § 523(a)(2)(A), as fraudulently
obtained by Mijares. Mijares filed a motion to alter or amend the judgment,
arguing that the bankruptcy court “overlooked” evidence entitling him to an
“offsetting credit of $30,123.17” based on “patient receivables kept by
[Pastorek].” During the hearing on the motion, Mijares additionally argued
that the evidence at trial showed that “throughout the entire period” the two

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                                        No. 23-10831

doctors practiced together, Pastorek “was overpaid over that period and not
underpaid.”
        The bankruptcy court granted in part and denied in part Mijares’
motion to alter and amend the judgment. Specifically, it granted Mijares’
request for “additional findings,” stating those findings on the record.
However, the court denied Mijares’ request for a reduction in the amount
awarded to Pastorek based on any offsetting credits. Mijares timely appealed
to the district court, which affirmed the bankruptcy court’s judgment.
Mijares then timely appealed to this Court.
                                             II.
       This Court reviews the “district court’s affirmance of a bankruptcy
court’s decision by applying the same standard of review that the district
court applied.” 1 “Thus, we review questions of fact for clear error and
conclusions of law de novo.” 2 “Clear error is a formidable standard: this
court disturb[s] factual findings only if left with a firm and definite conviction
that the bankruptcy court made a mistake.” 3
       Mijares argues that the lower courts “disregarded” evidence
establishing that the amount awarded to Pastorek was erroneous.                     He
contends this evidence includes MD Request’s federal income tax returns for
the 2016, 2017, and 2018 tax years, which he alleges established that Pastorek
was actually overpaid when collections and expenses for those annual tax
periods are “trued up.” He further asserts that the courts “missed” the
evidence of $30,123.17 in receivables paid by Mijares’ patients to MD
       _____________________
       1
           In re Cowin, 864 F.3d 344, 349 (5th Cir. 2017) (citations omitted).
       2
           Id. (citation omitted).
       3
          In re Krueger, 812 F.3d 365, 374 (5th Cir. 2016) (internal quotation marks and
citation omitted).

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                                        No. 23-10831

Request and $2,000 that Mijares deposited into MD Request’s bank account
in April 2019. He asserts he is entitled to a setoff, recoupment, or other credit
based on this evidence.
       We disagree. During the hearing on Mijares’ motion to alter and
amend the judgment, the bankruptcy court specifically addressed Mijares’
argument that Pastorek was overpaid, as well as Mijares’ argument that he
was entitled to setoff, recoupment, or other credit reducing the amount
awarded to Pastorek. As to Mijares’ overpayment argument, the court
reviewed the trial testimony and evidence and determined that “the evidence
[wa]s simply not clear what amounts [we]re owed between the parties.” The
court also looked at the evidence Mijares relied on in support of his claim for
some type of credit and determined that the evidence was not “complete or
reliable.”
       On appeal, Mijares does not identify evidence in the record
demonstrating that the bankruptcy court’s findings were clearly erroneous.
He continues to rely on singular pieces of evidence showing his patient
receivables and bank deposit to support his claim for some type of credit. As
the bankruptcy court found, these documents do not present a complete
picture such that the bankruptcy court’s findings can be said to be clearly
erroneous. 4 We agree with the bankruptcy court that Mijares simply did not
meet his burden of showing he was entitled to any type of credit.
       Additionally, as the bankruptcy court found during the hearing on the
motion to alter and amend the judgment, “recoupment is an equitable
doctrine.” 5 The bankruptcy court concluded it would not “be fair and
equitable to allow [Mijares] to recoup a fraud claim against a contractual
       _____________________
       4
           See id. (noting that “clear error is a formidable standard”).
       5
           See In re Mirant Corp., 318 B.R. 377 (Bankr. N.D. Tex. 2004) (citations omitted).

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                                      No. 23-10831

offset claim against the company.” Importantly, Mijares does not challenge
the bankruptcy court’s determination that Pastorek established the elements
of a fraud claim and, thus, shows no error in the bankruptcy court’s
assessment of the equities in this case.
        Regarding Mijares’ setoff claim, the bankruptcy court determined
that setoff did not apply because Mijares was “attempting to set off a non-
mutual obligation.” 6 Specifically, Mijares’ setoff claim was against the
company, while Pastorek’s fraud claim was against Mijares. Furthermore,
the court determined, as it did with his claim of overpayment, that Mijares
did not meet his burden of establishing “what amounts were owed and
whether they were appropriate.” Again, Mijares does not challenge the
bankruptcy court’s determination that Pastorek established the elements of
a fraud claim, and he does not direct this Court to evidence in the record
showing a complete picture of what amounts were owed between the parties. 7
        Based on the foregoing, we AFFIRM the district court’s judgment
affirming the bankruptcy court’s judgment.

        _____________________
        6
          See In re Gibson, 157 F.3d 1011, 766 (Bankr. N.D. Tex. 2002) (holding that one of
the elements of a valid right of setoff is that “the debt and the claim must be mutual
obligations”) (citations omitted).
        7
          Citing no authority, Mijares lastly contends that the lower courts erroneously
imposed a “double standard” that “unjustly enrich[ed] Pastorek and unduly penalize[d]
Mijares.” Considering that Mijares does not challenge the bankruptcy court’s
determination that Pastorek established the elements of a fraud claim, we are unpersuaded
that Pastorek was unjustly enriched and Mijares unduly penalized.

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