Court Opinion

ID: 1036942
Source: CourtListenerOpinion
Date Created: 2013-08-09 05:19:35.850127+00
Date Added: 2024-06-11T09:18:28.987027
License: Public Domain

Case: 12-20555          Document: 00512335629              Page: 1   Date Filed: 08/08/2013

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

                                                                                  FILED
                                                                                August 8, 2013

                                             No. 12-20555                        Lyle W. Cayce
                                                                                      Clerk

In the Matter of: RICHARD DAVIS,

                                                          Debtor,

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PHILIPPE TANGUY; 13,500 AIR EXPRESS, L.L.C.; 13,500 AIR EXPRESS,
L.P.,

                                                          Appellants,
v.

WILLIAM WEST, Trustee,

                                                          Appellee.

                      Appeal from the United States District Court
                           for the Southern District of Texas
                               U.S.D.C. No. 4:10-CV-1194

Before STEWART, Chief Judge, and DAVIS and WIENER, Circuit Judges.
PER CURIAM:*

        *
         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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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: 12-20555      Document: 00512335629      Page: 2    Date Filed: 08/08/2013

                                   No. 12-20555

      Appellants, Philippe Tanguy, 13,500 Air Express, L.L.C., and 13,500 Air
Express L.P. (collectively, “Tanguy”) appeal the district court’s judgment in favor
of Appellee, Chapter 7 Trustee, William G. West (“the Trustee”), holding Tanguy
liable to the Trustee for the remaining balance on an unpaid promissory note,
including interest and attorney’s fees. For the reasons stated herein, we affirm.
                                          I.
      In January 2006 in Houston, Texas, Tanguy executed a promissory note
in the amount of $1,237,500 payable to the debtor, Richard Davis (“Davis”),1 for
the purchase of a DeHavilland Twin Otter N186AL aircraft (“the aircraft”) in
accordance with a purchase agreement between Tanguy and Davis signed the
same day. The note was to be repaid in 124 monthly installments. Tanguy
began making monthly payments on the note in January 2007 in accordance
with its terms.
      Six months later, in June 2007, Davis filed a voluntary Chapter 7
bankruptcy and the Trustee was appointed. The bankruptcy estate, through the
Trustee, then became the owner of the note. A few months later, Davis assigned
the note to JLE Investors, Inc. (“JLE”) as collateral for a loan. Upon learning of
Davis’s assignment of the note to JLE, the Trustee filed a claim to recover the
note. In February 2008, the bankruptcy court approved a settlement wherein
the note was re-assigned from JLE to the Trustee. Then in April 2008, Tanguy
signed a stipulation indicating that the Trustee was the lawful holder of the note
and that the note was in full force and effect. Tanguy continued to make
payments on the note ultimately totaling approximately $190,000.
      In November 2008, Tanguy stopped making payments on the note, leaving
an unpaid principal balance of $1,047,500. A few months later, in January 2009,

      1
       The note was made payable to FMS Co., which the bankruptcy court found to be an
assumed name of Richard Davis.

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    Case: 12-20555        Document: 00512335629        Page: 3    Date Filed: 08/08/2013

                                      No. 12-20555

Tanguy repudiated all obligations under the note entirely. The Trustee then
sent several demand letters to Tanguy with regard to his default on the note.
In response, Tanguy’s counsel sent a letter to the Trustee notifying him of
another lawsuit (“the Laux suit”) wherein a temporary injunction was issued
prohibiting Tanguy from selling, encumbering, transferring or relocating the
aircraft from the county.2 Tanguy claimed that the Laux suit interfered with his
ownership rights to the aircraft and that the Trustee was bound by the terms of
the purchase agreement (entered into by Tanguy and Davis in 2006) to defend
Tanguy’s title to the aircraft, presumably pursuant to the covenants and
warranties set forth in the purchase agreement.
      In response, the Trustee sent a default demand to Tanguy accelerating the
terms of the note and demanding full payment of the unpaid principal balance.
Shortly thereafter, in March 2009, the Trustee filed a formal adversary
proceeding in the bankruptcy court against Tanguy seeking the full unpaid
balance on the note, plus interest and attorney’s fees.
      In April 2009, Tanguy filed an answer and counterclaim against the
Trustee for breach of contract or warranty under the purchase agreement, for
tortious interference, and for conspiracy to interfere.            Tanguy asserted as
affirmative defenses the absence of an indispensable party, equivalent value,
unclean hands and bad faith, fraud, ordinary course of business, non est factum,
failure of consideration, offset, and reformation and/or rescission. Tanguy’s
answer also included a jury demand.
          In response to Tanguy’s counterclaims, the Trustee asserted affirmative
defenses of failure to state a claim upon which relief can be granted, contributory
negligence, estoppel, failure of consideration and fraud, and absolute immunity.
The Trustee also filed a motion to strike the jury demand.

      2
          Tanguy v. Laux, 259 S.W. 3d 851, 853 (Tex. App. - Houston 2008).

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                                  No. 12-20555

      In a pretrial hearing, the bankruptcy court granted the Trustee’s motion
to strike Tanguy’s jury demand. Then in December 2009, the bankruptcy court
conducted a trial on the merits and ultimately entered judgment in favor of the
Trustee for the amount of $1,183,090.80 (the unpaid balance plus interest), plus
$31,180.75 in attorney’s fees. In 2010, Tanguy filed a notice of appeal, along
with a motion requesting the bankruptcy court to take judicial notice of the
Texas state court opinion in Laux, 259 S.W. 3d 851, and also a motion seeking
“amended or additional findings” pursuant to Bankruptcy Rule 7052. See Fed.
R. Bankr. P. 7052. The bankruptcy court denied both motions and Tanguy filed
his appeal with the district court thereafter.
       In his appeal to the district court, Tanguy reasserted all of his original
claims before the bankruptcy court and further appealed the bankruptcy court’s
award of attorney’s fees to the Trustee and its rulings granting the Trustee’s
motion to strike the jury demand, denying Tanguy’s motion to take judicial
notice, and denying Tanguy’s motion for additional findings pursuant to Rule
7052. See Fed. R. Bankr. P. 7052. In addition, Tanguy asserted for the first time
that the bankruptcy court and the district court lacked subject matter
jurisdiction over the proceedings due to the recent U.S. Supreme Court opinion
in Stern v. Marshall, 131 S. Ct. 2594, 2611 (2011) (holding that the bankruptcy
court lacked subject matter jurisdiction over counterclaims asserted by the
bankruptcy estate against a creditor where the claim is a “state law action
independent of the federal bankruptcy law and not necessarily resolvable by a
ruling on the creditor’s proof of claim in the bankruptcy.” (emphasis added)).
      As a preliminary matter, the district court ordered the parties to brief the
issue of whether the bankruptcy and district courts lacked subject matter
jurisdiction over the proceedings on account of Stern. After reviewing the
parties’ briefs and the applicable law, the district court found that Stern did not
apply and continued with the proceedings. Then, for the reasons set forth in the

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                                   No. 12-20555

bankruptcy court’s memorandum opinion, in addition to those set forth in its
own detailed opinion, the district court affirmed the bankruptcy court judgment
in full, including its rulings on the motions to strike jury demand, to take
judicial notice, and for additional findings pursuant to Rule 7052. See Fed. R.
Bankr. P. 7052. The district court also affirmed the bankruptcy court’s award
of attorney’s fees and, finding that the appeal was frivolous, awarded additional
fees and costs to the Trustee for the district court proceedings. Tanguy now
appeals to this court.
                                       II.
      “This court reviews the decision of a district court sitting as an appellate
court in a bankruptcy case ‘by applying the same standards of review to the
bankruptcy court’s findings of fact and conclusions of law as applied by the
district court.’” In re Pilgrim’s Pride Corp., 706 F.3d 636, 640 (5th Cir. 2013)
(citation omitted). A bankruptcy court’s findings of fact are reviewed for clear
error, and its conclusions of law are reviewed de novo. Id. (citation omitted).
                                        III.
      As an initial matter, we are unpersuaded by Tanguy’s argument that
neither the bankruptcy court, the district court, nor this court, have subject
matter jurisdiction over these proceedings in light of the Supreme Court’s
opinion in Stern. 131 S. Ct. at 2611. As pointed out by the Trustee in his
argument on appeal, the current proceedings are distinguishable from Stern
because they involve a bankruptcy proceeding party’s (Tanguy’s) counterclaim
against the bankruptcy estate itself, for acts which were allegedly committed
during the pendency of the bankruptcy proceedings. While it is true that
Tanguy names the Trustee in the counterclaims against the estate, he does so
explicitly in the Trustee’s representative capacity of the estate, not in his private
or personal capacity. This posture is contrary to that of Stern, which involved
a state law counterclaim by the bankruptcy estate against a creditor for acts the

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                                  No. 12-20555

creditor allegedly committed in his private capacity prior to the institution of the
bankruptcy proceedings. Id. at 2611. Moreover, as this court has previously
noted, while it is true that Stern invalidated 28 U.S.C. § 157(b)(2)(C) with
respect to “counterclaims by the estate against persons filing claims against the
estate,” Stern expressly provides that its limited holding applies only in that
“one isolated respect.” See In re Renaissance Hosp. Grand Prairie Inc., 713 F.3d
285, 294 n.12 (5th Cir. 2013) (quoting Stern, 131 S. Ct. at 2620). We decline to
extend Stern’s limited holding herein.
      We therefore conclude that the district court and the bankruptcy court
properly exercised subject matter jurisdiction over these proceedings and
consequently, this court also has subject matter jurisdiction over the proceedings
on appeal.
                                        IV.
      With regard to the remaining issues on appeal, we have throughly
considered both parties’ arguments, including those with respect to the district
court’s award of attorney’s fees for the district court proceedings. We have also
reviewed the record, the applicable case and statutory law, the bankruptcy
court’s well-reasoned memorandum and judgment, and the district court’s
detailed opinion affirming the bankruptcy court judgment. In light of this
analysis, we see no error in the lower court judgments with regard to findings
of fact or conclusions of law. In re Pilgrim’s Pride Corp., 706 F.3d at 640.
                                         V.
      Accordingly, we AFFIRM the district court’s judgment and adopt its
analysis in full.

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