Court Opinion

ID: 19280
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:22:58+00
Date Added: 2024-06-11T09:08:25.658573
License: Public Domain

UNITED STATES COURT OF APPEALS
                        FOR THE FIFTH CIRCUIT
                         ___________________

                             No. 99-50384
                           Summary Calendar
                         ___________________

  In The Matter Of: TEXAS HYDROGEN ENERGY CORPORATION, Debtor.

                       CLARENCE T. V. JOHNSON,

                                                 Defendant-Appellant,

                                versus

          TEXAS HYDROGEN ENERGY CORPORATION; HYDROGEN ENERGY
                                CORPORATION,

                                                 Plaintiffs-Appellees.

  _______________________________________________________________

           Appeal from the United States District Court
                 for the Western District of Texas
                           (MO-98-CV-140)
_________________________________________________________________

                           November 1, 1999

Before HIGGINBOTHAM, SMITH, and BARKSDALE, Circuit Judges.

PER CURIAM:*

         At issue is the non-award of attorney’s fees for a Texas

declaratory judgment action removed to bankruptcy court, the fees

being claimed under that Texas statute or for an alleged “bad

faith” claim under FED. R. BANKR. P. 9011.

     In April 1990, by promissory note, Clarence Johnson lent money

to Texas Hydrogen Energy Corporation (THEC) and Hydrogen Energy

Corporation (HEC).    An action against the loan, secured by a deed

of trust on an oil and gas lease, became time barred, at the

     *
      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this opinion should not be published and is not precedent except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.
latest, in October 1994.     But, in 1996, the debt was acknowledged

in writing by THEC and HEC without new consideration.                In 1997,

Johnson initiated foreclosure, which THEC and HEC contested in the

state declaratory judgment action, challenging the validity of the

debt.

     Before the state court proceeding began, both corporations

filed for Chapter 11 bankruptcy protection, removed the case to

bankruptcy court, and challenged the debt acknowledgment as a

fraudulent transfer or invalid preference.           During the course of

the bankruptcy proceeding, our court decided In Re Vineyard Bay

Development Co., Inc., 132 F.3d 269 (5th Cir. 1998), establishing,

under Texas law, the validity of the acknowledgment. Id. at 271.

     The   bankruptcy     court   held    the   debt     was   valid;     the

acknowledgment   was    neither   a   fraudulent    transfer   nor    invalid

preference; denied the declaratory judgment request; did not grant

Johnson a declaratory judgment; and made the parties responsible

for their own costs and attorney’s fees.           On reconsideration, the

bankruptcy court acknowledged that Johnson could seek attorney’s

fees under the Texas statute, but denied them.          In a comprehensive

and well-reasoned opinion, the district court affirmed.

     For essentially the reasons stated in the district court’s

opinion, the bankruptcy court did not abuse its discretion in

denying attorney’s fees.

     Johnson also contends that he should be awarded such fees

under FED. R. BANKR. P. 9011, claiming that the state action was

brought in “bad faith”.       The bankruptcy court found otherwise.

                                  - 2 -
Again, for essentially the reasons stated in the district court’s

opinion, this factual finding is not clearly erroneous.

                                                      AFFIRMED

                              - 3 -