Court Opinion

ID: 9947986
Source: CourtListenerOpinion
Date Created: 2024-03-06 01:00:37.401986+00
Date Added: 2024-06-11T14:28:52.576574
License: Public Domain

Case: 23-30374          Document: 65-1        Page: 1      Date Filed: 03/05/2024

         United States Court of Appeals
              for the Fifth Circuit                                    United States Court of Appeals
                                 ____________                                   Fifth Circuit

                                                                              FILED
                                  No. 23-30374                            March 5, 2024
                                Summary Calendar
                                                                         Lyle W. Cayce
                                ____________                                  Clerk

In the Matter of Royal Alice Properties, L.L.C.,

                                                                                  Debtor,

Picture Pro, L.L.C.,

                                                                              Appellant,

                                        versus

Arrowhead Capital Finance, Limited,

                                                                                Appellee.
                 ______________________________

                 Appeal from the United States District Court
                    for the Eastern District of Louisiana
                          USDC No. 2:22-CV-4165
                 ______________________________

Before King, Haynes, and Graves, Circuit Judges.
Per Curiam: *

     _____________________
     *
         This opinion is not designated for publication. See 5th Cir. R. 47.5.
Case: 23-30374         Document: 65-1          Page: 2   Date Filed: 03/05/2024

                                      No. 23-30374

       Picture Pro, L.L.C. appeals the district court’s order affirming the
bankruptcy court’s denial of Picture Pro’s motion for redemption of litigious
rights. On appeal, Arrowhead Capital Finance, Ltd. moved for sanctions
against Picture Pro and its counsel. For the reasons set forth below, we
AFFIRM the district court’s order and DENY Arrowhead’s motion for
sanctions.
                                 I.     Background
       This appeal arises out of a bankruptcy proceeding for Royal Alice
Properties, LLC (the “Debtor”). The Debtor owns three properties in New
Orleans, Louisiana, and its sole income derives from leasing such properties.
In re Royal Alice Props., LLC, No. 19-12337, 2020 WL 5357795, at *2 (Bankr.
E.D. La., Sept. 4, 2020). In 2019, the Debtor filed a petition for bankruptcy
relief under Chapter 11 of the Bankruptcy Code to stay a foreclosure on its
real estate assets. Id. at *4. The bankruptcy court subsequently ordered the
appointment of a Chapter 11 trustee (the “Trustee”). Id. at *11.
       As relevant here, two parties filed adversarial claims during the
bankruptcy proceeding. First, Arrowhead initiated a claim against the
Debtor, alleging that it was liable for the unsatisfied obligations of its affiliates
against which Arrowhead had obtained money judgments. Id. at *4. Second,
the Trustee filed claims against Picture Pro and Royal Street Bistro LLC for,
inter alia, unpaid rent for the occupancy of the leased properties. The
Trustee subsequently filed a motion for summary judgment regarding
Arrowhead’s claim, which the bankruptcy court granted. The bankruptcy
court then denied Arrowhead’s motion for reconsideration, and Arrowhead
appealed.
       While Arrowhead’s appeal was pending, the Trustee sought approval
of a settlement under Federal Rule of Bankruptcy Procedure 9019. The
agreement provided that, in exchange for Arrowhead dismissing its appeal,

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 Case: 23-30374           Document: 65-1        Page: 3       Date Filed: 03/05/2024

                                      No. 23-30374

the Trustee would assign to Arrowhead the rights for the claims the Debtor
had against Picture Pro and Royal Street Bistro. Picture Pro opposed the
settlement and filed a motion for redemption of litigious rights under
Louisiana Civil Code Article 2652, seeking to redeem the assigned rent
claims. The bankruptcy court approved the settlement on September 21,
2022. The court subsequently denied Picture Pro’s redemption motion on
October 13, 2022.
        On October 21, 2022, Picture Pro appealed to the district court,
seeking review of the bankruptcy court’s September order approving the
settlement and October order denying the redemption motion. The district
court dismissed the portion of the appeal seeking review of the September
order because it was untimely. 1           The district court later affirmed the
bankruptcy court’s denial of Picture Pro’s redemption motion because
Picture Pro had not shown that it met the requirements of Article 2652.
Picture Pro timely appealed. Arrowhead subsequently moved for sanctions
against Picture Pro and its counsel.
                    II.    Jurisdiction & Standard of Review
        The district court properly exercised jurisdiction pursuant to 28
U.S.C. § 158(a). We have appellate jurisdiction over the district court’s final
judgment pursuant to 28 U.S.C. § 1291.
        We review bankruptcy court rulings “under the same standards
employed by the district court hearing the appeal from bankruptcy court.”
In re Nat’l Gypsum Co., 208 F.3d 498, 504 (5th Cir. 2000). Accordingly,
“conclusions of law are reviewed de novo.” Id.

        _____________________
        1
         Picture Pro did not appeal the district court’s dismissal of its challenge to the
settlement approval. Accordingly, we address only Picture Pro’s appeal of the denial of the
redemption motion.

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 Case: 23-30374           Document: 65-1           Page: 4      Date Filed: 03/05/2024

                                          No. 23-30374

                                   III.      Discussion
        A. Redemption under Article 2652
        Picture Pro asserts that it has the right to redeem Arrowhead’s
assigned claims against it. Louisiana Civil Code Article 2652 provides in
pertinent part:
        When a litigious right is assigned, the debtor may extinguish his
        obligation by paying to the assignee the price the assignee paid
        for the assignment, with interest from the time of the
        assignment.
Here, Arrowhead dropped its appeal in the adversary proceeding against the
Debtor in exchange for the litigious right. Picture Pro claims that because
Arrowhead “paid” nothing for the assignment of claims, Picture Pro can
redeem the right for “zero dollars.” But the lack of a definite price renders
Article 2652 inapplicable. Louisiana courts have consistently held that
“transfer of a litigious right subject to the provisions of LSA–C.C. art. 2652
must be made in consideration of a price.” Martin Energy Co. v. Bourne, 598
So.2d 1160, 1162 (La. Ct. App. 1992). Accordingly, “only sales and onerous
transfers in which a price can be determined are contemplated by the codal
provisions governing litigious redemption.” 2 Id.; see also Charrier v. Bell, 380
So.2d 155, 156 (La. Ct. App. 1979) (“The fact that Art. 2652 speaks of interest
on the real price leads to the conclusion that it was intended to include only
those transfers that were made in return for the payment of a certain amount

        _____________________
        2
         Picture Pro relies on Calderera v. O’Carroll to argue that it is only required to pay
the noncontingent sum Arrowhead paid for its claim, which is zero. 551 So. 2d 824 (La. Ct.
App. 1989). In Calderera, the assignee of the litigious right paid both a fixed price and a
percentage of what it could recover from the claim. Id. at 826. The court found that the
redemption price was only the fixed amount because the contingent amount was merely a
“hope.” Id. at 827. Here, by contrast, Arrowhead did not agree to pay the Debtor a
percentage of its recovery, nor did it pay a fixed price to render Article 2652 applicable.

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                                    No. 23-30374

in money.”), writ denied, 382 So.2d 165 (La. 1980); Asset Integrity Mgmt. Sols.
v. Bourgeois, 2023 CA 0530, 2023 WL 8266308, at *3 (La. Ct. App. Nov. 15,
2023) (“If the creditor should transfer his claim without setting a price, it is
not clear why litigious redemption should apply.” (internal quotation marks
and citation omitted)).
       Because Arrowhead did not pay a determined price for the assignment
of claims, the price is not zero, but rather, the redemption code does not
apply. Accordingly, Picture Pro’s attempt to redeem the claims for “zero
dollars” fails.
       B. Sanctions
       Arrowhead seeks sanctions against Picture Pro and its counsel on the
basis that Picture Pro’s appeal is frivolous, delayed, and pursued in bad faith.
Federal Rule of Appellate Procedure 38 gives us discretion to award
sanctions if an appeal is frivolous. But we have held that an appeal is frivolous
“only if the result is obvious or the arguments of error are wholly without
merit and the appeal is taken in the face of clear, unambiguous, dispositive
holdings of this and other appellate courts.” Streamline Prod. Sys., Inc. v.
Streamline Mfg., Inc., 851 F.3d 440, 463 n.12 (5th Cir. 2017) (internal
quotation marks and citation omitted). Although we disagree with Picture
Pro’s assertion, it provided logical arguments and case law supporting its
position, and the Louisiana Supreme Court has not addressed the issue.
Further, Picture Pro largely remedied its initial filing errors. We thus decline
Arrowhead’s request for sanctions.
                              IV.      Conclusion
       For the reasons set forth above, we AFFIRM the judgment of the
district court denying Picture Pro’s appeal from the bankruptcy court.
Arrowhead’s motion for sanctions is DENIED.

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