PER CURIAM:
Plaintiff-Appellant Judgment Factors, L.L.C., filed an adversary proceeding to prevent the entry of a Chapter 7 discharge order for Defendant-Appellee Athol W. Packer, objecting to the discharge under various subsections of 11 U.S.C. § 727(a). Judgment Factors also asserted that various entities owned by Packer were his alter egos and requested that the corporate veils of these entities be reverse pierced. The bankruptcy court granted summary judgment to Packer, holding that he did not act in any way that merited the denial of a discharge under § 727(a) and dismissing alter ego claims. The district court affirmed the judgment of the bankruptcy court. Judgment Factors failed to obtain leave from the bankruptcy court to purse alter ego and reverse veil piercing claims on behalf of the estate, so it may not pursue these claims. As to the denial of a discharge under § 727(a), Judgment Factors failed to establish that Packer concealed or transferred any assets, destroyed or failed to keep financial records, or made any false oaths. Accordingly, we AFFIRM the judgment of the district court.
In the mid-2000s, Defendant-Appellee Athol W. Packer formed Parthenon Development Partners, L.L.C., with Henry Allen and David Allen (the "Allen Partners") to develop residential property in Prosper, Texas. The LLC and its three members borrowed approximately $4 million from Washington Federal Savings & Loan Association (the "Bank") to finance the residential development. Packer and the Allen Partners guaranteed the bank note. When the development project proved unsuccessful, the Bank foreclosed on the real property, filed suit against Packer and the Allen Partners, and obtained a deficiency judgment of approximately $5.9 million.
In November 2009, the spouses of the Allen Partners formed Plaintiff-Appellant Judgment Factors, L.L.C. Judgment Factors then acquired the judgment against Packer and the Allen Partners from the Bank. After Judgment Factors attempted to collect the judgment solely against Packer, he filed a voluntary petition for relief under Chapter 7 of the Bankruptcy
The bankruptcy court dismissed Count V of Judgment Factors' complaint and granted summary judgment to Packer on October 10, 2014. The bankruptcy court held that "[Judgment Factors] is precluded under both federal bankruptcy law and Texas law from seeking an actual judicial declaration that the `corporate veil' of . . . [Packer's] companies should be pierced." The bankruptcy court stated that a Texas statute substantially curtailed the situations in which a party could successfully assert alter ego and reverse veil piercing claims. The bankruptcy court explained that under federal bankruptcy law, Judgment Factors lacked standing to seek a declaration that the corporate veils of any of Packer's companies should be pierced because such actions lie within the exclusive control of the bankruptcy Trustee. The court also explained that, based on its dismissal of Count V of the complaint, Judgment Factors could not rely on an alter ego theory or reverse veil piercing to support its arguments for a denial of a discharge under § 727(a).
In addressing Judgment Factors' arguments that a discharge should be denied under § 727(a), the bankruptcy court carefully outlined the elements of each subsection under which Judgment Factors claimed that Packer should be denied a discharge. The court then emphasized the specific elements Judgment Factors had failed to satisfy with sufficient evidence. The bankruptcy court noted that many of Judgment Factors' arguments in support of denying Packer's discharge centered on his use of the bank account of his single-member LLC, P Custom Homes ("PCH"), to pay his personal expenses.
The bankruptcy court separately addressed Judgment Factors' claim under § 727(a)(4)(A) that Packer made false
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.'" Endeavor Energy Res., L.P. v. Heritage Consol., L.L.C. (In re Heritage Consol., L.L.C.), 765 F.3d 507, 510 (5th Cir.2014) (quoting Clinton Growers v. Pilgrim's Pride Corp. (In re Pilgrim's Pride Corp.), 706 F.3d 636, 640 (5th Cir.2013)). "Generally, a bankruptcy court's findings of fact are reviewed for clear error, and its conclusions of law are reviewed de novo." Id. (quoting In re Pilgrim's Pride Corp., 706 F.3d at 640). The bankruptcy court granted summary judgment to Packer, which is proper when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). "Intertwined with this [court's review] is the basic principle of bankruptcy that exceptions to discharge must be strictly construed against a creditor and liberally construed in favor of a debtor so that the debtor may be afforded a fresh start." Hudson v. Raggio & Raggio, Inc. (In re Hudson), 107 F.3d 355, 356 (5th Cir.1997).
Under 11 U.S.C. § 727(a), a "court shall grant the debtor a discharge, unless" the debtor engaged in specific actions that are statutorily enumerated. Judgment Factors argued in the bankruptcy court that Packer engaged in behavior enumerated in § 727(a)(2)(A), (a)(3), (a)(4)(A), and (a)(5) and that, therefore, he should not be granted a discharge.
In the bankruptcy court, Judgment Factors asserted alter ego and reverse veil piercing theories. It predicated its arguments that Packer had engaged in behavior that would justify the denial of a discharge under § 727(a) on the theory that PCH and Packer's other entities were his alter egos. Judgment Factors also requested
As the bankruptcy court correctly recognized, alter ego and reverse veil piercing claims "belong[] to the debtor," are "property of the estate," lie within the control of the Trustee, and generally may not be brought by a creditor. Cadle Co. v. Mims (In re Moore), 608 F.3d 253, 258-59 (5th Cir.2010); accord Schimmelpenninck v. Byrne (In re Schimmelpenninck), 183 F.3d 347, 358 (5th Cir.1999); S.I. Acquisition, Inc. v. Eastway Delivery Serv., Inc. (In re S.I. Acquisition, Inc.), 817 F.2d 1142, 1151 (5th Cir.1987). A creditor may be able to seek a judicial declaration that corporate entities constitute the alter egos of the debtor, but only in certain circumstances. The conditions necessary for a creditor to pursue an alter ego claim include: (1) the claim must be colorable; (2) the claim must be brought on behalf of the estate; and (3) the Trustee must have unjustifiably refused to pursue the claim. La. WorLd Exposition, Inc. v. Fed. Ins. Co. (In re La. World Exposition, Inc.), 832 F.2d 1391, 1397 (5th Cir.1987). If the creditor shows that these conditions are met, then the bankruptcy court may, in its discretion and after considering the benefit to the estate, grant the creditor leave to purse the claim on behalf of the estate. Id.; see also, e.g., Official Employment-Related Issues Comm. of Enron Corp. v. Lavorato (In re Enron Corp.), 319 B.R. 128, 131 (Bankr.S.D.Tex.2004) (discussing the circumstances under which a creditor may pursue a claim); Spring Serv. Tex., Inc. v. McConnell (In re McConnell), 122 B.R. 41, 43-44 (Bankr.S.D.Tex.1989) (discussing the conditions that must be present for a creditor to pursue an alter ego claim).
Judgment Factors has not demonstrated that the Trustee unjustifiably refused to pursue any claims.
To prevail on a claim under § 727(a)(2)(A),
While Judgment Factors is correct about Packer's involvement with PCH and PCH's execution of four contracts around the time Packer filed for bankruptcy, we perceive no error in the conclusions of the bankruptcy and district courts that Packer's actions do not warrant the denial of a discharge under § 727(a)(2)(A). As the bankruptcy court thoroughly explained, Packer disclosed the existence of PCH and other entities he owned, the valuations of those entities, and his interactions with those entities (including PCH's payment of his personal bills). Packer was also forthcoming with the Trustee, answering all of her questions about his various entities at the § 341 meeting. Consistent with the Trustee's evaluation of Packer's interactions with PCH and his other companies, the bankruptcy court concluded that Packer's use of his companies did not merit the denial of a discharge under § 727(a)(2)(A) because there was no "(1) [] transfer of property; (2) belonging to the debtor; (3) within one year of the filing of the petition." In re Duncan, 562 F.3d at 698 (quoting In re Chastant, 873 F.2d at 90). Nothing in the record convinces us that the bankruptcy court erred in reaching this conclusion.
With respect to the four contracts PCH executed to build homes, Judgment Factors has not produced any evidence demonstrating that the down payments on those contracts are the property of Packer. The down payments on those contracts are held by Pavilion Bank, and PCH only draws on those funds as needed to complete construction. Because Judgment Factors points to no evidence that Packer concealed or transferred assets related to these contracts or engaged in any other conduct that would justify the denial of a discharge under § 727(a)(2)(A), we conclude that the bankruptcy court did not err in granting summary judgment to Packer on Judgment Factors' § 727(a)(2)(A) claim. See id.
A court may deny a debtor a discharge under 11 U.S.C. § 727(a)(3) if the debtor has destroyed or failed to keep records from which his financial condition
Similarly, the bankruptcy court committed no error in concluding that Packer provided sufficient information for the Trustee and his creditors to ascertain his financial condition. The bankruptcy court found that Packer's schedules contained proper disclosures of his personal assets and that he was forthcoming with the bankruptcy Trustee. This court has previously explained that "[a] debtor's financial records need not contain `full detail,' but `there should be written evidence' of the debtor's financial condition." Robertson v. Dennis (In re Dennis), 330 F.3d 696, 703 (5th Cir.2003) (quoting Goff v. Russell Co. (In re Goff), 495 F.2d 199, 201 (5th Cir.1974)). Nothing in the record convinces us that Packer failed to provide sufficient written evidence of his financial condition. Thus, Judgment Factors cannot show that Packer "failed to keep or preserve" financial records "from which [Packer's] financial condition . . . might be ascertained." 11 U.S.C. § 727(a)(3).
Under 11 U.S.C. § 727(a)(4)(A), a "court shall grant the debtor a discharge, unless . . . the debtor knowingly and fraudulently, in or in connection with the case . . . made a false oath or account." This court has previously explained that:
In re Duncan, 562 F.3d at 695 (alterations in original) (quoting Sholdra v. Chilmark Fin. LLP (In re Sholdra), 249 F.3d 380, 382 (5th Cir.2001)). On appeal, Judgment Factors points to three separate instances that it claims constitute false oaths: (1) Packer's statement that some of his business interests were contingent on litigation, (2) his failure to disclose the existence of his accountant, and (3) his failure to disclose a life insurance policy. However, we find no error in the bankruptcy court's conclusion that Judgment Factors failed to show that Packer made any of these statements with "fraudulent intent" or that any of these statements were "material to the bankruptcy case." Id.; see also id. ("Under bankruptcy law, a creditor objecting to the debtor's discharge bears the initial
A creditor may prove fraudulent intent by showing either an actual intent to deceive or a reckless indifference to the truth. In re Sholdra, 249 F.3d at 382-83. In In re Duncan, this court held that, because the debtor cooperated with the bankruptcy process and was forthcoming about his assets and liabilities, he did not possess fraudulent intent. 562 F.3d at 697-98. Here, the record indicates that Packer was forthcoming with the Trustee and answered all of her questions satisfactorily. Thus, consistent with In re Duncan, the bankruptcy court correctly held that Packer possessed no fraudulent intent in making any of the statements to which Judgment Factors points. The bankruptcy court correctly granted summary judgment to Packer on Judgment Factors' objection under § 727(a)(4)(A).
For the foregoing reasons, we AFFIRM the judgment of the district court.
11 U.S.C. § 727(a)(2)(A).
11 U.S.C. § 727(a)(3).