ANDREW S. HANEN, District Judge.
This case is an appeal from several orders directing the Trustee in this case to distribute proceeds from this Chapter 7 estate to the primary debtor and to the Trustee and his counsel. This Court affirms the Bankruptcy Court as to all three orders. (Bankruptcy Case No. 07-33986; Doc. Nos. 222, 223, and 224).
The Appellants are Philippe Tanguy, 13,500 Air Express, LLC, 13,500 Air Express L.P., and PTRE Holdings, L.P. (hereinafter referred to jointly as "Appellants"). Appellee is William West, the Chapter 7 Trustee ("Trustee"). While the parties do not universally agree over what are the controlling facts, there are some basic facts about which there seems to be little or no contest. In 2007 Richard Davis, the debtor, filed a Chapter 7 bankruptcy. The Trustee filed an adversary proceeding against Appellants over a promissory note and received a favorable judgment in the amount of $1,183,090.80 plus attorney's fees of $31,180.75. This order was affirmed on appeal, Tanguy v. West (In re Davis), 10cv1194, 2012 WL 2871662 (S.D. Tex. July 10, 2012), and subsequently affirmed by the Fifth Circuit in Tanguy v. West, 538 F. App'x 440 (5th Cir. 2013), cert. denied, 134 S.Ct. 1002 (2014).
Part of the debtor's estate included a piece of real estate located at 1714 Driscoll Street ("Driscoll Street Property"). The Trustee sought to gain title to this property since it was nonexempt and a state court suit was filed. The proceedings proceeded on both state and federal tracts as the Trustee sought to collect monies due the bankruptcy estate. At one point a state court receiver was actually appointed. These state proceedings included two trips to the First Court of Appeals sitting in Houston (Cause No. 01-14-00455-CV, opinions issued April 28, 2016 and October 27, 2016). The ultimate conclusion on the first appeal was that the Court of Appeals "reject[ed] appellants' collateral attack on the bankruptcy court judgment . . ." (April 28
During this long drawn-out process, the Trustee ultimately sought and was granted permission by the Bankruptcy Court to sell the Driscoll Street Property on February 14, 2017. While the Appellants initially agreed to the sale in open court, they ultimately objected to the sale. The Bankruptcy Court found that the Appellants had waived these objections. They did not file a motion to stay, and the Driscoll Street Property was sold several days later. Nevertheless, this matter was not dropped. The Appellants here appealed the sale of the property to District Court. That appeal, Cause No. 17-cv-615, was presided over by Judge Vanessa Gilmore. She ultimately ruled against the Appellants and granted the Trustee's Motion to Dismiss (Doc. No. 15). Signed on September 18, 2017, this ruling was appealed to the Fifth Circuit, In the Matter of Richard Davis, No. 17-201655, where it was recently affirmed. (17cv615, Doc. No. 21).
After the sale was consummated the Trustee moved to distribute some of the funds in order to pay the primary creditor and to pay his own administrative expenses and attorney's fees. The Appellants objected to these payments, but on March 30, 2017 the Bankruptcy Court overruled the objections and granted the Trustee's Third Interim Application of Trustee's Counsel, the Trustee's First Interim Application for Compensation and Reimbursement, and the motion for an Interim Distribution to Creditor David Laux.
In the Fifth Circuit, legal conclusions receive de novo review, while findings of fact are reviewed for clear error. In re San Patricia Cnty. Cmty. Action Agency, 575 F.3d 553, 557 (5th Cir. 2009) (quoting In re Seven Seas Petroleum, Inc., 522 F.3d 575, 583 (5th Cir. 2008)); Matter of Texas Extrusion Corp., 844 F.2d 1142, 1156-57 (5th Cir. 1988); Matter of Briscoe Enterprises, Ltd., II, 994 F.2d 1160, 1163 (5th Cir. 1993) (citing Matter of Bennett, 970 F.2d 138, 139 (5th Cir. 1992)); Matter of Delta Towers, Ltd., 924 F.2d 74, 76 (5th Cir. 1991) (quoting In re Missionary Baptist Foundation, Inc., 712 F.2d 206, 209 (5th Cir. 1983) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948))); Drive Fin. Servs., L.P. v. Jordan, 521 F.3d 343, 346 (5th Cir. 2008) (citing Fed. R. Bankr. P. 8013).
The Fifth Circuit has defined clear error review in the following ways. In Matter of Delta Towers, the Fifth Circuit held that "[f]indings of fact made by a bankruptcy court will not be set aside unless clearly erroneous" and that "[a reviewing] Court will reverse only when `although there is evidence to support it, the reviewing court on the entire evidence is left with a firm and definite conviction that a mistake has been committed.'" Matter of Delta Towers, Ltd., 924 F.2d at 76 (quoting In re Missionary Baptist, 712 F.2d at 209 (quoting United States Gypsum, 333 U.S. at 395))).
In Good v. RMR Investments, Inc., the Fifth Circuit found that "[u]nder a clearly erroneous standard of review, the district court, sitting as an appellate court, must affirm the decision of the bankruptcy court if the bankruptcy court's account of the evidence is `plausible in light of the record viewed as a whole.'" 428 B.R. 249, 253 (E.D. Tex. 2010) (citing Jarvis Christian College v. Nat'l Union Fire Ins. Co., 197 F.3d 742, 746 (5th Cir. 1999)). The Good Court stated that, "[i]n practice, the `clearly erroneous' standard requires the appellate court to uphold any [lower] court determination that falls within a broad range of permissible conclusions." Id. (citing Jarvis Christian College, 197 F.3d at 746 (quoting Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 400 (1990))).
The Fifth Circuit in Missionary Baptist refined the standard of review for mixed questions of law and fact: "When a finding of fact is premised on an improper legal standard, or a proper one improperly applied, that finding loses the insulation of the clearly erroneous rule." Matter of Missionary Baptist, 712 F.2d at 209 (citing Smith v. Hightower, 693 F.2d 359 (5th Cir. 1982)); see also Fuji Photo Film Co. v. Shinohara Shoji Kabushiki Kaisha, 754 F.2d 591, 602 n.4 (5th Cir. 1985) (finding that "[t]he `clearly erroneous' rule does not apply . . . to determinations reached by application of an incorrect legal standard") (citing Falcon Rice Mill, Inc. v. Community Rice Mill, Inc., 725 F.2d 336, 344 & n.7 (5th Cir. 1984); Kentucky Fried Chicken Corp. v. Diversified Packaging Corp., 549 F.2d 368, 384 (5th Cir. 1977); Continental Motors Corp. v. Continental Aviation Corp., 375 F.2d 857, 859 (5th Cir. 1967)).
This appeal is the appeal of three orders allowing three interim payments to be made. The subject matter of the briefing, however, is the genesis of the biggest problem that permeates this appeal. Virtually no evidence has been provided by Appellants to suggest the Bankruptcy Court was incorrect. In fact, Appellants offer very little argument that even pertains to these payments. Instead, Appellants spend most of their briefs (both the Appellants' and Reply briefs) attacking the sale of the Driscoll Street Property and the jurisdiction of the Bankruptcy Court to order that sale. That issue was not appealed to this Court. It was previously appealed to Judge Gilmore's court. It was considered by that Court, and their objections/arguments were dismissed and that ruling has now been affirmed by the Fifth Circuit. It is not properly before this Court.
Appellants' emphasis on this topic can clearly be seen in the prayer/conclusion found in their first brief:
Similarly their points of error are all aimed at the sale of the Driscoll Street Property:
(Doc. No. 4 at pp. 27-36). (emphasis added).
Even when an appellate point does not specifically address the Driscoll Street Property, the subsequent argument does. For example, Point Four reads:
(Doc. No. 4 at p. 32).
The phrasing of this point of error suggests that the argument found underneath is going to concern the fees awarded or the debt that was paid to the primary creditor, which is the subject matter of this appeal. Instead, it is an attack on the sale of the property that was the subject of the appeal to Judge Gilmore whose ruling has now been affirmed by the Fifth Circuit.
(Doc. No. 4 at pp. 26-27).
Appellants eventually mention the fees that are the subject matter of this appeal, but only because they were paid with funds emanating from the sale of the Driscoll Street Property. That sale is not before this Court.
The law is clear that a Bankruptcy Court has the jurisdiction to order a Trustee to pay creditors. 11 U.S.C. §§ 105(a), 502(a); See In re Davis, 170 F.3d 475, 91-92 (5th Cir. 1999); In re Ezzell, 438 B.R. 108, 116 (S.D. Tex. 2010). Further, it has jurisdiction to compensate the Trustee and the Trustee's lawyers. 11 U.S.C. § 330(a)(1)(A)-(B) ("[T]he court may award to a trustee . . . reasonable compensation for actual, necessary services rendered . . . and [] reimbursement for actual, necessary expenses."); see also Matter of Wolf, 739 Fed. App'x 290, 290 (5th Cir. 2018). Any argument to the contrary would be frivolous.
Appellants' points of error based upon the sale of the Driscoll Street Property are denied. Appellants' jurisdictional complaints about the sale are also denied as the entire subject matter is the subject of a different appeal that has already been ruled upon and has been affirmed by the Fifth Circuit. A party only gets one bite of the apple. Currently, Appellants' only path to relief on those topics is to appeal the Fifth Circuit's recent ruling to the Supreme Court.
Appellant's Seventh Point of Error is actually pertinent to this appeal. It reads as follows:
(Doc. No. 4 at p. 37).
The argument under the Seventh Point again initially launches into the sale of the Driscoll Street Property and the lack of subject matter jurisdiction, but it eventually comes back to the subject matter of the actual point of error: the ruling on the record for this appeal.
The pleadings that are the subject of this argument questioned the power of the court to award fees and pay creditors, but neither pleading (See Appendix A attached hereto) addressed either the specifics of the fees requests or the debt owed to the creditor. The Bankruptcy Judge (as well as the state appellate court) had already resolved the issue of jurisdiction and the sale had been ordered. At that point Appellants' only path was to ask for a stay and appeal that ruling. They did appeal the ruling, but never asked for the stay. They have now lost that appeal at the District Court level and at the Fifth Circuit. The Bankruptcy Court struck the objections in question from this appellate record because it did not consider either in making its rulings on these motions. (See Appendix B attached hereto). They were not considered because neither pleading addressed the specifics of the fee requests; instead they both addressed an issue that had already been resolved, albeit against the positions being put forth by Appellants. The Bankruptcy Court's ruling striking these from the record is not in error.
Nevertheless, this Court has reviewed both the pleadings and holds as a matter of law that had they been included in the record, they would not have made a difference. That being the case, their exclusion from the record is certainly not error.
Appellants have raised jurisdictional objections throughout these proceedings. They lost those in the state district court and in the state appellate system. They lost that argument in the Bankruptcy Court and then at the District Court level. They have now lost that issue in the Fifth Circuit. Appellants do not get to keep appealing the same jurisdictional issue until they find a court that agrees with them.
Setting aside this jurisdictional issue and with regard to the actual merits of the three payments in question in this case, Appellants have not brought forth any factual reason or any legal argument that even hints at an error on the part of the Bankruptcy Court. Having shown no error with regard to factual filings and no error with regard to any legal ruling, the judgment of the Bankruptcy Court is affirmed.
This Court finds this appeal to be frivolous, if not in bad faith, and orders that the Trustee submit by November 21, 2018 a request for reasonable and necessary fees and costs with supporting documentation. Appellants may respond by December 5, 2018, if they so desire.
TO THE PRESIDING BANKRUPTCY JUDGE OF SAID COURT:
COME NOW, the Appellants, Philippe Tanguy ("TANGUY"), 13,500 Air Express L.L.C., 13,500 Air Express L.P. ("AIR EXPRESS"), and PTRE Holdings L.L.C., ("PTRE"), and file this their Response and Objection to the Trustee William G. West's First Interim Application for Compensation and Reimbursement of Expenses of William G. West, Trustee, Third Interim Application of Trustee's Counsel for Allowance of Compensation and Motion for Order Allowing and Approving Interim Distribution to Creditor and, in support of their Response and Objections, would show this Court the following:
1. Appellants Tanguy, 13,500, and PTRE Object to the relief demanded by the Trustee William G. West in his Motion For Order Allowing and Approving Interim Distribution to Creditor because this Court has no subject matter jurisdiction over the real estate located at 1714 Driscoll Street which is currently in custodia legis with the 270th Judicial District Court of Harris County, Texas.
2. This Court did not have the necessary subject matter jurisdiction to sell the property. The property never became property of the Chapter 7 Bankruptcy Estate of Richard D. Davis.
3. Due to its lack of jurisdiction to sell the property this Court has no jurisdiction to grant the relief demanded by the Trustee West in his Motions or to distribute the proceeds of sale of said property.
4. Appellants incorporate by reference the arguments set forth in their Motion for Entry of Stay on Appeal and the briefing and legal authority set out therein in support of this Response and Objection.
WHEREFORE, Appellants request that the Trustee's Motion be denied in all of its particulars. Appellants request such other and further relief, both in law and in equity, to which they may show themselves to be justly entitled.
I certify that a true and correct copy of the foregoing document was sent to Joshua W. Wolfshol, Porter & Hedges LLP, 1000 Main Street, 36th Floor, Houston, TX 77002 by electronic transmission on this the 29th day of March, 2017.
TO THE PRESIDING BANKRUPTCY JUDGE OF SAID COURT:
COME NOW, the Appellants, Philippe Tanguy ("TANGUY"), 13,500 Air Express L.L.C., 13,500 Air Express L.P. ("AIR EXPRESS"), and PTRE Holdings L.L.C., ("PTRE"), and file this their Objections to Trustee West's Exhibit Nos. 9 and 10 as well as the conduct by this Court of any Summary Trial on Contested Claims to the Proceeds of Sale of the Real Estate Located at 1714 Driscoll Street, Houston, Texas on the following grounds:
1. On March 28, 2017 Trustee West apparently served a List of Exhibits. Exhibits 9 and 10 — which are financial records of Appellants, PTRE and Philippe Tanguy, — are evidence which relates to PTRE's pending claim, by intervention, before the 270th Judicial District Court of Harris County, Texas in Case No. 2013-67779, the State Receivership Proceeding, for an equitable lien, by subrogation against a portion of any proceeds of sale of the 1714 Driscoll Street property. Exhibit 10 relates to Appellant Tanguy's claims potentially arising out of the State Court Receivership proceedings which cannot be proceeded with until the final decision of the First Court of Appeals in the case styled
2. Exhibits 9 and 10 indicate the Trustee is attempting to try Appellants' claims arising out of the State Court Receivership proceedings before this Court.
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I certify that a true and correct copy of the foregoing document was sent to Joshua W. Wolfshol, Porter & Hedges LLP, 1000 Main Street, 36th Floor, Houston, TX 77002 by electronic transmission on this the 30th day of March, 2017.
The Court has considered the Trustee's Emergency Motion to Strike Portions of Appellants' Designation of Items to be Included in the Record on Appeal (the "
