Huntsville Golf Development, Inc. v. Whitney Bank

Filing 24

MEMORANDUM OPINION AND ORDER DENYING 22 MOTION Rehearing. Signed by Judge Virginia Emerson Hopkins on 6/27/2014. (JLC)

FILED
2014 Jun-27 PM 03:54
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
NORTHERN DIVISION
HUNTSVILLE GOLF
DEVELOPMENT, INC.
Appellant,
v.
WHITNEY BANK,
Appellee.

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) Case No.: 5:13-CV-671-VEH
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MEMORANDUM OPINION AND ORDER
INTRODUCTION
The appellant (Huntsville Golf) has filed a Motion for Rehearing under Federal
Rule of Bankruptcy Procedure 8015. Doc. 22. Huntsville Golf asks this court to
reexamine its decision affirming the lower bankruptcy court’s opinion granting the
Appellee’s “Motion for Payment of Claims and Appointment of a Disbursing Agent”
(doc. 2-9).
There were five appealed issues that the court addressed in its Memorandum
Opinion affirming the lower court’s opinion. Huntsville Golf asks that the court
reconsider only one of them – namely, whether the Appellee (Whitney Bank) released
any claim to the Chatelain bankruptcy estate when it formed a “Sharing Agreement”

with the Estate of Robert Brindley, Sr. (the Brindley Estate). Huntsville Golf argues
that this court misconstrued Louisiana law in finding that Whitney Bank had not
created a general partnership with the Brindley Estate when it consented to the
Sharing Agreement. Moreover, Huntsville Golf contends that this court wrongly
determined facts in reaching this issue. The company asks the court to remand the
matter to the bankruptcy court so that the latter may conduct an evidentiary hearing
and formally make factual findings on the partnership issue.
This court finds that the existence of a partnership vel non between Whitney
Bank and the Brindley Estate is an issue unnecessary to resolving the matters
Hunstville Golf appealed to this court. Accordingly, the court will DENY the Motion
for Rehearing.
STANDARD OF REVIEW
Federal Rule of Bankruptcy Procedure 8015 provides:
Unless the district court or the bankruptcy appellate panel by local rule or by
court order otherwise provides, a motion for rehearing may be filed within 14
days after entry of the judgment of the district court or the bankruptcy appellate
panel. If a timely motion for rehearing is filed, the time for appeal to the court
of appeals for all parties shall run from the entry of the order denying rehearing
or the entry of subsequent judgment.
Fed. R. Bankr. P. 8015. “Rule 8015 does not provide a standard for evaluating a
motion for rehearing.” In re Daniels, No. 1:12-CV-4181-WSD, 2014 WL 547176, at

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*3 (N.D. Ga. Feb. 10, 2014). “Courts in this Circuit have applied the same standard
to motions for rehearing under Bankruptcy Rule 8015 as is applied to motions for
reconsideration." Id. (citing In re Steffen, 405 B.R. 486, 488 (M.D. Fla. 2009); Cover
v. Wal-Mart Stores, Inc., 148 F.R.D. 294, 295 (M.D. Fla. 1993)).1
The court will grant a motion for reconsideration where there is:
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newly discovered evidence;

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an intervening development or change in controlling law; or

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a need to correct a clear error of law or fact.

Id. (citations omitted). “A motion for reconsideration should not be used to present
the Court with arguments already heard and dismissed, or to offer new legal theories
or evidence that could have been presented in the previously-filed motion.” Id.
(citations omitted). “Whether to grant a motion for reconsideration is within the
sound discretion of the district court.” Id. (citation omitted).
DISCUSSION
In its Memorandum Opinion, the court addressed Huntsville Golf’s partnership
arguments because the court considered the partnership issue material to two issues

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“Other courts have considered Rule 40 of the Federal Rules of Appellate Procedure 40
(‘Rule 40') when applying Rule 8015.” Id. (citations omitted). Rule 40 states that “a petition for
panel rehearing” following entry of judgment “must state with particularity each point of law or
fact that the petitioner believes the court has overlooked or misapprehended.” Fed. R. App. P.
40(a)(2).
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central to the resolution of this action:
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whether res judicata applied; and

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whether Whitney Bank constructively released any claim it had to the
bankruptcy estate when it formed the Sharing Agreement with the
Brindley Estate.

The court has again reviewed the record below and the arguments presented before
this court. It now finds the partnership issue irrelevant to its disposition of the present
action. The lower bankruptcy court’s 1993 Confirmation Order was res judicata
regardless of whether Whitney Bank and the Brindley Estate formed a general
partnership or joint venture under Louisiana law. Similarly, even if such a
relationship existed between the two entities, Whitney Bank cannot be said to have
released its claim to the Chatelain bankruptcy estate.
I.

Res Judicata Applies Regardless of Any Partnership Relationship.
This court found that the lower bankruptcy court’s 1993 Confirmation Order

was res judicata. Doc. 19 at 26. Res judicata requires inter alia an identity of parties
– or their privies – between a former and current cause of action. See E.E.O.C. v.
Pemco Aeroplex, Inc., 383 F.3d 1280, 1285 (11th Cir. 2004) (“Simply put, before the
doctrines of either res judicata or collateral estoppel may be asserted against a party,
it must be established that the party in the second action was either a party in the
previous action or a privy of the party in that action.”). The “identity of parties”
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element of this analysis thus encompasses two sets of actors:
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those who were actual parties in the original action; and

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those who are or were in privity with the parties to the original action.

See id. Privity is a legal concept requiring some elaboration. The Eleventh Circuit has
explained privity in the following manner:
Privity is a flexible legal term, comprising several different types of
relationships and generally applying when a person, although not a party, has
his interests adequately represented by someone with the same interests who
is a party. Adequate representation can arise in a number of circumstances. For
example, a judgment that is binding on a guardian or trustee may also bind the
ward or the beneficiaries of a trust. The judgment in a class action may be
binding on members of that class. Or, where a special remedial scheme exists
expressly foreclosing successive litigation by nonlitigants, as for example in
bankruptcy or probate, legal proceedings may terminate preexisting rights if
the scheme is otherwise consistent with due process.
Id. at 1286 (internal quotation marks and citations omitted).
One of the parties to the 1992-93 bankruptcy proceedings identified itself as
Whitney Bank. The party that reopened this case in 2012 and appears here as an
appellee identifies itself as Whitney Bank. The two parties thus appear identical. But,
Huntsville Golf argues that this appearance is deceptive. Huntsville Golf states that,
on December 2, 2011, Whitney Bank and the Brindley Estate formed a general
partnership (or, at least, a joint venture) under Louisiana law. According to Huntsville
Golf, as a result, the actual appellee before this court is a new and different entity –

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namely, the “Whitney/Brindley partnership.” E.g., Doc. 7 at 40.
Even if this were so, it would not preclude the application of res judicata
because the formation of such a partnership (or joint venture) would not disrupt the
required “identity of parties.” Under Huntsville Golf’s theory, Whitney Bank and the
Brindley Estate formed a partnership (or joint venture) exclusively composed of
themselves. It was allegedly established for the limited purpose of obtaining and
sharing the bankruptcy proceeds Whitney Bank was designated to pursue from the
Chatelains and Huntsville Golf. If true, this “Whitney-Brindley” partnership would
be a privy of Whitney Bank – one of the two partners in the purported partnership.
That is, Whitney Bank can be said to have “adequately represented” the partnership’s
interests in the earlier litigation. See Shapiro v. United States, 951 F. Supp. 1019,
1023-24 (S.D. Fla. 1996) (holding that, for purposes of res judicata, taxpayerplaintiffs were in privity with limited partnership, which was party in prior action, by
virtue of their status as limited partners). Thus, the partnership between Whitney and
the Brindley Estate vel non does not sway the court’s determination that the 1993
Confirmation order was res judicata.
II.

Even if there were a Whitney-Brindley partnership, Brindley’s preexisting
release would not bind it.
The partnership issue is similarly inconsequential to resolving Huntsville

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Golf’s release argument. Huntsville Golf and a collection of entities associated with
Robert Brindley (the Brindley Group) entered into their Settlement Agreement on
November 28, 2011. Part of this agreement included a release “whereby [the Brindley
Group] completely and irrevocably released [Huntsville Golf] from any and all past,
present or future claims whether known or unknown arising out of the litigation
between the parties ‘and any other dealings between [Huntsville Golf] and [the
Brindley Group] as of the date of [that] Agreement.” Doc. 7 at 39 (quotation omitted).
The Brindley Estate (one entity within the Brindley Group) formed its Sharing
Agreement with Whitney Bank on December 2, 2011 – that is, four days after the
Settlement Agreement. The Sharing Agreement did not mention anything about a
release of claims. Nevertheless, Huntsville Golf alleges that the Sharing Agreement
created a general partnership between Whitney Bank and the Brindley Estate.
Huntsville Golf then uses this “partnership” to argue that the Brindley Estate
imported sub silentio the Brindley Group’s preexisting release of Huntsville Golf into
its (later) partnership agreement with Whitney Bank.
Assuming arguendo a Whitney-Brindley partnership, this is not a tenable
interpretation of Louisiana law. Hunstville Golf argues that “an obligation contracted
by a partner binds the partnership if the partnership benefits by the transaction or the
transaction involves matters in the ordinary course of business.” Id. (citing La. Civ.
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Code Art. 2816; Darden v. Cox, 123 So. 2d 68, 74-75 (1960)). This is accurate.
Huntsville Golf overlooks, though, the premise of this statement. The Louisiana Code
and relevant case law presume an existing partnership when a given partner contracts
such an individualized obligation. See, e.g., Darden, 123 So. 2d at 74-75 (holding that
a managing partner who obtained loans and bonds for the partnership not only bound
himself individually but also his junior partner). The court cannot find – and
Huntsville Golf does not provide – any authority for the notion that a partner who
incurs a preexisting, individualized obligation prior to the creation of a partnership
automatically subjects the later-formed partnership to that obligation. This is
particularly so where, as here, the preexisting obligation goes entirely unmentioned
in the ostensible partnership agreement. Louisiana law does not support such implicit,
retroactive assumption of pre-partnership obligations.
Huntsville Golf tries to skirt this obvious discrepancy in its argument by
highlighting the allegedly collusive negotiations between Whitney Bank and the
Brindley Estate that occurred before, during, and after the Settlement Agreement.
Doc. 7 at 38-39. Huntsville Golf does not maintain, however, that Whitney Bank and
the Brindley Estate formed their supposed partnership until after the settlement. This
concession is dispositive. Even assuming a Whitney-Brindley partnership, the
Brindley Group (of which the Brindley Estate was a part) executed its release against
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Huntsville Golf before it was formally associated with Whitney Bank. Under
Louisiana law, the release was thus not “[a]n obligation contracted for the
partnership.” La. Civ. Code Art. 2816.
CONCLUSION
For these reasons, the court finds that it need not reach the question of whether
or not Whitney Bank and the Estate of Robert Brindley, Sr., formed a partnership
under Louisiana law on December 2, 2011. As a corollary, the court concludes that
the bankruptcy court below need not have issued formal factual findings on the issue.
The court thus DENIES the present Motion for Rehearing.
DONE and ORDERED this the 27th of June, 2014.

VIRGINIA EMERSON HOPKINS
United States District Judge

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