IN RE: ATP Oil & Gas Corporation
Filing
81
ORDER AND REASONS denying 76 Motion for Entry of Judgment under Rule 54(b); denying 77 Motion for Entry of Judgment under Rule 54(b). Signed by Judge Sarah S. Vance on 6/30/16. (jjs)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
RODNEY TOW, TRUSTEE
CIVIL ACTION
VERSUS
NO: 15-3141
T. PAUL BULMAHN, ET AL.
SECTION: R
ORDER AND REASONS
Before the Court are two motions for entry of final judgment under
Federal Rule of Civil Procedure 54(b), one filed by the Director Defendants1
and one filed by Officer Defendants G. Ross Frazer, Isabel Plume, and Robert
M. Shivers III.2 For the following reasons, the Court denies both motions.
I.
BACKGROUND
This case arises out of the demise of ATP Oil & Gas Corporation, a Texas-
based oil and gas company that filed for bankruptcy in August 2012.3 Rodney
Tow, the Chapter 7 Trustee for ATP, filed this lawsuit against a number of
ATP's former officers and directors, alleging gross mismanagement and
1
R. Doc. 77.
2
R. Doc. 76.
3
Unless otherwise noted, the Court draws its factual account from its order
granting the Director Defendants' and Officer Defendants' motions to dismiss the
Second Amended Complaint. See R. Doc. 71.
various forms of unlawful conduct. In his Second Amended Complaint, the
Trustee alleged that beginning in May 2010, the Officer Defendants4 and
Director Defendants5 breached fiduciary duties they owed to ATP and its
creditors. The Trustee also sought to void cash and stock bonuses paid to
certain Officer Defendants as fraudulent transfers. Finally, the Trustee alleged
that each Officer Defendant and Director Defendant conspired with and/or
aided and abetted other defendants in breaching their fiduciary duties and
allowing the distribution of fraudulent transfers.
On April 29, 2016, the Court granted Rule 12(b)(6) motions to dismiss
filed by the Officer Defendants and Director Defendants. Finding that the
Trustee's request for leave to amend his complaint was generally unwarranted,
the Court dismissed most of the Trustee's claims with prejudice. Nonetheless,
the Court granted the Trustee twenty-one days to amend his pleadings to
better allege two causes of action: (1) his breach of fiduciary duty claim against
Officer Defendant Bulmahn for allegedly causing ATP to enter unfavorable
contracts to benefit his "friends"; and (2) his fraudulent transfer claims
4
The "Officer Defendants" are T. Paul Bulmahn, Leland Tate, Albert L. Reese, Jr.,
George R. Morris, Keith R. Godwin, Pauline van der Sman-Archer, Isabel Plume, Robert
M. Shivers III, and G. Ross Frazer.
5
The "Director Defendants" are Burt A. Adams, Arthur H. Dilly, Brent M.
Longnecker, Robert J. Karow, Gerard J. Swonke, Chris A. Brisack, George R. Edwards,
and Walter Wendlandt.
2
seeking to void cash and stock bonuses paid to certain Officer Defendants.
On May 18, 2016, the Trustee filed a one-count Third Amended
Complaint.6 As amended, the pleadings assert only fraudulent transfer claims
against Officer Defendants Bulmahn, Tate, Reese, Morris, and Godwin. The
Trustee does not re-allege his breach of fiduciary duty claim against Officer
Defendant Bulmahn; nor does he assert any claims whatsoever against the
Director Defendants or Officer Defendants Sman-Archer, Plume, Shivers, or
Frazer. The Director Defendants and Officer Defendants Plume, Shivers, and
Frazer now ask the Court to enter a final judgment as to the Trustee's claims
against them under Rule 54(b).7 The Trustee opposes both motions.8
II.
DISCUSSION
Rule 54(b) provides, in pertinent part:
When more than one claim for relief is presented in an action,
whether as a claim, counterclaim, cross-claim, or third-party
claim, or when multiple parties are involved, the court may direct
the entry of a final judgment as to one or more but fewer than all
of the claims or parties only upon an express determination that
there is no just reason for delay and upon an express direction for
the entry of judgment.
6
R. Doc. 72.
7
R. Docs. 76, 77.
8
R. Docs. 78, 79.
3
Fed. R. Civ. P. 54(b). The Fifth Circuit has noted that "[o]ne of the primary
policies behind requiring a justification for Rule 54(b) certification is to avoid
piecemeal appeals." PYCA Indus., Inc. v. Harrison County Waste Mgmt., 81
F.3d 1412, 1421 (5th Cir. 1996). It explained that Rule 54(b) judgments are not
favored and should be awarded only when necessary to avoid injustice: "A
district court should grant certification [in a Rule 54(b) case] only when there
exists some danger of hardship or injustice through delay which would be
alleviated by immediate appeal; it should not be entered routinely as a
courtesy to counsel." Id. (citing Ansam Assocs., Inc. v. Cola Petroleum, Ltd.,
760 F.2d 442, 445 (2d Cir. 1985)).
The threshold inquiry for this Court is whether "there is no just reason
for delay," a determination that is within the sound discretion of the district
court. See Ackerman v. FDIC, 973 F.2d 1221, 1224 (5th Cir. 1992). In making
this determination, the district court has a duty to weigh "the inconvenience
and costs of piecemeal review on the one hand and the danger of denying
justice by delay on the other." Road Sprinkler Fitters Local Union v.
Continental Sprinkler Co., 967 F.2d 145, 148 (5th Cir. 1992) (quoting
Dickinson v. Petroleum Conversion Corp., 338 U.S. 507, 511 (1950)). A major
factor the district court should consider is whether the appellate court "'would
have to decide the same issues more than once even if there were subsequent
4
appeals." H & W Indus., Inc. v. Formosa Plastics Corp., USA, 860 F.2d 172,
175 (5th Cir. 1988) (quoting Curtiss–Wright Corp. v. General Elec. Co., 446
U.S. 1, 8 (1980)).
After weighing the appropriate factors, the Court finds that certification
is inappropriate in this case. The Director Defendants and Officer Defendants
Frazer, Plume, and Shivers fail to convince the Court that "there exists some
danger of hardship or injustice through delay which would be alleviated by
immediate appeal." PYCA Indus., Inc., 81 F.3d at 1421 (holding that the
district court abused its discretion by certifying an appeal without a finding of
hardship). While both sets of defendants suggest that they would harmed by
delayed appellate review of the Court's April 29, 2016 order, the risk of being
brought back into litigation after a final judgment and appeal is present in
every case in which claims are dismissed against some defendants but not
others. Defendants provide no facts or argument demonstrating that this is
the sort of "infrequent harsh case" that Rule 54(b) was designed to address.
See Jasmin v. Dumas, 726 F.2d 242, 244 (5th Cir. 1984).
Further, litigation between the Trustee and Officer Defendants Bulmahn,
Tate, Reese, Morris, and Godwin remains unresolved and could result in an
appeal. Given the interrelatedness of the Trustee's breach of fiduciary duty,
conspiracy, aiding and abetting, and fraudulent transfer claims against all of
5
the defendants in this case, an entry of judgment against some of the
defendants could require an appellate court to decide the same issues on
multiple occasions. Thus, the risk of piecemeal review outweighs the danger
of denying justice by delay.
III. CONCLUSION
For the foregoing reasons, the Court DENIES both motions for entry of
final judgment under Rule 54(b).
New Orleans, Louisiana, this ___ day of June, 2016.
30th
___________________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE
6
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