UPD Global Resources, Inc.
Filing
20
MEMORANDUM OPINION AND ORDER affirming Bankruptcy Court's 5/12/2015 Order granting Defendant's Motion to Dismiss (Docket Entry No. 27 in Adversary Proceeding H-15-3073), affirming Bankruptcy Court's 8/13/2015 Order granting Motion for Clarification of the Order Granting Continental Casualty Company's Motion to Dismiss (Docket Entry No. 35 in Adversary Proceeding H-15-3073), affirming Bankruptcy Court's 9/17/2015 Order granting Motion of Continental Casualty Company pursuant to Bankruptcy Rule 3006 to Withdraw Claim No. 3 (Docket Entry No. 141 in Bankruptcy Case No. 11-36970-H5-11) (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
United States District Court
Southern District of Texas
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
IN RE:
UPD GLOBAL RESOURCES, INC.
§
§
§
§
I
Debtor.
UPD GLOBAL RESOURCES, INC.
Plaintiff,
v.
CONTINENTAL CASUALTY CO.
and PBC SERVICES, INC.
I
Defendants.
UPD GLOBAL RESOURCES, INC.
Appellant,
v.
CONTINENTAL CASUALTY CO.
and PBC SERVICES, INC.
I
Appellees.
UPD GLOBAL RESOURCES, INC.
Appellant,
v.
CONTINENTAL CASUALTY
co.
CIVIL ACTION NO. H-15-2488
§
§
§
§
§
§
§
§
§
I
I
Appellee.
David J. Bradley, Clerk
ADVERSARY NO. H-15-03073
§
§
§
§
§
§
§
§
§
§
I
July 21, 2016
BANKRUPTCY NO. 11-36970-H5-11
§
§
§
§
§
§
§
§
§
§
I
ENTERED
CIVIL ACTION NO. H-15-2717
MEMORANDUM OPINION AND ORDER
This Memorandum Opinion and Order addresses appeals brought by
UPD Global Resources,
Inc.
( "UPD"
entered in Bankruptcy Case No.
or
"Debtor")
from one order
H-11-36970-H5-11 and two orders
entered in related Adversary Proceeding No.
H-15-03073.
UPD's
appeal of these orders has given rise to two civil actions:
2488 and H-15-2717.
H-15-
Civil Action No. H-15-2488 concerns the appeal
of two orders entered in Adversary Proceeding No. H-15-03073:
•
Order granting Defendant's Motion to Dismiss,
signed May 12, 2015, Docket Entry No. 27;
•
Order on Motion for Clarification of the Order
Granting Continental Casualty Company's Motion to
Dismiss, signed August 13, 2015, Docket Entry
No. 35.
Civil Action No. H-15-2717 concerns the appeal of the Bankruptcy
Court's
•
For
Order granting Motion of Continental Casualty
Company ("Continental" or "Appellee") pursuant to
Bankruptcy Rule 3 0 0 6 to withdraw Claim No. 3,
signed on September 17, 2015, Docket Entry No. 141
in Bankruptcy Case No. 11-36970-H5-11.
the
reasons
Bankruptcy Court
explained
will
be
below,
these
affirmed,
and
three
the
orders
two
civil
of
the
actions
arising from UPD's appeal of these three orders will be dismissed.
I.
A.
Factual and Procedural Background
The Bankruptcy Case
UPD
was
the
debtor
in
a
Chapter
11
bankruptcy
filed
on
August 15, 2011, Case No. H-11-36970-H5-11 (the "Bankruptcy Case")
in the United States Bankruptcy Court for the Southern District of
Texas, Houston Division ("Bankruptcy Court").
PBC Services, Inc.
("PBC") submitted a proof of claim for $5,670,543.77, representing
the full value of a summary judgment received in the civil action
-2-
styled, PBC Services, Inc. v. UPD Global Resources, Inc., No. 4:080235, in the United States District Court for the Southern District
of Texas. 1
(1)
On June 3, 2013, the Bankruptcy Court entered its Order
Regarding
Final
Approval
of
Disclosure
Statement
and
(2) Confirming Fifth Amended Plan of Reorganization ("Confirmation
Order") . 2
they
PBC and UPD initially disagreed as to PBC' s Claim, but
ultimately
Class 4. 3
agreed
that
PBC' s
Claim
should
be
allowed
in
Other allowed claims totaled approximately $11.6 million. 4
In pertinent part the Fifth Amended Plan of Reorganization
("UPD's Plan") provides:
v.
Means for Execution of the Plan
After the Confirmation Date, Chief Restructuring Officer,
Wayne Fuquay,
shall be authorized to manage the
1
UPD Global Resources, Inc.'s Fifth Amended Combined Plan of
Reorganization and Disclosure Statement, Dated April 29, 2013,
~ IV.D, Appellant's Bankruptcy Record on Appeal ("BROA in Civil
Action No. H-15-2717"), Docket Entry No. 15-2, pp. 17-18 ("After an
objection to the Proof of Claim and related court proceedings, PBC
Services, Inc. has an allowed, general unsecured claim [] of
$5,670,534.77."). Page numbers contained in citations to the BROA
refer to the page number in the upper, right-hand corner that is
assigned by the court's ECF system.
2
BROA in Civil Action No. H-15-2717,
pp. 76-90 and No. 15-3, pp. 43-57.
Docket Entry No.
15-2,
Id. at ~ I.9, BROA in Civil Action No. H-15-2717, Docket
Entry No. 15-2, p. 79.
See also id. at ~ II.l, BROA in Civil
Action No. H-15-2717, Docket Entry No. 15-2, p. 86 ("The objections
of .
. and PBC Services are WITHDRAWN.").
3
4
Summary of General Unsecured Claims & Plan Proponent's
Position on Allowance, BROA in Civil Action No. H-15-2717, Docket
Entry No. 15-2, pp. 38-40.
-3-
liquidation of the Estate under the terms set forth in
the Plan.
The Plan provides for the liquidation of the Debtor's
assets in order to pay its Creditors.
The Debtor-inPossession proposes to implement this Plan by:
3.
Recovery of monies through a legal malpractice
proceeding described more fully in Section [IX] ,
infra.
IX.
Preservation of Retained Claims & Vesting of Assets
A.
Vesting
This is a liquidating plan, and the Debtor has no plans
to operate after Confirmation of the Plan.
Therefore,
property of the Estate shall not vest in the Debtor upon
Confirmation of the Plan. From, and after the Effective
Date, the Chief Restructuring Officer may settle and
compromise Claims with continued supervision of the
Bankruptcy Court.
B.
Retention and Enforcement of Causes of Action
Except as otherwise provided in the Plan, all causes of
action that the Debtor and the Estate may hold against
any person or entity shall be retained by the Bankruptcy
Estate
and
shall
be
prosecuted
[by]
the
Chief
Restructuring Officer, after the Effective Date.
In particular, the Debtor has a legal malpractice claim
against Timothy W. Strickland and Fowler, Rodriguez,
Valdes-Fauli, LLP related to their representation of the
Debtor in the lawsuit, PBC Services, Inc. v. UPD Global
Resources, Inc., No. 4:08-cv-00235, in the United States
District Court for the Southern District of Texas.
On
September 19, 2012, UPD commenced a legal malpractice
action against the Defendants in UPD Global Resources,
Inc. v. Fowler, Rodriguez, Valdes-Fauli, Flint, Gray,
McCoy, Sullivan and Carroll, LLP f/k/a & a/k/a Fowler,
Rodriguez, Valdes- Fuli f /k/a & a/k/a Fowler Rodriguez and
-4-
Timothy W. Strickland, Cause No. 2012-54817, in the 165th
District Court of Harris County, Texas. 5
XV.
Effect of Confirmation
A.
Binding Effect
The Plan shall be binding on all present and former
holders of Claims and Interests in their respective
successors and assigns.
B.
Moratorium, Injunction, and Limitation of Recourse
for Payment
Except as otherwise expressly provided in the Plan, all
entities who have held, hold or may hold Claims against,
5
This case was originally filed before confirmation of UPD's
Plan as Cause No. 2012-54817 in the 165th District Court of
Harris County, Texas.
See Plaintiff's Original Petition and
Request for Disclosure, BROA in Civil Action No. H-15-2717, Docket
Entry No. 15-2, pp. 65-71.
Post-confirmation, the parties agreed
to dismiss the lawsuit without prejudice upon the execution of an
agreement to toll the statute of limitations. Later, the case was
refiled as Cause No. 2013-63621 in the 334th District Court of
Harris County, Texas, but was transferred back to the 165th
District Court. See Debtor's Emergency Motion to Reconsider Order
Allowing Withdraw of Claim, BROA in Civil Action No. H-15-2717,
Docket Entry No. 15-2, p. 105; Amended Motion for Summary Judgment
of Timothy Strickland and Fowler Rodriguez, BROA in Civil Action
No. H-15-2717, Docket Entry No. 15-3, p. 7 (filed in the 165th
Judicial District of Harris County, Texas); Plaintiff UPD Global
Resources, Inc. 's Response to Defendants Timothy Strickland and the
Law Firm of Fowler Rodriguez' Motion for Summary Judgment and in
the Alternative Motion for Stay, BROA in Civil Action No. H-152717, Docket Entry No. 15-3, pp. 31 and 37-38 ~ 19.
"In lieu of
seeking an abatement, the parties in the legal malpractice [action]
negotiated a second tolling agreement and UPD took a voluntary
nonsuit of the legal malpractice case, with the right to refile the
case depending on the outcome of [UPD's] appeal [of the Bankruptcy
Court's grant of Continental's motion to withdraw claim]."
Appellant's Brief, Docket Entry No. 17 in Civil Action No. H-152717, p. 10. Page numbers contained in citations to the appellate
briefs refer to the native page numbers at the bottom of the page.
-5-
or Interest in, the Debtor's Bankruptcy Estate or the
Debtor will be permanently enjoined, on and after the
Consummation Date, from (i) commencing or continuing in
any manner any action or other proceeding of any kind
with respect to any such Claim, ( ii) the enforcement,
attachment, collection or recovery by any manner or means
of any judgment, award, decree or order against the
Debtor or the Debtor's Bankruptcy Estate, (iii) creating,
perfecting or enforcing any encumbrance of any kind
against the Debtor or the Debtor's Bankruptcy Estate on
account of any such Claim and (iv) asserting any right of
setoff, subrogation or recoupment of any kind against any
obligation due from the Debtor or the Debtor's Bankruptcy
Estate on account of any such claim; provided, however,
notwithstanding any provision of the Plan to the
contrary, each holder of a Claim shall be entitled to
enforce his, her or its rights under the Plan and Plan
Documents.
XVI.
No Discharge
This is a liquidating plan, and the Debtor does not
intend
to
engage
in
business
operations
after
confirmation of the Plan. Therefore, there shall be no
discharge granted in this case. 6
B.
UPD's Malpractice Action,
UPD's Adversary Action,
and
Continental's Motion to Withdraw Proof of Claim in UPD' s
Bankruptcy Case
Before
confirmation of
UPD' s
Plan,
UPD
commenced a
legal
malpractice case against the attorneys who represented UPD in the
breach of contract suit that resulted in PBC' s summary judgment and
claim against UPD for
$5, 670,534.77.
6
The defendants
in UPD' s
UPD Global Resources, Inc.'s Fifth Amended Combined Plan of
Reorganization and Disclosure Statement, Dated April 29, 2013, BROA
in Civil Action No. 15-2717, Docket Entry No. 15-2, pp. 19, 23-24,
29-30.
-6-
malpractice
suit
were
insured
under
a
policy
issued
by
assigned
to
Continental. 7
On
January
24,
2015,
PBC
transferred
and
Continental all of its rights and advantages under the summary
judgment received in the civil action styled, PBC Services, Inc. v.
UPD
Global
Resources,
District of Texas,
Inc.,
No.
4:08-00235,
in
the
Southern
and under PBC's general unsecured claim for
$5,670,534.77 allowed in UPD's Bankruptcy Case. 8
On January 27,
2015,
PBC filed a notice of transfer in the
Southern District of Texas,
required by
§
Civil Action No.
4: 08-cv-00235,
as
12.014 of the Texas Property Code. 9
7
Amended Motion for Summary Judgment of Timothy Strickland and
Fowler Rodriguez, BROA in Civil Action No. H-15-2717, Docket Entry
No. 15-3, p. 10 ~ 11.
See also Debtor's Emergency Motion to
Reconsider Order Allowing Withdraw of Claim, BROA in Civil Action
No. H-15-2717, Docket Entry No. 15-2, p. 105 ("Continental is
providing a defense for the defendant attorneys.").
See Confirmation Order ~ I.10.b, BROA in Civil Action
No. H-15-2717, Docket Entry No. 15-2, p. 79. See also id. at 86
~
II.D ("Approval of the Agreement with the POHA and PBC
Services"); Response to Continental Casualty Company's Motion to
Dismiss UPD Global Resources, Inc.'s First Amended Complaint
Pursuant to Rule 12(b) (1) for Lack of Subject Matter Jurisdiction
or, Alternatively, to Dismiss the First Amended Complaint Pursuant
to Rule 12(b) (6), Appellant's Bankruptcy Record on Appeal in Civil
Action No. H-15-2488 ("BROA in Civil Action No. H-15-2488"), Docket
Entry No. 2-2, p. 93 (acknowledging that PBC's claim was an
allowed, general unsecured claim) .
8
9
PBC's Notice of Transfer, BROA in Civil Action No. H-15-2717,
Docket Entry No. 15-2, pp. 98-99, and Docket Entry No. 15-3,
pp. 23-24.
-7-
On January 28, 2015, PBC filed a notice of transfer in UPD's
Bankruptcy
Case,
as
required
by
Federal
Rule
of
Bankruptcy
Procedure 3 0 01 (e) ( 2) . 10
On February 9,
2015,
Continental filed its first motion to
Bankruptcy Case, 11 which the Bankruptcy
withdraw claim in UPD' s
Court granted the next day. 12
urging
the
Bankruptcy
Court
The following day UPD filed a motion
to
reconsider
its
order
granting
Continental's motion to withdraw. 13
On February 16, 2015, Continental, as transferee and assignee
of PBC, filed a Satisfaction of Judgment in PBC Services, Inc. v.
UPD Global Resources, Inc., No. 4:08-00235, as required by Federal
Rule
of
Civil
Property Code.
Procedure
60 (b) (5),
and
§
52.005
of
of
PBC
Texas
The Satisfaction of Judgment stated that the final
judgment entered by the District Court on November 30,
favor
the
against
UPD,
awarding
compensatory
2010,
damages
in
plus
reasonable attorneys' fees and interest, "is satisfied in full." 14
10
Notice of Transfer of Claim Other Than for Security, BROA in
Civil Action No. H-15-2717, Docket Entry Nos. 15-2, p. 96, and
15-3, p. 26.
11
Motion of Continental Casualty Company Pursuant to Bankruptcy
Rule 3006 to Withdraw Claim and Notice of Hearing, BROA in Civil
Action No. H-15-2717, Docket Entry No. 15-2, pp. 93-95.
12
0rder, BROA in Civil Action No.
No. 15-2, p. 102.
H-15-2717,
Docket Entry
13
Debtor's Emergency Motion to Reconsider Order Allowing
Withdraw of Claim, BROA in Civil Action No. H-15-2717, Docket Entry
No. 15-2, pp. 103-08.
14
Satisfaction of Judgment, BROA in Civil Action No. H-15-2717,
Docket Entry No. 15-3, p. 29.
-8-
On February 25, 2015, UPD filed Adversary Proceeding No. H-1503073 against PBC and Continental seeking, inter alia, declaratory
judgment
that
PBC
and
contained in UPD' s
Continental
Plan and
violated
injunctions
impermissibly interfered with
(2)
implementation of UPD' s Plan. 15
(1)
On the same day the Bankruptcy
Court held a hearing on Debtor's Emergency Motion to Reconsider
Allowing Withdraw of Claim, and on March 10, 2015, the Bankruptcy
Court
signed
an
Order
vacating
its
February
10,
Order
2015,
granting Continental's motion to withdraw claim and denying the
motion subject to reconsideration at a hearing on UPD's application
for a temporary restraining order or preliminary injunction. 16
On
March
Complaint
in
4,
the
2015,
UPD
Adversary
filed
Plaintiff's
Proceeding
First
asserting
Amended
claims
for
declaratory judgment that PBC and Continental violated injunctions
contained
in
UPD's
confirmed
plan
of
reorganization,
impermissibly interfered with implementation of UPD' s
plan,
along
with
claims
for
breach
of
contract,
and
confirmed
conspiracy,
tortious interference with contract, post-confirmation equitable
subordination, and preliminary and permanent injunctive relief. 17
15
Plaintiff's Original Complaint,
BROA in Civil Action
No. H-15-2488, Docket Entry No. 2-2, pp. 1-11, esp. pp. 6-7 ~ 18.
16
0rder, BROA in Civil Action No.
No. 15- 3 , p . 4 2 .
17
H-15-2717,
Docket Entry
Plaintiff' s First Amended Complaint, BROA in Civil Action
No. H-15-2488, Docket Entry No. 2-2, pp. 12-26.
-9-
On March 27, 2015, Continental filed a motion to dismiss, and
memorandum in support thereof,
2015. 19
18
to which UPD responded on April 3,
On April 20, 2015, the Bankruptcy Court held a hearing on
Continental,s motion to dismiss. 20
motion
April
seeking
27,
Continental
2015,
to
On April 24, 2015, PBC filed a
join Continental, s
UPD submitted a
responded on May 1,
motion
to
dismiss. 21
post-hearing brief, 22
2015. 23
On May 12,
On
to which
2015,
the
Bankruptcy Court signed the first of the three orders from which
18
Continental Casualty Company's Motion to Dismiss UPD Global
Resources, Inc.'s First Amended Complaint Pursuant to Rule 12(b) (1)
for Lack of Subject Matter Jurisdiction or, Alternatively, to
Dismiss the First Amended Complaint Pursuant to Rule 12(b) {6), and
Continental Casualty Company's Memorandum of Law in Support of Its
Motion to Dismiss, BROA in Civil Action No. H-15-2488, Docket Entry
No. 2-2, pp. 75-78, and 79-89, respectively.
19
Response to Continental
UPD Global Resources, Inc.'s
Rule 12(b) (1)
for Lack of
Alternatively, to Dismiss the
Rule 12(b) (6), BROA in Civil
No. 2-2, pp. 90-105.
Casualty Company's Motion to Dismiss
First Amended Complaint Pursuant to
Subject Matter Jurisdiction or,
First Amended Complaint Pursuant to
Action No. H-15-2488, Docket Entry
20
Transcript of Hearing Held on April 20, 2015, Appellant's
BROA in Civil Action No. H-15-2488, Docket Entry No. 2-2, pp. 184215.
21
PBC Services, Inc. 's Motion to Join Continental Casualty
Company's Motion to Dismiss and Arguments, BROA in Civil Action
No. H-15-2488, Docket Entry No. 2-2, pp. 167-72.
22
Plaintiff,s Post-Hearing Brief,
BROA in
No. H-15-2488, Docket Entry No. 2-2, pp. 174-83.
23
Civil
Action
Continental Casualty Company's Response to Plaintiff's PostHearing Brief, BROA in Civil Action No. H-15-2488, Docket Entry
No. 2-3, pp. 1-5.
-10-
UPD appeals,
i.e.,
the Order dismissing the Adversary Proceeding
which stated only:
On
May
29,
2015,
suit
malpractice
arguing
"Defendant's Motion to Dismiss is GRANTED. " 24
filed
an amended motion
in
light
of
that
the
defendants
the
in
UPD's
for
state
summary
Satisfaction of
judgment
Judgment,
Continental filed in the Federal District Court,
court
which
there were no
damages and that absent damages, UPD's malpractice case could not
be sustained. 25
UPD responded on July 20, 2015, arguing that while
in personam damages against the debtor had been extinguished, in
rem damages against the debtor's estate had not been extinguished. 26
On
July
27,
2015,
the
state
court
denied
the
malpractice
defendants' motion for summary judgment. 27
On August 13,
order
from
2015,
which UPD
the Bankruptcy Court signed the second
appeals,
i.e.,
the
Order
clarifying
and
modifying the Order dismissing the Adversary Proceeding stating:
THE ORDER (DK #27) IS HEREBY CLARIFIED that Continental
Casualty Company's Motion to Dismiss is GRANTED pursuant
24
0rder, BROA in Civil Action No.
No. 2-2, p. 216.
H-15-2488,
Docket
Entry
25
Amended Motion for Summary Judgment of Timothy Strickland and
Fowler Rodriguez, BROA in Civil Action No. H-15-2717, Docket Entry
No. 15-3, pp. 7-13.
26
Plaintiff UPD Global Resources, Inc.'s Response to Defendants
Timothy Strickland and the Law Firm of Fowler Rodriguez' Motion for
Summary Judgment and in the Alternative Motion for Stay, BROA in
Civil Action No. H-15-2717, Docket Entry No. 15-2, pp. 31-41, esp.
pp. 36-39 ~~ 14-24.
27
0rder, BROA in Civil Action No.
No. 15-3, p. 58.
-11-
H-15-2717,
Docket
Entry
to 12(b) (1) and 12(b) (6) of the Federal Rules of Civil
Procedure, thereby dismissing PBC Services, Inc. and the
adversary suit in their entirety. 28
On August
20,
2015,
Continental
filed a
second motion to
withdraw PBC' s Claim from UPD' s Bankruptcy Case,
29
to which
UPD
responded on September 10, 2015. 30
On August 27, 2015, UPD timely filed a Notice of Appeal of the
Bankruptcy Court's May 12,
2015,
Order dismissing the Adversary
Proceeding, and the August 13, 2015, Order clarifying and modifying
the Order dismissing the Adversary Proceeding, thereby initiating
Civil Action No. H-15-2488.
On
September
17,
2015,
the
Bankruptcy
Court
granted
Continental's motion to withdraw PBC's Claim, and entered the third
order from which UPD appeals.
That Order stated:
On this day, the Court held a hearing on the Motion of
Continental Casualty Company (Docket No. 13 9) pursuant to
Bankruptcy Rule 3006 to withdraw Claim No. 3. The Court
having reviewed the pleadings and considered arguments of
counsel, grants this Motion .
. . . Claim No. 3 is hereby deemed withdrawn. 31
28
0rder, Appellant's BROA in Civil Action No. H-15-2488, Docket
Entry No. 2-2, p. 231.
29
Motion of Continental Casualty Company to Reconsider/Renew
Pursuant to Bankruptcy Rule 3006 Motion to Withdraw Claim and
Notice of Hearing, BROA in Civil Action No. H-15-2717, Docket Entry
No. 15-2, pp. 136-46.
30
Debtor's Response to Motion of Continental Casualty Company
to Reconsider/Renew Pursuant to Bankruptcy Rule 3006 Motion to
Withdraw Claim, BROA in Civil Action No. H-15-2717, Docket Entry
No. 15-3, pp. 1-59.
31
0rder, BROA in Civil Action No.
No. 15-2, p. 147.
-12-
H-15-2717,
Docket
Entry
UPD filed a notice of appeal the same day thereby initiating Civil
Action No. H-15-2717. 32
On October 1, 2015, UPD filed a motion seeking leave to reopen
the evidence in UPD's Bankruptcy Case to allow admission into the
record of documents. 33
"One such document was the Agreement Between
PBC and Continental Casualty Company regarding the purchase of the
PBC claim, which stated the Appellee's purpose for purchasing the
claim.
(ECF No. 15-2, p. 129) ." 34
On October 14, 2015, Continental
filed a response urging the Bankruptcy Court to deny UPD's motion
as improper. 35
Continental argued that
[a]lthough the Debtor asserts that some of the additional
documents and materials were previously identified on its
original and amended exhibit lists regarding the Debtor's
prior motion to reconsider, those proposed exhibits were
not previously admitted and, even if they were admitted
over Continental's objection, that was a different motion
resulting in a different order which is not the subject
of the Debtor's appeal. As such, there is no basis for
those documents and materials to be admitted for the
purpose of being added to the record on appeal. 36
32
Bankruptcy Docket Sheet, BROA in Civil Action No. H-15-2717,
Docket Entry No. 15-1, p. 18.
33
Debtor' s Motion for Rehearing and to Extend Time to File
Designations Under Rule 8009, BROA in Civil Action No. H-15-2717,
Docket Entry No. 15-2, pp. 148-53.
34
Appellant' s Brief,
No. H-15-2717, p. 10.
Docket
Entry
35
No.
17
in
Civil
Action
Continental Casualty Company's Response to Debtor's Motion
for Rehearing and to Extend Time to File Designations Under
Rule 8009, BROA in Civil Action No. H-15-2717, Docket Entry
No. 15-2, pp. 154-57.
36
Id. at 155 ~ 9.
-13-
The
Bankruptcy Court
has
not
ruled
on
this
motion,
37
and
the
referenced documents have not been considered for purposes of the
two appeals now before the court.
II.
Appellate Jurisdiction and Standards of Review
Final judgments, orders, and decrees of a bankruptcy court may
be appealed to a
federal district court.
28 U.S. C.
§
158 (a).
Because the district court functions as an appellate court,
it
applies the same standard of review that federal appellate courts
use when reviewing district court decisions.
Life Insurance Co.
1992).
See Webb v. Reserve
(In re Webb), 954 F.2d 1102, 1103-04 (5th Cir.
This court thus reviews the Bankruptcy Court's findings of
fact for clear error and its rulings on questions of law or mixed
questions of law and fact de novo.
See Wooley v. Faulkner (In re
SI Restructuring, Inc.), 542 F.3d 131, 135 (5th Cir. 2008).
III.
Appeal from Dismissal of the Adversary Proceeding
UPD's appeal in Civil Action No.
15-2488 of the Bankruptcy
Court's dismissal of Adversary Proceeding No.
H-15-03073 raises
three issues:
( 1)
37
Whether the Bankruptcy Court erred in dismissing
Plaintiff's First Amended Complaint for failure to
state a claim for which relief could be granted
pursuant to Fed. R. Bankr. P. 7012 and Fed. R. Civ.
P. 12 (b) (6).
Appellant' s Brief,
No. H-15-2717, p. 10.
Docket
Entry
-14-
No.
17
in
Civil
Action
(2)
(3)
A.
Whether the Bankruptcy Court erred in dismissing
Plaintiff's First Amended Complaint without first
giving the Plaintiff the opportunity to replead.
Whether the Bankruptcy Court had post-confirmation
jurisdiction over the subject matter of Plaintiff's
First Amended Complaint. 38
Standards of Review
The Bankrutpcy Court's decisions to dismiss the adversary case
under Federal Rule of Civil Procedure Rule 12(b) (1)
subject matter jurisdiction and/or Rule 12(b) (6}
for lack of
for failure to
state a claim are legal decisions subject to de novo review.
U.S. Brass Corp. v.
Travelers Insurance Group
Corp.), 301 F.3d 296, 303
and
district
courts'
(5th Cir. 2002)
finding
that
(In re U.S.
See
Brass
('"Both the bankruptcy
they
had
subject
matter
jurisdiction is a legal determination that we review de novo.'").
See also Carroll v. Fort James Corp., 470 F.3d 1171, 1173 (5th Cir.
2006)
(bankruptcy court's grant of Rule 12(b) (6) motion to dismiss
is reviewed de novo).
A bankrutpcy court's denial of a motion for
Waldron v.
leave to amend is reviewed for abuse of discretion.
Adams
&
Reese,
L. L. P.
(In re American International
Refinery,
Inc.), 676 F.3d 455, 461, 466 (5th Cir. 2012).
38
Appellant' s Brief,
No. H-15-2488, p. 3.
Docket
-15-
Entry
No.
5
in
Civil
Action
B.
Analysis
1.
The Bankruptcy Court Lacked Post-Confirmation Subject
Matter Jurisdiction Over the Adversary Proceeding
UPD argues that the Bankruptcy Court had post-confirmation
subject matter jurisdiction over the claims that it asserted in the
Adversary Proceeding because those claims are rooted in acts that
interfered with the implementation of UPD's confirmed Plan. 39
UPD
argues that the Bankruptcy Court had subject matter jurisdiction
because the claims asserted in the Adversary Proceeding concern
conduct calculated to thwart UPD's implementation of its
plan of reorganization when [Continental's] predecessor
in interest endorsed the prosecution of a
legal
malpractice suit as a means of implementing its plan.
This endorsement carne after UPD and PBC Services
litigated the amount and classification of PBC's claim
prior to confirmation. 40
(a)
Applicable Law
( 1)
Rule 12 (b) ( 1)
Federal Rule of Civil Procedure 12(b) (1) governs challenges to
the court's subject matter jurisdiction.
"'A case is properly
dismissed for lack of subject matter jurisdiction when the court
lacks
the
case.'"
statutory or constitutional power
to adjudicate
Horne Builders Association of Mississippi, Inc. v. City of
Madison, Mississippi, 143 F.3d 1006, 1010 (5th Cir. 1998).
39
Appellant' s Brief,
No. H-15-2488, p. 24.
40
the
Docket
Id. at 27-28.
-16-
Entry
No.
5
in
Civil
"Courts
Action
may dismiss for lack of subject matter jurisdiction on any one of
three different bases:
supplemented
complaint
by
(1) the complaint alone;
undisputed
supplemented
by
facts
in
the
undisputed
resolution of disputed facts."
(2) the complaint
record;
facts
plus
or
(3)
the
the
court's
Clark v. Tarrant County, Texas, 798
F.2d 736, 741 (5th Cir. 1986).
Rule 12(b) (1) challenges to subject matter jurisdiction come
in
two
forms:
Paterson v.
"facial"
Weinberger,
attacks
644
and
"factual"
F.2d 521,
523
attacks.
(5th Cir.
1981)
A
facial attack consists of a Rule 12(b) (1) motion unaccompanied by
supporting evidence that challenges the court's jurisdiction based
solely on the pleadings.
Id.
A
factual attack challenges the
existence of subject matter jurisdiction in fact - irrespective of
the pleadings - and matters outside the pleadings are considered.
Id.
UPD' s
Because both parties to this action cite evidence outside
pleadings
Continental's
in support of
Rule
12(b) (1)
their arguments
motion
to
for and against
dismiss,
i.e.,
UPD's
confirmed Plan and pleadings from the malpractice suit that UPD is
pursuing in state court against the attorneys who represented UPD
in the breach of contract suit that resulted in a $5,670,534.77
judgment and allowed claim in UPD's Bankruptcy Case, Continental's
motion to dismiss constitutes a factual attack on the Bankruptcy
Court's jurisdiction,
limited
to
whether
and the Bankruptcy Court's review was not
the
first
amended
-17-
complaint
filed
in
the
Adversary Proceeding sufficiently alleged jurisdiction. 41
UPD, as
the party asserting federal jurisdiction, has the burden of showing
that the jurisdictional requirements have been met.
Id.
Alabama-Coushatta Tribe of Texas v. United States,
757 F.3d 484,
487
(5th Cir.
2014).
When facing a subject matter jurisdiction
challenge and other challenges on the merits,
Rule 12(b) (6)
See also
challenge,
~'
Continental's
courts must consider the Rule 12(b) (1)
jurisdictional challenge before addressing other challenges on the
merits.
Id.
(2)
Bankruptcy Jurisdiction
Bankruptcy jurisdiction is governed by 28 U.S.C.
§§
157(c) (1)
and 1334(b) regardless of whether the matter at issue arises before
or after confirmation of a plan.
bankruptcy
judge
may
hear
a
Section 157(c) (1) provides:
proceeding
that
is
not
a
"A
core
proceeding but that is otherwise related to a case under title 11."
Under 28 U.S.C.
§
1334(b) federal district courts have original but
not exclusive jurisdiction of all civil proceedings arising under
or arising in or related to cases under title 11.
"Proceedings
'related to' a bankruptcy include (1) causes of action owned by the
debtor that become property of the estate pursuant to 11 U.S.C.
§
541, and (2) suits between third parties that have an effect on
the bankruptcy estate."
41
In re Rapid-Tore, Inc. , Bankruptcy Action
The underlying facts stated in
-18-
§
I, above, are not disputed.
No.
12-39217-H5-11,
December 31,
2014
2014).
WL 7410578,
Nevertheless,
*2
n.5
(Bankr.
S.D.
Tex.
in In re Craig's Stores of
Texas, Inc., 266 F.3d 388, 390 (5th Cir. 2001), the Fifth Circuit
held
that
"[a]fter
a
debtor's
reorganization
plan
has
been
confirmed, the debtor's estate, and thus bankruptcy jurisdiction,
ceases
to
exist,
other
than
for
matters
implementation or execution of the plan."
Brass Corp., 301 F.3d at 305 n.29 ("Although
Craig's Stores
confirms
[]
that
pertaining
to
the
See also In re U. S .
. our holding in
post-confirmation jurisdiction
exists for disputes concerning the implementation or execution of
a
confirmed plan,
jurisdiction.").
28 U.S.C.
§
1334 remains the source of this
In In re U.S. Brass Corp., 301 F.3d at 305, the
Fifth Circuit held that post-confirmation jurisdiction existed over
a dispute between the debtor's suppliers and the debtor's insurance
company upon concluding that "the proceeding will certainly impact
compliance with or completion of the reorganization plan."
In In re Enron Corp. Securities, 535 F.3d 325, 335 (5th Cir.
2008), the Fifth Circuit identified three factors as critical to
the holding in Craig's Stores that post-confirmation bankrutpcy
jurisdiction did not exist because the matters at issue did not
pertain to the implementation or execution of the confirmed plan.
First,
the
claims
at
issue
"principally
post-confirmation relations between the parties."
dealt
with
Second,
"[t]here was no antagonism or claim pending between the parties as
-19-
of the date of the reorganization."
Id.
And third,
"no facts or
law deriving from the reorganization or the plan [were] necessary
to the claim."
issue
in
the
Id.
Enron
Applying these three factors to the facts at
case,
the
Fifth
Circuit
held
that
post-
confirmation jurisdiction existed because the dispute at
issue
involved pre-confirmation events and arose pre-confirmation.
Since
these two factors weighed heavily in favor of federal jurisdiction,
the Fifth Circuit did not address the third Craig's Stores factor,
i.e., whether facts or law deriving from the reorganization plan
were necessary to resolve the claims.
(b)
Application of the Law to the Facts
The parties have argued both to the Bankruptcy Court and to
this court that the question of whether the Bankruptcy Court had
post-confirmation subject matter jurisdiction over the Adversary
Proceeding that UPD filed against Continental and PBC is governed
by the three factors that the Fifth Circuit articulated in In re
Enron,
535 F.3d at 335. 42
Applying these three factors
42
to the
Appellant' s Brief, Docket Entry No. 5 in Civil Action
No. H-15-2488, pp. 25-27; and Appellee Continental Casualty
Company's Brief, Docket Entry No. 8 in Civil Action No. H-15-2488,
pp. 7-14.
See also Continental Casualty Company's Memorandum of
Law in Support of Its Motion to Dismiss, BROA in Civil Action
No. H-15-2488, Docket Entry No. 2-2, pp. 82-84; Response to
Continental Casualty Company's Motion to Dismiss UPD Global
Resources, Inc. 's First Amended Complaint Pursuant to Rule 12 (b) ( 1)
for Lack of Subject Matter Jurisdiction or, Alternatively, to
Dismiss the First Amended Complaint Pursuant to Rule 12(b) (6), BROA
in Civil Action No. H-15-2488, Docket Entry No. 2-2, pp. 97-98.
-20-
undisputed
facts
of
this
case,
the
court
concludes
that
the
Bankruptcy Court correctly determined that it lacked subject matter
jurisdiction over the Adversary Proceeding.
{1)
The Claims at Issue Principally Concern PostConfirmation Relations Between the Parties
The first factor is whether the claims principally dealt with
pre- or post-confirmation relations between the parties.
In re
Enron, 535 F.3d at 335 (citing Craig's Stores, 266 F.3d at 391).
The claims at issue are the claims asserted in the First Amended
Complaint that UPD filed in the Adversary Proceeding, i.e., claims
for breach of contract, conspiracy, tortious interference with an
existing
contract,
post-confirmation
equitable
subordination,
declaratory judgment, and requests for injunctive relief, arising
from
UPD's
allegations
implementation of UPD' s
that
Continental
interfered
with
the
confirmed Plan when it purchased PBC' s
judgment against UPD and PBC's allowed claim in UPD's Bankruptcy
Case,
and subsequently filed a
Satisfaction of Judgment in the
federal district court from which the judgment issued, and a motion
to withdraw PBC' s
allowed claim in UPD' s
Bankruptcy Case.
Bankruptcy Court confirmed UPD's Plan on June 3, 2013. 43
asserted
by
UPD
in
the
First
Amended
Complaint
The
The claims
filed
in
the
Adversary Proceeding are all based on post-confirmation actions,
43
BROA in Civil Action No. H-15-2717, Docket Entry No. 15-2,
pp. 76-90 and 15-3, pp. 43-57.
-21-
i.e., PBC's sale of its judgment against UPD and its allowed claim
in UPD's
Bankruptcy Case
to
Continental
on January
24,
2015;
Continental's filing of the Satisfaction of Judgment in the federal
district court on February 16, 2015; and Continental's filing of
the motions to withdraw PBC's allowed claim in UPD's Bankruptcy
Case first on February 9, 2015, and again on August 20, 2015.
UPD does
Amended
Complaint
confirmed
argues
not
Plan
that
the
dispute
as
that
the
interfering
occurred
first
acts
with
alleged
in the
First
implementation of
UPD' s
post-confirmation.
Enron
factor
weighs
Nevertheless,
in
favor
UPD
of
post-
confirmation Bankruptcy Court jurisdiction because
[w]hen Continental purchased PBC's allowed, general
unsecured claim, Continental stepped into the shoes of
PBC, a creditor who was actively litigating bankruptcy
matters with UPD prior to confirmation.
Moreover, the
malpractice
claim was
originally filed prior
to
confirmation, and there is no reason to believe that
Continental was not then financing the defense for UPD's
former counsel. 44
Missing from UPD's briefing however is a cite to any authority
supporting its contention that when Continental purchased PBC's
allowed
claim,
Continental
violated
any
provision
of
UPD's
confirmed Plan or assumed from PBC any obligation that prohibited
it from taking the actions about which UPD complains, i.e., filing
a Satisfaction of Judgment in federal district court and filing
motions to withdraw PBC's allowed claim in UPD's Bankruptcy Case.
44
Appellant' s Brief,
No. H-15-2488, p. 26.
Docket
-22-
Entry
No.
5
in
Civil
Action
When UPD argued this point to the Bankruptcy Court at the April 20,
2015, hearing for Continental's motion to dismiss the Bankruptcy
Court
asked
UPD
for
authority
supporting
its
contention
that
Continental's purchase of PBC's judgment and allowed claim meant
that Continental assumed some sort of successor liability.
When
UPD's counsel was unable to cite any authority for the contention
that Continental assumed any successor liability,
the Bankruptcy
Court
the
accorded
Continental
UPD
successor
an
opportunity
liability in a
to
address
issue
post-hearing brief. 45
of
On
April 27, 2015, UPD filed a post-hearing brief in which it stated:
In further response to the Court's question regarding
"successor liability," traditional notions of successor
liability, which predominately concerns the liability of
a successor entity which acquires the assets of a
predecessor corporation has for the predecessor's general
liabilities, is not applicable to this case.
Rather,
under bankruptcy law, Continental has those rights and
obligations that PBC had prior to the post-confirmation
assignment of its allowed claim. Likewise, under state
law, the circumstances of this case show that Continental
impliedly assumed PBC's duties and obligations created
under the confirmed plan of reorganization.
Therefore,
the Court has jurisdiction over the subject matter of the
causes of action raised in UPD' s First Amended Complaint,
and the Court should not grant Defendant's Motion to
Dismiss. 46
Missing from PBC's briefing is any argument or authority from
which the Bankruptcy Court -
or this court -
could conclude that
45
Transcript of Hearing Held on April 20, 2015, pp. 18:1419:17, 22:18-23:2, BROA in Civil Action No. H-15-2488, Docket Entry
No. 2-2, pp. 201-02, 205-06.
46
Plaintiff's Post-Hearing Brief,
BROA in
No. H-15-2488, Docket Entry No. 2-2, pp. 174-75.
-23-
Civil
Action
UPD's confirmed Plan either prohibited PBC from selling its claim
to Continental or prohibited PBC or Continental from filing the
Satisfaction of Judgment
in the
Federal District Court or the
motions to withdraw PBC's allowed claim from UPD's Bankruptcy Case.
Because all of the claims asserted in the Adversary Proceeding
arise from actions that occurred post-confirmation, and because all
of those actions concern post-confirmation relations between PBC
and Continental and the alleged post-confirmation effect that those
actions and relations had on UPD's state court malpractice suit,
the
court concludes
that
the
claims
asserted in the Adversary
Proceeding principally concern post-confirmation relations between
the parties,
and that the first Enron factor weighs against the
existence of post-confirmation Bankruptcy Court jurisdiction.
(2)
There Was No Antagonism or Claim Pending
Between the Parties as of the Date of the
Reorganization
The second factor is whether " [t] here was no antagonism or
claim
pending
between
reorganization."
parties
In re Enron,
Stores, 266 F.3d at 391)
satisfied.
the
as
of
the
535 F. 3d at 335
of
the
(citing Craig's
UPD argues that this factor "is .
[because a]fter all, PBC had filed an objection to
confirmation of UPD' s plan of reorganization! " 47
While PBC objected
to confirmation of UPD's plan of reorganization,
47
date
Appellant' s Brief,
No. H-15-2488, p. 26.
Docket
-24-
Entry
No.
5
PBC's objection
in
Civil
Action
was
resolved by UPD
and
PBC before
the
confirmation. 48
Plan's
Therefore, there was no antagonism and there were no claims pending
between UPD and PBC as of the date of reorganization.
Moreover,
even if there were antagonism or claims pending between UPD and PBC
as of the date of the reorganization, UPD has failed to make any
showing that any such pre-confirmation antagonism with PBC could be
imputed to Continental.
Instead,
UPD acknowledged to the Bank-
ruptcy Court that "traditional notions of successor liability . . .
[are] not applicable to this case. " 49
Nor has UPD made any showing
that there was any pre-confirmation antagonism between UPD and
Continental. 50
Because UPD has failed to cite any evidence or
authority
which
from
the
court
could
conclude
that
there
was
antagonism or that there were claims pending between the parties,
i.e.,
between
reorganization,
UPD
and
Continental,
as
of
the
date
of
the
the court concludes that the second Enron factor
48
BROA in Civil Action No. H-15-2488, Docket Entry No. 2-2,
pp. 16, 91, 97. See also, Transcript of Hearing Held on April 20,
2015, p. 16:14-16 (Counsel for UPD acknowledges:
"Ultimately, an
agreement was reached, you know, between the parties where PBC's
claim was allowed in full. We agreed on what class they would fall
into."), BROA in Civil Action No. H-15-2488, Docket Entry No. 2-2,
p. 199.
49
Plaintiff' s
Post -Hearing Brief,
BROA in
No. H-15-2488, Docket Entry No. 2-2, pp. 174-75.
50
Civil
Action
See Transcript of Hearing Held on April 20, 2015, p. 17:3-8
(Counsel for UPD acknowledges: "[A]s far as Continental Insurance
Company goes, of course, we had - UPD had no claim against
Continental.
We didn't know that they would be defending Fowler
Rodriguez in the malpractice case. But again, Continental stepped
into PBC's shoes when they acquired that claim."), BROA in Civil
Action No. H-15-2488, Docket Entry No. 2-2, p. 200.
-25-
weighs against the existence of post-confirmation Bankruptcy Court
jurisdiction.
(3)
No Facts or Law Deriving from UPD's Confirmed
Plan Were Necessary to the Claims Asserted
The third factor is whether "no facts or law deriving from the
reorganization or the plan are necessary to the claim."
Enron, 535 F.3d at 335
In re
(citing Craig's Stores, 266 F.3d at 391).
UPD argues:
[T]he [c]ourt can only decide this issue in favor of UPD
[because t]he ability to prosecute a legal
malpractice claim is one of two means of implementing
UPD's plan.
For a creditor to release a judgment and
prevent such a prosecution frustrates this fundamental
purpose of the Plan. 51
Continental responds that
UPD's only argument regarding the third factor is that
the malpractice lawsuit against UPD's former attorneys
was one of the means for implementing UPD' s plan of
reorganization,
and Continental and PBC allegedly
interfered with the implementation of the Plan by
allegedly preventing UPD from prosecuting its legal
malpractice action.
The allegations of the Amended
Complaint show this is not true because UPD was able to
file and prosecute the lawsuit but ultimately is unable
to prove liability or damages against Continental's
insureds. Continental did not prevent UPD from filing or
prosecuting
its
legal
malpractice
lawsuit,
but
Continental did provide a defense for its insureds in the
malpractice lawsuit. The Plan did not enjoin Continental
from providing a defense for its insureds, nor could it
have. The Plan also did not enjoin creditors such as PBC
from transferring their underlying judgments or claims to
third parties, nor could it have since judgments and
claims are freely transferable.
The actions taken by
Continental to obtain PBC's judgment against UPD and file
a notice of satisfaction were lawful, and such actions
51
Appellant' s Brief,
No. H-15-2488, p. 27.
Docket
-26-
Entry
No.
5
in
Civil
Action
were not prohibited by UPD's Plan. UPD made the unsubstantiated and conclusory allegation in its Amended
Complaint that UPD interfered with the implementation of
the Plan, but the Bankruptcy Court correctly determined
that baseless allegations do not create jurisdiction in
the Bankruptcy Court. 52
UPD argues that Continental's purchase of the PBC claim and
release of the PBC judgment against UPD frustrated a fundamental
purpose of the confirmed Plan by preventing prosecution of UPD's
malpractice
suit
in
state
court.
While
prosecution of
UPD' s
malpractice suit is recognized in UPD's confirmed Plan as a means
of implementing that Plan, missing from UPD's briefing to both the
Bankruptcy Court and to this
court
is
a
citation to any Plan
provision or bankruptcy law that prohibits the actions about which
UPD complains,
against
UPD
i.e.,
and
PBC's sale to Continental of its judgment
the
claim
filed
in
UPD's
Bankrutpcy
Case,
Continental's filing of a Satisfaction of Judgment in the federal
district court, or Continental's filing of motions to withdraw the
PBC claim from UPD's Bankrutpcy Case.
2015,
hearing
held
by
the
Moreover, at the April 20,
Bankruptcy
Court
UPD's
counsel
acknowledged that
no one act between PBC and Continental was unlawful. You
know, Continental validly purchased a claim.
Again,
that's not an issue.
But the ultimate unlawful purpose was to seek the
release of the judgment in the district court and to use
that as the basis of saying that, no, there is no
underlying malpractice claim.at all, because there is no
judgment.
52
Appellee's Brief,
No. H-15-2488, p. 12.
Docket
Entry
-27-
No.
8
in
Civil
Action
So, nothing, you know, between - nothing in the
contact between PBC and Continental was unlawful, but it
was the means of what they did.
In fact, in our
response, we quoted the text of their written contract
53
and exactly what the purpose was.
UPD's counsel also acknowledged that the actions about which
it complains were not unlawful under Texas law:
THE COURT: And how is that unlawful under Texas law to
release and refuse to prosecute your own claim that you
purchased?
MR. HADDOCK:
Well, probably under Texas law it's
probably okay.
It would be- it's an ingenuous way to
defend a case, I would say. However, under federal law,
it is unlawful.
This plan of reorganization that the
Court approved governs the relationship between the debt
-- the reorganized debtor and the creditors. And also,
it imposes upon the reorganized debtor certain things
that it must do in order to perform the plan, one of
those is that malpractice suit.
So- so, by doing this, they haven't violated state
law but they are violating the orders of this court, and
that is unlawful to violate a bankruptcy court order. 54
53
Transcript of Hearing Held on April 20, 2015, p. 21:8-20,
BROA in Civil Action No. H-15-2488, Docket Entry No. 2-2, p. 204.
Although the text of the written contract between PBC and
Continental was not quoted in the response that UPD filed to
Continental's motion to dismiss, see Response to Continental
Casualty Company's Motion to Dismiss UPD Global Resources, Inc.'s
First Amended Complaint Pursuant to Rule 12 (b) (1) for Lack of
Subject Matter Jurisdiction or, Alternatively, to Dismiss the First
Amended Complaint Pursuant to Rule 12(b) (6), BROA in Civil Action
No. H-15-2488, Docket Entry No. 2-2, pp. 90-140, UPD did quote the
text of the PBC-Continental contract in the Debtor's Response to
Motion of Continental Casualty Company to Reconsider /Renew Pursuant
to Bankruptcy Rule 3006 Motion to Withdraw Claim.
See BROA in
Civil Action No. H-15-2717, Docket Entry No. 15-3, p. 3 (citing
~~ 5.1-5.4 stating Continental's intent to file notices of transfer
and satisfaction of judgment in the underlying suits.
54
Id. at 21:24-22:12, BROA in Civil Action No.
Docket Entry No. 2-2, pp. 204-05.
-28-
H-15-2488,
UPD's counsel also acknowledged that PBC was not barred either
from selling its judgment and allowed claim, or from withdrawing
its allowed claim in UPD's Bankruptcy Case:
Again, this is not the instance where someone just bought
and sold a claim.
The result of this was that
Continental was able to file a release of judgment and
argue in state court - and give them a basis for arguing
in state court that there is no malpractice claim,
because there is no judgment that ever harmed UPD, which
was one of the reasons why UPD probably came to
bankruptcy court, because they had a judgment against
them.
And I want to emphasize it's not the assignment of
the claim; it's not the withdrawal of the claim that's at
issue here.
It is the release of the judgment in the
U. S. District Court.
I mean, for instance, if Continental was a total
stranger to this case and PBC decided, for whatever
reason, that it wanted to withdraw the claim and not
participate in any distribution under the plan, maybe it
would be for a tax reason or something like that, that
would be PBC's right to withdraw a claim. But here, the
motives behind this - behind withdrawing the claim was to
release a judgment that was the foundation for a legal
malpractice claim.
It doesn't go- and this doesn't even go toward the
merits of the malpractice case. It's certainly possible
that but for the withdrawal or the release of the
judgment, it's certainly possible that UPD could lose the
malpractice suit. Anything could happen in a trial. But
this is a deliberate, you know, sabotage of a judg[e] -of a claim.
I t ' s - they have simply pulled the rug out
from under UPD and their ability to implement their plan
of reorganization. 55
Although
there
is
no
dispute
that
UPD's
confirmed
Plan
required UPD to prosecute its malpractice suit, UPD fails to cite
55
Transcript of Hearing Held on April 20, 2015, pp. 17:1218:13, BROA in Civil Action No. H-15-2488, Docket Entry No. 2-2,
pp. 200-01.
-29-
any evidence or authority from which either the Bankruptcy Court or
this court could conclude that UPD's confirmed Plan or bankruptcy
law prevented Continental from using all legal means available to
defend
its
insured
against
UPD's
malpractice
suit
or
barred
Continental from taking the actions about which UPD complains and
from which the claims that UPD asserted in the Adversary Proceeding
arise.
Instead, UPD appeals to equity by arguing that PBC was the
only creditor that benefitted from Continental's actions:
Even worse, when Continental paid $425,000 to PBC, the
only creditor who benefitted from the transaction was
PBC.
None of the other general unsecured creditors
received any benefit. Creditors should never be allowed
to
unilaterally
rewrite
confirmed
plans
of
reorganization. 56
Continental counters that
the reality is the only parties who would have benefitted
from the suit, if the suit had been successful ~t all,
would have been UPD's counsel in the legal malpractice
suit, UPD' s attorneys in the bankruptcy case, UPD' s Chief
Restructuring
Officer,
and
other
administrative
claimants.
Little, if any, payment would have flowed
through to general unsecured creditors.
On the other
hand, Continental caused a large multi-million dollar
judgment against UPD to be released and satisfied, and
thus all of UPD's creditors are left in a better position
if UPD raises any funds for its creditors. Regardless,
the Bankruptcy Court did not have subject matter
jurisdiction over UPD's claims, and thus the equities
involved do not have any relevance to the instant
appeal. 57
56
Id. at 19:20-20:6, BROA in Civil Action No. H-15-2488, Docket
Entry No. 2-2, pp. 202-03.
See Appellant's Brief, Docket Entry
No. 5 in Civil Action No. H-15-2488, p. 27.
57
Appellee's Brief,
No. H-15-2488, p. 13.
Docket
Entry
-30-
No.
8
in
Civil
Action
As
the
Bankruptcy Court
observed at
the
April
20,
2015,
hearing, there has to be a legal basis for any kind of equitable
ruling; and neither the record before the Bankruptcy Court nor the
record before this
court
supports
a
conclusion that
the First
Amended Complaint UPD filed in the Adversary Proceeding asserted
equitable
claims
over
which
confirmation jurisdiction. 58
the
Bankruptcy
Court
had
post-
The court thus concludes that UPD has
failed make any showing that
facts
or law deriving from UPD' s
confirmed Plan are necessary to the claims at issue.
Accordingly,
the court concludes that the third Enron factor weighs against the
existence of post-confirmation Bankruptcy Court jurisdiction.
2.
UPD' s First Amended Complaint Failed to State a Claim for
Which Relief Could Be Granted
UPD argues that
if the Bankruptcy Court did not have post-confirmation
subject matter jurisdiction, it should not have also
dismissed the case pursuant to Rule 12(b) (6).
In doing
so, the Bankruptcy Court, has improperly made a final
decision as to the merits of the case, which will likely
be res judicata in any subsequent case. 59
Continental responds that
the dismissal under Rule 12(b) (1) for lack of subject
matter jurisdiction was correct and should be affirmed.
Since the Bankruptcy court lacked subject matter
jurisdiction over UPD'S claims in the Amended Complaint,
58
Transcript of Hearing Held on April 20, 2015, pp. 20:2-6,
BROA in Civil Action No. H-15-2488, Docket Entry No. 2-2, p. 203.
59
Appellant' s Brief,
No. H-15-2488, p. 28.
Docket
-31-
Entry
No.
5
in
Civil
Action
the Bankruptcy Court is never going to be an appropriate
forum for UPD to litigate the claims alleged in its
Amended Complaint. Any error, if any, resulting from the
Bankruptcy Court's consideration and decision on the
Rule 12(b) (6) motion is completely harmless, and UPD's
arguments to the contrary are unfounded and lack merit. 60
The motion to dismiss that Continental filed in the Bankruptcy
Court sought dismissal
for lack of subject matter jurisdiction pursuant to
Rule 12(b) (1) of the Federal Rules of Civil Procedure
("Federal Rules"), or, alternatively, for failure to
state a cause of action upon which relief can be granted
pursuant to Rule 12(b) (6) of the Federal Rules, both made
applicable to this proceeding pursuant to Rule 7012 of
the Federal Rules of Bankruptcy Procedure. 61
The Bankrutpcy Court's grant of Continental's motion to dismiss was
therefore based first and foremost on Rule 12(b) (1)
subject matter
alternative,
conclude
jurisdiction,
i.e.,
that
in
the
and on Rule
event
that
a
the Bankruptcy Court did,
matter jurisdiction.
12 (b) (6)
higher
§
only in the
court
in fact,
For the reasons stated in
for lack of
were
have
to
subject
III.B.1, above,
the court has already concluded that the Bankruptcy Court correctly
concluded that
it
lacked subject matter
jurisdiction over
claims asserted in UPD's Adversary Proceeding.
for
the
reasons
Bankrutpcy Court
60
stated
below,
the
correctly concluded
Appellees' Brief,
No. H-15-2488, p. 17.
Docket
Entry
61
court
that
No.
In the alternative,
concludes
UPD' s
8
in
that
the
First Amended
Civil
Action
BROA in Civil Action No. H-15-2488, Docket Entry No.
p. 75 (emphasis added).
-32-
the
2-2,
Complaint filed in the Adversary Proceeding failed to state a claim
for which relief could be granted.
{a)
Rule 12{b) {6) Standard
Under Rule
8 of
the
Federal
Rules
of
Civil
Procedure,
a
pleading must contain "a short and plain statement of the claim
Fed.
showing that the pleader is entitled to relief."
P. 8(a) (2).
R.
Civ.
A Rule 12(b) (6) motion tests the formal sufficiency of
the pleadings and is
"appropriate when a
defendant attacks the
complaint because it fails to state a legally cognizable claim."
Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001), cert.
denied sub nom Cloud v. United States, 122 S. Ct. 2665 (2002).
The
court must accept the factual allegations of the complaint as true,
view them in a light most favorable to the plaintiff, and draw all
reasonable inferences in the plaintiff's favor.
Id.
To defeat a
motion to dismiss pursuant to Rule 12(b) (6), a plaintiff must plead
"enough facts to state a claim to relief that is plausible on its
face."
Bell Atlantic Corp.
(2007) .
"A claim has facial plausibility when the plaintiff pleads
factual
content
that
v.
allows
Twombly,
the
court
127 S.
to
Ct.
draw
1955,
the
1974
reasonable
inference that the defendant is liable for the misconduct alleged."
Ashcroft v.
Iqbal, 129 S. Ct. 1937, 1949
127 S. Ct. at 1965).
(2009)
(citing Twombly,
"The plausibility standard is not akin to a
'probability requirement, '
more
than
possibility that a defendant has acted unlawfully."
Id.
Twombly, 127 S. Ct. at 1965).
but
it
asks
for
a
sheer
(quoting
"Where a complaint pleads facts that
-33-
are
'merely consistent with'
short
of
the
line
between
entitlement to relief.'"
1966).
a defendant's liability,
possibility
Id.
and
(quoting Twombly,
it
'stops
plausibility
127 S.
Ct.
of
at
When considering a motion to dismiss district courts are
"limited to the complaint, any documents attached to the complaint,
and any documents
attached to
the motion to dismiss
central to the claim and referenced by the complaint."
Fund V (U.S.), L.P. v. Barclays Bank PLC,
Cir. 2010)
that
are
Lone Star
594 F.3d 383, 387 (5th
(citing Collins v. Morgan Stanley Dean Witter, 224 F.3d
496, 498-99 (5th Cir. 2000)).
(b)
UPD's
Application of the Law to the Alleged Facts
First
Amended
Complaint
filed
in
the
Adversary
Proceeding asserts claims for declaratory judgment that PBC and
Continental (1) violated injunctions contained in UPD's confirmed
plan of reorganization and (2) impermissibly interfered with UPD's
implementation of its confirmed plan,
contract,
conspiracy,
and claims for breach of
tortious interference with contract, post-
confirmation equitable subordination, and preliminary and permanent
injunctions. 62
{1}
UPD Failed to State a Breach of Contract Claim
UPD argues that
[i]ts claim for breach of contract arises out of the acts
done
by
Continental
to
interfere
with
UPD's
62
Plaintiff' s First Amended Complaint, BROA in Civil Action
No. H-15-2488, Docket Entry No. 2-2, pp. 12-26, especially, p. 7
~ 17.
-34-
implementation of its confirmed plan of reorganization by
seeking the withdrawal of a claim it purchased for an
improper purpose.
This claim is premised on the
principle that "[a] Chapter 11 bankruptcy plan is
essentially a contract between the debtor and his
creditors/ and must be interpreted according to the rules
governing the interpretation of contracts."
Miller v.
United States/ 363 F.3d 999 1004 (9th Cir. 2004) . 63
1
Under Texas law the essential elements of an action for breach
of
(2)
(3)
contract
are
performance
breach of
the
( 1)
or
the
existence
tendered
of
a
performance
contract by the
by
defendant/
valid
the
and
contract/
plaintiff/
(4)
damages
sustained by the plaintiff as a result of the breach.
Mullins v.
TestAmerica, Inc.
UPD argues
1
564 F.3d 386 1 418 (5th Cir. 2009).
I
that it
alleged that PBC voted in favor of a
plan of
reorganization that would pay allowed/ general unsecured
claims through/ among other means, proceeds realized from
the prosecution of a legal malpractice suit. Paragraphs
11 and 12 of UPD s Amended Complaint discuss how UPD
began implementing the Plan by bring[ing] suit, in state
court/ against Fowler, Rodriguez, Valdes-Fauli, Flint,
Gray, McCoy, Sullivan and Carroll, LLP and Timothy W.
Strickland
thus/ UPD tendered performance.
(ECF
no. 2-2, p. 16). Paragraphs 12 through 16 of the Amended
Complaint then described how Continental/ while providing
a defense in the state court litigation/ purchased PBC S
allowed claim for $425 000 so that it could unilaterally
release the underlying judgment and then urge/ in state
court/ how there could then be no legal malpractice claim
as a matter of law.
(ECF no. 2-2 pp. 16-17). UPD then
pled that it was damaged in an amount in excess of the
minimum jurisdiction of this Court and should also be
awarded its reasonable and necessary attorneys/ fees.
( ECF no . 2 - 2 p . 19 ) . 64
1
1
1
1
1
I
63
Appellant s Brief
No. H-15-2488, p. 18.
64
1
1
Docket
Id. at 19.
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Entry
No.
5
in
Civil
Action
The gist of UPD's argument is that although the acts of PBC
and Continental about which UPD complains were not individually
illegal
or
prohibited
by
UPD's
confirmed
PBC' s
Plan,
and
Continental's conduct was nevertheless illegal because that conduct
was undertaken to accomplish the illegal purpose of interfering
with implementation of UPD' s confirmed Plan. 65
UPD's contention
that its allegations stated a claim for breach of contract are
belied
not
only
by
the
First
Amended
Complaint's
failure
to
identify any provision or term of UPD's confirmed Plan that PBC's
or
Continental's
alleged
conduct
violated,
but
also
by UPD' s
failure to allege facts capable of establishing that Continental
acquired or assumed any affirmative duties or successor liability
from PBC when it acquired PBC' s
judgment against UPD and PBC' s
allowed claim in UPD's Bankruptcy Case.
Moreover, PBC was not only
unable to cite any authority in support of its arguments during the
April 20,
2015,
hearing held by the Bankruptcy Court,
but PBC
subsequently acknowledged to the Bankruptcy Court that "traditional
notions of successor liability .
[are] not applicable to this
case, " 66 the actions about which UPD complains do not violate Texas
65
Transcript of Hearing Held on April 20, 2015, p. 21:8-20,
BROA in Civil Action No. H-15-2488, Docket Entry No. 2-2, p. 204
(acknowledging that no one act between PBC and Continental was
unlawful).
66
Plaintiff's Post-Hearing Brief,
BROA in
No. H-15-2488, Docket Entry No. 2-2, pp. 174-75.
-36-
Civil
Action
law,
67
and that a grant of summary judgment to Continental's insured
in the state court malpractice suit would not harm UPD:
If Continental's insured obtains a summary judgment on
the basis that Continental is allowed to withdraw the
claim it now owns in this case, such an act will not harm
UPD per se. Rather, it will slam the door on creditors
such as Wells Fargo Bank and the Port of Houston. 68
Because UPD has failed to allege facts capable of establishing
either
that
Continental
or
PBC
breached
any
terms
of
UPD's
confirmed Plan, or that UPD sustained any damages as a result of
any such breach,
the court concludes
that UPD' s
First Amended
Complaint failed to state a claim for breach of contract.
(2)
UPD
argues
adequately pled. 69
UPD Failed to State a Conspiracy Claim
that
its
cause
of
action
for
conspiracy
was
"Under Texas law, civil conspiracy is defined
as a combination of two or more persons to accomplish an unlawful
purpose or to accomplish a lawful purpose by unlawful means."
Bane
One Capital Partners Corp. v.
(5th
Cir. 1995).
Kneipper,
67 F.3d 1187,
"In order for liability to attach,
1194
'there must be an
67
Id. at 21:24-22:12, BROA in Civil Action No.
Docket Entry No. 2-2, pp. 204-05.
H-15-2488,
68
Debtor's Response to Motion of Continental Casualty Company
to Reconsider/Renew Pursuant to Bankruptcy Rule 3006 Motion to
Withdraw Claim, BROA in Civil Action No. H-15-2717, Docket Entry
No. 15-3, p. 4.
See also § IV, below, affirming the Bankruptcy
Court's grant of Continental's motion to withdraw PBC's allowed
claim.
69
Appellant' s Brief,
No. H-15-2488, pp. 20-21.
Docket
-37-
Entry
No.
5
in
Civil
Action
unlawful,
overt
act
(quoting Massey v.
1983)).
are
furtherance
of
Armco Steel Co.,
the
conspiracy. '"
652 S.W.2d 932,
Id.
934
(Tex.
The essential elements of an action for civil conspiracy
that
( 1)
accomplished,
subject
in
or
two
( 3)
or
of
and (5)
Id.
result thereof.
persons,
( 2)
had
an
object
to
be
that there was a meeting of the minds on the
course
unlawful acts,
more
action,
( 4)
that
there
was
one
or more
the plaintiff was damaged as a proximate
See also Massey,
652 S.W.2d at 934.
UPD
argues that the provisions of the confirmed Plan requiring it to
pursue malpractice claims against the counsel that represented it
in the suit that resulted in PBC's judgment against it establish
all but the last two elements of conspiracy. As to the
element of carrying out one or more unlawful acts, the
Amended Complaint describes Continental's actions after
being assigned PBC's claims.
(ECF no. 2-2, pp. 16-18).
It then describes the damages incurred and sought.
(ECF
no. 2-2, p. 19). Thus, UPD alleged facts sufficient to
show that the right to relief is plausible and above mere
speculation. 70
For essentially the same reasons that the court has concluded
UPD's First Amended Complaint failed to state a claim for breach of
contract,
i.e., because UPD acknowledged to the Bankruptcy Court
[are] not
that "traditional notions of successor liability .
applicable
to
this
case, " 71
that
the
actions
complained were not unlawful under Texas law,
70
72
about
which
UPD
and that a grant of
Id. at 21.
71
Plaintiff's Post-Hearing Brief,
BROA in
No. H-15-2488, Docket Entry No. 2-2, pp. 174-75.
72
Civil
Id. at 21:24-22:12, BROA in Civil Action No.
Docket Entry No. 2-2, pp. 204-05.
-38-
Action
H-15-2488,
summary
judgment
to
Continental's
malpractice suit would not harm UPD,
insured
73
in
the
state
court
the court concludes that UPD
failed to allege facts capable of establishing that Continental
and/or PBC carried out one or more unlawful acts,
or that UPD
sustained any damages as a result of any such acts.
Accordingly,
the court concludes that UPD's First Amended Complaint failed to
state a claim for civil conspiracy.
UPD Failed to State a Claim for Tortious
Interference with an Existing Contract
(3}
UPD argues that its cause of action for tortious interference
with an existing contract was adequately pled. 74
Under Texas law
the essential elements of a claim for tortious interference with
contract are
(2)
a
willful
contract,
( 4)
( 1)
an existing contract subject to interference,
and
intentional
act
of
interference
with
the
{3) that proximately caused the plaintiff's injury, and
that caused actual damages or loss.
Homoki v.
Conversion
Services, Inc., 717 F.3d 388, 396 (5th Cir. 2013); Butnaru v. Ford
Motor Co., 84 S.W.3d 198, 207
(Tex. 2002).
Asserting that UPD's
confirmed Plan is essentially a contract between the debtor and its
creditors, UPD argues that
73
Debtor's Response to Motion of Continental Casualty Company
to Reconsider/Renew Pursuant to Bankruptcy Rule 3006 Motion to
Withdraw Claim, BROA in Civil Action No. H-15-2717, Docket Entry
No. 15-3, p. 4. See also§ IV, below, affirming Bankruptcy Court's
grant of Continental's motion to withdraw PBC's claim.
74
Appellant' s Brief,
No. H-15-2488, pp. 21-23.
Docket
-39-
Entry
No.
5
in
Civil
Action
Continental, as assignee of PBC's rights and obligations
under the "contract," devised a plan to tortiously
interfere with the implementation of UPD's plan of
reorganization, which it did through its purchase of
PBC' s claim in the amount of $425, 000.
The Amended
Complaint pleads facts how Continental then released the
judgment it acquired for the purpose of seeking a summary
judgment in state court that there is, somehow, no
malpractice claim.
Moreover, this scheme allowed a
single creditor - PBC - to obtain payment on its allowed
claim to the prejudice of other, similarly situated,
general unsecured creditors.
UPD then pled how this
caused and entitled UPD to an award of exemplary
damages. 75
For essentially the same reasons that the court has concluded
UPD's First Amended Complaint failed to state claims for breach of
contract or civil conspiracy, i.e., because UPD acknowledged to the
Bankruptcy Court that "traditional notions of successor liability
[are] not applicable to this case," 76 that the actions about
which UPD complained were not unlawful under Texas law, 77 and that
a grant of summary judgment to Continental's insured in the state
court malpractice suit would not harm UPD, 78 the court concludes
that
UPD
failed
to
allege
facts
capable
of
establishing
that
Continental and/or PBC engaged in any acts that violated any terms
75
Id. at 22.
76
Plaintiff's Post-Hearing Brief,
BROA in
No. H-15-2488, Docket Entry No. 2-2, pp. 174-75.
77
Civil
Id. at 21:24-22:12, BROA in Civil Action No.
Docket Entry No. 2-2, pp. 204-05.
78
Action
H-15-2488,
Debtor's Response to Motion of Continental Casualty Company
to Reconsider/Renew Pursuant to Bankruptcy Rule 3006 Motion to
Withdraw Claim, BROA in Civil Action No. H-15-2717, Docket Entry
No. 15-3, p. 4. See also§ IV, below, affirming Bankruptcy Court's
grant of Continental's motion to withdraw PBC's claim.
-40-
of UPD's confirmed Plan, interfered with UPD's implementation of
that Plan,
of caused UPD to suffer any actual damages or loss.
Thus, the court concludes that UPD's First Amended Complaint failed
to
state
a
claim
for
tortious
interference
with
an
existing
contract.
(4)
UPD Failed to State a Post-Confirmation Claim
for Equitable Subordination
UPD argues that its cause of action for post-confirmation
equitable subordination was adequately pled based on the facts
stated
in
~~
14-18
and
32
of
its
First
Amended
Complaint. 79
Equitable subordination is a creature of bankruptcy law and is
allowed when
( 1)
a
defendant-claimant engaged in some type of
inequitable conduct (2) that resulted in injury to creditors of the
debtor or conferred an unfair advantage on the defendant-claimant,
and
(3)
bestowing the remedy of equitable subordination is not
inconsistent with bankruptcy law.
Benjamin v.
Co.),
699-700
Mobile
Steel
(establishing the
563
F.2d
three-part
692,
test,
Diamond
(5th
its
First
Amended
Complaint
1977)
and cited with approval
United States v. Noland, 116 S. Ct. 1524, 1526 (1996)).
that
Cir.
(In re
alleged
facts
in
UPD argues
capable
of
establishing that Continental's conduct was not only inequitable
but also tortious and unlawful.
However, for essentially the same
reasons that the court has already concluded that UPD failed to
79
Appellant' s Brief, Docket Entry No. 5 in Civil Action
No. H-15-2488, pp. 23-24 (citing BROA in Civil Action No. H-152488, Docket Entry No. 2-2, pp. 14-18, 21-22).
-41-
state claims for breach of contract, civil conspiracy, or tortious
interference with existing contract, the court concludes that UPD
failed to allege facts capable of establishing that Continental
Moreover, UPD acknowledges that
engaged in inequitable conduct.
"[t]he only bar to UPD being able to seek such relief would
b~
if
the Bankruptcy Court truly did not have post-confirmation subject
matter
jurisdiction as
this
is not a
cause of
appropriate for other courts to try. " 80
stated in
the
§
action that
is
Since for the reasons
III.B.l, above, the court has already concluded that
Bankruptcy
Court
lacked
post-confirmation
subject
matter
jurisdiction over the claims asserted in the Adversary Proceeding,
the court concludes that UPD failed to state a claim for equitable
subordination.
(5)
UPD
argues
UPD Failed to State a Claim for Declaratory
Judgment
that
its
claim
for
declaratory
judgment
was
properly pled because the Bankruptcy Court was asked to determine
whether:
1.
The actions taken by Continental violated the
injunctions contained in UPD's confirmed plan or
reorganization and the Order confirming the same;
and
2.
The actions taken by Continental impermissibly
interfere[]
with UPD's
implementation of its
confirmed plan or reorganization. 81
80
Id. at 23-24.
81
Id. at 24.
-42-
As for its equitable subordination claim, however, UPD acknowledges
that "the only bar to UPD being able to seek declaratory relief
would
be
if
the
Bankruptcy
Court
truly
did
not
have
post-
confirmation subject matter jurisdiction as this is not a cause of
action that is appropriate for other courts to try." 82
the reasons stated in
concluded
that
the
§
III. B. 1,
Bankruptcy
above,
Court
Since for
the court has already
lacked
post-confirmation
subject matter jurisdiction over the claims asserted in UPD's First
Amended Complaint, the court concludes that UPD failed to state a
claim for declaratory judgment.
3.
The Bankruptcy Court Did Not Abuse Its Discretion by
Dismissing
the
Adversary
Case
Without
Granting
Appellant's Request to Amend
At the end of its response in opposition to Continental's
motion to dismiss UPD stated:
"[I] f
the court determines that
plaintiff has failed to state a claim, UPD respectfully requests
that the Court grant leave to amend the complaint." 83
At the end
of the hearing held on Continental's motion to dismiss, UPD reurged
its request for leave to amend by stating, "[I]f the Court thinks
that any part of this pleading is factually defective, we would,
s2Id.
83 Response to Continental Casualty Company's Motion to Dismiss
UPD Global Resources, Inc.'s First Amended Complaint Pursuant to
Rule 12(b) (1)
for Lack of Subject Matter Jurisdiction or,
Alternatively, to Dismiss the First Amended Complaint Pursuant to
Rule 12 (b) (6), pp. 15-16, BROA in Civil Action No. H-15-2488,
Docket Entry No. 2-2, pp. 104-105.
-43-
you know,
respectively,
ask for leave to, you know,
allow us to
amend it and make it very clear exactly, you know, what those facts
are." 84
UPD argues that the Bankruptcy Court erred by dismissing
the Adversary Proceeding without first giving it the opportunity to
replead. 85
was
Continental argues that UPD' s request for leave to amend
appropriately
denied
because
the
Bankruptcy
Court
lacked
subject matter jurisdiction. 86
Federal Rule of Civil Procedure 15(a) (2)
court
should
requires."
granting
freely
give
leave
[to
"Although Rule 15 [(a)]
leave
to
amend,'
it
is
states that "[t]he
amend]
when
justice
so
'evinces a bias in favor of
not
automatic."
Matter
of
Southmark Corp., 88 F.3d 311, 314 (5th Cir. 1996), cert. denied sub
nom Schulte Roth & Zabel v. Southmark, Corp., 117 S. Ct. 686 (1997)
(quoting Dussouy v. Gulf Coast Investment Corp., 660 F.2d 594, 598
(5th Cir. 1981), and Wimm v.
(5th Cir.
1993)).
Jack Eckerd Corp.,
"A decision
discretion of the trial court."
that
to
grant
Id.
in exercising its discretion,
leave
3 F.3d 137, 139
is
within
the
The Fifth Circuit has held
a
court may consider undue
delay, bad faith, dilatory motive, undue prejudice to the opposing
84
Transcript of Hearing Held April 20, 2015, p. 24, BROA in
Civil Action No. H-15-2488, Docket Entry No. 2-2, p. 207.
85
Appellant's Brief, p. 5, Docket Entry No. 5 in Civil Action
No. 15-2488, p. 20.
86
Appellee Continental Casualty Company's Brief, pp. 20-21,
Docket Entry No. 8 in Civil Action No. 15-2488, pp. 25-26.
-44-
party, and futility of the proposed amendment.
Azurix Corp., 332 F.3d 854, 864
(5th Cir. 2003)
Davis, 83 S. Ct. 227, 230 (1962)).
See Rosenzweig v.
(citing Foman v.
See also United States ex rel.
Steury v. Cardinal Health, Inc., 625 F.3d 262, 270 (5th Cir. 2010)
("Denial of leave to amend may be warranted for undue delay, bad
faith or dilatory motive
failure
party,
to
cure
on
deficiencies,
the part
of
the movant,
undue prejudice
to
or futility of a proposed amendment.") .
the
repeated
opposing
Moreover,
if a
complaint alleges the plaintiff's best case, there is no need for
further amendment.
Cir.
1999)
See Jones v. Greninger, 188 F.3d 322, 327 (5th
(per curiam)
(dismissing plaintiff's action because
court could perceive of no viable claim plaintiff could include in
an amended complaint based on the underlying facts) .
The
record
demonstrates
that
UPD
initiated
the
Adversary
Proceeding by filing Plaintiff's Original Complaint on February 25,
2015. 87
On March 4,
Complaint. 88
2015,
UPD filed Plaintiff's First Amended
On March 11, 2015, the Bankruptcy Court granted the
parties' Joint Motion to Reset Briefing Schedule and scheduled a
hearing for April 20, 2015. 89
87
BROA in Civil Action No.
pp. 1-11.
88
H-15-2488,
Docket Entry No.
2-2,
Id. at 12-26.
89
Docket Sheet, Docket Entry No. 9 in Adversary No. 15-3073,
BROA in Civil Action No. H-14-2488, Docket Entry No. 2-1, pp. 3-4.
-45-
On March 27, 2015, Continental filed its Motion to Dismiss, 90
and a memorandum of law in support thereof . 91
UPD responded on
April 3, 2015, by arguing that
1.
Based on the factors set forth in Newby v. Enron
Corp.,
this
Court
has
post-confirmation
jurisdiction
over
matters
where
Continental
Casualty
Company's
predecessor
materially
participated
in
contested
matters
up
until
confirmation of UPD's plan, engaged in conduct that
hinders UPD's implementation of its confirmed plan,
and engaged in conduct with another creditor which
is tantamount to a post-confirmation modification
of the plan.
2.
As to all causes of action pled in the Amended
Complaint, UPD has sought relief which may be
lawfully granted. 92
In the second to last paragraph of its Response to Continental's
Motion to Dismiss UPD included a perfunctory request for leave to
amend,
unaccompanied
by
either
a
proposed
amendment
or
a
substantive discussion of the amendment contemplated.
Plaintiffs are not entitled to replead when in response to
dispositive motions
they simply declare
the
adequacy of
their
9
°Continental Casualty Company's Motion to Dismiss UPD Global
Resources, Inc.'s First Amended Complaint Pursuant to Rule 12 (b) (1)
for Lack of Subject Matter Jurisdiction or, Alternatively, to
Dismiss the First Amended Complaint Pursuant to Rule 12 (b) ( 6) ,
Docket Entry No. 11 in Adversary No. 15-3073, BROA in Civil Action
No. H-15-2488, Docket Entry No. 2-2, pp. 75-78.
91
Docket Entry No. 12 in Adversary No. 15-3073, BROA in Civil
Action No. H-15-2488, Docket Entry No. 2-2, pp. 79-89.
92
Response to Continental Casualty Company's Motion to Dismiss
UPD Global Resources, Inc.'s First Amended Complaint Pursuant to
Rule 12(b) (1)
for Lack of Subject Matter Jurisdiction or,
Alternatively, to Dismiss the First Amended Complaint Pursuant to
Rule 12(b) (6), Docket Entry No. 13 in Adversary No. 15-3073, BROA
in Civil Action No. 15-2488, Docket Entry No. 2-2, pp. 90-140.
-46-
complaint and fail
to offer a
sufficient amended complaint
response to the defendants' motion.
472,
479
(5th Cir.
1994)
in
See Babb v. Dorman, 33 F.3d
(affirming district court's refusal to
grant plaintiff leave to amend his complaint after it had granted
defendant's motion to dismiss because plaintiff had declared the
sufficiency of
his pleadings and failed
to offer a
suffici'ent
amended complaint in response to the defendant's motion) .
Moreover,
since UPD has argued to this court that the claims asserted in is
First
Amended
Complaint
were
adequately
pled,
the
court's
conclusions that the Bankruptcy Court correctly decided not only
that it lacked post-confirmation subject matter jurisdiction over
UPD's
Adversary
Proceeding,
but
also
that
the
First
Amended
Complaint filed in the Adversary Proceeding failed to state a claim
for which relief may be granted, persuade the court that UPD had
pled its best case and that the Bankruptcy Court could perceive of
no
viable
claim
that
UPD
could
have
included
complaint based on the underlying facts.
327.
in
an
amended
See Jones, 188 F.3d at
See also Spiller v. City of Texas City Police Department, 130
F.3d 162, 167 (5th Cir. 1997)
(recognizing that if a complaint as
amended could not withstand a motion to dismiss then leave to amend
should be denied) .
Accordingly,
the
court
concludes
that
the
Bankruptcy Court did not abuse its discretion by failing to grant
UPD's perfunctory request for leave to amend stated at the end of
its briefing on appellees' motion to dismiss.
-47-
IV.
Appeal from Grant of Motion
to Withdraw Proof of Claim
UPD's appeal in Civil Action No. 15-2717 of the Order entered
in UPD's Bankruptcy Case No. H-11-36970-H5-11 allowing Continental
to withdraw the proof of claim purchased from PBC raises one issue:
Whether
the
Bankruptcy
Court
erred
in
allowing
Continental Casualty Company, an entity that was never a
creditor, from withdrawing its newly purchased allowed
claim against the estate when its stated purpose was to
destroy an asset of the estate. 93
A.
Applicable Law
Voluntary withdrawal
Federal
Rule
of
of
Bankruptcy
a
proof
Procedure
of
claim
3006,
is
which
governed by
provides
in
relevant part:
A creditor may withdraw a claim as of right by filing a
notice of withdrawal, except as provided in this rule.
If after a creditor has filed a proof of claim an
objection is filed thereto or a complaint is filed
against that creditor in an adversary proceeding, or the
creditor has accepted or rejected the plan or otherwise
has participated significantly in the case, the creditor
may not withdraw the claim except on order of the court
after a hearing on notice to the trustee or debtor in
possession, and any creditors' committee elected pursuant
to§ 705(a) or appointed pursuant to§ 1102 of the Code.
The order of the court shall contain such terms and
conditions as the court deems proper. Unless the court
orders otherwise, an authorized withdrawal of a claim
shall constitute withdrawal of any related acceptance or
rejection of a plan.
Motions to withdraw a claim in Bankruptcy Court are commonly
analogized to motions to withdraw a complaint under Federal Rule of
93
Appellant' s Brief,
No. 15-2717, p. 3.
Docket
Entry
-48-
No.
17
in
Civil
Action
Civil
No.
Procedure 41 (a) .
08-03163-BJH,
2008
December 19, 2008)
979-80
Federal
See
In re Manchester,
WL
5273289,
of
Adversary
(Bankr.
N.D.
Tex.
(citing In re 20/20 Sport, Inc., 200 B. R. 972,
(Bankr. S.D.N.Y. 1996)
Rule
*3
Inc. ,
Bankruptcy
(citing Advisory Committee Note to
Procedure
3006,
which
stated
that
Federal Rule of Civil Procedure 41(a) analysis should apply to a
motion to withdraw a proof of claim)).
International,
Inc.,
272
B.R.
852,
See also In re Kaiser Group
855
(Bankr.
D.
Del.
2002)
(" [T] he same considerations used by courts analyzing voluntary
dismissal under Federal Rule 41 should be used in determining the
question of withdrawal under Bankruptcy Rule 3006.") . 94
the general policy under Rule 41(a)
complaint,
withdrawal of a
"[S] ince
is to permit withdrawal of a
proof of
claim should be permitted
unless that withdrawal results in a 'legal harm' or 'prejudice' to
a non-moving party."
In re Manchester, 2008 WL 5273289, *3.
also Robles v. Atlantic Sounding Co.,
Cir. 2003)
(per curiam)
77 F. App'x 274,
275
See
(5th
(recognizing that Rule 41 motions "should
be freely granted unless the non-moving party will suffer some
plain legal prejudice other than the mere prospect of a second
lawsuit") .
"The non-moving party bears the burden to prove that it
will suffer such a legal harm or prejudice."
2008 WL 5273289, *3.
In re Manchester,
See also In re Ogden New York Services, Inc.,
312 B.R. 729, 733 (S.D.N.Y. 2004)
94
(recognizing that the objecting
Id. at 10 (recognizing that "[w] ithdrawal of claims under
Bankruptcy Rule 3006 is similar to voluntary dismissals of civil
actions under Fed. R. Civ. P. 41").
-49-
party bears the burden of demonstrating legal prejudice) .
"As with
a Rule 41(a) (2) motion, a motion to withdraw a proof of claim is
left
to
the
bankruptcy
exercised with due
[parties].'"
court's
discretion,
regard to the
legitimate
which
is
'to
be
interests of both
In re Manchester, 2008 WL 5273289, *3 (quoting in re
20/20 Sport, 200 B.R. at 979)
See LeCompte v. Mr. Chip, Inc., 528
F.2d 601, 604 (5th Cir. 1976)
(dismissal should not be granted when
the result will prejudice another party) .
B.
Application of the Law to the Record
UPD argues that the Bankruptcy Court abused its discretion in
allowing Continental to withdraw the claim it acquired from PBC
because of legal prejudice.
Asserting that legal prejudice is that
which extinguishes the right of a party to bring a case,
95
and that
Continental's goal of withdrawing the claim was, in fact, to cause
extreme prejudice to UPD,
96
UPD argues that the Bankruptcy Court
abused its discretion
[b]y allowing the Appellee to withdraw a claim it
purchased from another creditor, [because by so doing]
the Appellee hands a victory to its insured in a legal
malpractice case that was one of the means of raising
funds to pay UPD's other creditors holding approximately
$11.6 million in allowed claims. 97
95
Appellant' s Brief,
No. 15-2717, p. 11.
96
Entry No.
Id. at 13.
97
Docket
Id. at 11.
-50-
17
in
Civil
Action
Recognizing that it is permissible to withdraw a claim to gain a
tactical advantage in litigation, 98 UPD argues that
[t]he Appellee's act in withdrawing a claim so that its
insured could obtain a summary judgment in a legal
malpractice case being prosecuted as a means of
effectuating a confirmed plan of reorganization is more
than an [] act to obtain a tactical advantage.
In the
present case, the withdrawal of the claim was a predicate
to end a lawsuit which was a means of implementing a plan
of reorganization. 99
Citing
In
re
University,
Ogden,
900
F.2d
312
B.R.
12,
14
at
(2d
732,
Cir.
and
Zagano
1990),
UPD
v.
Fordham
argues
that
application of factors used in those cases to analyze the potential
for
prejudice
"shows
that
the
Bankruptcy
Court
abused
its
discretion in allowing the Appellee to withdraw its claim. " 100
The
factors analyzed in Ogden and Zagano are (1) the movant's diligence
in
bringing
the
motion
to
dismiss
or
vexatiousness on the part of the movant,
the
lawsuit
has
progressed,
including
withdraw,
(2)
undue
(3) the extent to which
the
effort
and
undertaken by the non-moving party to prepare for trial,
expense
(4)
the
duplicative expense of re-litigation, and (5) the adequacy of the
movant's explanation for the need to withdraw the claim.
In re
Odgen, 312 B.R. at 732; Zagano, 900 F.2d at 14.
Continental argues that the Bankruptcy Court's Order granting
its motion to withdraw the claim it acquired from PBC should be
98
Id. at 16.
99
Id. at 17.
100
Id. at 20.
-51-
affirmed because "UPD' s appeal fails to raise a legitimate argument
for
reversal
under
the
abuse
of
discretion
standard. " 101
Continental argues that the Bankruptcy Court did not abuse its
discretion but, instead, "allowed Continental to withdraw the claim
over UPD's objection as UPD did not meet its burden to demonstrate
legal prejudice would result due to withdrawal of the claim. " 102
Continental argues that it
is the insurer for UPD's former attorneys and was
providing a defense for them in the legal malpractice
suit.
As part of its defense of its insureds,
Continental obtained PBC' s Judgment with the intention to
resolve
the
legal malpractice
suit by filing
a
satisfaction of
judgment
thereby
eliminating any
possibility of legal malpractice liability as there were
no damages for the alleged malpractice. In the adversary
case, UPD acknowledged that Continental's actions were
legal and that Continental had the right to obtain the
Judgment and file the satisfaction of judgment.
[T]he Judgment that was transferred from PBC to
Continental formed the basis for a proof of claim filed
by PBC in UPD's bankruptcy case (the "Claim"), and as
part of the transaction with PBC, Continental also
acquired all rights to that Claim.
Knowing that the
Judgment would be eliminated and that Continental would
have no right to receive a distribution in the bankruptcy
case, Continental could not in good faith maintain its
claim based on the Judgment and so it filed a motion to
withdraw the Claim. UPD objected to Continental's motion
to withdraw the Claim and filed the adversary case
seeking injunctive relief and so the motion was denied
without prejudice and subject to reconsideration after
resolution of UPD's adversary case against Continental.
When the adversary case was dismissed by the Bankruptcy
Court, Continental renewed its motion to withdraw its
Claim, and after a hearing on the motion where UPD failed
101
Appellee Continental Casualty Company's Brief ("Appellee's
Brief"), Docket Entry No. 18 in Civil Action No. H-15-2717, p. 4.
1o2Id.
-52-
to show legal harm would result from the withdrawal of
the Claim, the Bankruptcy Court granted the motion and
allowed Continental's Claim to be withdrawn. 103
In reply UPD reiterates
Court
abused
its
its arguments that the Bankruptcy
discretion
by
failing
to
recognize
that
Continental's goal of withdrawing the claim was to cause extreme
legal prejudice to the debtor's estate, and that application of the
Ogden factors to the facts of this case requires this court to
conclude
that
the
Bankruptcy
Court
abused
granting Continental's motion to withdraw. 104
its
discretion
by
Citing Continental's
admission that it obtained PBC's judgment with the intention of
resolving the legal malpractice suit by filing a satisfaction of
judgment thereby eliminating any possibility of liability, 105
argues
that
"[s] uch bad faith
is
indicative of
UPD
the Appellee's
improper, vexatious purpose in seeking withdrawal of the claim." 106
The court is not persuaded that Continental's attempt to avoid
an adverse
judgment against
its
insureds
in UPD' s
state court
malpractice case caused legal prejudice to UPD, or that even if it
did,
the
Bankruptcy
Court
abused
Continental's motion to withdraw.
Railway Co.,
103
385 F.2d 366,
its
discretion
by
granting
See Durham v. Florida East Coast
368-69
(5th Cir.
1967)
("The crucial
Id. at 1-2.
104
Appellant' s Reply Brief, Docket Entry No. 19 in Civil Action
No. H-15-2717.
105
Id. at 7.
-53-
question
to
be
determined
is,
[w] ould
the
defendant
lose
any
'In exercising its discretion
substantial right by the dismissal.
the court follows the traditional principle that dismissal should
be
allowed unless
the
defendant
will
suffer
some
plain
legal
prejudice . . . It is no bar to dismissal that plaintiff may obtain
some tactical advantage thereby.'").
See also Standard National
Insurance Co. v. Bayless, 272 F.2d 185, 185-86 (5th Cir. 1959) (per
curiam)
(holding that the district court acted well within its
discretion in dismissing suit even though defendants maintained
that plaintiffs' motive was to attain supposed tactical advantage
This is not a situation where plaintiffs have
in state court)
"snatched away" UPD's sure victory in the malpractice case.
~'
Manshack v. Southwestern Electric Power Co.,
174-75 (5th Cir. 1990)
voluntary
inflict
dismissal
legal
(entertaining possibility,
granted
prejudice,
after
but
adverse
declining
to
See,
915 F.2d 172,
in dicta,
that
trial
ruling
could
find
"plain
legal
prejudice" where voluntary dismissal would not strip the defendant
of an "absolute defense").
The Fifth Circuit has recognized that legal prejudice can
arise in at least two circumstances.
dismissal -
or,
in this
opposing party of
F. App'x at 275.
279
F.3d 314,
case,
First, prejudice can occur if
withdrawal -
would deprive
an otherwise-available defense.
Robles,
the
77
See also, e.g., Elbaor v. Tripath Imaging, Inc.,
318-19
(5th Cir.
2002)
(vacating
and
remanding
district court's dismissal because non-movant could potentially
-54-
lose a statute of limitations defense); Ikospentakis v. Thalassic
S.S. Agency,
915 F.2d 176, 178-80
non-movant
(5th Cir.
could
lose
1990)
forum
(vacating and
non
conveniens
remanding
because
defense) .
Second, prejudice can occur if dismissal is sought at a
late stage in the litigation after the movant has suffered an
adverse legal decision.
See Manshack,
915 F.2d at 174
("in some
circumstances . . . a voluntary dismissal granted after an adverse
trial
court
ruling
could
inflict
'legal
prejudice'
on
the
defendant"); Davis v. Huskipower Outdoor Equipment Corp., 936 F. 2d
193, 199 (5th Cir. 1991)
(noting that prior to filing for voluntary
dismissal, a magistrate judge made a comprehensive recommendation
that
was
adverse
to
the
moving party) .
F. App'x at 275 ("timing cases .
movant
suffered an adverse
voluntary dismissal").
in this case.
withdrawal
of
defenses or of
See
also
Robles,
77
. involve situations where the
legal decision prior to moving for
Neither form of legal prejudice is present
UPD has neither argued nor made any showing that
PBC' s
claim would deprive
the benefit of
UPD
of
any potential
any ruling that was adverse
to
Continental or PBC.
Continental moved to withdraw the claim only after it filed a
Satisfaction of Judgment in the federal district court that issued
the judgment on which the claim is based.
Judgment
stated that
the
final
judgment of
The Satisfaction of
the District Court
entered against UPD, awarding compensatory damages plus reasonable
-55-
attorneys'
fees and interest,
"is satisfied in full. " 107
While
courts have generally held that dismissals without prejudice should
be granted if no prejudicial effects would result for the opposing
party, where a claimant seeks a voluntary dismissal with prejudice
courts generally take a
different view.
See United States of
America ex rel. Terry D. McLain v. Fluor Enterprises, Inc., Civil
Action No. 06-11229, 2016 WL 1031324, *3 (E.D. Louisiana March 15,
2016)
(citing Schwarz v.
1985),
Folloder,
767 F.2d 125,
129
(5th Cir.
overruled on other grounds by Buckhannon Board and Care
Home,
Inc.
v.
West
Virginia
Department
of
Health
and
Human
Resources, 121 S. Ct. 1835 (2001), and Smoot v. Fox, 340 F.2d 301,
3 03
Rule
(6th Cir.
41(a) (2)
1964)
(per curiam) ) .
motion
"Where
'specifically
a plaintiff's
request[s]
dismissal
with
prejudice, it has been held that the district court must grant that
request."
Id.
(quoting 9 Charles Alan Wright & Arthur R. Miller,
Federal
Practice
added)) .
See
& Procedure
also
Degussa
§
2367
(3d
Admixtures,
F. Supp. 2d 848, 851 (W.D. Mich. 2007)
ed.
Inc.
2008)
v.
(emphasis
Burnett,
471
("It generally is considered
an abuse of discretion for a court to deny a plaintiff's request
for voluntary dismissal with prejudice.").
The fact
that Continental sought withdrawal only after it
filed a Satisfaction of Judgment in the federal district court case
107
Satisfaction of Judgment, BROA in Civil Action No.
2717, Docket Entry No~ 15-3, p. 29.
-56-
H-15-
that resulted in the judgment underlying the claim eliminated or
significantly reduced any prejudice or injustice to UPD.
Schwarz,
767
F. 2d at
129
(" [N] o
matter when a
dismissal
prejudice is granted, it does not harm the defendant.") .
See
with
UPD cites
no case in which a court has refused to grant a motion to withdraw
a claim at the claim-holder's request following the filing of a
Satisfaction of Judgment.
Moreover,
UPD did not merely fail to
demonstrate to the Bankruptcy Court that it would suffer legal
prejudice if Continental's motion to withdraw was granted,
UPD
acknowledged as much in the brief that it filed with the Bankruptcy
Court by stating:
If Continental's insured obtains a summary judgment on
the basis that Continental is allowed to withdraw the
claim it now owns in this case, such an act will not harm
UPD per se. Rather, it will slam the door on creditors
such as Wells Fargo Bank and the Port of Houston. 108
Missing from UPD's briefing before either the Bankruptcy Court or
this court is any showing that withdrawal of the claim at issue
would cause harm or legal prejudice to UPD. 109
Also missing from
UPD's briefing is any showing or citation to authority from which
108
Debtor' s Response to Motion of Continental Casualty Company
to Reconsider/Renew Pursuant to Bankruptcy Rule 3006 Motion to
Withdraw Claim, BROA in Civil Action No. H-15-2717, Docket Entry
No. 15-3, p. 4.
109
See also Transcript of Hearing held April 20, 2015,
p. 17:19-22, BROA in Civil Action No. H-15-2488, Docket Entry
No. 2-2, p. 200 (UPD's counsel states: "And I want to emphasize
it's not the assignment of the claim; it's not the withdrawal of
the claim that's at issue here. It is the release of the judgment
in the u.s. District Court.").
-57-
either the Bankruptcy Court or this
court
could conclude that
withdrawal of the claim would harm any of UPD's other creditors.
Because Continental's motion to withdraw the Claim acquired from
PBC was based on the Satisfaction of Judgment filed in the district
court, Continental's motion effectively asked the Bankruptcy Court
to grant the withdrawal with prejudice.
the Bankruptcy Court did not
Continental
to
withdraw
the
abuse
Under these circumstances
its
discretion by allowing
claim purchased
from
PBC.
UPD' s
contention that Continental's actions destroyed an asset of UPD's
bankrutpcy estate has no merit.
The Satisfaction of Judgment that
Continental filed in the district court eliminated a $5,670,534.77
claim against UPD's estate.
UPD neither argues nor presents any
evidence capable of establishing that a favorable verdict in the
state court malpractice suit could have provided equal or greater
value to the estate.
See Schwarz,
767 F.2d at 130
(ruling that
dismissal with prejudice was not prejudicial to defendant because
it barred further adjudication) .
The court concludes therefore
that the Bankruptcy Court did not abuse its discretion by granting
Continental's motion to withdraw, and that the Bankruptcy Court's
September 17, 2015, Order granting Continental's motion to withdraw
should be affirmed.
V.
Conclusions and Order
For the reasons stated in§ III, above, the Bankruptcy Court's
Order granting Defendant's Motion to Dismiss, signed May 12, 2015
(Docket
Entry
No.
27
in Adversary
-58-
Proceeding
H-15-03073),
is
AFFIRMED;
and
the
Bankruptcy
Court's
Order
on
Motion
for
Clarification of the Order Granting Continental Casualty Company's
Motion to Dismiss, signed August 13, 2015 (Docket Entry No. 35 in
Adversary Proceeding H-15-03073), is AFFIRMED.
For the reasons stated in§ IV, above, the Bankruptcy Court's
Order granting Motion of Continental Casualty Company
Bankruptcy
Rule
3006
to
withdraw
Claim
No.
3,
pursuant to
signed
on
September 17, 2015 (Docket Entry No. 141 in Bankruptcy Case No. 1136970-HS-11), is AFFIRMED.
SIGNED at Houston, Texas, on this the 21st day of July, 2016.
UNITED STATES DISTRICT JUDGE
-59-
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