Garner v. Weeks et al

Filing 15

MEMORANDUM OPINION, this Court finds that it lacks subject matter jurisdiction over these three orders on appeal. These appeals will therefore be dismissed.A separate order accompanies this memorandum opinion. Signed by Judge Royce C. Lamberth. (wg)

FILED
UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS

AUG 01201?
CLERK, U.S. DISTRICT CLERK
WESTERN DIS1P}QT OF TEXAS

)

HOWARD KERRY GARNER,

BY

)

DEPUTY

)

Appellant,

)

Case No. 5:I7-cvO0036 (RCL)

)

v.

)
)

MIKE WEEKS, ET. AL.,

)
)

Appellee.

)
)

MEMORANDUM OPINION
I.

INTRODUCTION
This case comes before the Court on appeal from three separate orders of the Bankruptcy

Court regarding the bankruptcy case of Howard Kerry Gamer ("appellant" or "debtor"). The
debtor appeals the following Orders of the Bankruptcy Court: (1) Order denying Debtor's

Emergency Motion for Entry of an Order Authorizing Debtor to Execute Addendum to

Contribution Agreement ("Addendum Motion"); (2) Order denying Debtor's Motion to
Reconsider Order Denying Debtor's Emergency Motion for Entry of an Order Authorizing Debtor
to Execute Addendum to Contribution Agreement ("Motion to Reconsider"); and (3) Order

denying Debtor's Emergency Motion for Entry of an Order Authorizing Correction Agreement

("Correction Motion"). Because each motion is an attempt to seek collateral review of the

Bankruptcy Court's Remand Order, this Court finds that it lacks subject matter jurisdiction under
28 U.S.C. 1447(d). Consequently, this Court finds it is unnecessary to address whether the

Bankruptcy Court erred in denying each of the orders on appeal.

I

IL

BACKGROUND
On September 27, 2012 Howard Kerry Grant ("appellant" or "debtor") brought a suit

against Mike Weeks, Linda Weeks, and Weeks Environmental LLC, the appellees in the current
case, ("the Weeks") in state court regarding the ownership of Weeks Environmental, LLC. The
Weeks filed a separate proceeding in March 2013 seeking a declaratory judgment to determine

ownership of the company. The state court subsequently joined the cases ("Weeks Litigation") and

"[d]ebtor filed counter-claims against the Weeks for breach of contract, breach of fiduciary duty,
declaratory judgment declaring a partnership or joint venture, a demand for accounting, and

quantum meruit." Order Den. Debtor's Emergency Mot. for Entry of an Order Authorizing
Correction Agreement, or, in the Alternative, to Accept Reassignment of Claims. 2. ECF. No. 84.
On July 31, 2016, debtor filed for Chapter

11

bankruptcy and concurrently removed the

pending state court lawsuit in which he was both suing and being sued by appellees. However,
almost two years earlier debtor assigned "all right, title, atid interest" in the counter-claims of the
Weeks Litigation to Gamer Resources, LLC ("Garner Resources") in a pre-bankruptcy

contribution agreement ("Contribution Agreement"). Appellant's Br. 11. ECF. No, 8. Appellees,
the opposing parties in the Weeks Litigation, moved to dismiss the counter-claims only or,
alternatively, to remand the entire Weeks Litigation to state court on the grounds that Garner lacked
standing. Appellees claimed that Garner no longer owned the lawsuit claims, and the bankruptcy

court lacked subject matter jurisdiction over these claims.

Prior to the hearing on appellees' Motion to Dismiss, appellant moved to execute an
Addendum to the Contribution Agreement, which was denied by the Bankruptcy Court, Appellant
then sought reconsideration of the motion, which was again denied by the Bankruptcy Court. The

Bankruptcy Court subsequently announced in open court its decision to remand the Weeks

Litigation given that subject matter jurisdiction did not exist under 28 U.S.C.

§

1447(c). As a

result, appellant sought permission to correct the Contribution Agreement due to mutual mistake
or, alternatively, to accept an assignment of his legal rights back to him and supplemented his

motion to approve the Addendum. The Bankruptcy Court denied all motions and this appeal
followed.

IlL

JURISDICTION AND STANDARD OF REVIEW
A.

Jurisdiction

"Under 28 U.S.C.S.

§

158(a), district courts have jurisdiction to hear appeals from final

judgments, orders, and decrees of the bankruptcy court[." In re Asarco, L.L.C., 650 F.3d 593, 597,
(5th Cir. 2011). When a district court reviews the decision of a bankruptcy court it "functions as an

appellate court, applying the standards of review genórally applied in federal appeals courts." Harvey

Gulf Int'l Marine, Inc.
B.

v.

.Bennu

Oil& Gas, LLC, 559 B.R. 152, 154 (S.D. Tex. 2016).

Standard of Review

On appeal, a district court. "reviews the bankruptcy court's findings of fact under the clearly
erroneous standard and its conclusions of law de novo."

in re Morrison, 555

F.3d 473, 480 (5th

Cir. 2009). Mixed questions of law and fact are reviewed de novo. See In re Positive Health Mgmt.,
769 F.3d 899, 903 (5th Cir. 2014). "Matters within a bankruptcy judge's discretion are reviewed

for an abuse of discretion." Mud King Prods,,

Inc.

v.

Nat '1 Oilwell Varco,

L. P.,

(S.D. Tex. 2015). The standard of review appropriate for each issue raised on

WL

862319

appealis abuse

of discretion. "[D]eference.. . is the hallmark of abuse-of-discretion review."
Joiner, 522 U.S.

2015

Gen. Elec. Co.

v.

136, 143 (1997). A Bankruptcy Court abuses its discretion if "its ruling is based

on an erroneous review of the law or on a clearly erroneous assessment of the evidence." Chaves
v.

Mi'VMedina

Star,

47

F.3d 153, 156 (5th Cir. 1995) (citations omitted).

3

IV.

BANKRUPTCY COURT'S DECISIONS
First, on November 9, 201

6in an oral ruling on the recordthe Bankruptcy Court found

that Debtor could not execute a contract Addendum in order to cure a lack of subject-matter

jurisdiction when none existed at the time the case was removed.

See

Order Denying Debtor's

Emergency Motion for Entry of an Order Authorizing Debtor to Execute Addendum to

Contribution Agreement. ECF No. 78.

Next, the Bankruptcy Court denied Debtor's Motion to Reconsiderwithout a hearing
given that under Federal Rule of Civil Procedure 60(b) appellant did not provide any basis in which
the Bankruptcy Court should reconsider its earlier Order other than the argument that appellant and

Gamer Resources should be able to reform the contract to correct for their "mutual mistake." See Order
Denying Emergency Motion for Entry of an Order Authorizing Correction Agreement. 8, ECF No. 100
The Bankruptcy Court acknowledged that reformation is an appropriate tOol for modifying a contract
to reach its purported intent, but ultimately found that "there is nothing that Debtor can cite to that

allows Debtor and Gamer Resources to reform the Contribution Agreement to confer subject matter

jurisdiction on this Court?' Id. The.Bankruptcy Court found that Debtor already had his "opportunity
to have the Court determine what the Contribution Agreement means." Id. at 9. The Bankruptcy Court
held further, under Rules 9023 and 9024, that Debtor could not provide any basis that required the
court to deviate from its prior ruling.'

Federal Rule of Bankruptcy 9024 states that "[e]xccpt as provided in this rule and Rule 3008, Rule 59 F.R.Ciy.P.
applies in cases under the Code. A ñiotion for a new trial or to alter or amend a judgment shall be filed, and a court
may on its own order a new trial, no later than 14 days after entry ofjudgment. In some circumstances, Rule 8008
governs post-judgment motion practice after an appeal has been docketed and is pending." FED. R. BANKR. P. 9023
Federal Rule of Bankruptcy 9024 states that "Rule 60 F,R.Civ,P. applies in cases under the Code except that (1) a
motion to reopen a case under the Code or for the reconsideration of an order allowing or disallowing a claim
against the estate entered without a contest is not subject to the one year limitation prescribed in Rule 60(c), (2) a
complaint to revoke a discharge in a chapter 7 liquidation case may be filed only within the time allowed by §727(e)
of the Code, and (3) a complaint to revoke an order confirming a plan may be filed only within the time allowed by
governs post-judgment motion practice after an appeal
§ 1144, § 1230, or § 1330. In some circumstances, Rule
has been docketed and is pending." FED. R. BANKR. P. 9024

gg
4

In the same written Order, the Bankruptcy Court denied Appellant's Correction Motion given

that "to allow Garner Resources to assign its interest in the Weeks litigation back to Debtor is nothing
less than a subterfuge to avoid this Court's earlier determination that the adversary proceeding be

remanded to the state court." Id. at 9.

V.

THIS COURT LACKS JURISDICTION TO REVIEW THIS APPEAL
Under 28 U.S.C.

§

158(a, this Court has the authority to hear appeals from final orders of

the Bankruptcy Court. Here, the orders on appeal are final and were timely filed under

§

158(a).

However, this Court lacks jurisdiction over the appeals given that review of these orders would
effectively violate 28 U.S.C. § 1447(d).

Section 1447(d) dictates that "{a]n order remanding a case to the State court from which it
was removed is not reviewable on appeal or otherwise" other than in cases involving federal
officers or agencies being sued or civil rights. 28 U.S.C.

§

1447. "Not only may the order not be

appealed, but the district court itself is divested ofjurisdiction to reconsider the matter. Thus, even

if it later decides the order was erroneous, a remand order cannot be vacated even by the district
court." New

Orleans Public Service,

Inc.

v.

Majoue,

802 F.2d 166, 167 (5th Cir. 1986).

The Fifth Circuit has found that collateral attacks on a remand order can violate section
1447(d). See

Id.

For example, in Mq/oue, the plaintiff filed an action in state court alleging that he

was wrongfully discharged by his employer and the employer unsuccessfully attempted to remove

the action to federal district court. Subsequently, the employer brought claims against plaintiff in
federal court seeking injunctive relief under the Employee Retirement Income Security Act of
1974 ("ERISA"). The district court dismissed employer's claims given that they were not pre-

empted by ERISA. However, on appeal, the Fifth Circuit found it unnecessary to address whether
the claims were pre-empted by ERISA because they lacked subject matter jurisdiction over the

case given that employer's "Suit seeking declaratory and injunctive relief [wa]s an attempt to seek
S

collateral review of the district court's original order remanding the case to the state court." id. at
167. More specifically, the Court found that the employer's suit "[wa]s nothing more than an artful,

if not subtle, attempt to circumvent the plain language and meaning of 28 U.S.C. § 1447(d), which
provides that a remand order "is not reviewable on appeal or otherwise." Id. at 168.
While the underlying facts in the present case are distinguishable, this Court finds that the

Fifth Circuit's analysis in Majoue is instructive. Debtor's Addendum Motion, Reconsideration
Motion, and the Correction Motion all seek to establish that debtor reserved his interests in all
causes of action in the Weeks Litigation, which would effectively cure the Bankruptcy Court's

lack of subject matter jurisdiction. However, the Bankruptcy Court had already remanded the
Weeks Litigation to state court given that it lacked subject matter jurisdiction over those

proceedings pursuant to 28 U.S.C.

§

1447(c), Therefore,

if this Court were to reverse the

Bankruptcy Court's findings regarding any of the three orders on appeal it would be directly
challenging the Bankruptcy Court's underlying rationale for the Remand Order. This Court finds
that attacking the underlying rationale of the Remand Order constitutes a creative attempt to bypass the plain meaning of § 1447(d) just as the employer's suit in Majoue "[wa]s nothing more

than an.

artful,

if not subtle, attempt to circumvent the plain language and meaning of 28 U.S.C.

§

1447(d). Majoue, 802 F.2d at 168. Because the orders on appeal are effectively a collateral attack

on the Remand Order, this Court finds that it lacks subject matter jurisdiction over the issues on
appeal.
V.

CONCLUSION
For the reasons stated above, this Court finds that it lacks subject matter jurisdiction over

these three orders on appeal. These appeals will therefore be dismissed.

A separate order accompanies this memorandum opinion.

oycc C. Lamberth
United States District Judge
DATE: July 3? 2017