United States District Court, S.D. Texas
OPINION ON APPEAL
N. HUGHES UNITED STATES DISTRICT JUDGE.
bankruptcy trustee sued to recover a debtor's property
that was stolen by a former manager who had transferred it to
himself and then to a third party. The bankruptcy court
initially held that the trustee could not recover the
property because the subsequent transferee acted in good
faith. This court concluded that it did not act in good
faith. On remand, the bankruptcy court allowed the trustee to
recover. Its judgment will be affirmed.
A. Sharp, III, and a business partner formed Seiran
Exploration and Production, LLC, in May of 2010. Sharp
managed the company, a fishing camp. Four months later,
Seiran bought land in Plaquemines Parish, Louisiana.
November of 2010, Sharp and his partner assigned their
interests in Seiran to Great Gulfcan Energy, Inc. Sharp
continued to manage it as an employee of Gulfcan. In May of
2011, Sharp resigned from Gulfcan.
acting as Seiran, had transferred the Louisiana land to
himself by gift deed. In August, he became a shareholder and
corporate officer at GDH International, Inc., an unrelated
company. GDH forced him to resign in October for defalcation.
stole from Seiran, Gulfcan, and GDH. They sued him - Seiran
in Texas and GDH in Louisiana. The Texas court restrained
Sharp from transferring property stolen from Seiran.
December of 2011, Seiran petitioned for bankruptcy.
January, Sharp settled with CDH and transferred the Louisiana
land to it as part of the settlement. GDH had searched the
land's title and said that it did not find the title
questionable; it showed Sharp as the owner. The Louisiana
court entered judgment, transferring the land to GDH.
trustee filed an adversary to recover title to the land. The
bankruptcy court held that the trustee could not avoid the
transfer because GDH (a) gave value for the property, (b)
took the property in good faith, and (c) did not know the
transfer was voidable. It ruled in favor of GDH.
trustee appealed. This court held that GDH did not take the
land in good faith because it knew that Sharp (a) had
transferred the land to himself by gift deed while working at
Seiran, (b) later stole from a company that he had worked
for, and (c) transferred the land to GDH as reimbursement for
the assets he purloined from them. GDH should have questioned
Sharp's title to the land. The court vacated the
bankruptcy court's judgment and remanded. GDH did not
remand, GDH moved for leave to file a renewed motion for
judgment, saying that it would attach new evidence showing
that it took the property in good faith. The bankruptcy court
denied leave because it said it was bound by this court's