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Garner v. Weeks

United States District Court, W.D. Texas

July 31, 2017

HOWARD KERRY GARNER, Appellant,
v.
MIKE WEEKS, ET AL., Appellee.

          MEMORANDUM OPINION

          ROYCE C. LAMBERTH UNITED STATES DISTRICT JUDGE.

         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 Garner ("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.

         II. 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, and interest" in the counter-claims of the Weeks Litigation to Garner 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.

         III. 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 generally applied in federal appeals courts." Harvey Gulf Int'l Marine, Inc. v. Bennu Oil & Gas, LLC, 559 B.R. 152, 154 (S.D. Tex. 2016).

         B. 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'l Oilwell Varco, L.P., 2015 WL 862319 (S.D. Tex. 2015). The standard of review appropriate for each issue raised on appeal------is abuse of discretion. "[D]eference ... is the hallmark of abuse-of-discretion review." Gen. Elec. Co. v. Joiner, 522 U.S. 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. M/V Medina Star, 47 F.3d 153, 156 (5th Cir. 1995) (citations omitted).

         IV. BANKRUPTCY COURT'S DECISIONS

         First, on November 9, 2016-in an oral ruling on the record-the 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 ...


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