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In re Russell

United States Court of Appeals, Fifth Circuit

October 21, 2019

In the matter of: DAVID C. RUSSELL, Debtor.
v.
DAVID C. RUSSELL; RONALD J. SOMMERS, Appellants. JANNA F. RUSSELL, Appellee,

          Appeals from the United States District Court for the Southern District of Texas

          Before OWEN, Chief Judge, and JONES and SMITH, Circuit Judges.

          JERRY E. SMITH, CIRCUIT JUDGE:

         Janna Russell sued David Russell, her ex-husband and a Chapter 7 debtor, in bankruptcy court over a debt of $32, 500 plus interest. After an evidentiary hearing, the bankruptcy court ruled for David on the record, finding that David had paid the debt. The district court reversed, holding that David had not satisfied his obligation to Janna as a matter of law. We affirm the district court.

         I.

         This case presents one snippet of a ten-plus-year legal battle between ex-spouses. The dispute began when Janna filed a petition to modify David's and her parent-child relationship order. A Texas state court ordered David and Janna to mediation, where they executed a mediation settlement. The order approving the settlement mandated that David pay Janna $32, 500. On receipt of payment, Janna was to execute certain deeds to David.

         After David either failed or refused to pay Janna, the state court ordered the parties to arbitration. The resulting arbitration order awarded Janna $32, 500 plus interest. In relevant part, the arbitration order states,

9.6 IT IS ORDERED that said money order, certified check or cashier's check shall be made payable to "Janna Russell" only and shall not have any other endorsement.
9.7 IT IS ORDERED that if payment of the judgment together with post judgment interest at 5% is made by DAVID CHRISTOPHER RUSSELL to JANNA RUSSELL in cash, then JANNA RUSSELL shall execute the Special Warranty Deeds listed above in 9.3.1, 9.3.2, 9.3.3 and DAVID CHRISTOPHER RUSSELL shall execute the Special Warranty Deed listed in 9.4.1 on the same day the judgments are paid in cash.

Janna expressly sought provisions requiring payments to go directly to her.

         During the state proceedings, Janna and her attorney Ellen Yarrell found themselves at odds and decided to part ways. On December 23, 2010, two days after the state court had entered its arbitration order, Yarrell moved to withdraw from representing Janna. Janna agreed and signed the Order on Motion of Withdrawal of Counsel on December 30, 2010. At that time, Yarrell claimed that Janna owed her over $60, 000 in unpaid attorney fees.

         In a December 30, 2010, email, Yarrell asked Janna to sign the deeds due to David on receiving his $32, 500 payment. Yarrell also asked Janna to sign a statement authorizing Yarrell to collect David's payment on her behalf. Yarrell stated that she would then deposit the money to Janna's account balance with her law firm. In return, Yarrell offered to sign a complete release for the rest of the disputed attorney fees. Janna rejected that offer and stated that she had been "very clear about [her] position" with Yarrell, David, and David's attorneys, and she would "not be pressured or coerced . . . into signing the deed without [David] first paying [her] directly the $32, 500." Janna also expressed concern that Yarrell was not acting in her best interest and repeatedly informed Yarrell that she was not authorized to accept the $32, 500.

         According to Janna, David tried to manipulate Janna's conflict with Yar-rell to "negotiate a better deal." In particular, Janna claims that David threatened to deliver the settlement funds to Yarrell unless Janna dismissed an unrelated appeal. To support that claim, Janna presents emails from David.[1]

         On April 15, 2011, David went to Yarrell's office, unannounced, and paid her $32, 500 in cash. Because David did not receive Janna's deeds-which, per the arbitration order, he was entitled to on paying Janna $32, 500-on June 6, 2011, David filed a motion "to ...


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