DURKAY v. HEAD OIL PRODUCTION CO.
| Decision Date | 26 March 1990 |
| Docket Number | Civ. A. No. B-87-0155-CA. |
| Citation | 112 BR 825 |
| Parties | John DURKAY, as Bankruptcy Trustee v. HEAD OIL PRODUCTION CO., Allied Bank of Texas, and William A. Tillman. |
| Court | U.S. District Court — Eastern District of Texas |
David B. Gaultney, Mehaffy, Weber, Keith & Gonsoulin, Beaumont, Tex., for plaintiff.
Robert C. Floyd, Warren Taylor, Floyd, Taylor & Riley, Houston, Tex., for defendants.
AMENDED MEMORANDUM AND ORDER
In the beleaguered course of the exhaustive and exhausting legal war fought in many forums between and among Whitehead, Madco, Head Tillman, Allied, and Durkay, Trustee, a brief chronological listing of lawsuits, receiverships, bankruptcy filings, foreclosures (both valid and invalid), adversary hearings, interventions, settlements, claims, counterclaims, dismissals, judgments, motions to set aside judgments, subsequent final judgments, removals, and remands, will help this court, and those parties at interest in this Texas League Jarndyce v. Jarndyce.
1983:
January 1983: Adams, et al v. Whitehead, et al, No. 12,153 was filed (Dist.Ct. Jasper County, Texas) (Adams v. Whitehead), in which Adams, et al, claimed defendants Whitehead, et al, were stealing oil from the plaintiffs' leases in Jasper County, Texas.
April 8, 1983: The court in Adams v. Whitehead ordered a receivership for the oil leases in question.
June 29, 1983: Marvin Whitehead signed a promissory note for value received from Madco, Inc. (Madco), in the amount of $842,314.65.
September 7, 1983: Whitehead secured the note given to Madco by executing a Deed of Trust on the fourteen leases in question in Jasper County, Texas.
1984:
February 2, 1984: Madco filed Chapter 11 bankruptcy in the Southern District of Texas, In Re Madco, No. 84-00715-H1-5, and the automatic stay went into effect.1
March 12, 1984: In Adams v. Whitehead, the trustee of the Deed of Trust foreclosed on the fourteen leases in a private foreclosure sale, which was not on the first Tuesday of the month, and then sold the fourteen leases to Madco for $500,000. Durkay now contends that at the time of the foreclosure Whitehead's note was not in default; plaintiff Durkay has now in this action presented testimony from Dennis McClure, a principal in Madco, in which McClure stated Marvin Whitehead was making note payments at the time Allied requested the foreclosure, and Madco would not have foreclosed but for Allied's request.
April 3, 1984: Defendants Allied and Head Oil contend the Deed of Trust was validly foreclosed, with proper notice and upon the first Tuesday of April, 1988.
September 4, 1984: The Jasper County District Court in Adams v. Whitehead rendered judgment for the plaintiffs for approximately $1,300,000.
October 3, 1984: The Jasper County District Court in Adams v. Whitehead vacated the judgment rendered on September 4, 1984; and Allied and Madco intervened in Adams v. Whitehead in that suit.
October 30, 1984, Marvin Whitehead, et al v. Madco, Inc., Cause No. 7934. Whitehead sued Madco in the District Court of Aransas County, Texas, alleging he was the owner of various property in Aransas County, and had indeed executed a note to Madco for $842,314, and a Deed of Trust to secure that debt. The Deed of Trust included all of Whitehead's Aransas County property, and a second Deed of Trust secured four of the fourteen oil and gas leases in Jasper County. Whitehead alleged both Deeds of Trust and the note should be released because the debt had been paid and fully satisfied by reason of the March 12, 1984, foreclosure. Whitehead's position is inconsistent from his position in the Jasper case, in the Madco bankruptcy proceedings in Houston, and in this court.
November 13, 1984: Suit No. 7934 in the District Court of Aransas County, Texas, Whitehead v. Madco, was removed to the United States District Court, Southern District of Texas, Houston Division, because Madco was in bankruptcy.
November 26, 1984: The Jasper County District Court in Adams v. Whitehead rendered a second judgment, which impressed a judicial lien on all fourteen oil and gas leases. Madco and Allied had intervened in Adams v. Whitehead in Jasper County, claiming a property interest in four of the fourteen oil and gas leases. Madco claimed an interest in the oil and gas leases pursuant to its March 12/April 3, 1984, foreclosure of the Deed of Trust issued to secure the note Whitehead gave to Madco. Allied claimed an interest pursuant to Madco's assigning Allied a security interest in the Deed of Trust and Whitehead's $842,314 note.
1985:
June 19, 1985: The Madco Bankruptcy Court in the Southern District of Texas approved a compromise agreement between Allied, Madco, and Adams-Henderson group. The agreement is complicated, but essentially, Madco bought the Adams-Henderson judgment of November 26, 1984. It may well be Madco bought the judgment in order to foreclose the judicial lien, and thus extinguish any of Whitehead's interest in all fourteen oil and gas leases. Whitehead was not a party to the agreement approved on June 19, 1985.
July 12, 1985: The four leases put into receivership by the Jasper County District Court in Adams v. Whitehead were released from receivership.
August 23, 1985: Whitehead moved to vacate the June 19, 1985, order approving Adams-Henderson/Madco-Allied agreement to sell Adams-Henderson judgment.
September 19, 1985: The leases which had been in receivership were sold pursuant to the judgment in Adams v. Whitehead. Plaintiff Durkay now contends Madco bought them for $500. However, the defendants Head and Tillman contend the arrangements were such that in effect Madco paid $500,500 for the leases.
September 30, 1985: A hearing was held on Whitehead's motion to vacate the Madco bankruptcy June 19, 1985 order, which was denied. The Southern District of Texas Bankruptcy Court ruled that assignment of Madco interest in oil and gas leases required prior court consent. The June 19, 1985, order gave no authority to transfer Madco's interest in the oil and gas leases. Therefore, no adjudication of Whitehead's interest in oil and gas leases is necessary.
1986:
February 3, 1986: Marvin Whitehead and Whitehead Production filed a voluntary Chapter 11 petition in the United States Bankruptcy Court for the Eastern District of Texas, Beaumont Division, No. B-86-0148, In Re Whitehead. On November 4, 1986, that court appointed John Durkay as Trustee of the Bankrupt Estate of Marvin Whitehead and Whitehead Production.2 The petition listed all of the fourteen leases as part of the bankrupt estate, and an automatic stay went into effect.
February 27, 1986: Madco moved to transfer some of its interest in the fourteen oil and gas leases to Head Oil, in No. 84-00715-H1-5, In Re Madco, in the Southern District of Texas. Whitehead was given notice of this action.
April 12, 1986: An order was signed by the Bankruptcy Court of the Southern District of Texas authorizing the transfer from Madco (all of Madco's interest in all fourteen oil and gas leases in dispute) to Head Oil.
July 1, 1986: An agreed order was entered into the record of the Madco bankruptcy. The order lifted the Madco automatic bankruptcy stay which had gone into effect February 2, 1984, and Allied was permitted to foreclose on some of Madco's interests in the oil and gas leases in question.
October 7, 1986: Allied bank actually foreclosed on some of Madco's interest in the fourteen oil and gas leases.
1987:
January 29, 1987: Judge Houston Abel entered order modifying the automatic stay in No. B-86-0148, In Re Whitehead.
February 3, 1987: Durkay filed a motion for rehearing of the January 29, 1987, order was filed in B-86-0148-BR, In Re Whitehead, in Eastern District of Texas, by Durkay, Trustee.
Apparently, this is a widely accepted practice in bankruptcy, although this court had not previously been aware of the procedure.3
May 12, 1987: Hearing was held before Judge Abel in B-86-0148, In Re Whitehead, on Durkay's motion for rehearing, and it was granted. Head Oil's motion to vacate automatic stay was denied.
May 14, 1987: Order by Judge Abel in B-86-0148, In Re Whitehead, denying Head Oil's motion to lift automatic stay, and granting Trustee's motion to vacate order of January 29, 1987, upon Trustee's representation that all matters between all parties would be litigated in case now pending in this court.
December 11, 1987: After Whitehead, et al, intervened in 84-00715-H1-5, Madco, Inc., in Houston, and after the suit was filed, Allied's motion to join Madco Oil as additional defendant in B-87-0155-CA, Eastern District of Texas, was denied.
1988:
January 29, 1988: Allied's third party complaint against Madco Oil filed in B-87-0155, but no service issued.
This bankruptcy appeal is before the court on cross-motions for summary judgment, motions to stay and lift "and/or" (sic) set aside the stay order, and order for abstention (voluntary and involuntary). The motion...
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