Goldin v. Bartholow
| Decision Date | 26 January 1999 |
| Docket Number | 97-20915,97-20914,Nos. 97-20852,97-20927 and 97-20946,s. 97-20852 |
| Citation | 166 F.3d 710 |
| Parties | Harrison J. GOLDIN, Liquidating Trustee; Trustee for the MCORP Trust; MCORP Management Trust; MCORP Financial Incorporated Trust, Plaintiffs-Appellants, v. Peter BARTHOLOW; Michael D. Magill; Connie Couch; W. Mack Goforth; Frank W. McBee; Theodore C. Rogers; Joel T. Williams, Jr.; Gene H. Bishop; W.J. Bowen; Dolph Briscoe, Jr.; John T. Cater; Durwood Chalker; Leo F. Corrigan, Jr.; W. Fenton Guinee; Edwin B. Jordan; Herbert D. Kelleher; Meredith J. Long; Bill O. Mead; Jere W. Thompson; Dwain D. Howard; Jess T. Hay; Donald J. Stone; Robert Cochran, Defendants-Appellees. Harrison J. Goldin, Liquidating Trustee; Trustee for the MCORP Trust; MCORP Management Trust, Plaintiffs-Appellants, v. Peter B. Bartholow, et al., Defendants, Peter B. Bartholow; Michael D. Magill; Connie Couch; W. Mack Goforth; Dwain D. Howard; Robert Cochran, Defendants-Appellees. In re: Harrison J. Goldin, Liquidating Trustee for the MCORP Trust; MCORP Management Trust; MCORP Financial Incorporated Trust, Petitioner. Harrison J. Goldin; Trustee for the MCORP Trust; MCORP Management Trust; MCORP Financial Incorporated Trust, Plaintiffs-Appellants, v. Peter Bartholow; Michael D. Magill; Connie Couch; W. Mack Goforth; Frank W. McBee; Theodore C. Rogers; Joel T. Williams, Jr.; Gene H. Bishop; W.J. Bowen; Dolph Briscoe, Jr.; John T. Cater; Durwood Chalker; Leo F. Corrigan, Jr.; W. Fenton Guinee; Edwin B. Jordan; Herbert D. Kelleher; Meredith J. Long; Bill O. Mead; Jere W. Thompson; Dwain D. Howard; Jess T. Hay; Donald J. Stone, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
George H. Tarpley, Sheinfeld, Maley & Kay, Dallas, TX, Mary-Ann Abbott Bellatti, Sheinfeld, Maley & Kay, Houston, TX, for Plaintiffs-Appellants in all cases.
Ben B. Floyd, Randall A. Rios, Floyd, Smith & Rios, Houston, TX, for Bartholow, Magill, Couch, Goforth, Howard and Cochran.
Robert Roy Burford, Robin C. Gibbs, Jeffrey C. Alexander, Gibbs & Bruns, Houston, TX, for Bartholow.
David T. Hedges, Jr., Vinson & Elkins, Houston, TX, for McBee, Rogers, Williams, Bishop, Bowen, Briscoe, Cater, Chalker, Corrigan, Guinee, Jordan, Kelleher, Long, Mead, Thompson, Hay and Stone.
Mitchell A. Seider, Houston, TX, for Goldin, Trustee for the MCORP Trust and MCORP Mgt. Trust.
Appeals from the United States District Court for the Southern District of Texas.
Before KING, Chief Judge, and GARWOOD and HIGGINBOTHAM, Circuit Judges.
Appellant Harrison J. Goldin (Goldin) was the trustee of the MCORP Trust (the trust). Appellees served as officers (officer appellees) and directors (director appellees) of MCORP prior to Goldin's appointment. Goldin appeals on behalf of the trust the district court's grant of summary judgment to the appellees on the trust's misuse of estate property claims and the officer appellee's severance benefit claims, the denial of summary judgment on Goldin's declaratory judgment motion, the award to defendants of their attorney's fees, and the imposition of personal liability on Goldin individually. We vacate in part and reverse in part.
These cases originate in the collapse of the MCORP banking group, which filed for bankruptcy under Chapter 11 in 1989. The current litigation centers on the actions of the officers and directors of MCORP in the period following the bankruptcy and prior to the appointment of Goldin as Trustee on July 1, 1994. Goldin claims that several officer appellees misused assets of the estate for their own personal benefit, engaging in a variety of prohibited transactions at its expense. The director appellees are claimed to be liable for these abuses because they assertedly failed to halt this alleged misconduct, approved of improper payments to the officers, and ultimately passed a blanket ratification of the officers' actions. The director appellees are also accused of wrongfully changing the company's pension plan for the insiders' benefit and to the creditors' detriment. Goldin also requested a declaratory judgment that the officer appellees were not entitled to severance payments. The appellees deny these allegations, and the officer appellees contend that they are entitled, as administrative claims, to severance payments and indemnification.
Goldin initiated the current action as an adversary proceeding in the bankruptcy court on May 5, 1995. Following consolidation with appellees' administrative claims for severance payments, the reference on the case was withdrawn by the district court on appellees' motion. Both parties filed motions for summary judgment, which the district court heard. The district court also held a bench trial on the issue of the severance payments. In an interlocutory order dated August 23, 1996, the district court granted the appellees' summary judgment on almost all issues, and a separate opinion and order in October 1996 found the officer appellees were entitled to their severance payments. On appeal, this Court found that neither the interlocutory order nor the final judgment on severance benefits was an appealable final order.
Faced with the approach of the termination date for the trust, Goldin in May 1997 requested an extension of its term from the bankruptcy court. The bankruptcy court did not rule on the motion; and the district court again withdrew the reference, and denied the trustees' request on July 14, 1997, one day before the trust was scheduled to terminate. The district court also ordered that the trustee turn over all trust assets to the clerk of the district court, as provided for in the trust instrument. Goldin moved the district court for clarification of the order and appealed to this Court. We dismissed the appeal and denied rehearing. In September 1997, Goldin filed in the district court an emergency motion seeking authority to pay trust expenses.
The district court withdrew the reference from the bankruptcy court on the entire bankruptcy case in late August 1997. In October 1997, it issued a series of final orders that confirmed summary judgment in favor of appellees, granted the officer appellees the severance benefits, granted the appellees their costs as either indemnification or sanctions, granted appellees further attorney's fees pursuant to Rule 54, and again ordered the appellant to immediately turn over all trust assets. Goldin was additionally ordered to pay certain trust liabilities out of his own pocket, and ordered to personally complete certain tasks at his own expense.
Goldin then filed for a writ of mandamus to this Court, challenging the district court's withdrawal of the reference and its imposition of liability against Goldin in his personal capacity. We carried this motion with the case. Goldin also appealed the merits, claiming that summary judgment on the misuse of estate property claims was inappropriate and challenging the award of severance payments to the officer appellees.
We are obligated to address issues of jurisdiction, including mootness, prior to addressing the merits of an appeal. See Sierra Club v. Glickman, 156 F.3d 606, 613 (5th Cir.1998). See also Steel Company v. Citizens for a Better Environment, 523 U.S. 83, 118 S.Ct. 1003, 1014-1016, 140 L.Ed.2d 210 (1998). We must satisfy ourselves of this Court's and the district court's jurisdiction even if the parties have not raised the issue, and if we find the district court did not have jurisdiction we have limited jurisdiction to correct the error. See Arizonans For Official English v. Arizona, 520 U.S. 43, 117 S.Ct. 1055, 1072, 137 L.Ed.2d 170 (1997).
We find that we need not reach the merits of the bulk of the appeal, since the trust's termination mooted some or all of the case even before the lower court rendered a final judgment, and in any case moots the appeal by Goldin. Since the district court lacked jurisdiction over the trust's claims against the appellees, we must vacate that portion of the judgment. Because Goldin and those creditors having an interest in the trust's funds have been denied a chance to appeal an adverse judgment by matters for which they are largely not at fault, we also vacate the judgment awarding appellees severance pay and costs.
To resolve the question of mootness, we first examine the terms of the instrument creating the trust. Mootness hinges on when the trustee's legal responsibilities terminated, thus depriving him of a legal interest in the outcome. We interpret trust instruments as we do contracts. See Askanase v. LivingWell, Inc., 45 F.3d 103, 106 (5th Cir.1995). The interpretation of a contract is a question of law which we review de novo, unless the language of the contract is ambiguous and the lower court resorted to factual determinations of intent. See Snug Harbor, Ltd. v. Zurich Insurance, 968 F.2d 538, 541 (5th Cir.1992) (). Therefore, our review of the trust instrument here is de novo. The trust instrument, by its express terms, is to be construed under Texas law.
The district court found that the trust ended, by its own terms, on July 15, 1997. At the onset, it is crucial to note the purpose of the trust. While MCORP was in Chapter 11, and had been since 1989, the trust, established in July 1994, was specifically designed to effectuate the rapid liquidation of the MCORP assets and distribution of them to the creditors. 1 In line with this expectation, the trust instrument provides "The Trust shall terminate on the earlier of (1) the third anniversary of the Effective Date or (2) the date as of which substantially all of its assets have been reduced to Cash and distributed." 2 This language amounts to a clear and express statement that the trust would terminate on the third anniversary of its effective...
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