Hinojosa Eng'g, Inc. v. Lopez (In re Treyson Dev., Inc.)
| Decision Date | 19 April 2016 |
| Docket Number | CASE NO: 14-70256,ADVERSARY NO. 15-7014 |
| Parties | IN RE: TREYSON DEVELOPMENT, INC. Debtor HINOJOSA ENGINEERING, INC. Plaintiff v. HECTOR RUBEN LOPEZ, et al Defendants |
| Court | United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Southern District of Texas |
[Resolving Case No. 14-70256, ECF No. 158 and Case No. 15-7014, ECF No. 3]
This Court reviews whether the Order Confirming the Plan of Reorganization (the "Order"), [Case No. 14-70256, ECF No. 142], filed by Treyson Development, Inc. ("Treyson" or "Debtor") is void, as alleged by Hinojosa Engineering, Inc. (the "Plaintiff"), since a provision contained in Debtor's Chapter 11 Plan allegedly violated 11 U.S.C. § 524, which purportedly provides a basis for relief from judgment under Fed. R. Bankr. P. 9024 (which incorporates Fed. R. Civ. P. 60), and whether this Court should remand the case back to state court under Fed. R. Bankr. P. 9027. This Court determines that based on the Motion for Remand, Abstention and 9027(e)(3) Statement, [Case No.15-7014, ECF No. 3], the Motion For Relief From Order, [Case No. 14-70256, ECF No. 158], the arguments presented in an evidentiary hearing on this matter held January 12, 2016, all other evidence in the record, and relevant case law, that the Order is not void and thus the provision contained in the Plan, which discharged and released Hector Ruben Lopez, Jr.,1 and Treyson of liability for Plaintiff's claim, is binding upon all noticed parties, which includes Plaintiff, and that this Court is required to abstain from hearing the matter, as a result the case shall be remanded to state court.
On September 3, 2015, Hector Ruben Lopez and Blanca Lopez (collectively the "Lopez Defendants") filed a Notice of Removal of a case filed by Plaintiff in the 139th Judicial District of Hidalgo County, Texas, Case No. C-3020-15-C, against the Lopez Defendants and Slusher & Associates, PLLC ("Slusher"). [Case No. 15-7014, ECF No. 1] The claims alleged by Plaintiff in the case are that the Lopez Defendants and Slusher committed common law fraud, fraud by non-disclosure, breach of fiduciary duty, negligence, and violations under the Texas Deceptive Trade Practices Act, TEX. BUS. & COM. CODE § 17.41 et seq., ("Claims") related to a sale of real property by Debtor to Plaintiff in 2008. Plaintiff filed a Motion To Remand, Abstention and 9027(e)(3) Statement ("Motion to Remand"), [ECF No. 3], on September 17, 2015. The following day, September 18, 2015, Plaintiff also filed a Motion for Relief from Order ("Motion to Vacate"). [Case No. 14-70256, ECF No. 158]. The Lopez Defendants filed a Response to Plaintiff's Motion to Remand on September 30, 2015. [Case No. 15-7014, ECF No. 4].
This Court makes the following Findings of Fact and Conclusions of Law pursuant to Federal Rules of Bankruptcy Procedure 7052, which incorporates Fed. R. Civ. P. 52. To the extent that any Finding of Fact constitutes a Conclusion of Law, it is adopted as such. To theextent that any Conclusion of Law constitutes a Finding of Fact, it is adopted as such.
On February 25, 2008, Treyson purchased real property located at 109 E. Verna Jean Dr., South Padre Island, Texas 78597 (the "Property"). [ECF No. 28 at ¶¶ 2-3]. On December 23, 2008, Treyson sold the Property to Plaintiff pursuant to a Deed of Trust and Warranty Deed with Vendor's Lien that provided for wraparound financing,2 Doc. No. 2009-00000937, in Volume 15686, Page 164, in the Official Records of Cameron County. Id. at ¶ 7; [ECF No. 157-1 at ¶ 10]; Pl. Ex. 3. Plaintiff paid $200,000 of the $300,000 contract price at closing, and the remaining $100,000 took the form of a note to Treyson. [ECF No. 157-2]; see also Treyson Ex. 3. The Deed of Trust provided that Treyson, as Beneficiary, would be responsible for making payments on the underlying note,3 which was not provided with the claim. [Case No. 14-70256, Claim No. 23-1 at 14]. But see Treyson Ex. 3. Slusher acted as the closing agent for the transaction. [Case No. 14-70256, Claim No. 23-1 at 4].
On May 5, 2014, Treyson filed its initial petition under title 11, chapter 11 of the United States Code (the "Bankruptcy Code" or "Code"), which was signed by Hector Ruben Lopez, Jr. in his capacity as President.4 [Case No. 14-70256, ECF No. 1]. However, neither the initial petition nor the first amended petition filed on May 20, 2014, [ECF No. 10], contained any schedules, and the petition listed only four creditors. On May 30, 2014, Debtor filed its second amended petition, Schedules A-H, and Statement of Financial Affairs. [ECF No. 12]. The onlymentions of a relationship with Plaintiff were the details of a Note Receivable in the amount of $63,783.77 from Plaintiff related to the Property in Schedule B and that the property title was transferred to Plaintiff on December 23, 2008 as set forth in Schedule D. Id. at 8, 12.
On July 2, 2014, VFC Properties 30, LLC ("VFC"), a creditor in this case, filed a Motion for Relief from Stay Regarding Non-Exempt Real Property, which sought relief from the automatic stay on the Property sold by Treyson to Plaintiff. [ECF No. 28]. In the motion, VFC stated that "[Plaintiff] held title to the property described below,"5 and that Hector Ruben Lopez, Jr. executed a promissory note for such property with Texas State Bank on February 28, 2008 that included an assignment of rent, income, and receipts for the property. Id. at ¶¶ 2-6. VFC's Certificate of Service included Plaintiff in the Service List for those parties that received notice of the motion and any hearing(s) that were scheduled on the matter. Id. at 5-6. On July 15, 2014, Treyson filed a Response to VFC's Motion for Relief from Stay, which recited a general denial of allegations and asserted that Treyson could make adequate protection payments and had appropriate insurance. [ECF No. 31]. Nevertheless, on August 7, 2014, this Court signed the Unopposed Order Regarding Automatic Stay of Non-Exempt Real Property filed by VFC, which terminated the automatic stay as to the Property. [ECF No. 37].
On July 7, 2014, Treyson filed an Amended Schedule E, Amended Schedule F, and a list of Equity Security Holders. [ECF No. 29]. The list of unsecured creditors in Schedule F did not include Plaintiff. Id. at 3-8. On August 12, 2014, Treyson filed its Third Amended Schedule F that included, for the first time, Plaintiff as an unsecured creditor holding a non-priority claim in an "unknown" amount. Additionally, the claim was listed as contingent, unliquidated, anddisputed. [ECF No. 39]. Treyson served Plaintiff with the Amended Schedule F via Certified Mail, Return Receipt Requested. [ECF No. 41].
On September 30, 2014, Plaintiff, by and through its attorney Gerardo Linan, filed a Proof of Claim in the amount of $275,000 related to the transaction between Treyson and Plaintiff. [Case No. 14-70256, Claim No. 23-1]. In support of the Proof of Claim, Plaintiff provided a copy of the Warranty Deed with Vendor's Lien, [Claim No. 23-1 at 2-6], and a Deed of Trust, [Claim No. 23-1 at 7-16], that were executed by Hector Lopez, Jr., as President of Treyson, and Plaintiff on December 23, 2008.
On October 17, 2014, Treyson filed its Plan of Reorganization (the "Plan"). [ECF No. 66]. The Plan provided for no payment to Plaintiff as a member of Class 10, which was set forth as an unsecured non-priority, disputed, unliquidated, and contingent claim. Id. at 9. Treyson also stated that Plaintiff failed to file a timely claim and, as such, was barred from collecting from Treyson under the Plan. Id. at 13. Treyson certified that Plaintiff received notice via Certified U.S. Mail, Return Receipt Requested. [ECF No. 70]. Contemporaneously, Treyson filed its Disclosure Statement on October 17, 2014. [ECF No. 67]. The Disclosure Statement included Section XIV, entitled "Releases and Alteration of Rights of and With Respect to Third Parties." Id. at 24. This section contained a clause regarding the effect of the Plan on Third Parties:
Except as otherwise provided in the Plan or the Confirmation Order, on and after the Effective Date, each Holder of a Class 9 Unsecured Claim and Class 10 Unsecured Claim who (i) has voted to accept this Plan or abstained from voting and (ii) has not opted out from the release provided herein shall be deemed to have conclusively, absolutely, unconditionally, irrevocably, and forever, released and discharged the Debtor and Debtor's sole shareholder, Hector Ruben Lopez, Jr. ("Lopez"), from any and all claims, interests, obligations, rights, suits, damages, causes of action, remedies and liabilities whatsoever, including any derivative claims asserted against Lopez for conducting business on behalf of Debtor, whether such claims are known or unknown, foreseen or unforeseen,existing or hereafter arising, in law, equity or otherwise, that such entity or claimant would have been legally entitled to assert (whether individually or collectively), based on or relating to, or in any manner arising from, in whole or in part, the Debtor, Lopez, the Debtor's pre-petition and post-petition purchase, sale, or rescission of the purchase or sale of any asset of the Debtor, the subject matter of, or the transactions or events giving rise to, any claim or interest that is treated in the Plan, the business or contractual arrangements between the Debtor and any released party, the negotiation, formulation or preparation of the Plan and Disclosure Statement or related agreements, instruments or other documents, upon any other act or omission, transaction, agreement, event or other occurrence taking place on or before the Effective Date.
Id. at 25-6. Plaintiff was included in the service list prepared by the Bankruptcy Noticing Center to receive the notice mailed on October 19, 2014 by U.S. Mail to...
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