Huntsville Golf Dev., Inc. v. Whitney Bank
Decision Date | 19 March 2014 |
Docket Number | Case No.: 5:13-CV-671-VEH |
Parties | HUNTSVILLE GOLF DEVELOPMENT, INC. Appellant, v. WHITNEY BANK, Appellee. |
Court | U.S. District Court — Northern District of Alabama |
Huntsville Golf Development, Inc. ("Huntsville Golf") appeals from an adverse final judgment entered by the United States Bankruptcy Court for the Northern District of Alabama. In support, Huntsville Golf has filed a brief outlining its arguments for reversal. The appellees - Whitney Bank ("Whitney") and Mr. Stuart Maples, Trustee of the Bankruptcy Estate of Nelson and Charlene Chatelain - have responded. Huntsville Golf has, in turn, replied to these documents. For the following reasons, the court will AFFIRM the bankruptcy court's opinion below.
In an appeal of a bankruptcy court decision, the district court sits as anappellate court. In that capacity, this court cannot make independent factual findings, and it must affirm the bankruptcy court's factual findings unless they are clearly erroneous. Ala. Dep't of Human Res. v. Lewis, 279 B.R. 308, 313-14 (S.D. Ala. 2002) (citations omitted); see also In re Spiwak, 285 B.R. 744, 747 (S.D. Fla. 2002) () (citation omitted); Fed. R. Bankr. Proc. 8013 ( ). A finding of fact is clearly erroneous when - even if there is evidence to support it - the reviewing court is left with the definite and firm conviction that a mistake has been committed. In re Hatem, 273 B.R. 900, 903 (S.D. Ala. 2001) (citation omitted).
By contrast, the court reviews the bankruptcy court's legal conclusions de novo. In re Brown, 303 F.3d 1261, 1265 (11th Cir. 2002) (citation omitted). Finally, a bankruptcy court's equitable determinations are reviewed for abuse of discretion. Spiwak, 285 B.R. at 747-48 (citation omitted).
With this standard in mind, the court summarizes the following basic casefacts.1 On May 20, 1992, Nelson J. and Charlene L. Chatelain filed a voluntary petition under Chapter 11 of the Bankruptcy Code with the U.S. Bankruptcy Court for the Northern District of Alabama ("the bankruptcy court").2 The Chatelains are the sole shareholders of Huntsville Golf. Before the Chatelains filed their Chapter 11 petition, Huntsville Golf filed an arbitration demand against Brindley Construction Company, Inc. ("Brindley"). Huntsville Golf asserted various claims against Brindley arising from a construction contract formed between the two parties on December 18, 1989. On August 16, 1992 - after the Chatelains filed their petition - Huntsville Golf secured an arbitration award in its favor against Brindley in the amount of $376,316.75. The U.S. District Court for the Northern District of Alabama confirmed the arbitration award and entered a judgment finalizing it on December 24, 1992 ("the Brindley Judgment").
During the course of the Chatelains' bankruptcy case, Whitney timely filed a proof of claim, asserting an unsecured claim in the amount of $1,144,263.06 and a secured claim in the amount of $1,876,062.29. On November 23, 1993, the bankruptcy court issued an Order confirming the Chatelains' Second Amended Planof Reorganization ("the Confirmation Order"). A provision of the Confirmation Order reads as follows:
Whitney National Bank raised the issued [sic] that the plan does not reflect that one of the debtor's corporations, Huntsville Golf Company, of which they are the sole shareholders, has a judgment against Brindley Construction Company in the approximate amount of $350,000. It should be noted that the debtor, Nelson Chatelain, has an account receivable against this corporation in the approximate amount of $300,000. The testimony given at the hearing indicated that this judgment cannot be collected because Brindley Construction Company does not have any funds. It is the opinion of this Court that the debtors should attempt to collect this judgment, and that any funds which are collected shall be subject to the jurisdiction of this Court and made available for distribution to unsecured creditors.
The Order concluded with the following statement:
It is therefore ORDERED, ADJUDGED AND DECREED that the debtors' Second Amended Plan of Reorganization be and hereby is confirmed conditioned upon the debtors pursuing the collection of the judgment against Brindley Construction Company and providing for the payment of the debt owed to National Union if determined to be nondischargeable.
On December 29, 1993, the bankruptcy court closed the case and entered a final decree.
Huntsville Golf continued its efforts to enforce and collect its judgment against Brindley. To this end, the corporation instituted a proceeding against Brindley in the U.S. District Court for the Middle District of Tennessee.3 Huntsville Golf alleged,among other counts, claims seeking to pierce the corporate veil with respect to Brindley; Brindley Construction, LLC (f/k/a The Brindley Company, LLC); Brindley Construction Group, LLC; The Brindley Company (f/k/a Brindley Development Corporation); Brindley & Associates, Inc.; Brindley Development Company, LLC; Brindley Holdings, LP; Brindley Homes Corporation; The Brindley Company, LP; the Estate of Robert Brindley, Sr.; and Ronald Brindley (collectively, "the Brindley Group"). On November 28, 2011, Huntsville Golf and the Brindley Group entered into a Mutual Settlement Agreement and Release ("the settlement agreement"). Under this agreement, the Brindley Group agreed to pay Huntsville Golf the amount of $985,000.00. A portion of this payment covered the legal fees and expenses Huntsville Golf incurred in enforcing the arbitration judgment. After payment of such fees and expenses, Huntsville Golf maintained in its possession roughly $510,000.00 of the settlement payment.
On December 2, 2011, Whitney moved to reopen the Chatelains' bankruptcy case. On January 11, 2012, the bankruptcy court entered an order re-opening the case. Under this order, the court instructed Huntsville Golf to escrow $510,000.00 into its attorney's trust account subject to the court's further orders. On February 20, 2013, the court granted Whitney's "Motion for Payment of Claims and Appointing a Disbursing Agent. The court sua sponte appointed a Chapter 11 Trustee to determinethe unsecured creditors' claims. It also ordered Huntsville Golf's counsel to transfer the escrow funds to this Trustee. On February 25, 2013, the bankruptcy court denied Huntsville Golf's Motion for Reconsideration. On March 29, 2013, Huntsville Golf petitioned the bankruptcy court for a stay pending appeal. On April 1, 2013, the court denied Huntsville Golf's request.
Huntsville Golf filed a Notice of Appeal with this court on April 11, 2013. Doc. 1. It submitted its appellant's brief on April 25, 2013. Doc. 7. Mr. Maples filed his appellee's brief on May 9, 2013 (doc. 10), and Whitney filed its appellee's brief on May 13, 2013 (doc. 11). Huntsville Golf replied on June 1, 2013. Doc. 14. On June 7, 2013, Huntsville Golf filed a Motion for Stay Pending Appeal. Doc. 15. The court denied this motion on September 6, 2013.
The court finds that the Confirmation Order was res judicata and that it precludes the collateral attacks Huntsville Golf attempts to make upon it in the present appeal. Because the corporation could have introduced these objections at the time of the original judgment, it may not make them now before this court. Huntsville Golf also tries to undermine Whitney's efforts to complete administration of the Chatelain bankruptcy estate on other grounds. As set out in more detail below, these arguments fail on their merits. For these reasons, the court will affirm the bankruptcycourt's opinion.
"[A] confirmation order satisfies the requirements of a judgment that can be given preclusive effect." In re Optical Technologies, Inc., 425 F.3d 1294, 1300 (11th Cir. 2005) (citing In re Justice Oaks II, Ltd., 898 F.2d 1544, 1549 (11th Cir. 1990)) (internal quotation marks and alteration omitted). For res judicata - or claim preclusion4 - to apply, the following conditions must exist:
Id. at 1300-01. "When all of the requirements of claim preclusion are satisfied, the judgment or decree upon the merits in the first case is an absolute bar to the subsequent action or suit between the same parties not only in respect of every matter which was actually offered and received to sustain the demand, but also as to every claim which might have been presented." Justice Oaks, 898 F.2d at 1552 (citing Baltimore S.S. Co. v. Phillips, 274 U.S. 316, 319 (1927)) (internal quotation marks and alterations omitted). Huntsville Golf maintains that none of the res judicata elements are satisfied in this case, so the court will analyze each one in turn to show why they in fact apply.
Huntsville Golf first argues that the bankruptcy court lacked subject matter jurisdiction to issue the Confirmation Order. Doc. 7 at 16-19.5 Relying on Stern v. Marshall, — U.S. — , 131 S. Ct. 2594, 180 L. Ed. 2d 475 (2011), it maintains that the court improperly trespassed jurisdictional boundaries by including the Brindley Judgment within the Chatelains' bankruptcy estate. Id. According to Huntsville Golf, the bankruptcy court was not "of competent jurisdiction" to rule on that subject because it concerned an ancillary state-law matter unrelated to the...
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