Weaver v. Texas Capital Bank N.A.

• Decision Date: 17 October 2011
• Docket Number: No. 10–10835.,10–10835.
• Citation: 660 F.3d 900,55 Bankr.Ct.Dec. 155
• Parties: Dewey WEAVER, Plaintiff–Appellee, v. TEXAS CAPITAL BANK N.A., Defendant–Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

55 Bankr.Ct.Dec. 155
660 F.3d 900

Dewey WEAVER, Plaintiff–Appellee,
v.
TEXAS CAPITAL BANK N.A., Defendant–Appellant.

No. 10–10835.

United States Court of Appeals, Fifth Circuit.

Oct. 17, 2011.

[660 F.3d 901]

James A. Rountree (argued), Rountree Law Offices, Monroe, LA, Eric A. Leipins, Dallas, TX, for Plaintiff–Appellee.

James D. Shields (argued), Shields, Britton & Fraser, P.C., Plano, TX, for Defendant–Appellant.

Appeal from the United States District Court for the Northern District of Texas.

Before SMITH, BENAVIDES and HAYNES, Circuit Judges.

PER CURIAM:

This is an appeal from a grant of a summary judgment in favor of Plaintiff–Appellee Dewey Weaver (“Weaver”), and a denial of a cross-motion for summary judgment filed by Defendant–Appellant Texas Capital Bank N.A. (“Texas Capital”). We REVERSE and RENDER judgment in favor of Defendant–Appellant Texas Capital.

[660 F.3d 902]

I. Factual and Procedural Background

Plaintiff–Appellee Weaver was a member of SL Management, a Louisiana company that bought and sold real estate in Texas. Between October 2004 and September 2006, SL Management obtained loans from Texas Capital in the form of four promissory notes totaling $978,719. The notes were secured by eleven tracts of land in Tarrant County, Texas, and Weaver and his business partner, Walter Dootson, executed personal guaranties of payment on each of the promissory notes. The guaranties unconditionally committed Weaver and Dootson to satisfy SL Management's debt on the promissory notes.

On January 16, 2008, SL Management filed a Chapter 11 bankruptcy petition in the Northern District of Texas. Texas Capital appeared as a creditor in SL Management's bankruptcy suit and filed an unobjected-to proof of claim for $756,000. On March 6, 2008, SL Management filed its plan of reorganization. This plan classified Texas Capital as a Class 10 creditor. Section 5.11 of SL Management's bankruptcy plan provided:

The Debtor shall sell [Texas Capital's collateral properties] to The Champions Group, or its designee [ ], pursuant to that certain Motion to Sell [ ] filed with the Court on March 6, 2008. It is anticipated that the sale of these properties will occur prior to the Effective Date and that [Texas Capital] will have no remaining claim in Debtor's estate. In the event the Court does not approve the Sale Motion or if any of [Texas Capital's collateral properties] are not purchased by Champions as required by Sale Motion, the Debtor shall upon the Effective Date surrender all Debtor's interest [in Texas Capital's collateral properties] to the Class 10 creditor under 11 U.S.C. [§] 1129(b)(2)(A)(iii) in full satisfaction of the Class 10 claims. To the extent the Court after notice and hearing determines that the cumulative value of the properties to be surrendered to [Texas Capital] under this Plan is less than the cumulative amount of the Allowed Texas Secured Claim, any deficiency shall be treated as a Class 12 claim and paid in accordance with the Class 12 treatment. Class 10 shall not have a Class 11 Claim. Class 10 is impaired under this Plan.

Under the bankruptcy plan, Class 12 claimants were to be paid by Weaver in an amount fully satisfying their claims, up to $500,000. The bankruptcy plan also contained a provision stating that the plan would be the “exclusive remedy for payment of any claims or debt so long as the [p]lan is not in default,” which Weaver claims enjoined Texas Capital from separately suing to collect on the guaranty agreements.¹

Thus, as to Texas Capital, SL Management's bankruptcy plan provided, first, that SL Management would attempt to sell the properties in Tarrant County with which Texas Capital had secured the promissory notes, and second, if that sale did not occur, that all of the secured properties would be surrendered to Texas Capital in “full satisfaction of the Class 10

[660 F.3d 903]

claims” by the Effective Date of the plan. Should the bankruptcy court determine, however, that “the cumulative value of the properties to be surrendered ... is less than the cumulative amount of the [claim],” then any deficiency would be treated as a Class 12 claim and would be paid by Weaver “in the amount necessary for full and complete satisfaction” of the claim.

On September 2, 2008, the bankruptcy court confirmed SL Management's bankruptcy plan. SL Management did not sell the Tarrant County properties, and on October 13, 2008—the Effective Date of the plan—the properties were surrendered to Texas Capital. Neither party requested a valuation of the collateral. On December 1, 2008, Texas Capital foreclosed on the properties, leaving a deficiency of $431,659.34, plus fees, expenses, and interest. The bankruptcy action was closed on December 16, 2008.

Previously, on April 8, 2008—during the pendency of SL Management's bankruptcy case—Texas Capital filed an action in Texas state court to enforce the guaranty agreements between it and Weaver. Weaver was properly served, but he did not answer or otherwise respond, and on December 15, 2008, the Texas state court entered a default judgment against Weaver for $766,645.79, plus fees, costs, and interest. In February 2009, Texas Capital initiated collection proceedings against Weaver in Louisiana state court and registered the Texas judgment, subject to a $334,986.45 credit.

In response to the collection action, on February 27, 2009, Weaver filed the instant action in the Northern District of Texas, seeking a declaration that SL Management's debt to Texas Capital was fully satisfied by the surrender of collateral, and therefore, that any liability owed on the guaranties was also satisfied at the time of the Texas state judgment, or in the alternative, that the Texas state default judgment was fully satisfied by the bankruptcy plan. Under both theories, Weaver's case is premised on an argument that since SL Management's underlying debt to Texas Capital is paid, no payment related to the guaranties need be made to Texas Capital. The parties filed cross-motions for summary judgment, and on July 23, 2009, the action was referred to the bankruptcy court for proposed findings of fact and conclusions of law.

The district court largely adopted the bankruptcy court's proposed findings, and it denied Texas Capital's motion for summary judgment and granted in part Weaver's motion for summary judgment. Specifically, the district court held: (1) that the Texas state default judgment was entitled to preclusive effect; (2) that SL Management's surrender of the collateral properties was presumed to be in full satisfaction of its debt to Texas Capital, and that the Texas default judgment was also satisfied, but that Texas Capital could move to reopen the bankruptcy case to seek a deficiency valuation hearing; (3) that the bankruptcy plan enjoined Texas Capital from pursuing a collection action against Weaver without establishing a default under the bankruptcy plan; and (4) that the Rooker–Feldman doctrine did not deprive the court of jurisdiction. ² On August 6, 2010, the district court entered judgment, declaring that “the default

[660 F.3d 904]

judgment obtained by [Texas Capital] against [Weaver] in Texas state court has been fully satisfied by the plan of reorganization of SL Management.” On August 19, 2010, Texas Capital filed a notice of appeal.

II. Standard of Review

We review a district court's grant of summary judgment de novo. Holt v. State Farm Fire & Cas. Co., 627 F.3d 188, 191 (5th Cir.2010); Fed.R.Civ.P. 56(a). We also review a district court's rulings on questions of law, such as res judicata and subject matter jurisdiction, de novo. Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278, 281 (5th Cir.2007); Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 571 (5th Cir.2005).

III. Analysis A. Rooker–Feldman Doctrine

Defendant–Appellant Texas Capital argues that the Rooker–Feldman doctrine deprives this Court of subject matter jurisdiction. We address this issue first because it touches upon the jurisdiction of the Court, and we conclude that the Rooker–Feldman doctrine does not apply.

Under the Rooker–Feldman doctrine, “federal district courts lack jurisdiction to entertain collateral attacks on state court judgments.” Liedtke v. State Bar of Tex., 18 F.3d 315, 317 (5th Cir.1994). A state court judgment is attacked for purposes of Rooker–Feldman “when the [federal] claims are ‘inextricably intertwined’ with a challenged state court judgment,” Richard v. Hoechst Celanese Chem. Grp., Inc., 355 F.3d 345, 350 (5th Cir.2003), or where the losing party in a state court action seeks “what in substance would be appellate review of the state judgment.” Johnson v. De Grandy, 512 U.S. 997, 1005–06, 114 S.Ct. 2647, 129 L.Ed.2d 775 (1994). The doctrine, however, does not preclude federal jurisdiction over an “independent claim,” even “one that denies a legal conclusion that a state court has reached.” Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 293, 125 S.Ct. 1517, 161 L.Ed.2d 454 (2005).

In the current suit, Weaver seeks a declaration that SL Management's surrender of collateral under the bankruptcy plan satisfied any debt owed on the guaranties, and therefore, either (1) that no debt was actually owed at the time of the Texas judgment, or (2) that the Texas judgment itself has by extension also been fully satisfied. This is a close issue, but given that granting the requested relief does not actually require appellate-type review or invalidation of the Texas judgment, and also considering the narrow scope of the Rooker–Feldman doctrine, we conclude that the doctrine does not deprive us of jurisdiction. See Skinner v. Switzer, ––– U.S. ––––,...