April 27, 2022, opinions

Posted on by tadbartlett

Designated for publication

  • Edwards Family Partnership, L.P. v. Johnson, 20-61011, appeal from S.D. Miss.
    • Higginson, J. (Dennis, Higginson, Costa), bankruptcy
    • Affirming in part, reversing in part, and remanding from district court’s order reversing in part and affirming in part the bankruptcy court’s orders arising from $17.8 million claimed by companies controlled by Dr. Charles Edwards (“EFP” and “BHT”) with regard to loans to debtor Community Home Financial Services Corporation (“CHFS”) (controlled by William Dickson) for CHFS to acquire and service a line of home improvement loans, and from $11.8 million in loans or joint venture investments by EFP/BHT in seven portfolios of subprime mortgages acquired and serviced by CHFS; the bankruptcy court’s order also concerned claims by the bankruptcy trustee against Edwards arising from his acquisition of information about Dickson and CHFS “rogue” activities after Dickson absconded to Costa Rica after filing for Chapter 11 bankruptcy for CHFS.
    • The Court held there was no clear error by the bankruptcy court in determining that the Edwards entities’ claims on four of the subprime mortgage portfolios were barred by the Mississippi statute of frauds, because it was plausible in light of the record that CHFS could not perform its obligation to repay within fifteen months and was otherwise of an indefinite duration.
    • The Court remanded to the bankruptcy court the issue of the valuation method used by the court to value the Edwards entities’ claims on two of the mortgage portfolios, because there was no explanation by the bankruptcy court on why it accepted the trustee’s experts’ valuation assumption that the companies’ arrangement as to those portfolios was a joint venture arrangement rather than a loan. “[I]f the portfolio agreements are loans, EFP is entitled to the entire loan payment from CHFS (which is the secured interest of $1,728,804); if they are joint ventures, EFP is only entitled to the money from the mortgage collection.”
    • The Court remanded to the bankruptcy court the question whether the seventh mortgage portfolio claim should be disallowed, as the bankruptcy court did not explain the reasoning for its disallowal.
    • The Court held that the trustee has standing to challenge a pre-bankruptcy transfer of loan interest in the home improvement line of loans from one Edwards entity to another. But the Court then affirmed the district court’s conclusion that that transfer was valid.
    • The Court also held that the Edwards entities had a perfected security interest in the home improvement line of loans, under Mississippi law, despite the transfer of lender status amongst different Edwards entities.
    • The Court then affirmed the bankruptcy court’s conclusion that the Edwards’ entities had failed to provide a means of tracing the funds in which they had a security interest after they had been stolen by Dickson and commingled with other funds.
    • The Court affirmed the district court’s decision to vacate the bankruptcy court’s imposition of sanctions on Edwards for failure to immediately turn over information to the trustee that he had learned about the location of CHFS assets after Dickson’s absconding to Costa Rica, because under § 105, relied on by the district court, there would need to be clear and convincing evidence of violation of a definite and specific order.
    • The Court also affirmed the district court’s reversal of the bankruptcy court’s finding that Edwards’s failure to turn over a CD of materials provided to him by a third party about CHFS’s activities in Costa Rica was conversion under Mississippi law.
  • Box v. PetroTel, Inc., 21-10686, appeal from N.D. Tex.
    • Clement, J. (Stewart, Clement, Elrod), breach of contract, removal, federal officer jurisdiction
    • Affirming remand of breach of contract claim against oil development company for defendant’s failure to compensate plaintiff for helping raise funds for an oil and gas project in Oman, holding that there was no basis for federal officer jurisdiction on the theory that the defendant was acting under a federal agency by partnering with the U.S. International Development Finance Corporation (“DFC”), and that there was no Grable jurisdiction.
    • As to federal officer jurisdiction, the Court held that, rather than showing that the defendant assisted or helped carry out DFC’s duties, “[i]n fact, it was the other way around. PetroTel is a private company that approached the DFC for financial assistance in connection with its otherwise private oil and gas operations. By its own admission, PetroTel has been operating in Oman since May 2009, but it was only in recent years that it began to receive financial assistance from the DFC. There is no doubt that the Oman project is, and always has been, PetroTel’s—not the DFC’s.”
    • The Court held, as to Grable jurisdiction, that the defendant’s argument that there are necessary federal securities issues involved because of the involvement of the DFC-enabled public offerings was only an argument of contract illegality raised as an affirmative defense–and that federal issues in affirmative defenses cannot trigger Grable jurisdiction over the plaintiff’s otherwise state-law claims.
  • H.W. v. Comal Independent School District, No. 21-50838, appeal from W.D. Tex.
    • Clement, J. (Stewart, Clement, Elrod), Individuals with Disabilities Education Act
    • Affirming district court’s affirmance of hearing officer’s decision under the IDEA that school district’s decision to move student out of general education and into essential academics program because she had not made appropriate progress under the accommodations that had been offered was (1) the student’s least restrictive environment and (2) appropriate in light of the student’s circumstances.

Unpublished

  • Lin v. Garland, 20-60745, petition for review of BIA order
    • per curiam (Barksdale, Willett, Duncan), immigration
    • Dismissing in part and denying in part Burmese citizen’s petition for review of BIA order summarily affirming the Immigration Judge’s (IJ) denial of protection under the Convention Against Torture.
  • U.S. v. Minjarez, 21-50060, appeal from W.D. Tex.
    • per curiam (King, Jones, Duncan), criminal, sentencing
    • Affirming 71-month sentence on conviction of possession with intent to distribute cocaine.
  • U.S. v. Blea, 21-50898, appeal from W.D. Tex.
    • per curiam (Jolly, Willett, Engelhardt), criminal
    • Granting Anders motion to withdraw, and dismissing appeal.
  • U.S. v. Lujan-Galindo, 21-51022, appeal from W.D. Tex.
    • per curiam (King, Costa, Ho), criminal, sentencing
    • Affirming conviction and sentence for illegal reentry.