Take the Fifth

Designated for publication

• English v. Crochet, 25-30074, appeal from M.D. La.
  • Elrod, C.J. (Elrod, Clement, Haynes) (no oral argument), Rooker-Feldman doctrine, personal tort, defamation
  • Vacating Rooker-Feldman-based dismissal of plaintiff attorney’s defamation claims against defendant attorneys who had represented the plaintiff’s client’s employer in underlying Title IX claims brought by plaintiff’s client arising from alleged sexual assault and harassment of university students by university’s former football coach, and remanding for district court’s consideration of other bases for dismissal argued by defendants; and affirming dismissal of plaintiff’s intentional infliction of emotional distress claims.
  • Larry English, attorney for former LSU employee Sharon Lewis, filed a diversity action in federal court against LSU’s outside counsel—Vicki Crochet, Robert Barton, and their firm Taylor Porter—alleging defamation, intentional and negligent infliction of emotional distress, and civil conspiracy. The suit stemmed from earlier state-court litigation where Lewis and English were sanctioned more than $330,000 for pursuing unfounded racketeering claims and allegedly fabricating evidence. The federal district court dismissed English’s complaint with prejudice, holding that the defamation claim was barred under the Rooker–Feldman doctrine (which prohibits federal review of state-court judgments) and that the IIED claim was inadequately pled. English appealed, arguing that Rooker–Feldman was inapplicable and that the defendants’ conduct was “extreme and outrageous.”
  • The Fifth Circuit agreed in part. It held that the Rooker–Feldman doctrine did not bar English’s defamation claim because he sought damages for defendants’ alleged defamatory statements made during the sanctions proceedings—not review or reversal of the state-court judgment itself. The court vacated the dismissal of the defamation and conspiracy claims, remanding them for further consideration. However, it affirmed dismissal of the IIED claim, finding that the alleged insults, accusations, and litigation tactics did not rise to the level of “extreme and outrageous” conduct under Louisiana law, nor did insisting upon a lawful judgment debtor examination create liability. The appellate court also vacated the denial of leave to amend the complaint, as the futility finding rested on now-reversed grounds.

• DeWitt v. Drug Enforcement Administration, 25-60023, petition for review of DEA order
  • Elrod, C.J. (Elrod, Clement, Haynes) (no oral argument), administrative law
  • Granting petition for review of DEA order revoking petitioner’s controlled-substance license on basis that order exceeded DEA’s statutory authority; and vacating revocation of license.
  • Maria DeWitt, a Texas advanced practice registered nurse, lawfully holds both her APRN license and Prescriptive Authority Number, though she currently lacks an active physician supervision agreement and is not prescribing while pursuing a career transition. The DEA revoked her registration under 21 U.S.C. § 824(a)(3), claiming she lacked state authority to handle controlled substances. The court found this unlawful because § 824(a)(3) authorizes revocation only when a registrant’s state license or registration has been suspended, revoked, or denied—not merely when the registrant is temporarily without a delegation agreement. The panel rejected the DEA’s arguments that statutory registration and maintenance requirements implicitly allowed such action, emphasizing that DeWitt never lost any state license and that DEA’s interpretation would impermissibly expand its revocation authority beyond the statute’s text.

Unpublished decisions

• U.S. v. Saucedo, 25-10279, appeal from N.D. Tex.
  • per curiam (Elrod, Smith, Stewart), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• Triumphant Gold Ltd. v. Matloff, 24-10439, appeal from N.D. Tex.
  • per curiam (Graves, Engelhardt, Oldham), Oldham, J., dissenting in part (oral argument); bankruptcy
  • Affirming in part and vacating in part Bankruptcy Court’s dismissal of creditor’s adversary proceeding against debtor that debtor’s debt to creditor was non-dischargeable under § 523 of the Bankruptcy Code and that debtor should be denied discharge under § 727 of the Code, and remanding in part.
  • Rooftop Group began as a California distributor (Rooftop USA) working with Hong Kong manufacturer Asian Express to sell “Propel”-brand drones. In 2014–15 the business was reorganized under a new Singapore parent (Rooftop Singapore) with subsidiaries, memorializing roles through agency agreements: Asian Express manufactured and handled overseas sales as agent for Rooftop Singapore; Rooftop USA acted as North American sales agent for Rooftop Services, remitting customer proceeds upstream. After Disney licensed Asian Express in 2016 to make Star Wars–themed drones, Rooftop Singapore sought liquidity and obtained secured loans from TGL in 2016 and 2017, backed by receivables, proceeds, charged Asian bank accounts, and equity; Matloff personally guaranteed the debt. TGL tightened controls by amending the agency agreements in late 2016 to require deposit of collections into TGL-controlled “Charged Accounts.”
  • Rooftop Singapore missed the December 28, 2017, maturity on the 2017 facility, leading to a January 2018 forbearance/side letter with a $500,000 emergency advance and reaffirmed collateral controls. On March 1, 2018, fearing a sweep of Asian accounts, Matloff moved $846,919.82 from Charged Accounts to Rooftop USA’s U.S. account to pay “emergency bills,” and thereafter stopped remitting U.S. collections to the Charged Accounts, using them instead for payroll and operating expenses. TGL protested the unauthorized use. Cash dried up, Chinese suppliers halted shipments, and in February 2019 Rooftop licensed the Propel marks to Amax (the “Amax License”) to keep production moving and preserve brand value.
  • Rooftop Singapore filed Chapter 11 in April 2019; Rooftop USA and Rooftop Services filed Chapter 7 in August 2019; the cases were jointly administered with a confirmed plan. Separately, TGL obtained a 2018 Singapore judgment against Matloff on his guaranty. Matloff filed personal Chapter 7 in June 2019. In the adversary proceeding, TGL sought to deny/except discharge under §§ 727(a)(2) and (a)(3) and §§ 523(a)(2)(A) and (a)(6). After trial, the bankruptcy court issued a lengthy decision rejecting all nondischargeability theories; the district court affirmed (after a limited Fifth Circuit remand on the standard of review), and TGL appealed again.
  • Applying clear-error review to facts and de novo to law, the Fifth Circuit emphasizes that discharge denials are “harsh” and exceptions are strictly construed against creditors. On § 727(a)(2)(A) (incorporated through (a)(7)), the court holds TGL forfeited its late-raised “hinder-or-delay is enough” argument and, on the merits, finds no clear error in the bankruptcy court’s credibility-based finding that Matloff lacked actual intent to defraud when he diverted funds—his purpose was to keep the business alive to pay creditors, including TGL. On § 727(a)(3), the court upholds the finding that Matloff’s personal records were adequate (or any gaps justified) given TGL’s deep involvement and Matloff’s use of professional bookkeepers.
  • Turning to § 523(a)(2)(A), the court affirms: TGL failed to prove a knowingly false representation or justifiable reliance based on side-letter language about repaying a “bonus,” because the record did not credibly establish that Matloff ever received a 2016/2017 million-dollar bonus, and the documents lacked specifics; the bankruptcy court cited the correct “justifiable reliance” standard and reasonably viewed the evidence.
  • On § 523(a)(6), the panel partly agrees with the bankruptcy court but identifies unresolved issues. It affirms as to the $846,919.82 March 1 transfer because TGL did not show what portion, if any, was its collateral. But for other transfers (the $176,000 payroll payment and roughly $2.07 million and $405,530 in post-March 2018 receivable proceeds kept outside the Charged Accounts), the court explains that ordinary-course use of funds is not, by itself, a defense if the debtor, without the secured creditor’s consent, converts collateral with a subjective motive to cause harm or objective substantial certainty of harm. Because the record is unclear whether the “non-factored” receivable proceeds (about $3.3 million to Asian Express HK and $2.8 million to Rooftop USA) were TGL-encumbered collateral and, if so, the value of collateral lost, the court remands for the bankruptcy court to determine whether and to what extent those transfers constitute a willful and malicious injury and to measure nondischargeable debt by the value of converted collateral, if proved.
  • Judge Oldham dissented in part, as he would affirm the district court and bankruptcy court in full, contending that the bankruptcy court’s factual finding—that debtor Matloff did not willfully and maliciously injure creditor TGL—was not clearly erroneous and should be affirmed in full. Emphasizing the narrow construction of discharge exceptions and the debtor’s right to a “fresh start,” Judge Oldham reasoned that conversion of collateral is not automatically a willful and malicious injury and that precedent supports deferring to the bankruptcy court’s credibility-based findings. Matloff, who used funds to keep his company operating amid financial collapse rather than for self-dealing, credibly believed his actions would protect TGL’s interests. Because his conduct was arguably not wrongful or motivated by harm, Judge Oldham concluded the bankruptcy court’s finding was plausible and should not be disturbed, warning that reversal would effectively impose the “death penalty of bankruptcy.”

• U.S. v. Webster, 25-10581, appeal from N.D. Tex.
  • per curiam (Higginbotham, Engelhardt, Ramirez) (no oral argument), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• U.S. v. Ramirez-Benavidez, 24-11014, c/w 24-11017, appeal from N.D. Tex.
  • per curiam (Higginbotham, Engelhardt, Ramirez) (no oral argument), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• U.S. v. Casarez, 24-11039, appeal from N.D. Tex.
  • per curiam (Wiener, Willett, Wilson) (no oral argument), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• Sessanga v. City of DeSoto, 24-11050, appeal from N.D. Tex.
  • per curiam (Elrod, Clement, Haynes) (no oral argument), § 1983
  • Affirming dismissal of § 1983 malicious prosecution suit.

• Chhim v. City of Houston, 24-20469, appeal from S.D. Tex.
  • per curiam (Dennis, Graves, Duncan) (no oral argument), Title VII, employment discrimination, Age Discrimination in Employment Act
  • Affirming dismissal of plaintiff’s employment discrimination claims.

• U.S. v. Sloan, 24-30789, appeal from W.D. La.
  • per curiam (Barksdale, Oldham, Douglas) (no oral argument); criminal, sentencing
  • Affirming conviction and 235-month sentence for possession with intent to distribute methamphetamine.

• Century Surety Co. v. RTI Services, L.L.C., 25-50242, appeal from W.D. Tex.
  • per curiam (Dennis, Haynes, Ramirez) (no oral argument), ripeness, surety
  • Affirming dismissal of surety company’s declaratory judgment action as not ripe because underlying lawsuit had not concluded.

• U.S. v. Villa, 24-50410, appeal from W.D. Tex.
  • per curiam (Dennis, Graves, Duncan) (no oral argument), criminal, supervised release
  • Affirming revocation of supervised release.

• U.S. v. Parkerson, 24-50827, appeal from W.D. Tex.
  • Haynes, J. (Elrod, Clement, Haynes) (no oral argument), criminal, search and seizure
  • Affirming denial of motion to “suppress evidence found during a warrantless search of a tent in which [defendant] was sleeping” with his tent pitched on Texas Department of Transportation property, agreeing with district court that defendant “did not have a reasonable expectation of privacy while trespassing.”
  • The court noted the presence of “no trespassing” signage in the area around the highway underpass beneath which defendant and other homeless people had set up camp, and held, “Even if [defendant] was using the tent as a residence and thus had a subjective expectation of privacy, that expectation was not objectively reasonable.”
  • We note that it is interesting that the Court did not designate this opinion for publication, as it identified no Circuit precedent on point and acknowledged that “[t]he Supreme Court has not directly addressed whether a trespasser may have a reasonable expectation of privacy, but it has indicated that the answer is no.” Is the effect of this brief, unpublished opinion that homeless people who are on public property where they are not authorized to be (which would apply to most homeless people on public property, particularly when sleeping) have lost the Fourth Amendment right to be free from unreasonable searches, as the reasonable expectation of privacy largely (though perhaps not exclusively) would be tied to being able to own or rent a home?

• Maranon-Acuna v. Bondi, 25-60035, petition for review of BIA order
  • per curiam (Higginbotham, Engelhardt, Ramirez) (no oral argument), immigration
  • Denying Mexican citizen’s petition for review of BIA order upholding the immigration judge’s (IJ’s) denial of his application for adjustment of status.

• Hernandez-Rodas v. Bondi, 25-60070, petition for review of BIA order
  • per curiam (Barksdale, Graves, Duncan) (no oral argument), immigration
  • Denying Guatemalan citizens’ petition for review of BIA order dismissing their appeal from the Immigration Judge’s (IJ): denial of asylum, withholding of removal, and protection under the CAT.

• Castillo v. Bondi, 25-60153, petition for review of BIA order
  • per curiam (Barksdale, Oldham, Douglas) (no oral argument), immigration
  • Denying Honduran citizen’s petition for review of BIA order dismissing his appeal from an Immigration Judge’s (IJ) denying his application for: asylum; withholding of removal; and protection under the Convention Against Torture.