900 Captl Svcs Inc v. Cloud

• Court: Court of Appeals for the Fifth Circuit
• Decided: May 9, 2000
• Docket: 99-51109
• Status: Unpublished

Opinion

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_____________________

No. 99-51109 Summary Calender _____________________

In The Matter Of: JOHN THOMAS CLOUD

Debtor -------------------------------------------------------

900 CAPITAL SERVICES, INC

Appellant

v.

JOHN THOMAS CLOUD

Appellee

_________________________________________________________________

Appeal from the United States District Court for the Western District of Texas No. A-99-CV-557-JN _________________________________________________________________

May 4, 2000

Before KING, Chief Judge, and WIENER and BARKSDALE, Circuit Judges.

PER CURIAM:*

Appellant 900 Capital Services, Inc. appeals from the

district court’s judgment affirming the bankruptcy court’s

dismissal of its proof of claim against Debtor-Appellee John

Cloud. We AFFIRM.

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4. I.

Appellant 900 Capital Services (“Capital”) originally filed

a proof of claim in Cloud’s Chapter 11 bankruptcy proceedings

seeking $1,482,028.88 in damages, as well as an order forcing

Cloud to return stock and real property allegedly under his

control to Thousand Adventures, Inc. (“TAI”) and its

subsidiaries. Capital is a finance company that had loaned money

to TAI and its subsidiaries.1 When TAI and its subsidiaries

defaulted, Capital actively pursued collection by obtaining a

$1,028,265.01 judgment against TAI and David Vopnford (one of

TAI’s principals), in the United States District Court for the

Central District of California. It also filed claims in at least

two Chapter 7 bankruptcy proceedings pending against TAI

subsidiaries -- Thousand Adventures of Florida and Thousand

Adventures of Kansas.2

Capital’s proof of claim against Cloud alleged that he had

engaged in fraud, conversion, fraudulent transfer, and conspiracy

by shifting assets belonging to TAI and its subsidiaries to

companies controlled by Cloud, after TAI and its subsidiaries

were insolvent. Specifically, Capital alleges that: (1) TAI

transferred, without consideration, all the stock of its

1 At a hearing before the bankruptcy court, Capital admitted that, although it loaned money to TAI and a number of its subsidiaries, it was only pursuing its claim on the basis of money loaned to the subsidiaries. 2 Capital does not state, and it is not clear from the record, whether it filed a claim in the Chapter 7 proceedings against TAI.

2 subsidiaries to RV Holdings, Inc. (“RVHI”)3; (2) that Cloud,

Vopnford, and others set up a company known as Travel America,

Inc.,4 which collects funds due to TAI, thus diverting those

funds from TAI and its subsidiaries; and (3) that Cloud and

Vopnford caused real property belonging to TAI to be transferred

to Travel America and a company known as Buffalo Mortgage

Corporation (“Buffalo”). Capital claims that Cloud is an officer

and director of RVHI, Travel America (Delaware), Travel America

(Texas), and Buffalo, and that he is a 19% equity owner of Travel

America (Texas). Capital does not allege, and the record does

not indicate, that Cloud is an officer, director, or owner of TAI

or any of its subsidiaries.

Cloud objected to Capital’s proof of claim. The bankruptcy

court viewed Cloud’s objection as a motion to dismiss for failure

to state a claim pursuant to Federal Rule of Civil Procedure

12(b)(6). Finding that Capital failed to state a valid claim

against Cloud, the bankruptcy court dismissed Capital’s proof of

claim. Capital then appealed to the district court, which

affirmed without comment. Capital now appeals to this court.

II.

The bankruptcy court dismissed Capital’s proof of claim

3 Prior to the transfer, the stock of TAI’s subsidiaries was 100% owned by TAI. 4 Capital contends that Vopnford and Cloud actually established two Travel America corporations – one in Texas (“Travel America (Texas)”) and another in Delaware (“Travel America (Delaware)”).

3 under Federal Rule of Civil Procedure 12(b)(6) for failure to

state a claim. Therefore, we review the court’s decision to

dismiss de novo. See Lowrey v. Texas A & M Univ. Sys., 117 F.3d

242, 246 (5th Cir. 1997). Capital’s proof of claim must be

construed in its favor, with all the facts pleaded taken as true.

See Campbell v. Wells Fargo Bank, N.A., 781 F.2d 440, 442 (5th

Cir. 1986). While motions to dismiss pursuant to Rule 12(b)(6)

are generally looked upon with disfavor, a court may grant such a

motion if “it appears beyond doubt that the plaintiff can prove

no set of facts in support of his claim which would entitle him

to relief.” Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

On appeal, Capital presents three issue for review. First,

it argues that the bankruptcy court erred in applying Rule

12(b)(6) to a proof of claim. Second, Capital contends that its

proof of claim was presumptively valid and therefore the

bankruptcy court erred in dismissing the claim without first

requiring Cloud to come forward with evidence rebutting the

allegations. Lastly, it claims that the lower courts erred in

finding that it failed to state a valid claim against Cloud.

A. Application of Federal Rule of Civil Procedure 12(b)(6) and

the Burden of Proof

Capital contends that the bankruptcy court erred in applying

the same rules of pleading that govern general civil proceedings

to a proof of claim in a bankruptcy action. We find that the

bankruptcy court did not err in applying Federal Rule of Civil

4 Procedure 12(b)(6) to this matter.

By filing an objection to Capital’s proof of claim, Cloud

created a contested matter. See Fed. R. Bankr. 3007 advisory

committee’s note. Federal Rule of Bankruptcy 9014 governs

contested matters. Although Rule 9014 does not explicitly

provide for the application of Federal Rule of Bankruptcy 7012

(which wholly incorporates Federal Rule of Civil Procedure 12(b)-

(h)), Rule 9014 does state that a bankruptcy court “may at any

stage in a particular matter direct that one or more of the other

Rules in Part VII shall apply.”

The bankruptcy judge specifically noted that he would view

Cloud’s objection to the proof of claim as a motion to dismiss

pursuant to Rule 12(b)(6). By applying Rule 12(b)(6), the

bankruptcy judge was exercising his power under Rule 9014 to

apply “one or more of the Rules in Part VII.” In this case, that

rule was Federal Rule of Bankruptcy 7012. As such, the

bankruptcy court was well within its discretion to apply Rule

12(b)(6) to this contested matter.

The applicability of Rule 12(b)(6) resolves Capital’s

contention that the bankruptcy court erred in not presuming that

the proof of claim was valid and requiring Cloud to submit proof

rebutting that presumption. In accordance with Rule 12(b)(6),

the bankruptcy court presumed that all of the facts in Capital’s

proof of claim were true. See Campbell, 781 F.2d at 442. Given

that the facts as pleaded by Capital were presumptively true,

there was no need for Cloud to present evidence or rebut the

5 allegations. The bankruptcy court needed only resolve the legal

question of whether, taking all of the allegations as true,

Capital’s proof of claim stated any valid claims against Cloud.

See Beanal v. Freeport-McMoran, Inc., 197 F.3d 161, 164 (5th Cir.

1999) (citations omitted). The court determined that it did not.

B. Does Capital State a Valid Claim Against Cloud?

Cloud claims that Capital cannot state a claim against him

individually because all the complained of actions were taken

pursuant to his role as a corporate officer of RVHI, Buffalo, or

the Travel Americas. In Texas, as in other states, a corporate

officer may generally not be held individually liable for actions

taken on behalf of the corporation. See Powell Indus., Inc. v.

Allen, 985 S.W.2d 455, 457 (Tex. 1998). Cloud maintains that

Capital has failed to allege sufficient facts to “pierce the

corporate veil” and hold him individually accountable for actions

taken as a corporate officer.

Capital does not refute Cloud’s contention that it has

failed to submit facts sufficient to “pierce the corporate veil.”

Rather, it argues that it is seeking to hold Cloud individually

liable as an officer of a corporation who knowingly participated

in a tortious act. Texas has long held that a corporate agent

“who knowingly participates in tortious or fraudulent acts may be

held individually liable to third persons even though he

performed the act as an agent for the corporation.” Grierson v.

Parker Energy Partners, 737 S.W.2d 375, 377 (Tex.App. 1987, no

6 writ); see also Kinkler v. Jurica, 19 S.W. 359, 360 (Tex. 1892).

“It is not necessary that the ‘corporate veil’ be pierced in

order to impose personal liability, as long as it is shown that

the corporate officer knowingly participated in the wrongdoing.”

Barclay v. Johnson, 686 S.W.2d 334, 337 (Tex.App. 1985, no writ)

(citations omitted).

Even accepting Capital’s assertion that it is seeking to

hold Cloud liable as a tortfeasor, we nonetheless find that it

has failed to state a valid claim. On appeal, Capital focuses on

three discrete events as giving rise to its claims: (1) the

transfer, without consideration, of all of TAI’s subsidiaries’

stock from TAI to RVHI; (2) the transfer of real property owned

by TAI’s subsidiaries to Travel America and Buffalo; and (3) the

alleged redirection of money due to TAI to Travel America.5

We agree with the bankruptcy court that, viewing the

pleadings as a whole, Capital cannot state a cause of action

against Cloud. Any claim that Cloud or RVHI converted TAI’s

property or defrauded TAI and its creditors by taking transfer of

the subsidiaries’ stock without consideration is a claim owned by

TAI’s estate, and must be brought by TAI’s trustee, not a

creditor of TAI’s subsidiaries. Similarly, any claim that Cloud

or Travel America converted TAI’s assets by illicitly collecting

money due to TAI is also a claim properly brought by TAI’s

5 Capital does not specify whether the alleged recipient of the funds was Travel America (Texas) or Travel America (Delaware). Nor does it specify which Travel America allegedly received the real property transferred from TAI’s subsidiaries.

7 trustee.6

Capital also fails to state a claim against Cloud based on

the transfer of real property belonging to TAI’s subsidiaries.

As the bankruptcy court noted, Capital’s allegations essentially

contend that Vopnford and Cloud caused TAI’s subsidiaries to

transfer real property. There is, however, no allegation that

Cloud was a transferee of this property. Rather, the allegation

is that the real property was transferred to Travel America and

Buffalo. To the extent that any property was transferred out of

an insolvent TAI subsidiary, a creditor may chase that property

and seek an avoidance of the transaction. See Tex. Bus. & Com.

Code Ann. § 24.008(a) (West 1987); In re Mortgageamerica Corp.,

714 F.2d 1266, 1272 (5th Cir. 1983). Such a claim, however, is a

claim that must be pursued against the transferee, not Cloud

individually. See Tex. Bus. & Com. Code Ann. § 24.009(b)(1)-(2)

(West 2000) (stating that a judgment under the Texas Fraudulent

Transfer Act may be entered against the first transferee or any

subsequent transferee who did not take the property in good faith

and for fair value); In re Mortgageamerica Corp., 714 F.2d at

1272 (holding that the remedy provided by the Texas Fraudulent

Transfer Act “relates entirely to the debtor’s fraudulently

transferred property and entails no personal liability on the

6 The record on appeal contains an agreed order between Cloud and TAI’s trustee disallowing and denying the trustee’s claims against Cloud.

8 part of those responsible for the transfer”).7

III.

Even read in the broadest possible light and taking all of

the allegations as true, Capital’s proof of claim fails to allege

a cause of action against Cloud as an individual. The events

complained of are either not properly brought by Capital, or not

properly brought against Cloud. Therefore, we find that the

bankruptcy court did not err in dismissing Capital’s proof of

claim for failure to state a claim. AFFIRMED.

7 Similarly, to the extent that Capital’s claim regarding the transfer of the subsidiaries’ stock to RVHI is based upon the Texas Fraudulent Transfer act, it fails to state a claim against Cloud individually.