United States Court of Appeals,
Fifth Circuit.
No. 92-2141.
David ASKANASE, Trustee, Plaintiff-Appellee,
v.
LIVINGWELL, INC. et al., Defendants,
Gerald M.H. Stein and Joseph J. Zilber, Movants-Appellants.
Jan. 22, 1993.
Appeal from the United States District Court for the Southern District of Texas.
Before HIGGINBOTHAM, SMITH, and DeMOSS, Circuit Judges:
DeMOSS, Circuit Judge:
Procedural Background
On November 6, 1990, David Askanase, trustee of the bankruptcy estate of LivingWell, Inc.,
debtor in Bankruptcy Case No. 89-07878-H1-7 (hereinafter "Askanase Trustee"), filed his Original
Complaint in the United States District Court for the Southern District of Texas, naming as
defendants:
1. LivingWell, Inc., a Delaware corporation, together with its divisions and subsidiaries
(hereinafter "LivingWell"), who were the original debtors in possession in a Chapter 11 proceeding
filed on October 27, 1989, and which was later converted to a Chapter 7 proceeding on October 5,
1990;
2. The LivingWell, Inc. Directors and Officers Liability Insurance Trust (hereinafter the
"Insurance Trust"), an insurance trust created by LivingWell under a Trust Agreement dated February
12, 1987;
3. Pittsburgh National Bank, a national banking association in Pittsburgh, Pennsylvania, in its
capacity as Trustee of the Insurance Trust; and
4. McDonough Caperton Shepherd Group, Inc., d/b/a McDonough Caperton Risk Services,
a West Virginia corporation (hereinafter "McDonough Caperton"), in its capacity as administrator of the Insurance Trust.
In this action, Askanase Trustee asserted claims under various sections of the Bankruptcy Act
of the United States, under Section 24.01 et seq. of the Texas Business and Commerce Code (1967),
under Section 24.005(a) of the Texas Uniform Fraudulent Transfer Act (1987), and under ancillary
Texas state law regarding fraudulent transfers, constructive fraud, breaches of fiduciary duty,
breaches of express, resulting and/or constructive trusts, breaches of express, and/or implied
contracts, alter ego liability, and civil conspiracy. The relief sought by Askanase Trustee was
declaration of the rights of the parties with respect to the Insurance Trust and the alleged beneficiaries
thereunder; recovery of all funds transferred or paid by LivingWell to the Insurance Trust; the
turnover and/or imposition of equitable liens against and/or constructive trusts upon certain funds
now held in the name of the Insurance Trust, but which rightfully belong to Askanase Trustee;
turnover of funds held by the Trust pursuant to 11 U.S.C. §§ 542 and 543, and recovery for the
benefit of the bankrupt estate of actual damages, pre-judgment interest, costs, attorneys' fees, and
post-judgment interest.
In due course, defendants filed Answers and Cross-claims against Askanase Trustee and
Counterclaims as against certain other defendants; and certain individuals were permitted to
intervene, (hereinafter "intervenors"), asserting that they were actual or potential beneficiaries of the
Insurance Trust seeking to protect and preserve their rights thereunder.
In October 1991, Askanase Trustee filed a "Motion For Partial Summary Judgment" in which
Askanase Trustee requested the Trial Court to
"... enter Partial Summary Judgment declaring that the revocable Trust is an asset of the Estate, that the Trust's funds held by Pittsburgh National Bank are property of the estate, and that all funds be turned over to the Bankruptcy Trustee by virtue of 11 U.S.C. § 542."
On January 23, 1992, the Trial Court entered its "Memorandum Opinion" which discussed
the procedural posture of the case, the contentions of the parties, the various cases cited by the
parties as being determinative of the issues presented, and determined that since LivingWell retained
the power to amend and terminate the Insurance Trust under the Trust Agreement , the plaintiff
Askanase Trustee has the right to terminate the trust in accordance with the Trust Agreement and that right is the property of the estate. The Memorandum Opinion concluded with the following:
"The plaintiff's motion for summary judgment is GRANTED. In this regard, the plaintiff's notice of termination is effective and the plaintiff may proceed to terminate the Trust in accordance with its terms."
Following entry of the Memorandum Opinion, the Trial Court entered the following Orders
in response to various motions made by intervenors, defendants, and plaintiff:
1. On March 4, 1992, the Trial Court signed an Order which was entered on March 5, 1992,
in which the Trial Court denied a motion of intervenors for "stay pending appeal"; and inserted in
handwriting the following explanations: "NO FINAL JUDGMENT HAS BEEN ENTERED."
2. On March 18, 1992, the Trial Court signed an Order entered on March 19, 1962, which
denied a motion of Askanase Trustee "for severance and final judgment and request for turnover
order", but concluded its "discussion" with the following sentence:
"Given this Court's opinion that the rights to terminate the trust is a property right of the bankrupt estate, the Court holds that this is appealable and that the motions are DENIED."
3. On March 16, 1992, the Trial Court signed an order which was entered on March 19, 1992,
which denied the motions of two intervenors (i) to amend Memorandum Opinion concerning
plaintiff's motion for partial summary judgment, (ii) motion for clarification of Memorandum Opinion,
and (iii) motion seeking inclusion of statement pursuant to 28 U.S.C. § 1292(b); but granted the
motion of David Askanase Trustee for a turnover Order and directed Pittsburgh National Bank as
Trustee of the Insurance Trust to,
"... turnover the assets of the Trust to David Askanase, Trustee, within twenty (20) days of the date of this Order."
4. On May 7, 1992, the Trial Court signed an order entered on May 7, 1992, which amended
the order signed March 16, 1992, by deleting therefrom the last two paragraphs dealing with turnover
of assets; and
5. On July 9, 1992, the Trial Court signed an order entered on July 15, 1992, which granted
the motion of intervenors for "stay pending appeal".
None of these orders contain any language referencing actions taken or contemplated by the
Trial Court under Rule 54(b) of the Fed.R.Civ.P. nor any language reflecting an intention on the part of the Trial Court to make the certification contemplated by 28 U.S.C. § 1292(b). During the time
interval covered by the Orders cited above, some of the intervenors gave two Notices of Appeal to
this Circuit Court which were subsequently dismissed voluntarily. The record excerpts filed by
appellants now before the court does not cont ain a copy of the Notice of Appeal upon which
appellants rely as required by our Loc.R. 30.1.4. From a review of the docket sheets and the record
in the Trial Court, it would appear that the Notice of Appeal under which appellant is now acting was
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United States Court of Appeals,
Fifth Circuit.
No. 92-2141.
David ASKANASE, Trustee, Plaintiff-Appellee,
v.
LIVINGWELL, INC. et al., Defendants,
Gerald M.H. Stein and Joseph J. Zilber, Movants-Appellants.
Jan. 22, 1993.
Appeal from the United States District Court for the Southern District of Texas.
Before HIGGINBOTHAM, SMITH, and DeMOSS, Circuit Judges:
DeMOSS, Circuit Judge:
Procedural Background
On November 6, 1990, David Askanase, trustee of the bankruptcy estate of LivingWell, Inc.,
debtor in Bankruptcy Case No. 89-07878-H1-7 (hereinafter "Askanase Trustee"), filed his Original
Complaint in the United States District Court for the Southern District of Texas, naming as
defendants:
1. LivingWell, Inc., a Delaware corporation, together with its divisions and subsidiaries
(hereinafter "LivingWell"), who were the original debtors in possession in a Chapter 11 proceeding
filed on October 27, 1989, and which was later converted to a Chapter 7 proceeding on October 5,
1990;
2. The LivingWell, Inc. Directors and Officers Liability Insurance Trust (hereinafter the
"Insurance Trust"), an insurance trust created by LivingWell under a Trust Agreement dated February
12, 1987;
3. Pittsburgh National Bank, a national banking association in Pittsburgh, Pennsylvania, in its
capacity as Trustee of the Insurance Trust; and
4. McDonough Caperton Shepherd Group, Inc., d/b/a McDonough Caperton Risk Services,
a West Virginia corporation (hereinafter "McDonough Caperton"), in its capacity as administrator of the Insurance Trust.
In this action, Askanase Trustee asserted claims under various sections of the Bankruptcy Act
of the United States, under Section 24.01 et seq. of the Texas Business and Commerce Code (1967),
under Section 24.005(a) of the Texas Uniform Fraudulent Transfer Act (1987), and under ancillary
Texas state law regarding fraudulent transfers, constructive fraud, breaches of fiduciary duty,
breaches of express, resulting and/or constructive trusts, breaches of express, and/or implied
contracts, alter ego liability, and civil conspiracy. The relief sought by Askanase Trustee was
declaration of the rights of the parties with respect to the Insurance Trust and the alleged beneficiaries
thereunder; recovery of all funds transferred or paid by LivingWell to the Insurance Trust; the
turnover and/or imposition of equitable liens against and/or constructive trusts upon certain funds
now held in the name of the Insurance Trust, but which rightfully belong to Askanase Trustee;
turnover of funds held by the Trust pursuant to 11 U.S.C. §§ 542 and 543, and recovery for the
benefit of the bankrupt estate of actual damages, pre-judgment interest, costs, attorneys' fees, and
post-judgment interest.
In due course, defendants filed Answers and Cross-claims against Askanase Trustee and
Counterclaims as against certain other defendants; and certain individuals were permitted to
intervene, (hereinafter "intervenors"), asserting that they were actual or potential beneficiaries of the
Insurance Trust seeking to protect and preserve their rights thereunder.
In October 1991, Askanase Trustee filed a "Motion For Partial Summary Judgment" in which
Askanase Trustee requested the Trial Court to
"... enter Partial Summary Judgment declaring that the revocable Trust is an asset of the Estate, that the Trust's funds held by Pittsburgh National Bank are property of the estate, and that all funds be turned over to the Bankruptcy Trustee by virtue of 11 U.S.C. § 542."
On January 23, 1992, the Trial Court entered its "Memorandum Opinion" which discussed
the procedural posture of the case, the contentions of the parties, the various cases cited by the
parties as being determinative of the issues presented, and determined that since LivingWell retained
the power to amend and terminate the Insurance Trust under the Trust Agreement , the plaintiff
Askanase Trustee has the right to terminate the trust in accordance with the Trust Agreement and that right is the property of the estate. The Memorandum Opinion concluded with the following:
"The plaintiff's motion for summary judgment is GRANTED. In this regard, the plaintiff's notice of termination is effective and the plaintiff may proceed to terminate the Trust in accordance with its terms."
Following entry of the Memorandum Opinion, the Trial Court entered the following Orders
in response to various motions made by intervenors, defendants, and plaintiff:
1. On March 4, 1992, the Trial Court signed an Order which was entered on March 5, 1992,
in which the Trial Court denied a motion of intervenors for "stay pending appeal"; and inserted in
handwriting the following explanations: "NO FINAL JUDGMENT HAS BEEN ENTERED."
2. On March 18, 1992, the Trial Court signed an Order entered on March 19, 1962, which
denied a motion of Askanase Trustee "for severance and final judgment and request for turnover
order", but concluded its "discussion" with the following sentence:
"Given this Court's opinion that the rights to terminate the trust is a property right of the bankrupt estate, the Court holds that this is appealable and that the motions are DENIED."
3. On March 16, 1992, the Trial Court signed an order which was entered on March 19, 1992,
which denied the motions of two intervenors (i) to amend Memorandum Opinion concerning
plaintiff's motion for partial summary judgment, (ii) motion for clarification of Memorandum Opinion,
and (iii) motion seeking inclusion of statement pursuant to 28 U.S.C. § 1292(b); but granted the
motion of David Askanase Trustee for a turnover Order and directed Pittsburgh National Bank as
Trustee of the Insurance Trust to,
"... turnover the assets of the Trust to David Askanase, Trustee, within twenty (20) days of the date of this Order."
4. On May 7, 1992, the Trial Court signed an order entered on May 7, 1992, which amended
the order signed March 16, 1992, by deleting therefrom the last two paragraphs dealing with turnover
of assets; and
5. On July 9, 1992, the Trial Court signed an order entered on July 15, 1992, which granted
the motion of intervenors for "stay pending appeal".
None of these orders contain any language referencing actions taken or contemplated by the
Trial Court under Rule 54(b) of the Fed.R.Civ.P. nor any language reflecting an intention on the part of the Trial Court to make the certification contemplated by 28 U.S.C. § 1292(b). During the time
interval covered by the Orders cited above, some of the intervenors gave two Notices of Appeal to
this Circuit Court which were subsequently dismissed voluntarily. The record excerpts filed by
appellants now before the court does not cont ain a copy of the Notice of Appeal upon which
appellants rely as required by our Loc.R. 30.1.4. From a review of the docket sheets and the record
in the Trial Court, it would appear that the Notice of Appeal under which appellant is now acting was
the one dat ed June 4, 1992, and filed on June 5, 1992, which purports to appeal from the
Memorandum Opinion entered on January 23, 1992. The brief of appellant asserts that this court has
jurisdiction under 28 U.S.C. § 1291 as an appeal from a "Final Judgment". The brief of appellee
asserts that no final judgment appealable under 28 U.S.C. § 1291 has been entered and that this court
does not have jurisdiction under either 28 U.S.C. § 1292(a) or 28 U.S.C. § 1292(b) because the
Memorandum Opinion does not meet the requirements of those statutes.
Opinion
Federal appellate courts have jurisdiction over appeals only from (1) a final decision under
28 U.S.C. § 1291; (2) a decision that is deemed final due to jurisprudential exception or that has been
properly certified as final pursuant to Fed.R.Civ.P. 54(b); and (3) interlocutory orders that fall into
specific classes, 28 U.S.C. § 1292(a), or that have been properly certified for appeal by the district
court, 28 U.S.C. § 1292(b). See Dardar v. Lafourche Realty Cove, 849 F.2d 955, 957 (5th
Cir.1988); Save the Bay, Inc. v. U.S. Army, 639 F.2d 1100, 1102 (5th Cir.1981).
A decision is final when it "ends the litigation on the merits and leaves nothing for the court
to do but execute the judgment". Coopers and Lybrand v. Livesay, 437 U.S. 463, 467, 98 S.Ct.
2454, 2457, 57 L.Ed.2d 351 (1978) (quoting Catlin v. U.S., 324 U.S. 229, 233, 65 S.Ct. 631, 633,
89 L.Ed. 911 (1945)).
When an action involves multiple parties, any decision that adjudicates the liability of fewer
than all of the parties does not terminate the action and is therefore not appealable unless certified by
the district judge under Rule 54(b). Thompson v. Betts, 754 F.2d 1243, 1245 (5th Cir.1985). While
the recent en banc decision of this Circuit in Kelly v. Lee's Old Fashioned Hamburgers, Inc., 908 F.2d 1218 (5th Cir.1990) teaches that it is not necessary for the Trial Court to recite the magic words
of "no just reason for delay," that decision does require that "the order alone, or the order together
with the motion or some other portion of the record referred to in the order, contains clear language
reflecting the court's intent to enter the judgment under Rule 54(b)."
In the present appeal, it is clear that the Memorandum Opinion was neither in form nor
content a final decision. Likewise it is clear that the Trial Court expressly refused to make the
certifications necessary for appeal of the Memorandum Opinion under 28 U.S.C. § 1292(b), and it
is also clear that the Memorandum Opinion does not constitute one of those interlocutory orders
made appealable under 28 U.S.C. § 1292(a). While the Trial Court did indicate in its Order of March
19, 1992, that the issue as to the right to terminate the Insurance Trust being a property right of the
bankrupt estate was "appealable", neither that order nor any motion requesting the entry of such
order, made reference to Rule 54(b) as the source of the Trial Court's statement about "appealability".
Furthermore, on subsequent occasions the Trial Court entered orders modifying or amending the
Memorandum Opinion which would clearly not be consistent with an intention to enter judgment
without further delay on the basis of the Memorandum Opinion.
For the foregoing reasons we hold that this Court does not have appellate jurisdiction
of this matter and direct the Clerk to enter an Order of Dismissal herein.
Nothing herein shall be deemed or construed as an expression of opinion on the merits of any
issue involved in this controversy.