Cadles Grassy Meadows II, L.L.C. v. Gervin (In Re Gervin)

300 F. App'x 293
CourtCourt of Appeals for the Fifth Circuit
DecidedNovember 21, 2008
Docket07-50099, 07-50101
StatusUnpublished
Cited by6 cases

This text of 300 F. App'x 293 (Cadles Grassy Meadows II, L.L.C. v. Gervin (In Re Gervin)) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cadles Grassy Meadows II, L.L.C. v. Gervin (In Re Gervin), 300 F. App'x 293 (5th Cir. 2008).

Opinion

PER CURIAM: *

Cadies of Grassy Meadows II, L.L.C. (Cadies) and George Gervin (G. Gervin) appeal from orders of the district court affirming and reversing orders of the bankruptcy court. Joyce Gervin (J. Ger-vin), G. Gervin, and Cadies cross-appeal. The district court affirmed the bankruptcy court’s determination that Cadies held a valid lien on G. Gervin’s interest in a partnership, but not on J. Gervin’s interest. The district court reversed the bankruptcy court’s contempt finding against Cadies. We affirm the district court.

I

In 1983, G. Gervin and others formed the 401 Group partnership (401 Group). The 401 Group’s sole asset is an apartment complex in Tacoma, Washington. At the 401 Group’s formation, G. Gervin was a *296 50% general partner. In 1984, the Gervins divorced. The resulting decree awarded J. Gervin a one-half interest in G. Gervin’s property, which included the “Wright Park Apartments Limited Partnership, located in the State of Washington.” The Gervins remarried in 1985. J. Gervin filed for divorce again in 1989, but the Gervins did not actually divorce. In 1992, G. Gervin assigned a half of his interest in the 401 Group to J. Gervin in consideration of a reconciliation.

In 1986, the TransAmeriean Capital Corporation (TransAmeriean) filed a lawsuit against G. Gervin (but not J. Gervin) in Texas state court to recover the remaining debt of approximately $2 million on a loan that G. Gervin had guaranteed two years earlier. In 1989, the Texas court entered an Agreed Judgment in favor of TransAmeriean (TCAP Judgment). This judgment was eventually assigned to Ca-dies. Before the judgment was assigned to Cadies, a predecessor-in-interest to Ca-dies registered the TCAP Judgment as a foreign judgment in Washington state by initiating an action in Washington state court. The Washington court issued a charging order in 1996, which ordered G. Gervin to pay the judgment creditor any distributions from the 401 Group to which G. Gervin had a right until the debt was repaid. This judgment created a lien against G. Gervin.

In 1998, G. Gervin and J. Gervin jointly filed for chapter 7 bankruptcy in the bankruptcy court. This filing stayed all activity regarding the TCAP Judgment in the Washington court under 11 U.S.C. § 362. The Gervin’s bankruptcy schedules listed the 401 Group as community property. The U.S. Trustee filed a Notice of Intention to Abandon the 401 Group (meaning that the trustee wished to abandon pursuing this asset) after filing a No Asset Report (no property in the estate is available for distribution to creditor). G. Ger-vin and J. Gervin received a discharge injunction from the bankruptcy court, which released the Gervins from some of their debts but did not release them from valid and enforceable liens, such as the TCAP judgment.

Also in 1998, the Gervins filed their first adversary proceeding to determine the validity, extent, and priority of the TCAP Judgment and other liens. In December 1998, the bankruptcy court issued an Agreed Order that the TCAP judgment was a valid lien against G. Gervin and that TCAP is “entitled to payment from” the 401 Group. This is in line with the bankruptcy court’s previous decision to exempt enforceable liens from the bankruptcy court’s discharge order.

On September 15, 2004, Cadies filed a motion in the Washington court seeking the sale of G. Gervin’s 50% partnership interest in the 401 Group to pay off G. Gervin’s outstanding debt from the TCAP Judgment. On September 21, 2004, J. Gervin’s counsel notified Cadies that G. Gervin did not own the 50% interest in the 401 Group, but one half of that as J. Gervin asserted an independent 25% interest in the 401 Group.

On September 24, 2004, J. Gervin filed a second adversary action in the bankruptcy court to protect her 25% interest in the 401 Group alleging that Cadles’s actions in the Washington court violated the bankruptcy court’s discharge injunction. On October 1, 2004, the bankruptcy court entered a temporary restraining order and, on October 18, 2004, the bankruptcy court issued a preliminary injunction enjoining Cadies from seizing, attaching, selling, or executing J. Gervin’s 25% interest in the 401 Group. The bankruptcy court did not require a bond in either of these orders. The bankruptcy court held that the Washington court’s charging order on the TCAP *297 Judgment applied only to G. Gervin’s interest in the 401 Group and did not affect J. Gervin’s interest. Also on October 18, 2004, G. Gervin intervened in the second adversary proceeding.

On October 22, 2004, the Washington court heard Cadles’s Motion for an Order Directing Sale. The Washington court concluded that Cadies had standing to pursue the judgment and directed the sale of G. Gervin’s interest but not J. Gervin’s interest. The Washington court did not determine the validity of G. Gervin’s assignment to J. Gervin, but it did establish that the TCAP Judgment was valid in Washington and that Cadies owned it.

On November 18, 2004, G. Gervin filed a motion for a temporary restraining order in the second adversary proceeding seeking to protect his own interest in the 401 group. The bankruptcy court granted the temporary restraining order without requiring a bond. The bankruptcy court later granted G. Gervin’s motion for a preliminary injunction without requiring a bond. The bankruptcy court subsequently denied Cadles’s motions for reconsideration, new trial, and/or relief from the preliminary injunction. Cadies appealed these rulings to the district court.

Cadies filed for summary judgment in the second adversary proceeding. The bankruptcy court found J. Gervin owned a separate 25% interest in the 401 Group that was not subject to Cadles’s lien; however, Cadies could enforce its lien against G. Gervin’s 25% interest in the 401 Group. Additionally, the bankruptcy court held Cadies in contempt for violating J. Ger-vin’s discharge injunction by filing an action in the Washington court. The bankruptcy court awarded J. Gervin $25,000 for emotional distress, $18,190 for attorney’s fees incurred to that point, and another $15,000 for prospective attorney’s fees. G. Gervin and Cadies appealed the adverse rulings to the district court.

The district court entered three orders affirming the bankruptcy court in most respects. With regard to Cadles’s appeals, the district court affirmed the bankruptcy court’s (1) validation of J. Gervin’s 25% interest in the 401 Group partnership and (2) failure to require a bond. However, the district court reversed the bankruptcy court’s finding of contempt against Cadies and vacated any associated damages. Ca-dies also challenged the bankruptcy court’s jurisdiction for the first time on appeal to the district court. The district court rejected Cadles’s jurisdictional challenges. With respect to G. Gervin’s appeal, the district court affirmed the bankruptcy court in all respects. Specifically, the district court found that the bankruptcy court (1) appropriately permitted Cadies to raise its affirmative defense of estoppel at “a pragmatically sufficient time,” (2) properly deferred to the Washington court’s judgments, and (3) correctly rejected G. Ger-vin’s assertions of dormancy with respect to the TCAP Judgment. All parties timely appealed from the district court’s three appellate rulings.

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