CTHH Enterprises, Inc. v. Brunson (In re Havard)

209 B.R. 196, 1997 U.S. Dist. LEXIS 6929
CourtDistrict Court, W.D. Louisiana
DecidedApril 10, 1997
DocketCivil A. No. 96-2634
StatusPublished
Cited by3 cases

This text of 209 B.R. 196 (CTHH Enterprises, Inc. v. Brunson (In re Havard)) is published on Counsel Stack Legal Research, covering District Court, W.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
CTHH Enterprises, Inc. v. Brunson (In re Havard), 209 B.R. 196, 1997 U.S. Dist. LEXIS 6929 (W.D. La. 1997).

Opinion

[197]*197 DECISION ON APPEAL

F.A LITTLE, Jr., Chief Judge.

The bankruptcy court, in an order filed 22 August 1996, denied a motion for turnover made by CTHH Enterprises, Inc. (“CTHH”). CTHH then filed a timely notice of appeal to this court. We AFFIRM the decision of the bankruptcy court, but for different reasons. The basis of our decision follows.

I. BACKGROUND

CTHH filed a motion to turnover property in the United States Bankruptcy Court for the Western District of Louisiana, seeking an order directing the trustee, Ted Brett Brunson, to turn over Commodity Credit Corporation payments. The motion was opposed by the Farm Credit Bank of Texas (“FCBT”) and the trustee. The bankruptcy court, by order dated 22 August 1996, denied the motion. CTHH subsequently perfected an appeal to this court.

The facts, as found by the bankruptcy court, may be summarized briefly. The debtor, Malcolm Henry Havard, filed for chapter 12 relief on 26 May 1995. The case was converted to a chapter 7 proceeding on 14 November 1995. Prior to the filing, the debtor entered into a contract with the Commodity Credit Corporation, placing his farmland into the Conservation Reserve Program (“CRP”). FCBT held a mortgage on the property enrolled in the CRP. The United States District Court for the Western District of Louisiana seized the property by writ oí fieri facias, and, by order dated 5 September 1995, authorized FCBT to foreclose. CTHH purchased the land on 20 December 1995. In addition to the clause describing the property boundaries, both the mortgage and deed contained the following description of the rights conveyed with the land:

together with all buildings, component parts, incorporeal immovables, immovables by declaration, and other improvements, and all batture, relictions, derelictions, strips and gores, rights, ways, privileges and appurtenances, servitudes, and hereditaments and advantages thereunder belonging or in anywise appertaining, now owned or hereafter acquired ..., together with the rents, issues, profits, revenues and income therefrom.

The parties contest whether the rights to the CRP payments, for crop and fiscal years 1995, were included in the 20 December 1995 conveyance to CTHH. Finding that no transfer occurred, the bankruptcy court denied CTHH’s motion to turnover the CRP payments.

CTHH argues that the debtor mortgaged the rights to the CRP payments and that these rights were conveyed to CTHH in the later sale. CTHH contends, pursuant to Louisiana law, that the CRP payments may be characterized as “rents,” that rents are civil fruits, and that the seizure and sale of the subject property included the civil fruits of the parcel. In the alternative, CTHH argues that the CRP contract rights constitute an incorporeal immovable, a lease, and that incorporeal immovables were conveyed explicitly in the sale.

FCBT and the trustee challenge CTHH’s interpretation of the property description. Relying on common law rules of contract construction, they argue that the instrument conveyed only the land, real rights running with the land, rents derived from real rights, and crop allotments. Citing the federal CRP regulations, the appellees contend that the rights created under the CRP contract are neither real rights nor derivatives of real rights and, therefore, fall outside of the conveyance. In response to CTHH’s alternate theory, appellees argue that, under Louisiana law, the CRP contract cannot constitute a lease because it did not convey a right of possession. Even assuming that the CRP contract is a lease, the appellees contend that the deed conveyed only those incorporeal immovables that were real rights and that a lease is not a real right.

II. STANDARD OF REVIEW

This court has capacity to hear appeals from decisions of a bankruptcy court. See 28 U.S.C. § 158. Our review of a bankruptcy court’s decision is governed by the same standards employed by a review by the Fifth Circuit. A bankruptcy court’s conclusions of law are subject to de novo review on appeal and the findings of fact are adopted, unless [198]*198clearly erroneous. In re Rash, 90 F.3d 1036 (5th Cir.1996); In re Placid Oil, 988 F.2d 554, 557 (5th Cir.1993).

III. ANALYSIS OF THE CRP PAYMENTS

A. Choice of Law

In the absence of controlling federal law, state law controls the substantive nature of the security interests at issue in a bankruptcy claim. Matter of Haber Oil Co., Inc., 12 F.3d 426, 435 (5th Cir.1994) (citing In re Oxford Management, Inc., 4 F.3d 1329, 1334 (5th Cir.1993); Butner v. United States, 440 U.S. 48, 55, 99 S.Ct. 914, 918, 59 L.Ed.2d 136 (1979)). We find that the deed conveying the debtors’ land to CTHH controls the interests at issue in this bankruptcy case, and must be interpreted pursuant to Louisiana law.

At the same time, however, “federal law governs questions involving the rights of the United States arising under nationwide federal programs.” United States v. Kimbell Foods, Inc., 440 U.S. 715, 726, 99 S.Ct. 1448, 1457, 59 L.Ed.2d 711 (1979). See Bank of Am. Nat’l Trust and Sav. Ass’n v. Parnell, 352 U.S. 29, 34, 77 S.Ct. 119, 122, 1 L.Ed.2d 93 (1956) (“Federal law of course governs the interpretation of the nature of the rights and obligations created by the Government bonds themselves.”); Clearfield Trust v. United States, 318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838 (1943); Mafrige v. United States, 893 F.Supp. 691, 700 (S.D.Tex.1995) (“the construction of a deed to which the United States is a party is a question of federal law”). Where no federal legislation or regulation answers the precise legal question, a court must analyze whether federal or state law controls the interstitial lawmaking. Kimbell, 440 U.S. at 727, 99 S.Ct. at 1458 (“That the statutes authorizing these federal lending programs do not specify the appropriate rule of decision in no way limits the reach of federal law.”).

The CRP contract is a contract between the debtor and the Commodity Credit Corporation (“CCC”), 16 U.S.C.S. § 3841 (Law.Co-op.Supp.1996), a federally chartered corporation under the supervision of the United States Department of Agriculture. 15 U.S.C.S. § 714 et seq. (Law. Co-op.1984 & Supp.1996). Since such contracts involve the federal government directly, federal law governs the classification of the federal rights created by a CRP contract.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Bigsby v. Vogel
273 P.3d 284 (Court of Appeals of Oregon, 2012)
LaFargue v. United States
4 F. Supp. 2d 593 (E.D. Louisiana, 1998)
Cthh Enterprises v. Brunson D
137 F.3d 1349 (Fifth Circuit, 1998)

Cite This Page — Counsel Stack

Bluebook (online)
209 B.R. 196, 1997 U.S. Dist. LEXIS 6929, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cthh-enterprises-inc-v-brunson-in-re-havard-lawd-1997.