Jump v. McFarland

CourtDistrict Court, W.D. Louisiana
DecidedOctober 6, 2021
Docket5:01-cv-02039
StatusUnknown

This text of Jump v. McFarland (Jump v. McFarland) 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
Jump v. McFarland, (W.D. La. 2021).

Opinion

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF LOUISIANA SHREVEPORT DIVISION

DAVID L JUMP CIVIL ACTION NO. 01-cv-2039

VERSUS MAGISTRATE JUDGE HORNSBY

RORY S MCFARLAND ET AL

MEMORANDUM RULING Introduction This case is a dispute among parties with competing judgments and interests in an offshore mineral lease, OCS-310, and considerable revenues from it that have been deposited in the registry of the court. The case was previously assigned to Judge Stagg and then Chief Judge Hicks. The complexity of the case prevented a prior resolution, and the parties were unable to resolve their claims by mediation. The parties filed written consent to have the case decided by the undersigned magistrate judge, and the case was referred pursuant to 28 U.S.C. § 636(c). Before the court are multiple motions. Docs. 330, 332, 333, 334, 350 & 359. For the reasons that follow, Joslin’s Motion for Partial Summary Judgment (Doc. 330) will be granted, and the other motions will be denied. Relevant Facts In 1984, Rory S. McFarland pledged a $2.5 million note to the Bank of Commerce of Shreveport, Louisiana. McFarland secured the note with a mineral lease mortgage and an assignment of production from his interest in the mortgaged leasehold and mineral interests. The Bank of Commerce failed in 1986, and the FDIC took over the bank’s assets, including the pledged 1984 note, mortgage, and assignment. In August 1990, Bank One Equity Investment, Inc. obtained a judgment, “the Bank

One judgment,” against McFarland in Louisiana state court. Bank One recorded its judgment in various Louisiana parishes between March and August of 1991. (Bank One later released its mortgage, so its 1990 judgment is no longer at issue except as it relates to the history of the litigation.) On October 1, 1991, David L. Jump obtained a money judgment against McFarland,

“the Jump judgment,” in the Western District of Colorado for more than $5,000,000. Jump registered his judgment in the Western District of Louisiana on June 26, 1992, then he recorded the judgment in various Louisiana parishes. On October 31, 1991, the FDIC filed suit in the Western District of Louisiana, 91 CV 2351, to collect the debt owed by McFarland to the Bank of Commerce and enforce

the 1984 mortgage and assignment. Jump intervened and sought the proceeds from the mineral leases that had been paid into the court registry. Jump argued that the 1984 assignment to the Bank of Commerce did not encompass a specific offshore lease, OCS– 310, and that his earlier-recorded money judgment acted as a lien on OCS–310. In 1993, the district court ordered McFarland to pay the FDIC from the proceeds in

the court registry and recognized the FDIC’s 1984 mortgage as the first lien. The court also held that the 1984 assignment did not include OCS–310 and ordered McFarland to pay the proceeds of that lease to Jump and Bank One. The FDIC recorded its 1993 judgment for more than $1,733,000 in various Louisiana parishes. The Fifth Circuit affirmed the judgment in relevant part. Federal Deposit Ins. Corp. v. McFarland, 33 F.3d 532 (5th Cir. 1994). The FDIC reinscribed the 1984 McFarland mortgage and assignment in various

Louisiana parishes in July 1995 (more than ten years after it was executed). In 1997, the FDIC assigned the 1984 McFarland mortgage and assignment, as well as its 1993 judgment, to the Dennis Joslin Company (“Joslin”). Jump, in 1996, used his Colorado judgment to foreclose on McFarland’s royalty interest in the offshore lease, OCS–310. A marshal’s sale was held, and Jump purchased

the royalty interest in OCS–310 for $1,000. In 1997, Jump transferred the interest in OCS- 310 to American Milling, a company in which he was a principal. In 1998, Joslin filed a motion for issuance of a writ of execution and for foreclosure of the property that is subject to the 1984 mortgage and assignment. Joslin also sought distribution of the funds in the court registry that are attributable to McFarland’s interests

in the leases subject to the Joslin/FDIC mortgage and assignment. The district court issued the requested writ of execution and the U.S. Marshal for the Western District of Louisiana seized the property. The marshal advertised the sale of the property and set October 28, 1998 as the date of sale. In the days before the sale, Jump objected to Joslin’s actions. Jump argued that the

FDIC’s failure to reinscribe the 1984 mortgage and assignment within ten years of its execution resulted in a loss of ranking. Jump argued that the 1991 Jump judgment out of Colorado consequently had priority as to both the mineral interests and the proceeds deposited in the court registry. The court postponed the marshal’s sale. In June 1999, the court entered another judgment holding that Louisiana’s 10-year reinscription law required the FDIC to reinscribe the 1984 mortgage and assignment by November 30, 1994. The FDIC’s reinscription in 1995 was therefore untimely, depriving

its assignee, Joslin, of priority rank. The district court ranked the Bank One judgment first, the Jump judgment second, and the FDIC’s 1984 mortgage and assignment third. Joslin appealed that decision. The Fifth Circuit explained that the FDIC’s 1993 judgment did not implicitly end its continuing obligation to reinscribe the mortgage, and failure to reinscribe could deprive it of its lien. The Court rejected arguments that federal

law exempted the FDIC from the obligation to reinscribe, and it affirmed the district court, finding that “Louisiana reinscription law operates to strip the FDIC of priority lien status.” But the Fifth Circuit agreed with Joslin that the Jump judgment from Colorado was not “final” when Jump prematurely registered it in Louisiana. The Jump judgment issued by the Colorado court in 1991 did not dispose of all claims, was not certified under Rule

54(b)), and did not become truly final until the Colorado suit concluded in 1997. “Because the registration of the Jump judgment was premature, it could not prime the FDIC’s lien following the FDIC’s reinscription of the mortgage and assignment in 1995. Although registration of the 1997 judgment would assure Jump of a claim to McFarland’s assets, a resulting lien would remain subordinate to those held by Bank One and Joslin,

respectively.” F.D.I.C. v. McFarland, 243 F.3d 876, 892 (5th Cir. 2001) (McFarland II). This part of the litigation got underway later in 2001 when Joslin filed a third-party complaint to annul the marshal’s sale of OCS–310 to Jump. The complaint was originally filed as a miscellaneous action, 92 MC 25, but was then filed in this civil action, 01 CV 2039, Docs. 35 & 68. It argued that McFarland II held that Jump’s 1991 judicial lien on OCS–310 is invalid, and that therefore the FDIC/Joslin 1993 judgment against McFarland is the only valid lien on OCS–310. Joslin claimed that it is entitled to unravel the marshal’s

sale as well as disgorgement of any proceeds attributable to McFarland’s interest in OCS– 310 that had been previously distributed to Jump. Judge Stagg, in what the parties call the “2003 order,” granted Joslin’s motion for partial summary judgment and declared the 1996 marshal’s sale and deed to be nullities. In 2004, Judge Stagg issued another order (the “2004 order”) that directed the proceeds attributable to McFarland’s and Jump’s interests

in OCS–310 to be deposited in the registry of the court until further order. The 2004 order stated that Joslin “holds a valid mortgage and valid seizure of the runs and minerals of federal lease OCS-310,” that “David L.

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Related

Federal Deposit Insurance v. McFarland
33 F.3d 532 (Fifth Circuit, 1994)
Federal Deposit Insurance v. McFarland
243 F.3d 876 (Fifth Circuit, 2001)
David Jump v. Rory McFarland
596 F. App'x 256 (Fifth Circuit, 2014)

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Jump v. McFarland, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jump-v-mcfarland-lawd-2021.