Michael Torres v. Jeffrey Krueger

596 F. App'x 319
CourtCourt of Appeals for the Fifth Circuit
DecidedMarch 3, 2015
Docket13-11165
StatusUnpublished
Cited by8 cases

This text of 596 F. App'x 319 (Michael Torres v. Jeffrey Krueger) 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
Michael Torres v. Jeffrey Krueger, 596 F. App'x 319 (5th Cir. 2015).

Opinion

PER CURIAM: *

Michael Torres appeals the district court’s dismissal of the claims of Cru En *320 ergy, Inc., an unrepresented corporation, and its denial of Torres’ motions to file derivative claims or as a substituted party for Cru in a bankruptcy action by Jeffrey Tre Krueger. Because the district court did not abuse its discretion, we AFFIRM.

FACTS AND PROCEDURAL HISTORY

Jeffrey Tre Krueger and Michael Torres co-founded Cru Energy, Inc., a renewable energy company, in 2010. In 2011, the parties became involved in a dispute over the ownership and management of Cru. Krueger sued Torres in state court for breach of fiduciary duty, fraud, conversion, and other theories of recovery. Torres counterclaimed with similar theories of recovery against Krueger. During the state court litigation, Torres sought and obtained a temporary restraining order and two temporary injunctions against Krueger. Krueger allegedly violated the temporary injunction by transferring funds from Cru’s bank account.

On January 18, 2012, prior to any contempt proceedings for violations of the injunction, Krueger filed a petition for Chapter 7 bankruptcy, resulting in an automatic stay. Cru filed a motion for relief from the automatic stay and the bankruptcy court lifted the stay to allow Cru to pursue contempt charges.

On July 17, 2012, Cru, along with other parties not involved in this appeal, filed an adversary proceeding objecting to Krueger’s discharge in bankruptcy under 11 U.S.C. §§ 523 and 727. The bankruptcy court later granted Krueger’s motion to withdraw reference and Cru’s complaint was transferred to the district court.

On September 6, 2012, Krueger was held in contempt in the state court proceedings. In December of 2012, Krueger was found to be in violation of the temporary injunction and sentenced to 125 days in jail. However, on May 16, 2013, the Court of Appeals of Texas granted Krueger habeas relief and voided the state court’s contempt order on the basis that the injunction violated the specificity requirements of Rule 683 of the Texas Rules of Civil Procedure. In re Krueger, No. 03-12-00838-CV, 2013 WL 2157765 (Tex. App. May 16, 2013). On May 31, 2013, Krueger held a Cru shareholders’ meeting, during which Torres was removed as director and Krueger was re-elected as a director. 1 In a later board meeting, Torres was removed as president of Cru and Krueger was elected chairman of the board, president, and chief executive officer of Cru. The board also voted to fire the attorneys who had represented Cru while it was under Torres’ control and to dismiss all of Cru’s claims against Krueger.

On July 31, 2013, the district court ordered Krueger, Torres and Cru to each file ■ “a document providing the court his or its comments and views” on the court’s proposed dismissal of all claims asserted by Cru based on the fact that Cru no longer had an attorney of record, unless an attorney entered an appearance on behalf of Cru. The district, court ordered the responses to be filed by 4 p.m. on August 7, 2013. Krueger filed a response to the court order. Neither Torres nor Cru responded as ordered. Instead, Torres filed a response to Krueger’s motion to dismiss *321 Torres’ untimely objection to Krueger’s discharge, a motion to extend time for filing objections to discharge, a motion to substitute himself for Cru, and a derivative motion for leave to intervene, on behalf of Cru.

On September 24, 2013, the district court entered an Order Dismissing Claims of Cru Energy, Inc., and Denying Motions and a final judgment. The court then denied Torres’ motions for substitution and to intervene.

On September 25, 2013, the district court entered an order which referred the motions it had denied, including Torres’ motions to substitute and intervene, back to the bankruptcy court and ordered that the motions were denied without prejudice to the refiling of any of the motions in the bankruptcy court. Thereafter, Torres filed this appeal.

Subsequently, the bankruptcy court granted Krueger’s motion to sell his shares of stock in Cru at an auction conducted by the Chapter 7 trustee. Thus, Krueger is no longer a shareholder. On May 6, 2014, on motion of Torres, the bankruptcy court ordered the dismissal of Krueger’s bankruptcy. Torres filed a motion to supplement the record in this appeal by including the bankruptcy opinion. The motion was granted, along with Torres’ motion for supplemental briefing on the impact of the bankruptcy opinion on this appeal.

STANDARD OF REVIEW

This court reviews a Federal Rule of Civil Procedure 41(b) dismissal for failure to prosecute or to comply with any court order for abuse of discretion. McCullough v. Lynaugh, 835 F.2d 1126, 1127 (5th Cir. 1988). Rule 41(b) dismissals will be affirmed only upon a showing of a clear record of delay or contumacious conduct and where lesser sanctions are not sufficient. Rogers v. Kroger Co., 669 F.2d 317, 320 (5th Cir.1982). This court has affirmed 41(b) dismissals where it has found one or more of the following aggravating factors: “(1) delay attributable directly to the plaintiff, rather than his attorney, (2) actual prejudice to the defendant; and (3) delay caused by intentional misconduct.” Callip v. Harris County Child Welfare Dep’t, 757 F.2d 1513, 1519 (5th Cir.1985). Additionally, this court looks at the degree of actual prejudice to the defendant from the plaintiffs failure to comply with a court order. Pardee v. Moses, 605 F.2d 865, 867 (5th Cir.1979).

DISCUSSION

Torres asserts that the district court abused its discretion in dismissing Cru’s claims under Rule 41(b) without considering the less stringent measures of allowing him to assert claims derivatively on behalf of Cru or as the substituted party for Cru.

There is.no dispute that Cru was not represented by counsel. This court has previously affirmed dismissals of claims or striking of pleadings of unrepresented corporations. See Donovan v. Road Rangers Country Junction, Inc., 736 F.2d 1004, 1005 (5th Cir.1984); K.M.A., Inc. v. Gen. Motors Acceptance Corp., 652 F.2d 398, 399 (5th Cir.1981).

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596 F. App'x 319, Counsel Stack Legal Research, https://law.counselstack.com/opinion/michael-torres-v-jeffrey-krueger-ca5-2015.