Pender v. Texas NAPCO, Inc. (In re LaJet, Inc.)

150 B.R. 648, 1993 Bankr. LEXIS 1019
CourtDistrict Court, E.D. Louisiana
DecidedFebruary 5, 1993
DocketBankruptcy No. 87-01581; Adv. No. 91-1053-JAB
StatusPublished
Cited by2 cases

This text of 150 B.R. 648 (Pender v. Texas NAPCO, Inc. (In re LaJet, Inc.)) is published on Counsel Stack Legal Research, covering District Court, E.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pender v. Texas NAPCO, Inc. (In re LaJet, Inc.), 150 B.R. 648, 1993 Bankr. LEXIS 1019 (E.D. La. 1993).

Opinion

MEMORANDUM OPINION

JERRY A. BROWN, Bankruptcy Judge.

On September 21, 1992, this matter came before the Court as a hearing on the motion of defendant Robert A. Trevisani (“Trevisani”) for summary judgment and on cross-motion of Plaintiff/Intervenor, Department of Energy (“DOE”) for partial summary judgment. The last post-hearing memoranda was filed, and the matter was taken under advisement on October 9,1992. Considering the statements of counsel, the memoranda filed, the applicable law and the record in the case, the Court will enter an order granting Trevisani’s motion for summary judgment and denying the DOE’s motion for partial summary judgment.1

BACKGROUND

The complaints of both the Trustee and the DOE allege that Trevisani, a resident of Massachusetts, while acting as a director for LaJet, Inc., voted for a dividend, or assented to a distribution of assets in June 1983 in favor of LaJet’s parent corporation and sole stockholder, defendant Flare Energy Corporation (“Flare”). This action is allege to have rendered LaJet insolvent. Both the trustee’s complaint and the complaint in intervention allege: a) under Count III that Trevisani caused La-Jet to declare a dividend that was intended to hinder, delay or defraud creditors of LaJet in violation of sections 24.02(a)(1) or 24.04(a)(2) of the Texas Fraudulent Transfer Act (“TFTA”); b) under Count IV that Trevisani caused a dividend to be paid without fair consideration being received by LaJet while LaJet was insolvent under Section 24.03(a) of the TFTA, making the dividend voidable under Section 544(b) of the Bankruptcy Code; c) under Count V that Trevisani’s action as a former director violated articles 2.38, 2.40A(1) and 2.41 of the Texas Business Corporation Act (“TBCA”) in declaring or causing to be declared a dividend while LaJet was insolvent; and d) under Count VI that Trevisani breached his fiduciary duty to LaJet in declaring and causing to be paid the dividend while LaJet was insolvent.

The relevant dates are as follows:

June 29, 1983 Occurrence of conduct giving rise to claims of DOE and Trustee.
August 1984 LaJet transferred to D.D. Corporation.
April 10, 1987 Involuntary Chapter 7 bankruptcy petition filed.
August 31, 1987 Effective date of amendment to article 2.41 of TBCA providing two-year limitations period.
September 2, 1987 Case converted to Chapter 11 and Order for relief entered.
February 23, 1989 Trustee appointed.
March 1989 Date DOE and Trustee state they discovered claims.
April 8, 1989 Trustee files first adversary proceeding.
February 7, 1991 Case converted to Chapter 7.
February 22, 1991 Trustee files second adversary proceeding.
April 4, 1991 DOE moves to intervene in Trustee’s second adversary proceeding.

[652]*652On March 20, 1992, Trevisani filed a motion for summary judgment on all four counts. Trevisani asserts that he never conveyed or received any of the $5,000,-000.00 transferred to Flare; therefore, no claim exists for fraudulent conveyance under Texas law and Counts III and IV must be dismissed. Also, he contends that Counts V and VI have a two-year limitations period and are time barred both under the Code and Texas law, and that the counts are barred because the facts do not establish that Mr. Trevisani, as a director, voted any dividend.

Thereafter, the DOE filed a motion in opposition to Trevisani’s motion for summary judgment and in support of its cross-motion for partial summary judgment on Counts V and VI. The DOE contends that it is entitled to judgment on Counts V and VI as a matter of law; that Texas law provides a four-year statute of limitation for asserting claims; that the claims had not expired when the bankruptcy petition was filed; and that the claims are not barred because the Trustee and DOE filed complaints within four years of discovering the instant actions in early 1989. The DOE asserts that under the doctrine of adverse domination, the Texas limitations statutes are tolled while culpable directors control a corporation. As a consequence, the DOE asserts that it could not have discovered the instant claims until early 1989, and that the claims in Counts V and VI were therefore timely when filed in 1991. Alternatively, the DOE asserts that the second adversary proceeding, filed on February 22, 1991, amends and relates back to the first adversary proceeding filed April 8, 1989.

DOE also submits that the court should deny Trevisani’s motion for summary judgment, or in the alternative, stay its ruling on such motion until DOE has completed discovery on certain contentions raised by Trevisani in support of his motion.

Trevisani has responded that the Texas limitations statute, found in a 1987 amendment to article 2.41, is a “statute of repose” and that the DOE’s claims under the TBCA therefore expired in 1985 (two years after the transaction) or in 1989 (two years after enactment of the statute of repose). The DOE’s response is that article 2.41(3), as amended in 1987, is not a statute of repose and that such provision should not be retroactively applied to an action which occurred prior to the 1987 amendment. Trevisani contends that he is entitled to summary judgment on Counts V and VI because the alleged discovery by the DOE and the Trustee in March 1989 of the claims against Trevisani is irrelevant; that the 1987 amendment is a statute of repose, and that the DOE’s cause of action did not accrue until after the statute’s effective date thereby making the statute of repose applicable to the DOE’s cause of action.

SUMMARY JUDGMENT ON COUNTS III AND IV

Both the Trustee’s and DOE’s complaints make claims against Trevisani, in Count III under §§ 24.02(a)(1) and 24.04(a)(2) of the TFTA and in Count IV under § 24.03(a) of the TFTA.2 The complaints assert that on or about June 27, 1983, LaJet, through its new board of directors, declared a $5 million cash dividend in favor of its parent corporation and sole stockholder, defendant Flare Corporation; that at the time LaJet was insolvent and could not pay all of its creditors; that Trevisani was either an initial transferee for whose benefit the dividend was named or an immediate or mediate transferee of the initial transferee for whose benefit the dividend was made. Tre-visani asks for summary judgment in his favor on Counts III and IV on the grounds that he never conveyed or received any funds, either directly or indirectly, and thus no claim can exist for fraudulent conveyance under Texas law. The DOE, in its [653]*653memorandum in support of its cross motion for summary judgment, asserts that it requires discovery to respond to Trevisani’s claims that he did not convey or receive, directly or indirectly, any of the $5 million that was transferred from LaJet to Flare. Accordingly, it requests the Court to exercise its discretion under Rule 56(f) to stay any ruling on Trevisani’s motion until it has an opportunity to complete discovery on the contentions in question.

Summary judgment should be granted if the court determines that “there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P.

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Bluebook (online)
150 B.R. 648, 1993 Bankr. LEXIS 1019, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pender-v-texas-napco-inc-in-re-lajet-inc-laed-1993.