Snook v. Jan v. Popiel, Inc.

168 F. App'x 577
CourtCourt of Appeals for the Fifth Circuit
DecidedFebruary 22, 2006
Docket05-20583
StatusUnpublished
Cited by6 cases

This text of 168 F. App'x 577 (Snook v. Jan v. Popiel, Inc.) 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
Snook v. Jan v. Popiel, Inc., 168 F. App'x 577 (5th Cir. 2006).

Opinion

PER CURIAM: *

In this bankruptcy action, debtor Orin Snook appeals the findings of the bankruptcy court and the district court that a particular debt was not dischargeable in bankruptcy. We affirm.

I. FACTS AND PROCEEDINGS

Snook and Jan V. Popiel, Inc. (“Popiel”) entered into a construction contract in which Popiel agreed to work on Snook’s residence. Complications ensued and the two parties sought relief in Texas state courts. At the conclusion of the trial, the jury found in favor of Popiel and awarded damages as follows: $1731 for fraud; $8631.50 for breach of contract; and $4852.37 for quantum meruit. The jury charge set out a separate question for each type of damage alleged and an additional question on attorney fees, without apportionment by claim. None of the individual damages inquiries included an award for attorney fees. In response to the separate attorney fees question, the jury determined that “the reasonable fee for the necessary services of Popiel, Inc.’s attorneys” amounted to $108,000. 1 Snook did not appeal the judgment.

Subsequently, Orin and Angela Snook filed for bankruptcy protection under chapter 7. Popiel initiated an adversary proceeding as a creditor to except portions of Snook’s debt from discharge under 11 U.S.C. § 523. The bankruptcy court determined that the $1731 award for fraud and the $108,000 award for attorney fees were both non-dischargeable debts. 2 On the limited question of whether the attorney fees were dischargeable, Snook appealed the bankruptcy court’s order to the district court. The district court dismissed the appeal with prejudice; Snook now appeals to this court. On appeal, Snook advances the same argument that both the bankruptcy court and the district court rejected.

II. STANDARD OF REVIEW

This court reviews the district court’s dismissal of an appeal from the bankruptcy court under the same standards the district court applies to the bankruptcy court. I.G. Petroleum, L.L.C., v. Fenasci (In re West Delta Oil Co.), 432 F.3d 347, 354 (5th Cir.2005). Findings of fact are reviewed for clear error and conclusions of law are reviewed de novo. Id. (citing Daniels v. Barron (In re Barron), 325 F.3d 690, 692 (5th Cir.2003)).

III. DISCUSSION

A chapter 7 bankruptcy proceeding “does not discharge an individual debtor from any debt ... for money, property, services ... to the extent obtained by ... false pretenses, a false representation, or actual fraud.” 11 U.S.C. § 523(a)(2)(A). The Supreme Court has read this provision as exempting from discharge all debts arising out of the underlying fraud. Cohen v. de la Cruz, 523 U.S. 213, 218, 118 S.Ct. 1212, 140 L.Ed.2d 341 (1998) (“Once it is established that specific money or property has been obtained by fraud, however, ‘any debt’ arising therefrom is excepted from discharge.”). See also Archer *579 v. Warner, 588 U.S. 314, 321, 123 S.Ct. 1462, 155 L.Ed.2d 454 (2003) (“The dischargeability provision applies to all debts that ‘aris[e] out of fraud.”) (quoting Brown v. Felsen, 442 U.S. 127, 138, 99 S.Ct. 2205, 60 L.Ed.2d 767 (1979)). This circuit has articulated the reach of § 523: “[T]he status of ancillary obligations such as attorney’s fees and interest depends on that of the primary debt. When the primary debt is nondischargeable ..., the attorney’s fees and interest accompanying compensatory damages, including post-judgment interest, are likewise nondischargeable.” Gober v. Terra + Corp. (In re Gober), 100 F.3d 1195, 1208 (5th Cir.1996). Under this regimen, if the attorney fees arose from Snook’s fraud, then that debt, like the fraud debt, is not dischargeable.

Snook concedes that his debt from the state court’s award of fraud damages is not dischargeable; nevertheless, he asks the court to discharge the award of attorney fees attendant to the state court judgment. Snook contends (1) that the jury award specifically excluded attorney fees from the fraud award, and (2) that, under Texas law, attorney fees are not recoverable for fraud claims. As a result, Snook’s theory continues, the attorney fees are not traceable to the fraud-based debt, and, therefore, not exempted from discharge under 11 U.S.C. § 523. We disagree and hold they are exempt from discharge.

Snook’s argument has two aspects. The first aspect of Snook’s argument is that the attorney fees were not traceable to the fraud award because of Popiel’s statements and the form of the jury charge. In Snook’s view, Popiel admitted the attorney fees were not traceable when Popiel argued to the bankruptcy court that “[t]he attorney’s fees that Popiel seeks to recover were awarded as attorney’s fees, separate and distinct from the fraud damages.” In context, it is clear that Popiel was simply describing the form of the jury charge and the manner in which the different awards were presented. The statement, viewed in context, is no admission that the award of attorney fees was limited to the breach of contract and quantum meruit claims. Indeed, Popiel was arguing quite the opposite in the brief Snook quotes.

With respect to the jury charge, none of the damages inquiries included attorney fees in the calculation, and, as such, the fact that the fraud damages question asked for the jury’s damages assessment “excluding reasonable attorneys fees, if any” is of no import. 3 What is important, and not discussed by Snook is that the jury charge question on attorney fees lacked any limitation. Rather, the jury was simply asked, “What is the reasonable fee for the necessary services of Popiel, Inc.’s attorneys in this case, in dollars and cents?” Reading the jury charge as a whole, it is clear that the jury itemized the damages awards by claim and, separately, reached an award of attorney fees for the case as a whole.

The second aspect of Snook’s argument is that the attorney fees could not be traceable to the fraud finding because, as a matter of Texas law, attorney fees are not recoverable for fraud actions in the absence of punitive damages. Whether Texas allows attorney fees for pure fraud *580 claims, a question we do not reach here, is irrelevant for these purposes.

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

Related

Cite This Page — Counsel Stack

Bluebook (online)
168 F. App'x 577, Counsel Stack Legal Research, https://law.counselstack.com/opinion/snook-v-jan-v-popiel-inc-ca5-2006.