IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-30494
BILLY R. VINING, TRUSTEE; JANET OCHS NORRIS;
JAMES ALLAN NORRIS, JR.; TOMMYE CONNER NORRIS;
and JOHN GRAHAM NORRIS, JR., M.D.,
Appellees,
versus
JOHNSON & PLACKE; DON H. JOHNSON;
ALLAN L. PLACKE,
Appellants.
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Appeal from the United States District Court
for the Western District of Louisiana
(96-CV-312)
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November 26, 1999
Before POLITZ, WIENER, and BENAVIDES, Circuit Judges.
PER CURIAM:*
This appeal arises from a bizarre and acrimonious fact
situation with which the parties hereto are all too familiar and
from which considerable litigation, both criminal and civil,
evolved. The instant appeal involves one aspect of bankruptcy
proceedings emanating from the real-life soap opera that provides
the historical background of this case. Specifically, Appellants
consist of a Monroe, Louisiana law firm and its two current
partners (collectively “Appellants”) who are judgment creditors of
*
Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
Appellee James Allan Norris, Jr., attorney at law (“Debtor”), the
debtor in the subject bankruptcy, who is also the non-discharged
judgment debtor and former partner of Appellants. Appellees Tommye
Conner Norris and John Graham Norris, Jr., M.D. (collectively
“First Mortgagees”) are, respectively, the now-deceased mother and
the cousin of the Debtor, to whom they loaned money and from whom
they accepted as collateral special mortgages on property of the
Debtor. The First Mortgagees’ special mortgages were obtained and
duly recorded before Appellants obtained and recorded their money
judgment against the Debtor and before they put Debtor into
involuntary bankruptcy.
Appellants have contended all along that the First Mortgagees
colluded with the Debtor to put his assets beyond the reach of his
creditors by participating with him in the mortgage transactions
referred to above, insisting that the mortgages and the first liens
they create on the property of the Debtor should be disallowed for
purposes of his bankruptcy, the result of which would be to make
Appellants’ judicial mortgages first in rank among encumbrances on
the properties of the Debtor that he mortgaged to the First
Mortgagees.
Specifically, the instant appeal arises from an adversary
proceeding that was instigated by Appellee Billy R. Vining, Trustee
(the “Trustee”) in the bankruptcy court for the Western District of
Louisiana against the First Mortgagees. The Trustee sought to have
the mortgages on the property of the Debtor voided as collusive.
The adversary proceeding was removed from the bankruptcy court to
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the district court when, because of a jury trial request, the
reference was withdrawn.
The district court conducted a full-blown, two-day jury trial
which the district court terminated and dismissed, after the case
had gone to the jury, on joint motion of the Trustee and the First
Mortgagees who reached a settlement and compromise of the issues
before the court: Perceiving the likelihood that the jury would
find the First Mortgagees credible and hold in their favor, the
Trustee advocated and the First Mortgagees accepted a settlement
proposal that would recognize the validity of the mortgages and
cause title to the mortgaged properties to be conveyed by the
Trustee to the First Mortgagees —— free and clear of all junior
encumbrances —— in satisfaction of their secured claims, in
consideration of payment of $205,000 by the First Mortgagees to the
Trustee for the benefit of the bankruptcy estate of Debtor and the
waiver of some $40,000 in fees and commissions by the Trustee,
which would be paid to Appellants. The court was prepared to
approve the settlement and compromise and authorize the sale but
Appellants objected. Before approving the settlement and
authorizing the sale, therefore, the district court conducted a
hearing on October 1, 1998, at which Appellants were ordered to
file their expert reports on the valuation of the subject
properties by or before November 13, 1998. The expert reports were
in fact submitted on December 11, 1998 and, according to the
district court, were given full consideration along with all other
evidence and pleadings. Concluding that, notwithstanding the
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opposition and expert evidence submitted by Appellants, the
proposed amicable disposition was fair and reasonable, the court
approved the compromise and settlement and authorized the sale on
the terms and conditions set forth in the settlement agreement.
Even though a result of the compromise and sale was to produce an
additional $205,000 for the estate of the Debtor, Appellants
remained dissatisfied, primarily because the subject properties
would be conveyed to the First Mortgagees free and clear of
Appellants’ judicial mortgage that resulted from the filing and
recording of their judgment against the Debtor. This would
eliminate the security of the Appellants in those properties. They
therefore sought a new trial, which the district court denied.
This appeal ensued.
The sole claim of reversible error advanced to this court by
Appellants is the purported failure of the district court to comply
with 11 U.S.C. § 363 before approving the sale of the subject
property free and clear of Appellants’ judicial mortgage. In
particular, Appellants contend that the district court violated 11
U.S.C. § 363(f) by authorizing the sale of the property under §
363(b) or (c) free and clear of Appellants’ encumbrance without
conducting a hearing to determine if one or more of subsections (1)
through (5) of § 363(f) applied.
After reviewing the record on appeal, and the facts and the
applicable law, and considering the arguments of the parties as set
forth in their respective appellate briefs, we are satisfied that
the district court committed no reversible error. Following the
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filing of Appellants’ opposition, the district court conducted a
hearing on October 1, 1998. Appellants requested and received a
continuance for the purpose of obtaining and submitting property
appraisals. After Appellants obtained and filed the expert reports
and appraisals, the court on November 20, 1998 held a status
conference. Only after conducting that conference and receiving
all pleadings and other filings of the parties did the court grant
the requested authority to settle the claims being litigated and
allow the Trustee to sell the properties free and clear of all
inferior encumbrances. Again, from the record and from the court’s
Memorandum Ruling and Order on April 9, 1999, it is clear that, in
letter and in spirit, the district court complied with 11 U.S.C. §
363(f). It is equally clear that the court seriously considered
all facts, including expert reports, and all legal arguments of the
parties, after which it concluded, “[e]ven accepting [Appellants’]
evaluation of the assets...the compromise was fair and equitable.”
The court even expressed that the series of hearings and
considerations it had conducted constituted compliance with 11
U.S.C. § 363 —— and we agree. The court committed no legal error;
its findings of fact were not clearly erroneous; and it did not
abuse its discretion in concluding that the compromise as a whole
and the particular aspect of that compromise that provides for the
sale of the encumbered properties free and clear of Appellants’
judicial mortgage is fair and equitable and in the best interest of
the estate and its creditors. The rulings of the district court,
therefore, are affirmed in all respects.
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AFFIRMED.
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