Timothy Biliouris v. David Patman

Case: 18-10355 Document: 00514824587 Page: 1 Date Filed: 02/06/2019

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit

FILED
February 6, 2019
No. 18-10355
Lyle W. Cayce
Clerk
TIMOTHY L. BILIOURIS, and as next friend of JADE N. BILIOURIS;
ANNE M. BULLOCK; BRIAN BULLOCK; ROBERT BULLOCK; RANDY
COUGH; et al.,

Plaintiffs–Appellants,

v.

DAVID CAINE PATMAN; DAVID “PAT” PATMAN; BEVERLY ANN
PATMAN,

Defendants–Appellees.

Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:16-CV-1461

Before ELROD, WILLETT, and DUNCAN, Circuit Judges.
PER CURIAM: *
Appellants contend the district court erred in dismissing their
fraudulent-conveyance suit as time-barred. The district court did not err. As
Appellants timely “could have known” of the conveyance and its alleged
fraudulence, they filed suit too late. We AFFIRM.

* 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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.
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No. 18-10355
I. BACKGROUND
Timothy L. Biliouris and several other plaintiffs sued David “Pat”
Patman and his brother Michael in 2007 in Texas state court and won a
judgment against them in 2010. 1 When Pat Patman could not pay the
judgment, the plaintiffs levied on Pat’s property and pursued further written
discovery. In 2015, the plaintiffs deposed Pat’s wife, Beverly Patman, who
testified that the Patmans had given their son, David Caine Patman, a parcel
of land worth $400,000. This transaction was recorded as a sale in Johnson
County’s property records.
Appellants then filed this case in 2016, alleging that the transfer was a
gift rather than a sale, and thus fraudulent under TUFTA. 2 Appellees
responded that the suit was time-barred under TUFTA’s four-year statute of
repose for fraudulent-transfer claims. 3 The district court agreed and dismissed
the case. Appellants argue that the district court ignored relevant Fifth Circuit
precedent stating that “a fraudulent-conveyance claim does not accrue until
the claimant knew or reasonably could have known both of the transfer and
that it was fraudulent in nature.” 4

II. STANDARD OF REVIEW
We review dismissals under Federal Rule of Civil Procedure 12(b)(6) de
novo. 5 “To survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is plausible on

1 Biliouris v. Sundance Res., Inc., No. 3:07-CV-1591-N, 2010 WL 11515689 (N.D. Tex.
Mar. 12, 2010).
2 Tex. Bus. & Comm. Code § 24.005(a)(1).
3 Tex. Bus. & Comm. Code § 24.010(a)(1).
4 Janvey v. Romero, 817 F.3d 184, 188 (5th Cir. 2016) (quoting Janvey v. Democratic

Senatorial Campaign Comm. (DSCC), 712 F.3d 185, 193 (5th Cir. 2013).
5 Smit v. SXSW Holdings, Inc., 903 F.3d 522, 527 (5th Cir. 2018).

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No. 18-10355
its face.” 6 We examine pleadings by viewing all well-pleaded facts in the light
most favorable to the plaintiff. 7
When reviewing a Rule 12(b)(6) motion to dismiss, the court may
examine the complaint, documents attached to the complaint, and documents
central to the plaintiff’s claims which are attached to the motion to dismiss and
to which the complaint refers. 8 Taking judicial notice of directly relevant public
records is proper on review of a Rule 12(b)(6) motion. 9 “A court may take
judicial notice of the record in prior related proceedings[.]” 10

III. DISCUSSION
TUFTA’s statute of repose reads, in relevant part:
[A] cause of action with respect to a fraudulent transfer or obligation
under this chapter is extinguished unless action is brought . . . under
Section 24.005(a)(1) of this code, within four years after the transfer was
made or the obligation was incurred, or, if later, within one year after
the transfer or obligation was or could reasonably have been discovered
by the claimant . . . . 11
The second portion of this statute, known as the “discovery rule,” defers accrual
of a § 24.005 cause of action until the claimant knows or could know by
reasonable diligence of the conveyance’s fraudulent nature. 12
Under Texas law, proper recording of an instrument of conveyance
“provides all persons, including the grantor, with notice of the deed’s
contents[.]” 13 This settled rule presumes that a person exercising reasonable

6 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
7 In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007).
8 Lone Star Fund V (U.S.), L.P. v. Barclays Bank P.L.C., 594 F.3d 383, 387 (5th Cir.

2010).
Funk v. Stryker Corp., 631 F.3d 777, 783 (5th Cir. 2011).
9

In re Missionary Baptist Found., Inc., 712 F.2d 206, 211 (5th Cir. 1983).
10
11 Tex. Bus. & Comm. Code § 24.010(a)(1).
12 Romero, 817 F.3d at 189; see also Zenner v. Lone Star Striping & Paving, 371 S.W.3d

311, 315 (Tex. App.—Houston [1st. Dist.] 2012, pet. denied).
13 Cosgrove v. Cade, 468 S.W.3d 32, 34 (Tex. 2015); see also Tex. Prop. Code § 13.002.

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No. 18-10355
diligence could discover the existence of a properly recorded deed the moment
it was recorded. Appellants did not exercise such diligence during the time
allotted under TUFTA’s statute of repose and thus did not actually discover
that the transfer occurred until 2015; however, they had constructive record
notice of the transfer’s existence as of April 3, 2008, when the warranty deed
was recorded.
Appellants argue that they could not have known the transfer at issue
was fraudulent in nature even if they could have known of the transfer’s
existence. 14 We have indeed made a relevant Erie guess “that the Texas
Supreme Court would conclude that . . . a fraudulent transfer claim must be
filed within one year after the fraudulent nature of the transfer is discovered
or reasonably could have been discovered.” 15 Appellants admit, however, that
the disputed transfer took place in 2008, “while [the underlying case] was
pending.” In fact, the district court record in the underlying case reflects that
Appellants deposed Appellee Pat Patman on July 3, 2008—three months after
the warranty deed was filed in the Johnson County property records. 16 Thus,
Appellants could have known of the transaction’s fraudulence by July 2008
because they had (1) proper notice of its existence as of April 2008; and (2) an
opportunity to discover its fraudulent nature during the July 2008 deposition
of one of the transaction’s participants.
Moreover, in our Janvey line of cases, the appointed receiver was faced
with a sophisticated, extensive, worldwide Ponzi scheme, and thus the point
where the discovery rule activated was harder to suss out. 17 But here,

14 Romero, 817 F.3d at 188 (quoting DSCC, 712 F.3d at 193).
15 DSCC, 712 F.3d at 195.
16 Biliouris, No. 3:07-CV-1591-N, Dkt. No. 131-5 (N.D. Tex. July 14, 2008).
17 Romero, 817 F.3d at 189-91.

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No. 18-10355
Appellants had the resources and opportunity to discern the fraudulent nature
of this single transaction when it was recorded.

IV. CONCLUSION
TUFTA’s statute of repose bars Appellants’ tardy suit. We AFFIRM the
district court’s judgment.

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