Manges v. Atlas

UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT

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Nos. 95-40582 & 95-40584
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In The Matter Of: DUVAL COUNTY
RANCH C

Debtors

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HELEN RUTH MANGES,

Appellant,

versus

MORRIS ATLAS; THE MANGES LIQUIDATING
TRUST,

Appellees.

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Appeal from the United States District Court
For the Southern District of Texas
(C-94-CV-325 & C-94-CV-326)
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April 12, 1996
Before WISDOM, EMILIO M. GARZA, and PARKER, Circuit Judges.

PER CURIAM:*

Helen Ruth Manges ("Manges"), wife of Clinton Manges, filed

suit against her lawyer Morris Atlas in Texas state court, alleging

that Atlas had defrauded her out of "properties and royalties"

located in Duval County, Texas. Manges sought the recovery of

*
Pursuant to Local Rule 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opinion should not be published and is not precedent except under the limited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 Local Rule 47.5.4.
these interests. These properties and royalties, however, were the

subject of an ongoing bankruptcy proceeding. Atlas had the Manges

suit removed to the bankruptcy court, where a similar adversary

proceeding, brought by the Manges Liquidating Trust ("Liquidating

Trust"),2 was pending against Atlas. Manges filed a motion to

abstain and remand her suit to state court. Atlas filed a motion

to consolidate the two adversary proceedings, and the Liquidating

Trust, arguing that it had all rights to the property Manges sought

from Atlas, filed a motion to substitute itself as plaintiff in the

Manges suit. The Atlas and Liquidating Trust motions went

unopposed, and the bankruptcy court granted them. The bankruptcy

court then denied Manges's motion to abstain and remand her case

back to state court. Manges then filed motions to reconsider the

granting of Atlas's motion to consolidate and the Liquidating

Trust's motion to substitute. The bankruptcy court denied both

these motions.

On appeal to the district court, the district court affirmed

the bankruptcy court's order denying Manges's motion to abstain and

remand her case to state court. The district court determined that

Manges's suit should not be remanded because she sought to recover

assets which belonged to the Liquidating Trust. The Liquidating

Trust then moved to have Manges's remaining appeals dismissed as

moot. The Liquidating Trust argued that, because the district

court had determined that the relief sought by Manges involved

2
The Manges Liquidating Trust was created by the plan of
reorganization, and confirmed by the bankruptcy court, to administer the assets
of the Manges bankruptcy.

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assets owned by the Trust, the bankruptcy court acted properly in

consolidating the two adversary proceedings, and substituting the

Liquidating Trust as plaintiff in Manges's suit. Manges again

filed no response, and the learned district court judge granted the

unopposed motion to dismiss Manges's appeals as moot.3 Manges then

filed a motion to reconsider, which the district court denied.

Manges appeals the district court's order granting the Liquidating

Trust's unopposed motion to dismiss as moot Manges's appeal of the

bankruptcy court's denial of her motion to reconsider its ruling

consolidating the two adversary proceedings, and substituting the

Liquidating Trust as plaintiff in Manges's suit.

We review the bankruptcy court's findings of fact, affirmed by

the district court, for clear error. HECI Exploration Co., Inc. v.

Holloway, 862 F.2d 513, 518 (5th Cir. 1988). We review the

district court's conclusions of law de novo. Id. Where the

disputed holding involves the district court's exercise of

discretion, we will affirm unless the district court abused its

discretion. Id. Having carefully reviewed the record in this

case, we find the district court did not err in dismissing as moot

Manges's appeals of the bankruptcy court's decision to consolidate

the two adversary proceedings and substitute Liquidating Trust as

plaintiff in Manges's suit. The record shows that Manges's

original complaint sought recovery of assets properly belonging to

3
The district court's decision that the remaining Manges appeals were
moot was further supported by the fact that, one day earlier, Liquidating Trust
and Atlas had entered a settlement of their claims in the adversary proceedings.
This settlement effectively ended the controversy over the assets at issue in
Manges's suit. Manges filed no motion in opposition to this settlement.

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the Liquidating Trust. Although she later amended her complaint to

include psychic damages, her complaint still reflects her desire to

obtain assets to which she has no right.4 Manges's claims were

thus properly removed to the bankruptcy court, and the district

court did not err in affirming the bankruptcy court's decision not

to abstain and remand Manges's case. In light of the relevant case

law, and Manges's continual failure to timely respond to motions

filed in both the bankruptcy court and the district court, we hold

that the district court did not abuse its discretion in refusing to

reconsider its order properly granting Liquidating Trust's

unopposed motion to dismiss Manges's appeals as moot.

Accordingly, we AFFIRM the district court's disposition.

However, we REMAND the case to the district court to issue a show

cause order and to conduct a hearing to determine why Manges and

her attorneys should not be assessed, in the amount the district

court determines, sanctions, costs, and attorneys' fees in this

case.

4
We note that because Manges has no legal right to seek recovery of
these assets, she has no right to have her claim to these assets tried before a
jury.

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