900 Captl Svcs Inc v. Cloud ( 2000 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 99-51109
Summary Calender
_____________________
In The Matter Of: JOHN THOMAS CLOUD
Debtor
-------------------------------------------------------
900 CAPITAL SERVICES, INC
Appellant
v.
JOHN THOMAS CLOUD
Appellee
_________________________________________________________________
Appeal from the United States District Court
for the Western District of Texas
No. A-99-CV-557-JN
_________________________________________________________________
May 4, 2000
Before KING, Chief Judge, and WIENER and BARKSDALE, Circuit
Judges.
PER CURIAM:*
Appellant 900 Capital Services, Inc. appeals from the
district court’s judgment affirming the bankruptcy court’s
dismissal of its proof of claim against Debtor-Appellee John
Cloud. 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this opinion should not be published and is not precedent except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.
I.
Appellant 900 Capital Services (“Capital”) originally filed
a proof of claim in Cloud’s Chapter 11 bankruptcy proceedings
seeking $1,482,028.88 in damages, as well as an order forcing
Cloud to return stock and real property allegedly under his
control to Thousand Adventures, Inc. (“TAI”) and its
subsidiaries. Capital is a finance company that had loaned money
to TAI and its subsidiaries.1 When TAI and its subsidiaries
defaulted, Capital actively pursued collection by obtaining a
$1,028,265.01 judgment against TAI and David Vopnford (one of
TAI’s principals), in the United States District Court for the
Central District of California. It also filed claims in at least
two Chapter 7 bankruptcy proceedings pending against TAI
subsidiaries -- Thousand Adventures of Florida and Thousand
Adventures of Kansas.2
Capital’s proof of claim against Cloud alleged that he had
engaged in fraud, conversion, fraudulent transfer, and conspiracy
by shifting assets belonging to TAI and its subsidiaries to
companies controlled by Cloud, after TAI and its subsidiaries
were insolvent. Specifically, Capital alleges that: (1) TAI
transferred, without consideration, all the stock of its
1
At a hearing before the bankruptcy court, Capital
admitted that, although it loaned money to TAI and a number of
its subsidiaries, it was only pursuing its claim on the basis of
money loaned to the subsidiaries.
2
Capital does not state, and it is not clear from the
record, whether it filed a claim in the Chapter 7 proceedings
against TAI.
2
subsidiaries to RV Holdings, Inc. (“RVHI”)3; (2) that Cloud,
Vopnford, and others set up a company known as Travel America,
Inc.,4 which collects funds due to TAI, thus diverting those
funds from TAI and its subsidiaries; and (3) that Cloud and
Vopnford caused real property belonging to TAI to be transferred
to Travel America and a company known as Buffalo Mortgage
Corporation (“Buffalo”). Capital claims that Cloud is an officer
and director of RVHI, Travel America (Delaware), Travel America
(Texas), and Buffalo, and that he is a 19% equity owner of Travel
America (Texas). Capital does not allege, and the record does
not indicate, that Cloud is an officer, director, or owner of TAI
or any of its subsidiaries.
Cloud objected to Capital’s proof of claim. The bankruptcy
court viewed Cloud’s objection as a motion to dismiss for failure
to state a claim pursuant to Federal Rule of Civil Procedure
12(b)(6). Finding that Capital failed to state a valid claim
against Cloud, the bankruptcy court dismissed Capital’s proof of
claim. Capital then appealed to the district court, which
affirmed without comment. Capital now appeals to this court.
II.
The bankruptcy court dismissed Capital’s proof of claim
3
Prior to the transfer, the stock of TAI’s subsidiaries
was 100% owned by TAI.
4
Capital contends that Vopnford and Cloud actually
established two Travel America corporations – one in Texas
(“Travel America (Texas)”) and another in Delaware (“Travel
America (Delaware)”).
3
under Federal Rule of Civil Procedure 12(b)(6) for failure to
state a claim. Therefore, we review the court’s decision to
dismiss de novo. See Lowrey v. Texas A & M Univ. Sys., 117 F.3d
242, 246 (5th Cir. 1997). Capital’s proof of claim must be
construed in its favor, with all the facts pleaded taken as true.
See Campbell v. Wells Fargo Bank, N.A., 781 F.2d 440, 442 (5th
Cir. 1986). While motions to dismiss pursuant to Rule 12(b)(6)
are generally looked upon with disfavor, a court may grant such a
motion if “it appears beyond doubt that the plaintiff can prove
no set of facts in support of his claim which would entitle him
to relief.” Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
On appeal, Capital presents three issue for review. First,
it argues that the bankruptcy court erred in applying Rule
12(b)(6) to a proof of claim. Second, Capital contends that its
proof of claim was presumptively valid and therefore the
bankruptcy court erred in dismissing the claim without first
requiring Cloud to come forward with evidence rebutting the
allegations. Lastly, it claims that the lower courts erred in
finding that it failed to state a valid claim against Cloud.
A. Application of Federal Rule of Civil Procedure 12(b)(6) and
the Burden of Proof
Capital contends that the bankruptcy court erred in applying
the same rules of pleading that govern general civil proceedings
to a proof of claim in a bankruptcy action. We find that the
bankruptcy court did not err in applying Federal Rule of Civil
4
Procedure 12(b)(6) to this matter.
By filing an objection to Capital’s proof of claim, Cloud
created a contested matter. See Fed. R. Bankr. 3007 advisory
committee’s note. Federal Rule of Bankruptcy 9014 governs
contested matters. Although Rule 9014 does not explicitly
provide for the application of Federal Rule of Bankruptcy 7012
(which wholly incorporates Federal Rule of Civil Procedure 12(b)-
(h)), Rule 9014 does state that a bankruptcy court “may at any
stage in a particular matter direct that one or more of the other
Rules in Part VII shall apply.”
The bankruptcy judge specifically noted that he would view
Cloud’s objection to the proof of claim as a motion to dismiss
pursuant to Rule 12(b)(6). By applying Rule 12(b)(6), the
bankruptcy judge was exercising his power under Rule 9014 to
apply “one or more of the Rules in Part VII.” In this case, that
rule was Federal Rule of Bankruptcy 7012. As such, the
bankruptcy court was well within its discretion to apply Rule
12(b)(6) to this contested matter.
The applicability of Rule 12(b)(6) resolves Capital’s
contention that the bankruptcy court erred in not presuming that
the proof of claim was valid and requiring Cloud to submit proof
rebutting that presumption. In accordance with Rule 12(b)(6),
the bankruptcy court presumed that all of the facts in Capital’s
proof of claim were true. See Campbell, 781 F.2d at 442. Given
that the facts as pleaded by Capital were presumptively true,
there was no need for Cloud to present evidence or rebut the
5
allegations. The bankruptcy court needed only resolve the legal
question of whether, taking all of the allegations as true,
Capital’s proof of claim stated any valid claims against Cloud.
See Beanal v. Freeport-McMoran, Inc., 197 F.3d 161, 164 (5th Cir.
1999) (citations omitted). The court determined that it did not.
B. Does Capital State a Valid Claim Against Cloud?
Cloud claims that Capital cannot state a claim against him
individually because all the complained of actions were taken
pursuant to his role as a corporate officer of RVHI, Buffalo, or
the Travel Americas. In Texas, as in other states, a corporate
officer may generally not be held individually liable for actions
taken on behalf of the corporation. See Powell Indus., Inc. v.
Allen, 985 S.W.2d 455, 457 (Tex. 1998). Cloud maintains that
Capital has failed to allege sufficient facts to “pierce the
corporate veil” and hold him individually accountable for actions
taken as a corporate officer.
Capital does not refute Cloud’s contention that it has
failed to submit facts sufficient to “pierce the corporate veil.”
Rather, it argues that it is seeking to hold Cloud individually
liable as an officer of a corporation who knowingly participated
in a tortious act. Texas has long held that a corporate agent
“who knowingly participates in tortious or fraudulent acts may be
held individually liable to third persons even though he
performed the act as an agent for the corporation.” Grierson v.
Parker Energy Partners, 737 S.W.2d 375, 377 (Tex.App. 1987, no
6
writ); see also Kinkler v. Jurica, 19 S.W. 359, 360 (Tex. 1892).
“It is not necessary that the ‘corporate veil’ be pierced in
order to impose personal liability, as long as it is shown that
the corporate officer knowingly participated in the wrongdoing.”
Barclay v. Johnson, 686 S.W.2d 334, 337 (Tex.App. 1985, no writ)
(citations omitted).
Even accepting Capital’s assertion that it is seeking to
hold Cloud liable as a tortfeasor, we nonetheless find that it
has failed to state a valid claim. On appeal, Capital focuses on
three discrete events as giving rise to its claims: (1) the
transfer, without consideration, of all of TAI’s subsidiaries’
stock from TAI to RVHI; (2) the transfer of real property owned
by TAI’s subsidiaries to Travel America and Buffalo; and (3) the
alleged redirection of money due to TAI to Travel America.5
We agree with the bankruptcy court that, viewing the
pleadings as a whole, Capital cannot state a cause of action
against Cloud. Any claim that Cloud or RVHI converted TAI’s
property or defrauded TAI and its creditors by taking transfer of
the subsidiaries’ stock without consideration is a claim owned by
TAI’s estate, and must be brought by TAI’s trustee, not a
creditor of TAI’s subsidiaries. Similarly, any claim that Cloud
or Travel America converted TAI’s assets by illicitly collecting
money due to TAI is also a claim properly brought by TAI’s
5
Capital does not specify whether the alleged recipient of
the funds was Travel America (Texas) or Travel America
(Delaware). Nor does it specify which Travel America allegedly
received the real property transferred from TAI’s subsidiaries.
7
trustee.6
Capital also fails to state a claim against Cloud based on
the transfer of real property belonging to TAI’s subsidiaries.
As the bankruptcy court noted, Capital’s allegations essentially
contend that Vopnford and Cloud caused TAI’s subsidiaries to
transfer real property. There is, however, no allegation that
Cloud was a transferee of this property. Rather, the allegation
is that the real property was transferred to Travel America and
Buffalo. To the extent that any property was transferred out of
an insolvent TAI subsidiary, a creditor may chase that property
and seek an avoidance of the transaction. See Tex. Bus. & Com.
Code Ann. § 24.008(a) (West 1987); In re Mortgageamerica Corp.,
714 F.2d 1266, 1272 (5th Cir. 1983). Such a claim, however, is a
claim that must be pursued against the transferee, not Cloud
individually. See Tex. Bus. & Com. Code Ann. § 24.009(b)(1)-(2)
(West 2000) (stating that a judgment under the Texas Fraudulent
Transfer Act may be entered against the first transferee or any
subsequent transferee who did not take the property in good faith
and for fair value); In re Mortgageamerica Corp., 714 F.2d at
1272 (holding that the remedy provided by the Texas Fraudulent
Transfer Act “relates entirely to the debtor’s fraudulently
transferred property and entails no personal liability on the
6
The record on appeal contains an agreed order between
Cloud and TAI’s trustee disallowing and denying the trustee’s
claims against Cloud.
8
part of those responsible for the transfer”).7
III.
Even read in the broadest possible light and taking all of
the allegations as true, Capital’s proof of claim fails to allege
a cause of action against Cloud as an individual. The events
complained of are either not properly brought by Capital, or not
properly brought against Cloud. Therefore, we find that the
bankruptcy court did not err in dismissing Capital’s proof of
claim for failure to state a claim. AFFIRMED.
7
Similarly, to the extent that Capital’s claim regarding
the transfer of the subsidiaries’ stock to RVHI is based upon the
Texas Fraudulent Transfer act, it fails to state a claim against
Cloud individually.
9