Reeves v. Vaughn ( 2000 )

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 00-10066
Summary Calendar
Civil Action No. 5:99-CV-297-C
In The Matter of: TRUETT DAVID REEVES
Debtor.
-------------------------------------------------
TRUETT DAVID REEVES,
Appellant,
v.
JULIA E. VAUGHN; WALTER STEELE; ALBERT WITCHER; and
BRUCE WYATT,
Appellees.
Appeal from the United States District Court for the
Northern District of Texas
June 23, 2000
Before JOLLY, JONES, and BENAVIDES, Circuit Judges.
PER CURIAM:*
Truett David Reeves (“Reeves”) appeals the dismissal of
his suit seeking injunctive relief against the Appellees, who are
all members of the Board of Law Examiners (“BLE”) for the State of
Texas. Reeves relies on Ex parte Young to argue that the Appellees
*
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opinion should not be published and is not precedent except under the limited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.
lost their 11th Amendment immunity from suit by violating the anti-
discrimination and automatic stay provisions of the Bankruptcy
Code, 11 U.S.C. §§ 525(a) and 362(a), in the course of denying his
application for a law license. Having carefully reviewed the
briefs and record, this court finds that Reeves has failed to show
an ongoing violation of federal law as required by Ex parte Young.
This court, therefore, affirms the dismissal of Reeves’s claim on
11th Amendment grounds.
Reeves, a former attorney in the state of Nevada, is an
unsuccessful applicant for a Texas law license. Although Reeves
passed the February 1999 Texas Bar Examination, Reeves was required
to attend a BLE hearing to determine whether he possessed the
present good moral character required to be licensed to practice
law in Texas. See Tex. Gov’t Code Ann. § 82.004(c) (Vernon 1998).
During the hearing, the Appellees questioned Reeves about: (1) his
admission that he had engaged in the unauthorized practice of law
without a license in Texas; (2) his failure to maintain a separate
account for client trust funds while an attorney in Nevada; and (3)
his credit, debt, and tax histories. Reeves objected to these
lines of questioning. According to Reeves, since he had previously
filed a Chapter 13 bankruptcy petition, any inquiry into his past
financial problems was precluded by the anti-discrimination and
2
automatic stay provisions of the Bankruptcy Code.1 The panel
denied Reeves’s application without prejudice to his right to
reapply for a license after one year.
Instead of appealing the panel’s decision to the state
district court,2 Reeves filed suit in bankruptcy court seeking to
enjoin the Appellees from considering the evidence offered at the
hearing. The bankruptcy court dismissed the suit on Eleventh
Amendment grounds. On appeal, the district court affirmed, holding
that Ex parte Young did not support injunctive relief in the
present case because Reeves failed to show that there was an
ongoing violation of federal law that the court could enjoin.
Suits seeking declaratory or injunctive relief against
state officials are not automatically barred. See Ex parte Young,
209 U.S. 123, 28 S.Ct. 441 (1908). A state official is not
entitled to the Eleventh Amendment protection afforded the
sovereign when an individual seeks an injunction “in order to
remedy a state officer’s ongoing violation of federal law.”
Seminole Tribe, 517 U.S. 44, 73, n.16, 116 S.Ct. 1114, 1132 n.16
1
The district court held that Reeves had waived his automatic stay
argument under § 362(a) by failing to brief the issue. Reeves once again raises
the § 362(a) issue on appeal but does not explain how the Appellees violated that
provision beyond saying that “it is the position of the Appellant that the
aforesaid penalty constitutes a violation of § 362(a)(3), and that the exception
contained in 11 U.S.C. § 362(b)(4) is not applicable.” The issue is, therefore,
waived. See United States v. Beaumont, 972 F.2d 553, 563 (5th Cir. 1992)
(“Failure of an appellant to properly argue or present issues in an appellate
brief renders those issues abandoned.”).
2
Rule 15(j) of the Texas Rules governing Admission to the Bar permits
applicants to obtain judicial review of the BLE’s decisions by appealing to the
district courts of Travis County, Texas.
3
(1996)(citing Ex parte Young, 209 U.S. 123 (1908)); see also Idaho
v. Coeur d’Alene Tribe of Idaho, 521 U.S. 261, 269-70, 117 S.Ct.
2028, 2034-35 (1997).
In order to make his case fit within Ex parte Young,
Reeves contends that the Appellees are violating 11 U.S.C. §
525(a), which prohibits governmental agencies from discriminating
against debtors in bankruptcy “solely because” a debtor is
insolvent, has failed to pay a dischargeable debt, or has filed
bankruptcy.3 In order to show a violation of § 525(a), Reeves must
show that the alleged discrimination was caused exclusively by the
plaintiff’s status as a debtor: “Only discrimination based solely
upon the debtor’s status is precluded.” Exquisito Servs. Inc. v.
United States (In re Exquisito Servs.), 823 F.2d 151, 153 (5th Cir.
1987). The prohibition against discrimination “‘does not extend so
far as to prohibit examination of the factors surrounding the
bankruptcy, the imposition of financial responsibility rules if
they are not imposed only on former bankrupts, or the examination
of prospective financial condition or managerial ability.’” Id. at
154 (citation omitted). Provided that the governmental agency has
a reason for denying a license other than the debtor’s status, §
525(a) does not prevent the agency’s considering other factors
3
Section 525(a) states in relevant part: “[A] governmental unit may
not deny, revoke, suspend or refuse to renew a license, permit, charter,
franchise, or other similar grant to ... [or] discriminate with respect to such
a grant against ... a person that is or has been a debtor under this title ...
solely because such bankrupt or debtor is or has been a debtor under this title
..., has been insolvent ..., or has not paid a debt that is dischargeable in the
case under this title....”
4
surrounding an applicant’s bankruptcy or financial condition.4
In the present case, the BLE panel clearly had a
permissible, non-bankruptcy related reason for denying Reeves’s
application -- Reeves’s admission that he practiced law without a
license. The panel’s Order focuses exclusively on this admission
and makes no reference to Reeves’s status as a debtor in
bankruptcy. At the hearing, the panel questioned Reeves about his
handling of client trust funds while practicing law in Nevada as
well as his financial history and future financial responsibility.
But, under Exquisito, the panel is permitted to examine “the
factors surrounding the bankruptcy” as well as Reeves’s
“prospective financial condition or managerial ability.” Id.
Reeves’s failure to establish a trust account relates directly to
his fitness to practice law in Texas; furthermore, the potential
claims of an out-of-state bar association against Reeves shed light
on his future financial condition.
Since Reeves has failed to show that the Appellees
violated § 525(a) (yet alone establish an ongoing violation as
4
See also Laracuente v. Chase Manhattan Bank, 891 F.2d 17 (1st Cir.
1989)(to recover under § 525, debtor had to show her bankruptcy status was the
sole reason for her termination; bank had reasons for discharging the debtor
other than her bankruptcy status); Duffey v. Dollison, 734 F.2d 265, 273 (6th
Cir. 1984)(recognizing that § 525 does not prevent governmental agencies from
considering factors surrounding the bankruptcy as long as the agency does not
differentiate between debtor and non-debtor); Housing Authority v. James (In re
James), 198 B.R. 886, 888 (Bankr. E.D. Pa. 1996)(“It is not enough to show that
[the debtor’s] bankruptcy filing played a ‘substantial role.’ Section 525(a) is
not violated, even if one of the grounds enumerated therein is present, so long
as the governmental unit also has a bona fide reason other than those enumerated
therein for taking action against the debtor.”).
5
required by Seminole Tribe), Reeves cannot use Ex parte Young to
get around the Appellees’ Eleventh Amendment immunity. This court,
therefore, affirms the dismissal of Reeves’s claim.
AFFIRMED.
6