Amberson v. McAllen ( 2023 )

Case: 22-50788 Document: 00516818077 Page: 1 Date Filed: 07/12/2023
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
____________ FILED
July 12, 2023
No. 22-50788 Lyle W. Cayce
____________ Clerk
In the Matter of Jon Christian Amberson,
Debtor,
Jon Christian Amberson,
Appellant,
versus
James Argyle McAllen; El Rucio Land and Cattle
Company, Incorporated; San Juanito Land Partnership,
Limited; McAllen Trust Partnership, Limited,
Appellees.
______________________________
Appeal from the United States District Court
for the Western District of Texas
USDC No. 5:21-CV-496
______________________________
Before Graves, Higginson, and Douglas, Circuit Judges.
Stephen A. Higginson, Circuit Judge:
In 2020, Appellee James McAllen won a multi-million-dollar arbitra-
tion award (the “Award”) against his former attorney and son-in-law, Ap-
pellant Jon Amberson. Amberson soon filed for bankruptcy and sought to dis-
charge the amounts awarded against him. McAllen objected under 11 U.S.C.
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No. 22-50788
§ 523(a) (“Exceptions to Discharge”) and sought summary judgment, argu-
ing that (i) the Award is entitled to preclusive effect based on the doctrine of
collateral estoppel and (ii) the Award found that all the elements of § 523(a)
were met. The bankruptcy court granted summary judgment with respect to
the bulk of the Award. The district court affirmed, and Amberson timely ap-
peals. This court has jurisdiction under 28 U.S.C. § 158(d)(1).
Amberson argues that the lower courts erred in finding the Award is
entitled to preclusive effect because the Award contains what Amberson calls
a “disclaimer,” specifying that it is merely a “reasoned award,” not “formal
findings of fact and law.” McAllen argues, and the lower courts held, that
this “disclaimer” is not dispositive and the arbitrator’s 53-page, single-
spaced Award, predicated on a 10.5-day hearing that involved more than 300
exhibits and testimony from 16 live witnesses, clearly satisfies the require-
ments for collateral estoppel. We AFFIRM.
The parties agree that our review is de novo. Some statements by the
district court, however, might be read to suggest our review is for abuse of
discretion. We need not decide this issue because Amberson’s arguments fail
under either standard. We therefore assume, arguendo, that our review is de
novo.
“The Supreme Court has explicitly stated that collateral estoppel, or
issue preclusion, principles apply in bankruptcy dischargeability
proceedings.” In re Schwager, 121 F.3d 177, 181 (5th Cir. 1997) (citing Grogan
v. Garner, 498 U.S. 279, 285 n.11 (1991)). There is no dispute that “arbitral
decisions may have preclusive effect.” OJSC Ukrnafta v. Carpatsky
Petroleum Corp., 957 F.3d 487, 503 (5th Cir. 2020); Tremont LLC v.
Halliburton Energy Servs., Inc., 696 F. Supp. 2d 741, 823 & n. 124 (S.D. Tex.
2010) (Rosenthal, J.) (“[T]here is ample authority for giving preclusive effect
to issues resolved in arbitration.”).
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No. 22-50788
Under federal law, 1
Collateral estoppel precludes a party from litigating an issue
already raised in an earlier action between the same parties only
if: (1) the issue at stake is identical to the one involved in the
earlier action; (2) the issue was actually litigated in the prior
action; and (3) the determination of the issue in the prior action
was a necessary part of the judgment in that action.
Petro–Hunt, L.L.C. v. United States, 365 F.3d 385, 397 (5th Cir. 2004)
(footnotes omitted). Amberson makes no argument that the existence of the
so-called “disclaimer” negates any of these three requirements, so he has
forfeited any argument to that effect. Wise v. Wilkie, 955 F.3d 430, 438 n.28
(5th Cir. 2020).
Instead, Amberson appears to argue that this court should recognize a
fourth requirement that has no basis in our precedent, to the effect that
collateral estoppel is inappropriate where an arbitration award contains a
“disclaimer” like the one in the Award. We need not decide whether a
“disclaimer” could ever render collateral estoppel inappropriate. We hold
merely that this “disclaimer” does not do so. Here is what it says in full.
The parties’ arbitration agreement does not speak to the type
of Award to be entered. The parties requested and agreed to a
_____________________
1
McAllen claims that federal rather than state law governs the application of
collateral estoppel in this context; Amberson fails altogether to brief the issue. We assume
without deciding that federal law governs. Amberson does not mention the Texas
requirements for collateral estoppel, let alone argue that the so-called “disclaimer” negates
any of those requirements, so he has forfeited any argument to that effect. In any event,
because the “key difference between” federal and Texas requirements for collateral
estoppel “is the [additional] requirement that the issue be identical for federal collateral
estoppel,” see In re Horne, No. ADV 10-5063, 2011 WL 350473, at *4 (Bankr. W.D. Tex.
Feb. 2, 2011), we do not see an argument that application of Texas law might favor
Amberson or affect this case’s outcome. Cf. Tremont LLC, 696 F. Supp. 2d at 821 n.123
(S.D. Tex. 2010) (applying federal law to the issue of collateral estoppel because, as here,
the arbitration award was confirmed in federal court).
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“reasoned Award,” which is to be more detailed than a short-
form “standard Award” but is not in the form of formal
Findings of Fact and Conclusions of Law as might be entered
by a court as to every element of a claim and every defense.
Thus, while the Arbitrator on this substantial record and
briefing has sought to provide his essential reasoning as to each
of the eight issues (as contemplated by a “reasoned” Award),
the Arbitrator has not and does not intend the Award to consist
of formal findings of fact and conclusions of law. The
Arbitrator has considered all the arguments, claims and
defenses asserted by both sides, regardless of whether or not an
argument or defense specifically is addressed herein or not.
The Arbitrator has assessed the credibility of the witnesses,
especially the two main parties, Amberson and McAllen. His
assessment of their credibility and the documentary evidence
forms the primary basis for this Award.
Later, the arbitrator reiterated:
As noted in the Award’s Introduction, this Award does not
constitute formal Findings of Fact and Conclusions of Law as
might be entered by a trial court. The parties agreed to a
“reasoned Award.” Thus, while the Arbitrator below enters
his determinations as to McAllen’s Part II. claims by
summarizing the elements of each claim, such is not intended
as formal findings and/or conclusions.
On Amberson’s telling, we “cannot know what prompted such a
disclaimer” from the arbitrator. However, Amberson contends, “[t]he
arbitrator’s disclaimer gives rise to an inference that there were flaws in his
fact-finding process which he acknowledged with the disclaimer.” What’s
more, Amberson tells us that the “disclaimer” contains “an express
instruction” to future tribunals that they must not give collateral estoppel
effect to the award.
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No. 22-50788
These assertions are mistaken. The arbitrator included the so-called
“disclaimer” because the parties requested a reasoned award. Nothing in the
“disclaimer” suggests the arbitrator had doubts about his fact finding. The
arbitrator goes to lengths to assure us, immediately before and after first
providing the “disclaimer,” that he “has considered all the arguments,
claims and defenses asserted by both sides, regardless of whether or not an
argument or defense specifically is addressed herein or not,” and that he held
10.5 days of hearings that included testimony from 16 live witnesses and 325
exhibits filling 17 three-ring binders. And at no place in his 53-page, single-
spaced award does the arbitrator provide an “express instruction” to future
tribunals not to grant the Award preclusive effect.
AFFIRMED.
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