Manges v. Atlas

UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT
_______________
Nos. 95-40582 & 95-40584
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In The Matter Of: DUVAL COUNTY
RANCH C
Debtors
_______________________________________________
HELEN RUTH MANGES,
Appellant,
versus
MORRIS ATLAS; THE MANGES LIQUIDATING
TRUST,
Appellees.
_______________________________________________
Appeal from the United States District Court
For the Southern District of Texas
(C-94-CV-325 & C-94-CV-326)
_______________________________________________
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opinion should not be published and is not precedent except under the limited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.
-3-
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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