All Trac Transportation, Inc. v. Transportation Alliance Bank (In Re All Trac Transportation, Inc.)

United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT December 29, 2006
_______________________ Charles R. Fulbruge III
Clerk
No. 05-11343
_______________________
In the Matter of: ALL TRAC TRANSPORTATION, INC., Debtor.
ALL TRAC TRANSPORTATION, INC.,
Appellant,
versus
TRANSPORTATION ALLIANCE BANK,
Appellee.
On Appeal from the United States District Court
for the Northern District of Texas - Dallas Division
Docket No. 3:04-CV-1759
Before JONES, Chief Judge, and SMITH and STEWART, Circuit Judges.
EDITH H. JONES, Chief Judge:*
Appellant All Trac Transportation, Inc. (“All Trac”), a
Chapter 11 debtor, appeals the district court’s judgment affirming
the bankruptcy court’s rulings with respect to damages and the
dismissal of claims against Transportation Alliance Bank (“TAB”)
for numerous violations of the automatic stay. Although the
outcome is disturbing given the gravity of TAB’s automatic stay
violations and the minimal damages awarded, the district court did
*
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opinion should not be published and is not precedent except under the limited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.
not err in upholding the bankruptcy court’s rulings. Because both
of the lower courts devoted close attention to All Trac’s issues
and wrote comprehensively on them, we need not repeat their work in
order to AFFIRM.
I. BACKGROUND
All Trac, a long-haul trucking company, filed for
Chapter 11 protection on August 13, 2002. At the time, TAB was All
Trac’s bank. Through its agent, TAB provided a pre-approved line
of credit, a demand account that All Trac used as a checking
account, and a reserve account. Additionally, TAB was All Trac’s
factor, purchasing its accounts receivable.
On August 15, 2002, after All Trac filed for bankruptcy,
TAB sent 528 letters to All Trac’s customers advising them that all
payments owed to All Trac should be paid to TAB, regardless of
contrary instructions from All Trac, and that a failure to do so
could result in civil liability. The relationship between All Trac
and TAB deteriorated, and on September 6, 2002, All Trac sought the
bankruptcy court’s permission to terminate its relationship with
TAB and enter into a post-petition factoring and security agreement
with Allied Capital Partners, L.P. (“Allied”). The court approved.
Shortly thereafter, on September 19, TAB sent another round of
letters to All Trac’s customers, again instructing them to make all
payments to TAB and warning of potential liability if they did not.
Additionally, on September 18 and 27, TAB bounced several of All
2
Trac’s checks, although TAB held sufficient funds to cover the
checks.
On September 23, All Trac filed an adversary proceeding
and applied for a temporary restraining order against TAB. On
October 1, the bankruptcy court entered an agreed order that
adopted several stipulations by All Trac, TAB, and Allied,
terminating the banking relationship between All Trac and TAB, and
directing that customers’ future payments be made directly to
Allied.
Months later, All Trac amended its complaint to include
(1) a motion to hold TAB in contempt of court for numerous
violations of the automatic stay and (2) a claim for tortious
interference with contracts between All Trac and its customers,
employees, Allied, and other secured creditors. All Trac contended
that TAB improperly withheld its accounts receivable, depriving it
of funds it needed to make adequate protection payments to secured
creditors; when it could not make those payments, All Trac faced
the foreclosure or sale of all its trucks and went out of business.
The bankruptcy court tried the adversary proceeding and
contempt motion together and, following a lengthy bench trial,
concluded that TAB indeed violated the automatic stay and court
orders numerous times and tortiously interfered with All Trac’s
contractual relationships with Allied and All Trac’s customers.
The court rejected several of All Trac’s other allegations of
automatic stay violations, its contempt claims, and other tortious
3
interference with contract claims. It did not address All Trac’s
claims for tortious interference with business relations and
prospective business relations.
The court determined that All Trac had not proven TAB
responsible for the destruction of All Trac’s entire business, and
thus was not entitled to lost profits for the cessation of
operations. Since All Trac did not itemize damages from the
specific automatic stay violations, it had failed to prove damages
aside from the $5,698.80 surcharge Allied imposed after TAB
violated a court order, and the court limited damages to that
amount. The court also awarded All Trac $68,552 in attorneys’ fees
plus out-of-pocket expenses and prejudgment interest.
All Trac appealed to the district court, contending that
(1) the bankruptcy court erred by failing to properly address its
tortious interference claims; (2) it proved that TAB caused the
destruction of All Trac’s business; (3) it met its burden of proof
as to lost profits; (4) the attorneys’ fee award was inadequate;
(5) the bankruptcy court erred in finding TAB did not act with
malice; (6) TAB committed violations of the automatic stay beyond
those found by the bankruptcy court; and (7) the bankruptcy court
erred in finding some of TAB’s actions justified. The district
court affirmed on all counts, and All Trac now appeals.
II. DISCUSSION
4
This court reviews the district court’s decision on
appeal from the bankruptcy court by applying the same standards as
the district court. Total Minatome Corp. v. Jack/Wade Drilling,
Inc., 258 F.3d 385, 387 (5th Cir. 2001). We review conclusions of
law de novo and findings of fact only for clear error. Id. Under
the clearly erroneous standard, we will “defer to a bankruptcy
court’s factual findings unless, after reviewing all of the
evidence, ‘we are left with a firm and definite conviction that the
bankruptcy court made a mistake.’” In re Cahill, 428 F.3d 536, 542
(5th Cir. 2005) (quoting In re Bradley, 960 F.2d 502, 507 (5th Cir.
1992) (internal quotation marks omitted)). The bankruptcy court’s
unique ability to evaluate the witnesses and consider all the
evidence in context must be respected. Gen. Elec. Capital Corp. v.
Acosta, 406 F.3d 367, 373 (5th Cir. 2005). If the factfinder’s
view of the evidence is plausible in light of the record as a
whole, the appellate court may not reverse it. Sequa Corp. v.
Christopher, 28 F.3d 512, 514-15 (5th Cir. 1994).
A. Destruction of Business
All Trac first contends that it proved TAB caused the
demise of its trucking business by wrongfully withholding the
proceeds of its accounts receivable, thereby leaving All Trac
unable to make adequate protection payments to its secured
creditors. It argues that the bankruptcy court erred in making
several factual and legal conclusions and in using a hypothetical
5
analysis to determine what would have happened if TAB had not
withheld the proceeds.
Although All Trac contends it raises a legal question,
the bankruptcy court made a fact finding about All Trac’s failure
of proof that this court reviews for clear error. We agree, as All
Trac contends, that the bankruptcy judge improperly used a
hypothetical to determine what may have happened had All Trac had
access to the funds improperly withheld by TAB. This error,
however, is harmless, because the court also found that All Trac
had not shown how it would have been able to become profitable, in
light of its prebankruptcy financial condition, which could not be
attributed to TAB. Significant evidence from financial experts
supported the finding that All Trac was not financially sound even
apart from any actions by TAB. The court further found that All
Trac had not shown why, after the relationship with TAB ceased, All
Trac still could not pay the costs of its continuing operations.
Although All Trac asserted that TAB’s actions affected it
cumulatively, there was no evidence that any customers limited or
stopped doing business with it because of TAB’s actions. At most,
the company proved that TAB caused the loss of one driver. Thus,
even absent the improper hypothetical, the finding that All Trac
failed to prove TAB caused the destruction of All Trac’s entire
business is not clearly erroneous.
B. Lost Profits
6
All Trac next argues the bankruptcy court erred by
failing to award All Trac damages for lost profits resulting from
TAB’s automatic stay violations. It contends the court erroneously
believed All Trac was constrained to provide an “all or nothing”
finding on damages, and because the court disbelieved some of All
Trac’s experts, it improperly denied all lost profits damages. All
Trac asserts that because the company offered substantial evidence
as to the damages caused by TAB’s actions, the court had a duty to
calculate the damages, even if it did not accept All Trac’s
calculations. Again, the record does not support All Trac’s
claims.
The bankruptcy court found that All Trac failed to prove
that TAB’s misconduct destroyed its business. This finding was not
clearly erroneous. Thus, even assuming the correctness of All
Trac’s calculation of profits lost when it ceased operations, the
company lost profits because it closed down, not because TAB shut
it down. Although TAB’s numerous violations of the automatic stay
undoubtedly damaged All Trac, it failed to connect the violations
to identifiable losses, leaving the bankruptcy court unable to
award damages for the specific violations. Because All Trac did
not make the factual showing necessary to enable a determination of
damages attributable to TAB’s misconduct, the district court did
not err in affirming the denial of damages for lost profits.
C. Tortious Interference
7
1. Appropriate Legal Standard
All Trac next argues that the district court erred by
failing to conduct a de novo review of the legal standard applied
by the bankruptcy court to its tortious interference claims and
that the bankruptcy court applied an improper clear and convincing
evidence standard instead of the preponderance of the evidence.
There is, however, nothing in the bankruptcy court’s opinion
discussing or applying the higher standard and nothing to indicate
it “imported by reference” a more stringent standard. The district
court properly denied this ground for relief.
2. Waiver of Claims
All Trac purports to have asserted claims for tortious
interference with contract, tortious interference with business
relations, and tortious interference with prospective business
relations before the bankruptcy court. TAB objected to including
any of these claims in the pretrial order, but the bankruptcy court
overruled the objection in part, as it stated that All Trac had
preserved its claim for tortious interference with contracts in the
amended complaint. Ultimately, the court dealt carefully with
claims for interference with contracts but it did not address All
Trac’s business relations claims. The district court held that All
Trac waived, as inadequately briefed, its complaint that the
bankruptcy court erred by failing to consider the “omitted” claims.
See In re Nary, 253 B.R. 752, 762 n.23 (N.D. Tex. 2000).
8
A careful reading of the record persuades us that All
Trac did adequately brief this contention to the district court.
That court’s oversight is, however, the least of All Trac’s
problems, because the bankruptcy court correctly limited the issues
to interference with contractual relations. The bankruptcy court
found that the tortious interference with contracts claims were
properly before it because they were contained in paragraphs 44 and
45 of All Trac’s March 4, 2003, amended complaint. Contrary to All
Trac’s position, the amended complaint makes no mention of the
business relations claims. All Trac did not litigate those claims
in bankruptcy court and may not resurrect them on appeal.
9
III. CONCLUSION
For the foregoing reasons, the judgment of the district
court, affirming the bankruptcy court, is AFFIRMED.
10