Rex-Tech International, LLC v. James Rollings, Et

Case: 10-20253 Document: 00511629228 Page: 1 Date Filed: 10/12/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
October 12, 2011
No. 10-20253 Lyle W. Cayce
Clerk
In the Matter of: JAMES C. ROLLINGS,
Debtor
REX-TECH INTERNATIONAL, LLC,
Appellant
v.
JAMES C. ROLLINGS; W. STEVE SMITH,
Appellees
Appeal from the United States District Court
for the Southern District of Texas
Civil Action No. 4:09-cv-00195
Before WIENER, BENAVIDES, and STEWART, Circuit Judges.
PER CURIAM:*
Appellant Rex-Tech International, LLC (“Rex-Tech”) appeals the district
court’s affirmance of the bankruptcy court’s finding that James C. Rollings
(“Rollings”), appellee and debtor in this bankruptcy adversary proceeding, owned
*
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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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.
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three pieces of oilfield equipment. Because we find no errors of law and no
clearly erroneous findings of fact, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Rollings worked for Rex-Tech, an oilfield equipment repair and sales
company, from 1999 through 2003. In 2000 and 2001, Rollings served as Rex-
Tech’s production manager, overseeing equipment repairs. In 2003, Rex-Tech
ceased operations and filed for Chapter 13 bankruptcy, and Rollings’
employment was terminated. Shortly thereafter, on September 4, 2003,
Rollings, through an attorney, sent a letter to Rex-Tech listing eight items at
Rex-Tech’s facility which he claimed to be his, including a set of bookshelves
with workbooks and manuals, a rotary table with its associated equipment, and
a National 1320M mechanical drawworks (“drawworks”), which allegedly
included a drum shaft assembly (“drum shaft”). These items were exempt from
the public foreclosure sale of Rex-Tech’s assets on October 22, 2003.
On January 31, 2004, Rollings filed for Chapter 13 bankruptcy.1 On May
10, 2004, Rollings claimed ownership of a 14” ID 5’ long ram hydraulic cylinder
(“cylinder”) at Rex-Tech’s facility in an amended schedule of assets that he filed
in his Chapter 7 bankruptcy proceedings. W. Steve Smith, the Trustee of
Rollings’ estate (“Trustee”), demanded the return of all of the items Rollings
claimed were his, pursuant to Rex-Tech’s duty to return estate assets. By April
29, 2005, Rex-Tech had surrendered the rotary table to Rollings’ Trustee and
some furniture and books to Rollings, but insisted that it would not turn over the
remaining equipment without documentation of ownership from Rollings.
1
The case converted to a Chapter 7 liquidation on June 14, 2004. See In re James
Clinton Rollings, No. 04-31511-H3-7, 2008 Bankr. LEXIS 993 (Bankr. S.D. Tex. Mar. 31,
2008). There were also state court proceedings that involved some of the equipment. See Rex-
Tech Int’l et al. v. Rollings, No. 2003-38112-A (55th Dist. Ct., Harris County, Tex.).
2
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On May 18, 2005, Rex-Tech brought a “Complaint for Declaratory
Judgment and Determination of Interests in Property” against Rollings and his
estate, asking the bankruptcy court to determine the ownership of the disputed
items and to order Rollings to provide documentation showing that the items
were his. Rollings and the Trustee asked the bankruptcy court to order
Rex-Tech to turn over the drawworks, drum shaft, and cylinder to the estate.2
On November 18, 2008, the bankruptcy court commenced a bench trial to
determine the ownership of the disputed assets. Seven witnesses testified over
the course of the three-day trial.
Rollings testified that he used his personal funds to purchase the cylinder
in 2000 from IRI International Corporation (“IRI”),3 his former employer. He
testified that he purchased the drawworks, which included the drum shaft, the
following year, from Texas International (“TI”) with a $10,000 personal check.
According to Rollings, he stored these items at Rex-Tech’s facility with Rex-
Tech’s permission.
John Fessenden (“Fessenden”) testified that as a plant manager at IRI, he
sold a hydraulic cylinder to Rex-Tech, not to Rollings individually. He identified
an invoice from IRI to Rex-Tech for the cylinder dated January 26, 2000. But,
the invoice had a generic description and inaccurate terms, and Fessenden did
not know the purchase order number and did not personally receive payment.
Moreover, according to Fessenden, IRI sold dozens of cylinders while Fessenden
was employed there, according to Fessenden’s testimony.
2
The drawworks was sold on May 8, 2008, for $47,000 and the proceeds were placed
in escrow pending a final determination of this action. The drawworks had been
“cannibalized,” according to Rex-Tech.
3
In his testimony Rollings referred to IRI as Cardwell International, but at the relevant
time IRI had already purchased Cardwell International.
3
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James E. Petersen, Jr. (“Petersen”), the manager and majority stockholder
of Rex-Tech, identified an invoice for a used hydraulic cylinder dated January
26, 2000, and a check in the amount of $1082.50, relating to that invoice, dated
March 7, 2000, payable to IRI. He also identified checks for $60,000 and
$125,000, payable to CV International. But, the bankruptcy court found that the
purposes of these checks were not proved. Moreover, Petersen acknowledged
that he was not involved in Rex-Tech’s daily operations. The bankruptcy court
also found that Petersen’s “credibility was impaired by his self interest and his
personal dislike of Debtor.”
The bankruptcy court concluded that Rex-Tech failed to show by a
preponderance of the evidence that it owned the disputed assets. It determined
that Rollings’ testimony that he purchased the cylinder and the drawworks with
the drum shaft as a component was credible. On January 16, 2009, the
bankruptcy court issued an order deeming the disputed assets to be the property
of the Trustee.
Rex-Tech appealed the bankruptcy court’s judgment and the district court
affirmed. The district court held that the bankruptcy court correctly placed the
burden of proof on Rex-Tech because Rex-Tech made an affirmative claim in its
declaratory judgment action. The district court also found that the bankruptcy
court’s findings of fact sufficiently laid out the basis for its decision, though it
refused to consider the bankruptcy court’s supplemental findings, which the
bankruptcy court had issued after the district court signed an order divesting the
bankruptcy court of jurisdiction. Finally, the district court rejected Rex-Tech’s
argument that the bankruptcy court clearly erred in its findings of fact, and held
that each of the bankruptcy court’s conclusions were supported by the evidence.
Rex-Tech now appeals to this court, claiming that the bankruptcy court
erred in assigning the burden of proof to Rex-Tech, in refusing to apply a
presumption of ownership to Rex-Tech, and in not treating Rollings’ sworn
4
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bankruptcy schedules as judicial admissions. Rex-Tech also argues that the
court clearly erred in its findings regarding the testimony of Fessenden and
Petersen, and in according Rollings’ testimony greater weight than
contemporaneous documents. Finally, Rex-Tech contends that the bankruptcy
court made insufficient findings for appellate review because it failed to address
the credibility of the testimony of Rollings, Richard Hellinger (“Hellinger”) (the
general manager of TI) and Rex Shepperd (“Shepperd”) (a half-owner of that
company), the authenticity of Rollings’ alleged drawworks sales contract, and
Rollings’ testimony relating to the drum shaft.
STANDARD OF REVIEW
“In reviewing cases originating in bankruptcy, we ‘perform the same
function, as did the district court: Fact findings of the bankruptcy court are
reviewed under a clearly erroneous standard and issues of law are reviewed de
novo.’” In re Soileau, 488 F.3d 302, 305 (5th Cir. 2007) (quoting In re Berryman
Prods., 159 F.3d 941, 943 (5th Cir. 1998)).
ANALYSIS
1. Burden of proof
Rex-Tech argues that the court should have imposed on Rollings the
burden of proving that he owned the disputed items. The bankruptcy court held
that Rex-Tech, as the party seeking relief, had the burden of proving ownership
because “[i]n a declaratory judgment action, the party seeking relief bears the
burden of proof.” We agree.
“[T]he bankruptcy court has the power to issue declaratory judgments
when the matter in controversy regards the administration of a pending
bankruptcy estate.” Sears, Roebuck and Co. v. O’Brien, 178 F.3d 962, 964 (8th
Cir. 1999); see 28 U.S.C. § 157(b)(1),(2)(a) (“Bankruptcy judges may hear and
determine all cases under title 11 and all core proceedings arising under title 11.
. . . Core proceedings include, but are not limited to . . . matters concerning the
5
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administration of the estate”). The parties do not dispute that Texas law
governs the ownership dispute. See Butner v. United States, 440 U.S. 48, 55
(1979) (“Property interests are created and defined by state law. Unless some
federal interest requires a different result, there is no reason why such interest
should be analyzed differently simply because an interested party is involved in
a bankruptcy proceeding.”). But, though the district court, in reviewing the
issue of burden of proof, cited Texas law, we believe that federal law governs the
preliminary issue of what burden of proof applies here. As stated above, our
jurisdiction over this matter stems from federal bankruptcy law. Thus, we do
not look to state law in determining the burden of proof here. See In re Willcox,
329 B.R. 554, 562 (Bankr. D.S.C. 2005), rev’d on other grounds, 467 F.3d 409 (4th
Cir. 2006) (applying federal law in determining what burden of proof applies in
declaratory judgment action in a property dispute related to the administration
of a bankruptcy estate); In re Big V Holding Corp., 267 B.R. 71, 90-91 (Bankr.
D. Del. 2001) (where court had jurisdiction under 28 U.S.C. § 157(a) and (b)(1),
it relied on federal case law for conclusion that burden of proof is on the plaintiff
seeking declaratory judgment though the parties agreed New Jersey law
controlled the underlying contract interpretation question); cf. Liberty Mut. Ins.
Co. v. Sweeney, 216 F.2d 209, 211 (3d Cir. 1954) (“[T]his matter of burden of
proof [in a declaratory judgment action] is one in which the federal court in a
diversity case will follow state decisions.”).4
4
In any case, whether we apply Texas or federal law has little effect on how we place
the burden, as Texas and federal courts apply the same principle in determining the burden
of proof in declaratory judgment actions. See Harkins v. Crews, 907 S.W.2d 51, 58 (Tex.
App.–San Antonio 1995, writ denied) (“Generally, the burden of proof in a declaratory
judgment action is on ‘the party who, on the pleadings, asserts the affirmative claim, and who
in the absence of evidence will be defeated, and is not controlled by the position of the parties
on the docket as plaintiff or defendant in the declaratory action.’” (quoting Mitchell v. Rancho
Viejo, Inc., 736 S.W.2d 757, 760 (Tex. App.–Corpus Christi 1987, writ ref’d n.r.e.) (internal
quotation marks and citation omitted))).
6
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“It is a fundamental rule that the burden of proof in its primary sense
rests upon the party who, as determined by the pleadings, asserts the
affirmative of an issue. . . .” Pacific Portland Cement Co. v. Food Machinery &
Chemical Corp., 178 F.2d 541, 547 (9th Cir. 1949) (placing burden of proof on
party that brought the declaratory judgment action because it sought affirmative
relief of declaration of nonliability and relief from overcharges and also because
that party presented extensive evidence at trial). Here, Rex-Tech made an
affirmative claim in asking the bankruptcy court to determine the ownership of
the disputed property.
We also decline to place the burden of proof on Rollings because Rex-Tech
accepted the risk of proving its case by filing suit. In a similar case, In re
Willcox, 329 B.R. at 562, a debtor filed a declaratory action asking the court to
determine the ownership of historic papers the debtor found in his closet. The
In re Willcox court found that the burden of proof fell on the debtor because he
brought the declaratory judgment action, explaining, “the burden of proof in
declaratory judgment actions lies, as a general principle of law, with the moving
party who is held to ‘have assumed the risk of nonpersuasion.’” 329 B.R. at 562
(quoting 10B CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY KANE,
FEDERAL PRACTICE AND PROCEDURE § 2770 (3d ed. 1998)); see In re Weller, 316
B.R. 708, 711 (Bankr. W.D. Mo. 2004) (implying that party seeking declaratory
judgment when the matter pending involves administration of a bankruptcy
estate always bears the burden of proof, stating, “[t]he party seeking a
declaratory judgment must bear the burden of proof in these proceedings”).
Because we construe Rex-Tech’s complaint as asserting an affirmative claim,
and because Rex-Tech assumed the risk of non-persuasion by filing the
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declaratory judgment action, we conclude that the bankruptcy court did not err
in placing the burden of proof on Rex-Tech.5
2. Legal presumption of ownership
Nor was it error for the bankruptcy court to refuse to apply a legal
presumption of ownership to Rex-Tech. The bankruptcy court held that “given
that there was a dispute ab initio as to the ownership of the property in dispute
. . . it is not clear from the evidence that Rex-Tech ‘possessed’ the property.” The
bankruptcy court also provided that “[e]ven if a presumption of ownership is
accorded to Rex-Tech as a result of the location of the disputed items, the
presumption is rebutted by Debtor’s credible testimony as to his purchase of the
property.”
Under Texas law, “[o]ne in possession (or control) of property is presumed
to be the owner of it.” Smith v. Briggs, 168 S.W.2d 528, 531 (Tex. Civ. App.–San
Antonio 1943, writ ref’d w.o.m.) (citation omitted); see Hickey v. Couchman, 797
S.W.2d 103, 110 (Tex. App.–Corpus Christi 1990, writ denied) (presumption
applied where evidence showed assets were in possession of the debtor); Worth
Tool & Die Co. v. Atlantis Electronics Corp., 398 S.W.2d 656, 657 (Tex. Civ.
App.–Dallas 1965, writ dism’d by agr.) (“At the time the suit was filed and the
writ levied the property was in possession of appellant, which fact alone gives
rise to the inference that appellant had a legal right to such possession.”). Rex-
Tech argues that the bankruptcy court incorrectly interpreted Chenoworth v.
Flannery, 202 S.W.2d 480, 481 (Tex. Civ. App.–Amarillo 1947, no writ), to
require Rex-Tech to show exclusive possession to trigger the presumption. The
Chenoworth court refused to apply the presumption based solely on the evidence
5
In any case, if the bankruptcy court had placed the burden of proof of ownership on
Rollings, it would still have concluded that Rollings owned the property. The bankruptcy
court’s finding that Rollings’ evidence of ownership rebutted any presumption that Rex-Tech
owned the property constituted a finding that Rollings had demonstrated proof of ownership
by a preponderance of the evidence.
8
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that a “deposit box was maintained in [one] name” and the disputed property
was found in the envelope upon which that person’s name was written. Id. at
481-82. Rather, the Chenoworth court held, “because the evidence was to the
effect that the deposit box was maintained for the benefit of both,” “[i]t was a
joint tenancy,” and “it contained numerous articles belonging to each of them,”
such that no exclusive possession was shown. Id. at 481. Citing Chenoworth, the
bankruptcy court found that the presumption of ownership based on possession
did not apply to Rex-Tech in this case because Rex-Tech allowed employees to
store and work on their own equipment at the Rex-Tech facility.
We agree with the bankruptcy court that the presumption does not apply
here. The presumption is to be used when there is no “evidence to the contrary”
regarding possession. See Bradshaw v. Ashley, 180 U.S. 59, 63 (1901) (“If there
be no evidence to the contrary, proof of possession, at least under a color of right,
is sufficient proof of title.”). Rex-Tech is obviously correct that the evidence that
Rex-Tech permitted Rollings to store his property on the Rex-Tech facility is not
as indicative of joint control over the property as the evidence of a joint tenancy
in Chenoworth. Furthermore, there was also undisputed evidence that Rex-Tech
used and profited from the hydraulic cylinder and drum shaft.6 But, this case
is more similar to Chenoworth than to those cases that have applied the
presumption, because in those cases there was no evidence indicating that the
party in possession did not actually own the disputed items. Compare
Chenoworth 202 S.W.2d at 481 with Cathey v. Shields, 385 S.W.2d 889, 893 (Tex.
Civ. App.–Austin 1965, writ ref’d n.r.e.) (“The fact that the money was in a
building on his land raises a presumption that the money belonged to the
deceased.”); Hickey, 797 S.W.2d at 110 (applying presumption where items were
at the debtor’s condominium). The evidence that Rollings was permitted to store
6
Rex-Tech explains that it integrated the hydraulic cylinder into a vertical press that
generated income for Rex-Tech, and it traded the drum shaft.
9
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items on Rex-Tech’s property while he was an employee there undermines the
contention that Rex-Tech had control of the property. The fact that Rex-Tech,
with Rollings’ permission, used the cylinder to profit does not eliminate the fact
that there was a plausible reason, aside from ownership, that Rex-Tech’s facility
housed Rollings’ oilfield equipment. In light of the evidence that Rex-Tech
permitted Rollings to use its facility for storage, the presumption of ownership
does not apply in this case.7
3. Judicial admissions
Rex-Tech argues that the bankruptcy court erred by failing to determine
that Rollings’ statements in his bankruptcy schedule and amended bankruptcy
schedules were binding judicial admissions. Rollings did not list any oilfield
equipment when he originally filed his bankruptcy case on January 31, 2004, nor
when he amended the schedule on February 14, 2004. In both schedules he
affirmatively swore that he did not own equipment or machinery of any kind.
Approximately four months later, in May 2004, he amended the petition to
include the rotary table, drawworks, and cylinder, and listed them as exempt
from his bankruptcy estate. Rex-Tech asserts that because Rollings did not list
the drawworks on his first two schedules, and never listed the drum shaft in any
of his six amended bankruptcy schedules, he has made a judicial admission that
he does not own these items. See, e.g., In re Sissom, 366 B.R. 677, 697 (Bankr.
S.D. Tex. 2007) (explaining that statements in bankruptcy schedules can be
treated as judicial admissions). We will briefly address the issue, though we
need not, as Rex-Tech never argued to the bankruptcy court or district court that
7
Because the bankruptcy court decided in the alternative that Rollings rebutted the
presumption of ownership, a conclusion that the presumption of ownership applied to Rex-
Tech would not be dispositive of the issue of ownership. See Bullard v. Oatman, 271 S.W. 422,
423 (Tex. Civ. App.–San Antonio 1925, no writ) (possessor would not “recover against the
claims of any one who [] establish[es] a better right to the property than that of the
possessor”).
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the statements in the bankruptcy schedules should be considered binding
judicial admissions. See Ingalls Shipbuilding v. Fed. Ins. Co, 410 F.3d 214, 228
(5th Cir. 2005) (“It is the obligation of the party to direct the court’s attention to
the facts and law supporting its argument . . . [and] failure to raise the argument
properly before the district court [relieves] our obligation to address it.”).
“Statements in bankruptcy schedules are executed under penalty of
perjury and when offered against a debtor are eligible for treatment as judicial
admissions.” In re Bohrer, 266 B.R. 200, 201 (Bankr. N.D. Cal. 2001).
“Admissions made in superseded pleadings are as a general rule considered to
lose their binding force, and to have value only as evidentiary admissions.”
White v. ARCO/Polymers, Inc., 720 F.2d 1391, 1396 n.5 (5th Cir. 1983) (citation
omitted). Rollings’ original schedules are superseded by the third amended
schedule. The statements in the original schedules are therefore not binding
admissions, though they may be considered as evidence.8 Because Rex-Tech did
not argue to the courts below that Rollings’ failure to claim the drum shaft on his
bankruptcy schedule foreclosed him from claiming that he owned the drum
shaft, he cannot now do so. “By failing to contend that [a party’s] admissions
barred his subsequent assertion of the contrary position, [the opposing parties]
effectively waived the argument that the issue was irreversibly settled.” White,
720 F.2d at 1396. Consequently, under White, this evidence is admissible, but
is not a binding judicial admission. See id. We find that the bankruptcy court
did not err on this issue.
4. Clear error in weighing the evidence
Rex-Tech argues that the bankruptcy court clearly erred in weighing the
testimony of “disinterested witnesses” Fessenden and Petersen, and the
8
The schedules were amended to include the cylinder and drawworks after Rollings
retained a new attorney. An attorney’s failure to list items on a schedule does not immunize
the represented party from the effect of the schedules. See Wolinsky v. Oak Tree Imaging, LP,
362 B.R. 770, 780 (Bankr. S.D. Tex. 2007).
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contemporaneous documents in evidence, such as invoices, against Rollings’
testimony. Under Federal Rule of Civil Procedure 52(a) “[f]indings of fact,
whether based on oral or other evidence, must not be set aside unless clearly
erroneous, and the reviewing court must give due regard to the trial court’s
opportunity to judge the witnesses’ credibility.” “The rationale for deference to
the original finder of fact is not limited to the superiority of the trial judge’s
position to make determinations of credibility. The trial judge’s major role is the
determination of fact, and with experience in fulfilling that role comes
expertise.” Anderson v. Bessemer City, 470 U.S. 564, 574 (1985). When, as here,
the trial court “is faced with testimony that may lead to more than one
conclusion, its factual determinations will stand so long as they are
plausible–even if we would have weighed the evidence otherwise.” Nielsen v.
United States, 976 F.2d 951, 956 (5th Cir. 1992). “Where the court’s finding is
based on its decision to credit the testimony of one witness over that of another,
‘that finding, if not internally inconsistent, can virtually never be clear error.’”
Schlesinger v. Herzog, 2 F.3d 135, 139 (5th Cir. 1993) (internal citation omitted).
We find no reversible error in the bankruptcy court’s fact determinations. The
bankruptcy court made a credibility determination that Rollings’ testimony was
truthful. Moreover, the bankruptcy court was unconvinced by Rex-Tech’s
evidence that it had purchased the items. This determination was within the
discretion of the factfinder. We briefly review the evidence and Rex-Tech’s
arguments regarding ownership of each item.
a. The hydraulic cylinder
Rex-Tech argues that the bankruptcy court made the following clearly
erroneous findings in concluding that Rollings owned the cylinder: Fessenden
could not confirm whether he sold the cylinder to Rex-Tech; Fessenden testified
that IRI sold more than one cylinder; nothing in Petersen’s testimony
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established Rex-Tech’s ownership; and Rollings’ testimony was more credible
than the contemporaneous documents.
First, there was an evidentiary basis for the bankruptcy court to arrive at
its conclusions regarding Fessenden’s testimony. While Fessenden testified that
he was positive he had sold the disputed cylinder, his unequivocal testimony was
undermined by the fact that he admitted that he did not personally receive the
payment and did not know the purchase order number of the cylinder. Because
Fessenden admitted that he did not personally receive payment from Tex-Tech,
it was permissible for the bankruptcy court to discount Fessenden’s assertion
that he had sold the disputed cylinder and conclude that Fessenden could not
confirm that he had indeed sold the cylinder to Rex-Tech. Fessenden testified
that he only knew of one sale of a hydraulic cylinder to Rex-Tech, but that other
employees sold hydraulic cylinders. Because Fessenden admitted that, although
he only knew of one sale of a hydraulic cylinder to Rex-Tech, other employees of
IRI also sold hydraulic cylinders, it was permissible for the bankruptcy court to
infer that IRI sold more than one cylinder to Rex-Tech. See Anderson, 470 U.S.
at 574 (“Where there are two permissible views of the evidence, the factfinder’s
choice between them cannot be clearly erroneous. This is so even when the
district court’s findings do not rest on credibility determinations, but are based
instead on . . . inferences from other facts.”) (internal citations omitted).
Next, the bankruptcy court’s finding that nothing in Petersen’s testimony
establishes that Rex-Tech purchased any of the disputed pieces of equipment
was within its discretion. Petersen testified that one of his responsibilities at
Rex-Tech was to sign checks, and at trial Petersen identified a check payable to
IRI, dated March 7, 2000, and a related check stub and invoice, dated January
26, 2000, for a used hydraulic cylinder. But, the bankruptcy court was free to
find, as it did, that Petersen’s credibility was impaired by his self interest and
his personal dislike of Rollings. See Schlesinger, 2 F.3d at 139. Moreover,
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Petersen could not confirm that the transaction was definitely affiliated with a
specific piece of equipment. His testimony regarding Rex-Tech’s purchase of the
cylinder was plausibly weakened by the fact that he testified that he was not
involved in the day-to-day operations of Rex-Tech and that he had written
checks for other cylinders, as it diminished the likelihood that he had familiarity
with the disputed cylinder.
Finally, the bankruptcy court did not erroneously give Rollings’ testimony
greater evidentiary weight than it gave to the contemporaneous documents. If
oral “testimony is in conflict with contemporaneous documents we can give it
little weight. . . .” United States v. United States Gypsum Co., 333 U.S. 364, 396
(1948). But, here there was no conflict between Rollings’ oral testimony and the
contemporaneous documents. The evidence showed that the invoice and check
for the hydraulic cylinder could have been for a different cylinder. Additionally,
though Rollings’ testimony and interrogatories did vary on some minor details,9
these inconsistencies could be attributed to memory lapse. Nor was it fatal to
Rollings’ case that he did not have any documentation of his purchase. See
Schlesinger, 2 F.3d at 139-40 (“This alleged link between the two transactions
is not subject to any writing whatsoever. . . . Thus, the court’s decision rested
almost entirely on credibility determinations.”). We find no clear error in the
bankruptcy court’s determination that Rollings owned the hydraulic cylinder.
b. The drawworks
Rex-Tech argues that the bankruptcy court clearly erred by crediting
Rollings’ testimony regarding his purchase of the drawworks over the
9
For example, Rollings testified that he purchased the disputed cylinder in 2000 and
in his interrogatory stated 2001 was the purchase year. Additionally, Rollings’ discovery
response stated that the cylinder “was acquired from Mr. Fessenden,” but his testimony at
trial was that he “could not answer” whether Fessenden was present when Rollings picked up
the cylinder. Rollings’ seemingly contradictory statements regarding whether Fessenden was
present at the facility could be justified by the fact that Rollings picked up equipment for Rex-
Tech on other occasions, and that his memory was flawed due to the passage of time.
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contemporaneous documents, and over the testimony of Hellinger, Shepperd,
and Petersen.
Variations in Rollings’ testimony as to how he paid for the drawworks did
not necessarily undermine Rollings’ testimony that he was absolutely certain
that he purchased the drawworks from TI for $10,000 with check number 100,
using money from his savings account, in early 2001. His bank savings account
record showed a withdrawal of $10,000 on February 21, 2001. Rollings testified
that he did not remember if he paid in cash, and later, while looking at a bank
record, he testified that he used a $10,000 check to pay for the drawworks. But,
the inconsistency in these two statements can be explained by memory lapse.
Rollings testified that he recalled the event because his wife at the time was
angry about this purchase. His only documentary evidence of the purchase was
a sales contract which he acknowledged was drafted by Betty Ochoa (“Ochoa”),
his girlfriend at the time, not a TI employee. But, the bankruptcy court was free
to believe Rollings’ testimony as it was not inconsistent or implausible. This
evidence provided a credible basis for the bankruptcy court to find that Rollings
purchased the drawworks.
As with the testimony regarding the cylinder, it was permissible for the
bankruptcy court to credit Rollings’ testimony regarding the drawworks over
Shepperd’s and Hellinger’s. Shepperd’s testimony unequivocally recounts that
TI did not sell a drawworks to Rollings in the time that Rollings claimed he
bought it. Shepperd testified that “[a] complete 1320M never was sold to Mr.
Rollings,” and that he did not recall TI having a complete 1320M drawworks.
Hellinger testified that he never received a check from Rollings for a drawworks.
But, “a trial judge does not have to believe any witness . . . if there is reasonable
cause not to believe him,” such as conflicting testimony. Gee Chee On v.
Brownell, 253 F.2d 814, 817 (5th Cir. 1958). The bankruptcy court did not
specifically discuss Shepperd’s and Hellinger’s testimony. Nonetheless, because
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it made a global finding that Rollings’ testimony was credible, it was permissible
for the bankruptcy court to credit Rollings’ testimony over that of Shepperd and
Hellinger without further discussion. The bankruptcy court also acted within
its discretion in crediting Rollings’ testimony over Petersen’s testimony that Rex-
Tech purchased the drawworks from CV International. The bankruptcy court
did not have to believe Petersen’s testimony that Rex-Tech used the $125,000
check in evidence to purchase the drawworks. Thus, the bankruptcy court’s
finding that Rollings owned the drawworks was not clearly erroneous.
c. The drum shaft
Finally, Rex-Tech contends that the bankruptcy court clearly erred in
finding that Rollings purchased the drum shaft. The drum shaft was a part of
the drawworks. Rex-Tech claims that because Rollings admitted that Rex-Tech
acquired the drum shaft by providing Diamond Offshore with a trade-in credit
on the purchase of another drum shaft, Rollings could not have been the owner
of the drum shaft. But, Rex-Tech’s argument ignores the explanation given by
Rollings. According to Rollings, he permitted Rex-Tech to sell the drum shaft
from his drawworks to Diamond Offshore with the understanding that the drum
shaft traded in by Diamond Offshore would be repaired and replaced to him.
Thus, he was to be restored a working, useable drum shaft in exchange for
allowing Rex-Tech to provide Diamond Offshore with his drum shaft. The
bankruptcy court was free to accept Rollings’ explanation, and the trade-in credit
to Diamond Offshore does not negate Rollings’ ownership of the drum shaft.
5. Sufficiency of the findings for appellate review
Rex-Tech argues that the bankruptcy court failed to sufficiently describe
its reasoning regarding the following issues: conflicting contemporaneous
documents; the credibility of Rollings; the testimony of TI’s principals; the
alleged forgery of the sales contract; and Rollings’ testimony pertaining to the
drum shaft. “Rule 52(a) exacts neither punctilious detail nor slavish tracing of
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the claims issue by issue and witness by witness.” Collins v. Baptist Memorial
Geriatric Cent., 937 F.2d 190, 194 (5th Cir. 1991) (internal quotation marks and
citations omitted). It only “require[s] findings that are explicit and detailed
enough to enable us to review them under the applicable standard.” Id. (internal
quotation marks and citations omitted). “If a trial judge fails to make a specific
finding on a particular fact, the reviewing court may assume that the court
impliedly made a finding consistent with its general holding so long as the
implied finding is supported by the evidence.” Century Marine v. United States,
153 F.3d 225, 231 (5th Cir. 1998). Overall, the bankruptcy court’s eight-page
findings of fact and conclusions of law are sufficiently detailed to adequately
state the factual and legal bases for the bankruptcy court’s denial of Rex-Tech’s
ownership claim. They provide a sufficiently definite predicate for appellate
review.
Each of the court’s evidentiary choices that Rex-Tech challenges are
supported by the evidence. We can assume that the bankruptcy court impliedly
made a finding consistent with its general holding on these issues. First, there
was evidence that the alleged contemporaneous documents were not necessarily
associated with the equipment at issue because Rex-Tech’s witnesses could not
definitively associate the documents with the disputed equipment. Nor did the
bankruptcy court err by failing to issue any findings concerning the testimony
of TI’s principals, Hellinger and Shepperd. “A court may not arbitrarily reject
the testimony of a witness whose testimony appears credible,” Gee Chee On, 253
F.2d at 817, but it has no obligation to describe the weight of the testimony of
every witness. The bankruptcy court’s global finding that Rollings’ testimony is
credible is a sufficient basis from which to conclude that the bankruptcy court
made the determination that it was picking Rollings’ testimony over Shepperd’s
and Hellinger’s. Despite Rex-Tech’s argument to the contrary, the bankruptcy
court described that it found Rollings’ testimony at trial credible. Nor was the
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bankruptcy court required to make any findings concerning whether or not the
sales contract was forged. That was not a material issue because to the extent
that Rex-Tech argues that the bill of sale is not an original, Rollings’ testimony
itself acknowledges that. Finally, as stated above, we find Rollings’ admission
that “Rex-Tech provided its customer with a trade-in credit in exchange for the
Drum Shaft,” to be consistent with the other evidence. In sum, the bankruptcy
court’s findings meet the requirements of Rule 52(a).
We do not review the sufficiency of the evidence de novo and we cannot
substitute our judgment for that of the factfinder. The evidence supports the
bankruptcy court’s findings. Because there is evidentiary support, there is
sufficient support for the findings of the bankruptcy court and we find no clear
error in its conclusions.
CONCLUSION
For the aforementioned reasons, the judgment of the district court is
AFFIRMED.
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