Foster v. Holder (In Re Foster)

Case: 15-10778 Document: 00513445300 Page: 1 Date Filed: 03/30/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 15-10778 United States Court of Appeals
Summary Calendar Fifth Circuit
FILED
March 30, 2016
In the Matter of: REGINA NACHAEL HOWELL FOSTER, Lyle W. Cayce
Clerk
Debtor
REGINA NACHAEL HOWELL FOSTER, Foster Children by and through
their Next Friend,
Appellant
v.
AREYA HOLDER,
Appellee
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 4:15-CV-116
Before HIGGINBOTHAM, ELROD, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
The three children of Regina Foster filed a proof of claim in their
mother’s Chapter 7 bankruptcy proceeding. The claim was filed by their
* 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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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No. 15-10778
mother as next friend. The bankruptcy court disallowed the claim. The district
court affirmed. We conclude that the appeal is frivolous, and DISMISS.
Regina Foster filed for Chapter 7 bankruptcy in 2012. She did not list
her children as creditors in her schedules. Then, in 2013, Foster filed a proof
of claim against herself, as next friend of her three children. The claim was for
delinquent property taxes on what is called the “Bonnell property,” which was
left in trust to the children by Foster’s great aunt.
The Chapter 7 Trustee timely objected to the claim. The bankruptcy
court held an evidentiary hearing, at which Foster testified in support of her
children’s claim. The bankruptcy court sustained the Trustee’s objection and
disallowed the claim. On appeal to the district court, Foster’s children failed
to provide the district court with a transcript of the bankruptcy court’s
evidentiary hearing. The district court affirmed the bankruptcy court. The
three Foster children timely appealed here.
DISCUSSION
We review bankruptcy court rulings “under the same standards
employed by the district court hearing the appeal from the bankruptcy court.”
In re National Gypsum Co., 208 F.3d 498, 504 (5th Cir. 2000). Conclusions of
law are reviewed de novo and findings of fact for clear error. Id.
On appeal, the three Foster children contend that their mother is liable
for the property taxes because she has breached her fiduciary duty, either as
their custodial parent or as trustee of the Bonnell property, to pay the property
taxes. The bankruptcy court, largely based on Foster’s testimony at the
evidentiary hearing, held that Foster had not breached any fiduciary duty
imposed by Texas law. The bankruptcy court stated: “The court finds that
there has been full and complete compliance with the fiduciary duty imposed
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on the Debtor. The Court finds that the Debtor had been doing whatever she
could to preserve this Property for the Foster children.”
State law determines the validity of a creditor’s claim, but a bankruptcy
court exercises its equitable powers to allow or disallow the claim as a matter
of federal law. See Matter of Ford, 967 F.2d 1047, 1049–50 (5th Cir. 1992). The
bankruptcy court properly reviewed the validity of the children’s breach of
fiduciary duty claim under Texas law to determine whether to allow it. “Where
the underlying facts are undisputed, determination of the existence, and
breach, of fiduciary duties are questions of law, exclusively within the province
of the court.” National Med. Enters. v. Godbey, 924 S.W.2d 123, 147 (Tex.
1996). The bankruptcy court here held that after hearing Foster’s sworn
testimony, it found “that there has been a full and complete compliance with
the fiduciary duty imposed” on Foster.
We cannot review that determination because, in their appeal to the
district court and again to this court, the children failed to include in the record
a transcript of the evidentiary hearing. As appellants, they had the
responsibility of “ensuring that the record on appeal included all of the items
relevant and necessary to [their] position.” See Matter of Ichinose, 946 F.2d
1169, 1173 (5th Cir. 1991). We are prevented, as was the district court, from
reviewing the facts on which the legal conclusion that there was no breach of
duty was based. The record before the district court did not permit it to find
the bankruptcy court’s factual findings were clearly erroneous. See United
States v. Bob Lawrence Realty, Inc., 474 F.2d 115, 126 (5th Cir. 1973).
Therefore, we reject the claim that there was a breach of fiduciary duty.
Finally, the Chapter 7 Trustee requests that we find the appeal frivolous
and award damages and costs. Federal Rule of Appellate Procedure 38 governs
damages and costs for frivolous appeals. The Chapter 7 Trustee requested
damages and costs in its appellate brief rather than filing a motion. We agree
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with a panel of our court holding, in an unpublished opinion, that a statement
in a brief is insufficient to request damages and costs under Rule 38. See Olive
v. Gonzalez, 31 F. App’x 152 (5th Cir. 2001).
We have the right on our own motion to exercise discretion in concluding
that an appeal is frivolous and to award costs. See FED. R. APP. P. 38; 5TH CIR.
R. 42.2. We exercise that discretion to the extent of dismissing the appeal as
frivolous. The appellant must bear all court costs, but we do not award
damages.
DISMISSED.
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