CHS, Incorporated v. Plaquemines Holdings, L.L.C.
2013 U.S. App. LEXIS 22473
| 5th Cir. | 2013Background
- CHS, Inc. and South Louisiana Ethanol, L.L.C. (SLE) own a fifty-fifty interest in Land, a single asset (4.5 acres).
- SLE filed Chapter 11 and, per its liquidation plan, dissolved CHS-SLE Land, L.L.C. and partitioned Land; sale of assets was approved under the plan.
- During dissolution, SLE sold an option to Plaquemines Holdings, L.L.C. to purchase SLE’s interests in Land; Plaquemines later assigned the option to Plaquemines.
- CHS sued, alleging the option transfer was the assignment of a litigious right under Article 2652, entitling redemption by reimbursing Plaquemines plus interest.
- District court dismissed, ruling Article 2652 does not apply to a sale conducted within Chapter 11; CHS appealed.
- Louisiana law’s judicial-sale exception, based on Bluefields and related authority, treats court-approved or adjudicated sales as exempt from Article 2652 redemption.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did SLE’s sale of the option constitute an assignment of a litigious right? | CHS contends assignment of litigious right occurred via sale of the option. | Plaquemines argues there was no assignment of a litigious right because CHS lacks an obligor status in Article 2652. | Yes; the right was litigious and assignable. |
| Does Article 2652 permit redemption where the litigious right is sold during a bankruptcy proceeding? | CHS seeks redemption by paying Plaquemines the option price with interest. | Plaquemines maintains Article 2652 governs such redemption only in non-judicial assignments. | Article 2652 applies to the underlying litigious right; redemption is possible unless exempt. |
| Is the sale of the option by SLE exempt from Article 2652 under the judicial-sale exception? | Bluefields/Early/others could limit exception, not applying to Chapter 11 plan sales. | Sale—confirmed by a Chapter 11 plan, planned and supervised by a court—fits the judicial-sale exception. | Yes; the sale falls within the judicial-sale exception; CHS cannot redeem. |
| Does a Chapter 11 liquidation sale fall within the judicial-sale exception for redemption under Article 2652? | Plan-supported sales are not conventional assignments and should not qualify for the exception. | Chapter 11 plan confirmations create court-ordered, judicially supervised sales that fit the exception. | Yes; a confirmed Chapter 11 liquidation sale qualifies as a judicial sale under the exception. |
Key Cases Cited
- Crain v. Waldron, 210 La. 561, 27 So.2d 333 (La. 1946) (illustrates assignment of litigious right when rights unsettled during suit)
- Bluefields S.S. Co. v. Lala Ferreras Cangelosi S.S. Co., 133 La. 424, 63 So. 96 (La. 1913) (recognizes judicial sale as exempt from Article 2652)
- Early v. Black, 12 La. 205 (La. 1838) (Article 2652 applies to conventional assignments; not to adjudications by public officer)
- Hughes v. Harrison, 7 Mart. (n.s.) 227 (La. 1828) (establishes judicial-sale framework exempting certain transfers from Article 2652)
- Calderera v. O’Carroll, 551 So.2d 824 (La. Ct. App. 1989) (discusses litigious-right redemption in Louisiana appellate context)