Spicer v. Laguna Madre Oil & Gas II, L.L.C. (In Re Texas Wyoming Drilling, Inc.)
647 F.3d 547
5th Cir.2011Background
- Texas Wyoming Drilling, Inc. filed Chapter 11, with a plan approving the liquidation of shareholder interests.
- The plan’s Retention of Causes of Action reserved all rights to pursue Estate Actions, including Chapter 5 claims, with sole authority to prosecute.
- The disclosure statement described Estate Actions, including avoidable transfers under Chapter 5, and identified various pre-petition shareholders as potential defendants for fraudulent transfer claims valued around $4 million.
- A few months post-confirmation, TWD sued thirty-two former shareholders for pre-petition dividends and transfers (Avoidance Actions) under 11 U.S.C. §§ 544, 548, 550 and Texas Business & Commerce Code.
- Laguna Madre Oil & Gas II, L.L.C. moved for summary judgment arguing lack of standing; the bankruptcy court sua sponte converted to Chapter 7 and Trustee succeeded to the action.
- The district court denied Laguna’s motion; Laguna petitioned for direct appeal which the Fifth Circuit granted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trustee has standing to pursue Avoidance Actions after confirmation | Trustee retained claims via plan and disclosure statement. | Retention was insufficient or too vague to preserve standing. | Yes; plan and disclosure statement sufficiently retained Avoidance Actions. |
| Whether judicial estoppel bars the trustee from pursuing the Avoidance Actions | No inconsistent position; retention shown in plan/disclosure. | Inconsistent post-confirmation conduct could raise estoppel. | No judicial estoppel; retention created consistent position. |
| Whether res judicata bars the Avoidance Actions | Confirmation preserved the claims; not precluded. | Finality of confirmation could bar later actions. | Not barred by res judicata; confirmation reserved open claims. |
Key Cases Cited
- In re United Operating, L.L.C., 540 F.3d 351 (5th Cir. 2008) (standing requires explicit retention in plan; disclosure considered)
- In re Ice Cream Liquidation, Inc., 319 B.R. 324 (Bankr. D. Conn. 2005) (plan need not name every prospective defendant; retention suffices)
- In re Coastal Plains, Inc., 179 F.3d 197 (5th Cir. 1999) (disclosure statement and plan interplay; preservation for standing)
- In re Superior Crewboats, Inc., 374 F.3d 330 (5th Cir. 2004) (judicial estoppel requirements and equitable considerations)
- In re Paige, 610 F.3d 865 (5th Cir. 2010) (trustee claims reservation; res judicata considerations)