Ingalls v. Beutel, et al, No. 08-50558 (5th Cir. 2009)

 Annotate this Case
Download PDF
IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED June 16, 2009 No. 08-50558 Charles R. Fulbruge III Clerk In The Matter Of: GARY L BRADLEY Debtor RONALD INGALLS, Chapter 7 Trustee Appellant v. JAMES D GRESSETT Appellee Appeal from the United States District Court for the Western District of Texas USDC No. 1:05-CV-461 Before REAVLEY, WIENER, and SOUTHWICK, Circuit Judges. PER CURIAM:* Plaintiff-Appellant Ronald Ingalls, as Chapter 7 Trustee of the estate of debtor Gary Bradley, appeals the district court s grant of summary judgment in favor of Defendant-Appellee James Gressett, dismissing the Trustee s Texas law claim against Gressett for conspiring with Bradley to fraudulently transfer * 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 R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR .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. No. 08-50558 assets out of Bradley s estate. The district court held that the Trustee lacked standing to bring the civil conspiracy claim. Reviewing both the grant of summary judgment and the underlying legal issue of standing de novo, Texas v. United States, 497 F.3d 491, 495 (5th Cir. 2007), we AFFIRM the district court s judgment for the following reasons: 1. It is well established that a trustee has no standing to bring tort claims that belong exclusively to creditors of the bankruptcy estate. See Caplin v. Marine Midland Grace Trust Co., 406 U.S. 416, 433 34, 92 S. Ct. 1678, 1688 (1972) (holding that a trustee lacked standing to sue a third party for damages incurred by debenture holders of the corporate debtor); In re Seven Seas Petroleum, Inc., 522 F.3d 575, 584 (5th Cir. 2008) (citing Caplin for the proposition that the trustee has no right to bring claims that belong solely to the estate s creditors ); In re Educators Group Health Trust, 25 F.3d 1281, 1284 (5th Cir. 1994) (same). We agree with our sister circuit that Congress s adoption of the strongarm clause, 11 U.S.C. § 544(a), did not supersede Caplin s holding that a trustee lacks authority to assert a claim against a third party that does not comprise part of the bankruptcy estate. See In re Ozark Rest. Equip. Co., 816 F.2d 1222, 1226 30 (8th Cir. 1987). Although Caplin predated the enactment of § 544(a), we, too, find it extremely noteworthy that Congress considered including a provision that would have expressly overruled Caplin but declined to do so. See id. at 1227 28 & nn. 9 & 10; see also Williams v. Cal. 1st Bank, 859 F.2d 664, 667 (9th Cir. 1988) (agreeing with the Eighth Circuit s interpretation of the legislative history behind § 544(a)). The Bankruptcy Code does not authorize the Trustee to collect property or money except that which is owed to the estate. 2. The Trustee alternatively contends that the conspiracy claim belongs to the bankruptcy estate because, unlike in Caplin, the claim here seeks to remedy an injury to all of Bradley s creditors and not merely a subset thereof. Even 2 No. 08-50558 assuming that any or all of Bradley s creditors could properly assert the claim, we disagree that this fact alone confers standing on the Trustee. This court recently clarified that, when determining whether a claim is property of the bankruptcy estate such that the trustee has standing to assert it under 11 U.S.C. § 541(a), the distinction between claims that are personal to some creditors or general as to all is relevant only after a claim has been analyzed to determine whether it is properly assertable by the debtor or creditor, and not as a substitute for the analysis itself. In re Seven Seas Petroleum, 522 F.3d at 588 (construing In re Schimmelpenninck, 183 F.3d 347 (5th Cir. 1999) (emphasis added)). For instance, a claim that would ordinarily be brought by creditors nonetheless belongs to the debtor s estate if it pursues property in which the debtor retains an equitable interest, see, e.g., In re MortgageAmerica Corp., 714 F.2d 1266, 1275 (5th Cir. 1983) (construing a fraudulent transfer claim to belong to the debtor s estate), or if the debtor itself could have brought the claim under applicable state law, see, e.g., id. at 1276 77 (holding Texas law permits a corporate debtor to bring a trust fund (denuding) action); In re S.I. Acquisition, Inc., 817 F.2d 1142, 1152 53 (5th Cir. 1987) (holding an alter ego action could be brought by the debtor corporation under Texas law). But Texas law does not suggest that Bradley has any cognizable legal or equitable interest in the damages sought here to replace assets that he conspired to fraudulently transfer or that Bradley could seek damages from his co-conspirator for assisting with those transfers. Indeed, the Trustee does not contend otherwise. Thus, in suing Gressett for his role in the conspiracy, the Trustee does not represent the creditors interests in Bradley s conspiracy claims against Gressett but attempts to assert the creditors own direct claim against Gressett in which Bradley has no interest. This he cannot do. See In re Seven Seas Petroleum, 522 F.3d at 588 (distinguishing between a trustee s permissible enforcement of the creditors interests in the debtor s claims against a third party, and a trustee s 3 No. 08-50558 impermissible attempt to assert the creditors direct claims against third parties (quoting Steinberg v. Buczynski, 40 F.3d 890, 893 (7th Cir. 1994)). Finding no standing on the part of the Trustee to bring the action for civil conspiracy, we conclude that the district court properly granted summary judgment in favor of Gressett. AFFIRMED. 4

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.