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In re T.S.C. Seiber Services, L.C.

United States Court of Appeals, Fifth Circuit

November 3, 2014

In the Matter of: T.S.C. SEIBER SERVICES, L.C., Debtor HOLT TEXAS, LIMITED, doing business as Holt Cat; TRANSAMERICAN UNDERGROUND, LIMITED, Appellants
v.
STEPHEN J. ZAYLER, Appellee

Page 247

Appeal from the United States District Court for the Eastern District of Texas.

For Holt Texas, Limited, doing business as: Holt Cat, Appellant: Guy Wade Caldwell, Barton, East & Caldwell, P.L.L.C., San Antonio, TX; James S. Wilkins, Willis & Wilkins, L.L.P., San Antonio, TX.

For Transamerican Underground, Limited, Appellant: Vernon Childs Howerton Jr., Gray Reed & McGraw, P.C., Dallas, TX.

For Stephen J. Zayler, Appellee: Jason Riley Searcy, Joshua Powers Searcy, Searcy & Searcy, P.C., Longview, TX.

Before JOLLY, SOUTHWICK, and HAYNES, Circuit Judges.

OPINION

Page 248

E. GRADY JOLLY, Circuit Judge:

Holt Texas, Ltd. (" Holt" ) and Transamerica Underground Limited (" TAUG" ), subcontractors of the bankrupt T.S.C. Seiber (" Seiber" ), appeal the September 24, 2013, district court judgment affirming a prior bankruptcy court order. The district court held that funds of an interpleader action, filed by EnCana Oil & Gas (USA) Inc. (" EnCana" ), were property not of EnCana, but property of the bankruptcy estate of Seiber because the interpleader action extinguished the earlier construction liens of Holt and TAUG. Thus, on appeal they challenge the district and bankruptcy courts' reasoning and conclusions that: (1) the Texas Construction Trust Funds Act did not apply, because EnCana's deposit of the funds was not a qualifying payment triggering creation of a trust fund; and (2) Appellants did not have valid, perfected mineral liens under chapter 56 of the Texas Property Code. We consider Appellants' contentions de novo and, for the reasons that follow, we VACATE the district court's judgment and REMAND for further proceedings not inconsistent with this opinion.

I.

The facts are undisputed. In 2008, EnCana engaged Seiber to build a natural gas pipeline in Robertson County, Texas, known as the Camp Creek 12-inch Pipeline Project (" the project" ). Holt and TAUG were among the subcontractors of Seiber, the primary contractor. Holt provided heavy machinery, parts, and services; TAUG installed over two thousand linear feet of pipe. The agreement between EnCana and Seiber provided that if a subcontractor notified EnCana that it had not been paid by Seiber, EnCana would withhold all sums remaining and make no further payments to Seiber.

In due course, EnCana made two payments to Seiber for exactly half of the total contract price. Following those payments, however, in August 2009, TAUG notified EnCana that it was not being paid and, under Texas law, would look to EnCana for payment of the $96,300 that TAUG claimed it was owed. Accordingly, EnCana withheld the remaining half of the contract payments. It later received reports that Seiber failed to pay other subcontractors as well.

In September 2009, EnCana filed an interpleader, naming Seiber and the project's subcontractors, including Holt and TAUG, as defendants, in the Northern District of Texas. EnCana sought protection of its property and a declaration shielding it from further liability for the unpaid amounts owed by Seiber to its subcontractors and deposited just more than $345,000 into the district court registry, disclaiming any interest in the interpleader funds.

Page 249

In October 2009, Seiber filed a voluntary petition for bankruptcy relief under Chapter 11 of the Bankruptcy Code in the Eastern District of Texas. The petition was quickly converted to a Chapter 7 petition, and Appellee Stephen Zayler was appointed trustee of the bankruptcy estate. Shortly thereafter, Holt, like TAUG earlier, formally notified EnCana that it had not been paid for work done on the project and would look to EnCana for payment of the $207,480.80 it was owed. It is undisputed that EnCana was already aware Holt had performed work and not been paid because EnCana included Holt as a defendant in the earlier-filed interpleader action.

In November 2009, TAUG filed its Affidavit Claiming Mineral Lien, against property of EnCana, in the public records of Robertson County, Texas. Holt filed its ...


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