United States District Court, W.D. Louisiana, Monroe Division
For Ernest Glynn Roden, Helen Folden Roden, Appellants: Samuel O Henry, IV, LEAD ATTORNEY, Law Office of Samuel Henry IV, W Monroe, LA.
For Synergy Technologies Inc, Sterifx Inc, Appellees: Roger Joseph Naus, LEAD ATTORNEY, Michael Allyn Stroud, Seth Michael Moyers, Wiener Weiss & Madison, Shreveport, LA.
For Eugene Hastings, Trustee, Appellee: E Eugene Hastings, LEAD ATTORNEY, Chapter 13 Trustees Office (MON), Monroe, LA; Fran E Hewitt, LEAD ATTORNEY, U S Trustee's Office (SPORT), Shreveport, LA.
ROBERT G. JAMES, UNITED STATES DISTRICT JUDGE. MAG. JUDGE KAREN L. HAYES.
ROBERT G. JAMES, UNITED STATES DISTRICT JUDGE.
Pending before the Court is the Appeal of Ernest and Helen Roden (" the Rodens") from the Bankruptcy Court's August 21, 2014 order converting the Roden's Chapter 13 bankruptcy to a Chapter 7 liquidation. [Doc. No. 3, Exh. 17].
For the following reasons, the Bankruptcy Court's order is AFFIRMED in its entirety, and the Appellants' Appeal is DISMISSED.
I. Facts and Procedural Background
In 2002, Ernest Roden (" Roden") was granted a patent on safe-acid technology for use primarily in food processing. Roden and others then formed SteriFx, Inc. (" SteriFx"), later succeeded by Synergy Technologies, Inc., (" Synergy"), for the purpose of exploiting the safe-acid technology. Through a series of corporate transactions, Roden assigned the patent to Synergy in 2012.
On April 25, 2011, the Rodens filed for a Chapter 13 bankruptcy. On June 14, 2011, the Rodens attended a 341 meeting of creditors, in which they stated that they did not have any legal claims outstanding and did not intend to file suit against anyone. [Doc. No. 3, Exh. 1, p. 13 of 53]. On July 11, 2013, after four amended plans, and reliance on the Roden's statements that they did not have any outstanding legal claims, the Chapter 13 trustee dismissed the case without discharge for failure to make plan payments. Approximately five months later, on December 20, 2013, Roden filed suit against Synergy and SteriFx for patent infringement, theft, and fraud in the Eastern District of Louisiana (hereafter referred to as " the patent litigation"). See Roden v. Synergy Technologies, Inc., CIV.A. No. 13-6753, 2014 WL 2533718, at *2 (E.D. La. June 4, 2014).
On March 14, 2014, Synergy and SteriFx filed a motion for summary judgment in the patent litigation, asserting judicial estoppel on grounds that Roden
had previously represented that he had no known legal claims. Id. at *1. Roden argued that he only learned of his patent infringement claim after his bankruptcy case was dismissed and, thus, that his current claims were not plainly inconsistent with his previous position and that any misrepresentation to the bankruptcy court was inadvertent. Id. Roden
also contended that, because his bankruptcy was dismissed without discharge, the
bankruptcy court never accepted any representation that he had no patent rights. Id. at *2.
On June 4, 2014, the district court denied Synergy and SteriFx's motion for summary judgment, reasoning that there were material facts at issue because the bankruptcy court " may have revoked any acceptance when it dismissed the plaintiff's bankruptcy without a discharge, " returning the parties to their pre-discharge " status quo ante." Id. (internal citations and quotations omitted).
On September 16, 2014, Synergy and SteriFx (hereafter collectively referred to as " the Appellees") intervened as an interested party in Roden's bankruptcy case and moved the Bankruptcy Court, under Federal Rule of Civil Procedure 60(b), to vacate its July 11, 2013 order of dismissal and to convert Roden's Chapter 13 bankruptcy to a Chapter 7 liquidation. [Doc. No. 3, Exh. 9, pp.14-15]. On September 16, 2014, the Bankruptcy Court conducted an evidentiary hearing and found that Roden had committed fraud and acted in bad faith for failure to disclose his patent claim. [Doc. No. 3, Exh. 17]. Accordingly, the Bankruptcy Court granted the motion. Id.
Sam Henry, Roden's Chapter 13 attorney, failed to appear at that hearing. Id. at 2. The Bankruptcy Court allowed Bradley Drell to substitute as Roden's Chapter 13 attorney. Roden attempted to present three letters from attorneys whom he had consulted regarding his patent law claim, but who had declined to take Roden's case because, inter alia, they believed Roden's patent claim had prescribed. [Doc. No. 3, Exh. 20, pp. 25-26]. Appellees objected to the letters on hearsay grounds. Mr. Drell argued the letters were admissible under the present sense impression exception to the hearsay rule. The Bankruptcy Court upheld Appellees' objection and refused to allow the letters into evidence. Id. at 26.
Roden has timely filed an appeal of the Bankruptcy Court's order to this Court. [Doc. No. 10]. Roden petitions this Court to overrule the Bankruptcy Court's ruling and, alternatively, to permit him to reinstate his case as a Chapter 13 bankruptcy. [Doc. No. 10, p. 16].
Appellees filed an Opposition Brief [Doc. No. 15]. Roden filed a reply. [Doc. No. 16]. Eugene Hastings, the Chapter 13 trustee, also filed an Opposition Brief [Doc. No. 17], to which Roden did not reply.
II. Legal Standard
This Court has jurisdiction over Roden's appeal from the Bankruptcy Court's order pursuant to 28 U.S.C. § 158(a). In this regard, a district court functions as an appellate court, reviewing the bankruptcy court's findings of fact for clear error and the bankruptcy court's conclusions of law de novo. In re Eldercare Properties, Ltd., 568 F.3d 506, 515 (5th Cir. 2009). A court " by definition abuses its discretion when it makes an error of law." In re Superior Crewboats, Inc., 374 F.3d 330, 334 (5th Cir. 2004) (citations omitted); In re Cahill, 428 F.3d 536, 539 (5th Cir. 2005) (" An abuse of discretion occurs where the bankruptcy court '(1) ...