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Dooley v. MB Industries LLC

United States District Court, W.D. Louisiana, Shreveport Division

January 22, 2018





         Before the Court is Petitioners David M. Dooley, Sr., individually and as Trustee for the BD 2008 Family Trust No. 1, Brenda Dooley, individually and as Trustee for the DMD 2008 Family Trust No. 1, David M. Dooley, Jr., and Chris Vallot's (collectively the “Dooley Parties”) “Motion for Leave to Appeal” (Record Document 1) seeking to appeal four separate rulings of the Bankruptcy Court (Adversary Documents 182, 183, 185, and 192) “to the extent any of the rulings are considered interlocutory.” These orders were filed in an adversary proceeding, David. M. Dooley, Sr., et al. v. MB Industries, LLC, et al., (Bankruptcy No. 15-1005) to the bankruptcy case, In re: MB Industries, LLC, (Bankruptcy No. 14-12416).[1] The Dooley Parties filed no supporting memorandum. Respondents Carmel Enterprises, LLC, Carmel Foods, LLC, Carmel Group, Inc., Hallwood Financial Limited, Hallwood Modular Buildings, LLC, X-Treme Doors, LLC, Frederick J. Gossen, Jr., Gert Lessing, and Anthony Gumbiner (collectively the “Respondents”) filed their opposition brief on April 1, 2016, arguing there are no grounds that warrant leave to appeal the orders.[2] For the reasons contained in the instant ruling, the Dooley Parties' Motion is DENIED.


         The Dooley Parties initiated this adversary proceeding seeking rescission of a transaction which occurred on October 27, 2011, pursuant to which David Dooley, Sr. (“Mr. Dooley”) sold and transferred interests in various companies, including the Debtor, MB Industries, LLC (“MBI”). See Adversary Document 1. The consideration promised to Mr. Dooley for the sale of the business interests included: (1) $250, 000 cash; (2) a promissory note for $2, 750, 000; and (3) monthly payments to his wife, son, and son-in-law for an agreed period of time. See id. The cash due at closing in the amount of $250, 000 was paid; however, the promissory note has not been paid, except for one interest payment made in February 2012 for approximately $88, 000, and the payments to Mr. Dooley's family members were terminated in May 2013. See id.

         In February 2013, Mr. Dooley filed suit in Louisiana state court to enforce his rights on the note and amended his petition in February 2014 to first seek rescission. See id. With Mr. Dooley's suit pending, MBI entered bankruptcy in October 2014, automatically staying the Dooley Parties' state court action. See Bankruptcy Document 1. The Dooley Parties then sought authorization from the MBI Bankruptcy Court to proceed with their state court action, but their request was denied by Judge Norman. See Bankruptcy Document 252. In response, the Dooley Parties filed their Complaint to Rescind and Dissolve Contract, and for Damages to initiate this adversary proceeding in the Bankruptcy Court on March 10, 2015. See Adversary Document 1.

         The suit for rescission is based upon non-performance and failure to pay the purchase price as contemplated by La. C.C. arts. 2013 and 2561. See id. In addition, the Dooley parties allege fraud and vices of consent. See id. Count Three of the Complaint alleges that Gert Lessing (“Lessing”) and Anthony Gumbiner (“Gumbiner”) were liable for mismanagement of MBI, and Count Four alleges intentional infliction of emotional distress for the alleged failure to pay pursuant to certain agreements. See id. Additionally, the Dooley Parties filed a Third Party Demand against Blank, MBI's chief financial officer, and Crossclaims against Frederick J. Gossen, Jr. (“Gossen”) and Lessing, individuals who served as MBI managers during the period of time MBI is alleged to have acted fraudulently. See Adversary Document 115. The instant Motion pertains to four orders from the Bankruptcy Court in the adversary proceeding which are described below.

         1. Order Granting Rule 12(b)(6) Motion to Dismiss Third Party Demand and Extending Stay to Third Party (“Order #1”)

         Third Party Defendant, Blank, filed a motion to dismiss under Rule 12(b)(6), arguing that a defendant in a fraudulent transfer action in bankruptcy has no claim for contribution or indemnity under bankruptcy law. The Dooley Parties opposed the motions, pointing out they were not asserting indemnity claims under bankruptcy law, but based their claims under Louisiana law of indemnity. Nevertheless, the Bankruptcy Court granted the motion to dismiss (Adversary Document 182) finding “there is no right to indemnification or contribution stemming from the recovery of an avoidable transfer in this case.”

         2. Order Granting Rule 12(b)(6) Motion to Dismiss Crossclaim (“Order #2”)

         The Bankruptcy Court dismissed crossclaims (Adversary Document 183) made by the Dooley Parties seeking indemnity and contribution from Defendants Lessing and Gossen due to “wrongdoing” and “fraudulent conduct.” The Bankruptcy Court incorporated its previous ruling in Adversary Document 182 in dismissing the Dooley Parties' crossclaims.

         3. Order Granting Rule 12(b)(6) Motion to Dismiss Counts Three and Four of Plaintiffs' original and amended Complaints (“Order #3”)

         Respondents Carmel Enterprises, LLC, Carmel Group, Inc., Hallwood Financial Limited, Hallwood Modular Buildings, LLC, Gossen, Lessing, and Gumbiner filed a 12(b)(6) motion to dismiss Counts Three and Four arguing the Complaint did not state any facts entitling the Dooley Parties to relief. The motion was granted after the Dooley Parties filed no opposition (Adversary Document 185).

         4. Order Denying Motion to Strike Amended Pleading and Motion for Leave to Amend (“Order #4”)

         The Dooley Parties moved to strike (alternatively requesting leave to file an amended pleading) Hallwood Financial Limited and Hallwood Modular Buildings, LLC, and their principals, Gumbiner and Lessing, (collectively the “Hallwood Parties”) amended Complaint in which they withdrew their jury trial demand. That motion was denied (Adversary Document 192).

         The Dooley Parties filed the instant Motion requesting leave to appeal the four orders described above on March 16, 2016. See Record Document 1. The Dooley Parties contend Orders #1 and #2 are final judgments, for which an appeal exists as of right. See id. at 4 and 6. If the orders are not final judgments, the Dooley Parties argue the Court should grant them leave because “there is a serious question of jurisdiction in this case.” Id. at 9. Regarding Order #4, the Dooley Parties suggest the Bankruptcy Court's decision to allow withdrawal of the demand for a jury trial without compliance with Rule 38(d) was erroneous and requires an immediate appeal. See id. at 11.[3] Respondents suggest the four orders at issue are all interlocutory orders, and the Dooley Parties have failed to state any grounds or exceptional circumstances that warrant an immediate appeal. See Record Document 4 at 6.


         I. Legal Standards

         A. Appeal of Bankruptcy ...

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