Crop Production Services, Inc. v. Kelley (In the Matter of Grabanski)

Case Type:
Business
Case Status:
Affirmed
Citation:
16-40830 (5th Circuit, Jun 20,2017) Not Published
Tag(s):
Ruling:
Once a final judgment was entered by default against a partnership, with its former general partners' knowledge, they were not entitled to have that judgment set aside after prevailing on a related claim brought in the same case under a different liability theory.
Procedural context:
Appellants were former partners in general partnership who appealed a district court judgment holding them jointly and severally liable for a default judgment entered against the partnership they used to own. The district court rejected claims against one of the partners on a theory that he was individually liable as a guarantor of the debt, but declined to set aside the default judgment against the partnership.
Facts:
G&K Farms was a general partnership that farmed land in Texas. G&K owed over $600,000 to CPS when two of its general partners, John and Dawn Keeley, assigned their interest in G&K to another general partner, Thomas Grabanski. Years later, Grabanski filed a petition for relief under the Bankruptcy Code, and CPS filed suit against Grabanski and John Keeley. Keeley removed the collection lawsuit to federal bankruptcy court and successfully moved to transfer the case to federal district court. Prior to the transfer, the Keeleys and Grabanski's bankruptcy trustee objected to CPS's proof of claim on the basis that statute-of-limitations defenses existed. In the district court, CPS moved for default judgment against G&K when it failed to answer. The Keeleys did not object to the default judgment, and the district court entered a default judgment totaling more than $1.3 million. The district court granted summary judgment for John Keeley on his argument that the independent guarantee-based claims against him were barred by limitations. However, the district court granted summary judgment for CPS on its claim that the Keeley's were jointly and severally liable to it under Texas law for the amount of the default judgment against G&K.
Judge(s):
Barksdale, Graves and Higginson (per curiam)

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