Holt Texas v. Zayler (In the Matter of T.S.C. Seiber Services)

Citation:
--- F.3d ---, Case No. 13-41153 (5th Cir. Nov. 3, 2014)
Tag(s):
Ruling:
REVERSED judgment of the District Court: "Simply depositing interpleader funds does not automatically mean that the funds have been legally accepted, ownership thereof transferred, and the interpleader relieved of further duty to the court or further obligation to the parties of the dispute. If this were so, the interpleader would be the final judge of its own legal obligations relative to the dispute, by depositing a sum solely determined by it, washing its hands of any relationship to the dispute and walking away whistling Yankee Doodle. . . A party filing an interpleader is at least required to obtain court approval before it can disclaim interest in the deposited sum as satisfaction for any liability it may have had in the dispute." REMANDED to district court to determine the proper mechanism to distribute the interplead funds from the estate, having concluded that appellants' mineral liens were perfected under state law as of the petition date by operation of state law and 11 U.S.C. § 546.
Procedural context:
Appeal from U.S. District Court for the Eastern District of Texas, which affirmed Bankruptcy Court's ruling on summary judgment that funds deposited into the registry of the District Court in an interpleader action (filed pre-petition, but not adjudicated until years after the petition date) were property of the general contractor’s bankruptcy estate because the interpleader action extinguished the subcontractors’ mineral liens.
Facts:
In 2008, EnCana hired the debtor as the general contractor to build a natural gas pipeline. The debtor hired, among others, the two appellants, Holt and TAUG to assist in various aspects of the project. Under EnCana’s contract with the debtor, EnCana could withhold contractual amounts due to the debtor if EnCana became aware of unpaid amounts due to subcontractors. After EnCana paid the debtor half the contract amount, TAUG notified EnCana of an unpaid balance due from the debtor. In September 2009, when EnCana learned that other subs were unpaid, it filed an interpleader action in federal district court, naming the debtor as the general contractor and Holt, TAUG and others as unpaid subcontractors. The next month, in October 2009, before the interpleader action was resolved, the debtor filed a voluntary bankruptcy petition. Holt and TAUG each recorded their mineral lien affidavits and filed notices of the same in the bankruptcy court. EnCana was not discharged from the interpleader action until April 2012. Thereafter, Holt and TAUG filed summary judgment motions in the bankruptcy court, asking the court to determine whether EnCana’s interpleader action, filed pre-petition but not adjudicated until after the petition date, effectively transferred the funds to the estate free and clear of their mineral liens. The bankruptcy court held that neither the Texas Construction Trust Fund Act (“CTFA”) nor Chapter 56 of the Texas Property Code applied to the interpleader fund, because EnCana’s action of depositing the funds into the registry of the District Court meant that the funds became property of the debtor’s bankruptcy estate. The district court affirmed.
Judge(s):
Jolly, Southwick and Haynes; Opinion by E. Grady Jolly

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