- No. 11-20777 (5th Cir. March 20, 2012)
- An affidavit filed in support of a claimant's lien against mineral property did not indicate it was sworn in the presence of the affiant. The failure to provide a properly sworn affidavit in support of the recorded lien rendered the lien invalid and supported the grant of summary judgment to the Chapter 11 Trustee that objected to the lienholder's claim. Under Texas law, to secure a lien against mineral property, the lien claimant must file an affidavit that includes a "jurat", a certification by a third party, such as a notary, that the affiant swore to or affirmed the statement in issue before the authorized third party. The crux of the inquiry is whether the affiant was sworn in the notary's presence and the notary certifies it witnessed the oath. The notary certification contained in the affidavit submitted by the appellant did not contain lanaguage showing that the oath was sworn in the notary's presence. Without the proper notary certification, there is no jurat, rendering the affidavit invalid. The appellant's alternative argument was also rejected by the Fifth Circuit. The appellant asserted it was a secured creditor by its status as a third-party beneficiary to a joint operating agreement between the debtor and general contractor that employed the appellant, a subcontractor. While the joint operating agreement did provide for payments to subcontractors to avoid the filing of liens against the property, this right was merely an incidental benefit under the contract. The joint operating agreement lacked an express intent to directly benefit the appellant, a third party.
- Procedural context:
- The Fifth Circuit Court of Appeals affirmed the District Court for the Southern District of Texas' affirmance of the bankruptcy court's grant of summary judgment to the chapter 11 Trustee.
- The debtor entered into a joint operating agreement with a general contractor to operate, drill and complete the gas wells it owned. In turn, the general contractor hired various subcontractors, including the appellant, to perform engineering services. After the general contractor failed to pay, the appellant timely filed and properly recorded an affidavit in support of its lien against the mineral property. Subsequently, the debtor was the subject of an involuntary chapter 7 that was later converted to a chapter 11 case and a chapter 11 Trustee was appointed. The appellant filed its claim against the debtor with the bankruptcy court. The chapter 11 Trustee objected to the appellant's claim, contending that the affidavit was insufficient because it lacked the required "jurat" under Texas law. The bankruptcy court granted summary judgment to the chapter 11 Trustee on his claim objection. The appellant appealed to the district court, which affirmed. The appellant then timely appealed that affirmance to the Fifth Circuit, which affirmed the district court.
- Reavley, Smith and Prado (per curiam)
George Czaplinski v. Bank of America
Summarizing by Lars Fuller
3144 in the system
1 Being Processed