In the Matter of: BUCCANEER RESOURCES, L.L.C., BUCCANEER ENERGY LIMITED, BUCCANEER ENERGY HOLDINGS, INCORPORATED, BUCCANEER ALASKA OPERATIONS, L.L.C., BUCCANEER ALASKA, L.L.C., KENAI LAND VENTURES, L.L.C., BUCCANEER ALASKA DRILLING, L.L.C., BUCCANEER ROYALTIES, L.L.C., KENAI DRILLING, L.L.C., Debtors
CURTIS BURTON, Appellee MERIDIAN CAPITAL CIS FUND; MERIDIAN CAPITAL INTERNATIONAL FUND; FRED TRESCA; RANDY A. BATES; BRANTA II, L.L.C., Appellants
from the United States District Court for the Southern
District of Texas
WIENER, SOUTHWICK, and COSTA, Circuit Judges.
COSTA, Circuit Judge
Buccaneer Resources LLC filed for bankruptcy, it fired its
CEO, Curtis Burton. Burton filed a claim for breach of
contract in the bankruptcy, but later dropped that and filed
a tortious interference with contract claim in state court
against Buccaneer's secured creditor, Meridian Capital
CIS Fund. Meridian removed the case to federal court, arguing
that the claim belonged in the bankruptcy. The bankruptcy
court disagreed, sending the tortious interference claim back
to state court. The district court affirmed.
dispute about jurisdiction turns on whether the tortious
interference claim belongs to Burton, in which case it should
be heard in state court, or to the debtor Buccaneer, in which
case bankruptcy court is the proper forum. Because the claim
seeks to recover for a direct injury to Burton, we agree with
the bankruptcy and district courts that he can pursue it in
was Buccaneer's CEO from the company's founding in
2006 until May 2014. Along with affiliated entities,
Buccaneer was an oil exploration and production company.
Although companies that hit gushers get the attention,
Buccaneer had the more common experience for oil and gas
ventures: it never struck it big.
Buccaneer's fortunes dwindled, Meridian Capital CIS Fund
became its most important secured creditor. By January 2014,
it held all of Buccaneer's senior debt, securing it with
a blanket lien over all Buccaneer's assets. The purchase
of senior debt rescued Buccaneer from immediate insolvency,
but it was only a temporary life raft-Buccaneer filed for
Chapter 11 in May.
before that bankruptcy filing, Buccaneer fired Burton. Burton
says the termination violated the terms of his contract and
triggered a penalty worth three years of his base salary. He
contends that Meridian was involved in Buccaneer's
decision. According to Burton, three of the four Buccaneer
board members, that is every board member other than Burton,
had close ties to Meridian-some were even appointed by it. In
emails, Meridian referred to intriguing assets Buccaneer
controlled, assets that could benefit Meridian if Buccaneer
was operated by a new CEO it controlled. Burton also alleges
that Meridian contacted the board and informed it that
Meridian would no longer invest or loan money to Buccaneer
unless Burton was fired.
filed a claim in the bankruptcy but later withdrew it.
Buccaneer and Meridian eventually reached a settlement in
which Buccaneer released Meridian from any potential claims
Buccaneer may have had for $10 million. That settlement was
incorporated into Buccaneer's bankruptcy plan.
then filed this suit against Meridian (and several affiliates
and individual advisors for the fund) in state court,
alleging tortious interference with contract as well as
tagalong claims of conspiracy and assisting. Meridian removed
the case to the bankruptcy court, arguing that the claims
belonged to the debtor's estate and were thus released in
the Buccaneer-Meridian settlement. The bankruptcy court
mostly disagreed, concluding that the tortious interference
claim belonged to Burton and thus should be litigated in
state court. The district court later remanded all claims to
state court as the follow-on claims depended on the success
of the tortious interference claims. This appeal followed,
and the parties agree that the fate of all claims turns on
what we decide about the tortious interference claim.
the bankruptcy estate or a creditor can pursue a claim
against third parties is a recurring issue in bankruptcy law.
In re Seven Seas Petroleum, Inc., 522 F.3d 575 (5th
Cir. 2008), instructs us to focus on whether the creditor has
suffered a direct injury or one that is derivative of an
injury to the debtor. Id. at 584. If the
harm to the creditor comes about only because of harm to the
debtor, then its injury is derivative, and the claim is
property of the estate. Id.; see also 11
U.S.C. § 541(a)(1). In that situation, only the
bankruptcy trustee has standing to pursue the claim for the
estate so that all creditors will share in any recovery.
Seven Seas, 522 F.3d at 584.
direct-injury claims that belong to a particular creditor or
group of creditors, the simple case is when the claim does
not involve any harm to the debtor. These cannot be part of
the estate. Id. at 584 (quoting In re Educators
Grp. Health Trust, 25 F.3d 1281, 1284 (5th Cir. 1994)).
But even when the conduct harms the debtor, the creditor may
also have a claim if its asserted injury does not flow from
injury to the debtor. This means that the estate and a
creditor may have separate claims against a third party
arising out of the same events. Seven Seas, 522 F.3d
at 585, 590; Ed ...