     Case: 09-40439     Document: 00511028547          Page: 1    Date Filed: 02/17/2010




            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                     Fifth Circuit

                                                  FILED
                                                                          February 17, 2010

                                     No. 09-40439                      Charles R. Fulbruge III
                                   Summary Calendar                            Clerk



In the Matter of: BFG Investments LLC,

                                                   Debtor.

______________________________________________________________

JOHN E. VILLEGAS,

                                                   Appellant,
v.

TEXAS STATE BANK; TEXAS REGIONAL BANCSHARES
CORPORATION; BOB NORMAN; SUE CIZLER; PAUL MOXLEY; GLENN
RONEY; RUEBEN COLE; BALDEMAR F. GUTIERREZ,

                                                   Appellees.




                   Appeal from the United States District Court
                        for the Southern District of Texas
                              USDC No. 7:08-CV-112


Before GARZA, CLEMENT, and OWEN, Circuit Judges.
PER CURIAM:*



        *
         Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
   Case: 09-40439     Document: 00511028547     Page: 2   Date Filed: 02/17/2010

                                  No. 09-40439

      John Villegas appeals from the district court’s order affirming the
bankruptcy court’s exercise of core jurisdiction to enter a final order sanctioning
Villegas and dismissing his case. We hold that Villegas impliedly consented to
the bankruptcy court’s entry of final judgment by failing to object to the
bankruptcy court’s exercise of core jurisdiction. Accordingly, we affirm.
                                         I
      Villegas is the majority interest owner in BFG Investments, LLC and BFG
Development, Inc. (collectively BFG). In 2005, each BFG entity filed a voluntary
petition under Chapter 11 of Title 11 of the U.S. Bankruptcy Code, and both
cases were later converted to Chapter 7 proceedings.         Subsequently, BFG
Investments filed an action in state court seeking to prevent Texas State Bank
(TSB) from foreclosing on its real estate. TSB removed the action to bankruptcy
court, and the bankruptcy court declined BFG’s request for a preliminary
injunction to enjoin the foreclosures. The bankruptcy court also imposed the
following sanction on Villegas for his conduct in relation to the preliminary
injunction hearing:
            Mr. John E. Villegas is enjoined from asserting any
            right to any property of BFG Investments, LLC’s
            bankruptcy estate. Without limiting the generality of
            the preceding sentence, Mr. Villegas shall not file any
            lawsuit or make any demand against any person or
            entity asserting any irregularity in the provision of
            insurance or banking services to BFG Investments,
            LLC.
The district court affirmed the imposition of this sanction on appeal. Ultimately,
an agreed final judgment was entered into in the adversary proceeding,
pursuant to which the Chapter 7 trustee released TSB, its agents, successors,
and assigns from any and all claims owned by the bankruptcy estate, including
“any claim that the foreclosures conducted by TSB were unlawful, in violation




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                                  No. 09-40439

of the Bankruptcy Code, Texas law or the documents pledging [BFG
Investments’] property to TSB.”
      Subsequently, Villegas filed an action in state court on behalf of BFG
concerning alleged misconduct by TSB and others that resulted in the
foreclosures at issue in the prior state court and adversary proceedings. The
bank defendants (referred to collectively as TSB) removed to bankruptcy court.
In the notice of removal, TSB alleged:
            The State Court Case involves matters concerning the
            administration of the BFG Bankruptcies and their
            Estates, possible counterclaims by the BFG Bankruptcy
            Estates against TSB, which filed claims in both BFG
            cases, the automatic stay, the use of cash collateral and
            proceedings affecting the liquidation of the assets of the
            BFG Bankruptcy Estates, as well as matter adjudicated
            in an adversary proceeding before the Bankruptcy
            Court. The State Court Case is, therefore, a core
            proceeding pursuant to 28 U.S.C. § 157.
After removal, TSB filed a motion to dismiss and motion for sanctions on the
grounds that Villegas’s claims were adjudicated in the prior adversary action in
bankruptcy court, barred by the court’s sanctions order in that proceeding, and
released by agreed judgment. After a hearing, the bankruptcy court determined
that Villegas had violated the court’s previous sanctions order by filing a state
court complaint asserting causes of action owned by BFG. The court granted
TSB’s motion for sanctions and dismissed the adversary proceeding.
      Villegas then appealed to the district court.      After the district court
dismissed all but one of Villegas’s arguments on appeal as frivolous, the sole
issue was whether the bankruptcy court had core jurisdiction to issue a final
order in the adversary proceeding.       The district court concluded that TSB
asserted core jurisdiction in its notice of removal and that Villegas impliedly
consented to have the bankruptcy court “enter appropriate orders and
judgments” by failing to object to the bankruptcy court’s core jurisdiction or

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                                       No. 09-40439

authority to enter any final order or judgment during the adversary proceeding.
The district court also determined that the current adversary proceeding was a
core proceeding because: (1) it concerned allegations against TSB that were
adjudicated and then released in a prior core proceeding; and (2) it directly
violated the sanctions order of the bankruptcy court in that proceeding.
Accordingly, the district court affirmed the bankruptcy court’s exercise of core
jurisdiction to enter its final order. This appeal followed.
                                              II
       Villegas argues that the district court erred in concluding that the
adversary proceeding in bankruptcy court was a core proceeding.                      Villegas
contends that the adversary proceeding was a non-core proceeding, requiring the
district court to conduct a de novo hearing and treat the bankruptcy court’s
decision as proposed findings of fact and conclusions of law. We review de novo
a bankruptcy court’s conclusion that a proceeding is core under 28 U.S.C.
§ 157(b).1
       Bankruptcy courts exercise jurisdiction in two types of cases: “core”
proceedings, which “invoke a substantive right provided by title 11 or could arise
only in the context of a bankruptcy case,” 2 and non-core proceedings, which are
cases “‘related to’ the bankruptcy case . . . whose outcome could have any
conceivable effect on         the estate being administered in bankruptcy.”3
“Bankruptcy courts have full adjudicative power over core proceedings; in non-
core proceedings they are restricted to issuing proposed findings of fact and


       1
        Gandy v. Gandy (In re Gandy), 299 F.3d 489, 494 (5th Cir. 2002); Ins. Co. of N. Am.
v. NGC Settlement Trust & Asbestos Claims Mgmt. Corp. (In re Nat’l Gypsum Co.), 118 F.3d
1056, 1062 (5th Cir. 1997).
       2
        Morrison v. W. Builders of Amarillo, Inc. (In re Morrison), 555 F.3d 473, 479 (5th Cir.
2009) (quoting Wood v. Wood (In re Wood), 825 F.2d 90, 97 (5th Cir. 1987) (internal quotation
marks omitted)).
       3
           Id.

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                                          No. 09-40439

conclusions of law, which the district court may adopt or reject.”4 However, “[i]n
a non-core proceeding, the parties may consent to have a bankruptcy court ‘enter
appropriate orders and judgments.’ Such consent may be express or implied.”5
Furthermore, “[f]ailure to object in the bankruptcy court may constitute implied
consent.” 6
       Without deciding whether the adversary proceeding was a core proceeding,
we hold that Villegas impliedly consented to the bankruptcy court’s entry of final
judgment by failing to object to the court’s exercise of core jurisdiction. As
required by the Federal Rules of Bankruptcy Procedure, TSB’s notice of removal
stated that the state court case was “a core proceeding pursuant to 28 U.S.C.
§ 157.” 7 Villegas did not file a statement “admitting or denying [the] allegation
in the notice of removal” that this was a core proceeding.8 Furthermore, Villegas
did not object to the bankruptcy court’s exercise of core jurisdiction until his
appeal to the district court. Therefore, because Villegas failed to object in



       4
           Beitel v. OCA, Inc. (In re OCA, Inc.), 551 F.3d 359, 367 (5th Cir. 2008).
       5
           Id. at 368 (quoting 28 U.S.C. § 157(c)(2)).
       6
         Id.; see also M.A. Baheth & Co., Inc. v. Schott (In re M.A. Baheth Constr. Co., Inc.), 118
F.3d 1082, 1084 (5th Cir. 1997) (“[B]y failing to object to the bankruptcy court’s assumption
of core jurisdiction, Baheth impliedly consented to the court’s entry of final judgment.”);
McFarland v. Leyh (In re Tex. Gen. Petroleum Corp.), 52 F.3d 1330, 1337 (5th Cir. 1995) (“A
party who fails to object to a bankruptcy court’s assumption of core jurisdiction consents to
that court’s entry of final judgment.”).
       7
        See FED . R. BANKR . P. 9027(a)(1) (requiring a notice of removal to “contain a statement
that upon removal of the claim or cause of action the proceeding is core or non-core and, if non-
core, that the party filing the notice does or does not consent to entry of final orders or
judgment by the bankruptcy judge”).
       8
         See FED . R. BANKR . P. 9027(e)(3) (“Any party who has filed a pleading in connection
with the removed claim or cause of action . . . shall file a statement admitting or denying any
allegation in the notice of removal that upon removal of the claim or cause of action the
proceeding is core or non-core. If the statement alleges that the proceeding is non-core, it shall
state that the party does or does not consent to entry of final orders or judgment by the
bankruptcy judge.”).

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bankruptcy court to that court’s exercise of core jurisdiction, we hold that
Villegas impliedly consented to the bankruptcy court’s entry of final judgment.
                               *        *         *
      Accordingly, we AFFIRM the judgment of the district court.




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