     Case: 10-20134   Document: 00511520576   Page: 1   Date Filed: 06/24/2011




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

                                                                   FILED
                                                                 June 24, 2011
                                 No. 10-20134
                                                                 Lyle W. Cayce
                                                                      Clerk
PRUDENTIAL MORTGAGE CAPITAL COMPANY, L.L.C.; P.M.C.F
PROPERTIES, L.L.C.,

                                          Plaintiffs - Appellees
v.

NAMIR FAIDI; 500 SEAWALL I, LTD.; SUNHILL P. B. I., INC.,

                                          Defendants - Appellants

            ************************************************
                           Consolidated with
                              No. 10-20423
In re: NAMIR FAIDI,

                                          Debtor

NAMIR FAIDI,

                                          Appellant
v.

PRUDENTIAL MORTGAGE CAPITAL COMPANY, L.L.C.; PMCF
PROPERTIES, L.L.C.,

                                          Appellees


                 Appeals from the United States District Court
                      for the Southern District of Texas
                                  08-CV-1310
                                  10-CV-1149
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                                Nos. 10-20134, 10-20423

Before GARWOOD, SMITH, and STEWART, Circuit Judges.
PER CURIAM:*
       Namir Faidi (Faidi) personally guaranteed a loan with Prudential
Mortgage Capital Company, LLC (Prudential).                  Prudential sued Faidi for
making what it believed were material misrepresentations that affected its
decision to make the loan. Four days prior to trial, Faidi filed for Chapter 7
bankruptcy. Subsequently, the district court found in Prudential’s favor, and the
bankruptcy court held that Faidi’s debt to Prudential was not dischargeable. We
AFFIRM both judgments.
                                              I.
       Faidi is a real estate developer in the Houston-Galveston, Texas area. He
was at all times in control of 500 Seawall I, Ltd. (Seawall) and Sunhill P. B. I.,
Inc. (Sunhill). In 2004, Seawall began to develop a retail and shopping center.
In need of a permanent loan for the project, Seawall contacted Prudential. After
performing due diligence on the property and the prospective buyer, Prudential
approved and made a loan to Seawall in the amount of $13,860,000.                          As
consideration for the loan, Prudential, Seawall, and Faidi executed a series of
loan documents, in which Faidi assumed personal liability for the loan and
guaranteed payment to Prudential for all losses and damages incurred, suffered,
or sustained by Prudential arising out of, or relating to, among other things, any
fraud, material misrepresentation, failure to disclose a material fact, or a failure
to disclose in any of the materials provided to Prudential by the borrower.
       After Prudential funded the loan, Seawall never made a loan payment.
Accordingly, Prudential foreclosed on the retail and shopping center. The
foreclosure resulted in a deficiency in the borrower’s loan account of more than


       *
         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.

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                             Nos. 10-20134, 10-20423

$3.2 million. Just prior to foreclosure, Prudential learned that Faidi made what
Prudential believed to be misrepresentations that were material to its decision
to make the loan to Seawall.               Prudential also believed that the
misrepresentations led to the deficiency following foreclosure. Subsequently,
Prudential filed suit against Faidi for breach of contract, common law fraud, and
statutory fraud under section 27.01 of the Texas Business and Commerce Code.
Trial was set for September 15, 2009.
      Four days before trial, Faidi filed a suggestion of bankruptcy (hereinafter
the bankruptcy case). Per the Southern District of Texas’s general practice, the
bankruptcy case was automatically referred to a bankruptcy judge.              Also,
pursuant to 11 U.S.C. § 362, all claims against Faidi were automatically stayed,
including the claims alleged in Prudential’s civil suit (hereinafter the civil suit).
The district court withdrew the reference to the bankruptcy court, lifted the stay
of the civil suit, and conducted a hearing on September 14, 2009.
      Following the hearing, the district court re-referred all bankruptcy
matters to the bankruptcy court and reset the trial for December 15, 2009. On
October 27, 2009, the district court entered an order allowing the parties to file
an amended joint pretrial order and amended trial materials. On November 10,
2009, Faidi’s counsel for the civil suit filed a motion to withdraw. The district
court granted the motion on November 25, 2009 and gave Faidi until December
30, 2009 to obtain new counsel.
      Faidi, appearing pro se, filed a motion for a continuance of trial on
December 3, 2009, which the district court denied on December 7, 2009. The
next day, Prudential filed amended trial materials. Faidi, through new trial
counsel, filed a second motion for a continuance on December 9, 2009. The
district court, again, denied Faidi’s motion.
      On December 15, 2009, the civil suit began. Ultimately, the district court
entered findings and conclusions, holding that Faidi willfully and maliciously

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                              Nos. 10-20134, 10-20423

harmed Prudential by committing fraud and knowingly making material
misrepresentations in connection with the loan. The same day, the district court
entered its final judgment. Faidi appealed the district court’s judgment to this
court.
         On December 17, 2009, two days after the civil suit commenced,
Prudential filed an adversary proceeding in the bankruptcy case, objecting to the
dischargeability of the debt owed to Prudential by Faidi (hereinafter the
dischargeability action). On February 26, 2010, following the district court’s
entry of judgment against Faidi, Prudential filed a motion for summary
judgment in the bankruptcy case, regarding dischargeability. Faidi opposed
Prudential’s motion for summary judgment and sought an abatement of the
bankruptcy court’s determination of the motion, pending appeal of the civil suit.
The bankruptcy court denied Faidi’s request to abate the adversary proceeding
and entered summary judgment in favor of Prudential. Faidi appealed the
bankruptcy court’s determination. The district court certified Faidi’s challenge
for direct appeal to this court. We granted the district court’s certification and
consolidated that case with Faidi’s appeal of the district court’s judgment in the
civil suit.
         On appeal, Faidi does not challenge the merits of either judgment. In
regard to the civil suit, he argues that (1) the district court did not have
jurisdiction over his case, (2) the district court erred in allowing Prudential to
amend its complaint, and (3) the district court erred in denying his motions for
a continuance. Regarding the bankruptcy court’s judgment, Faidi argues that
it erred in denying his motion to abate.
                                          II.
A.       Subject Matter Jurisdiction
         Faidi argues that the district court did not have jurisdiction to decide the
dischargeability action. Faidi claims that the dischargeability action, a core

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                             Nos. 10-20134, 10-20423

bankruptcy proceeding, was referred to the bankruptcy court. Therefore, he
contends, after the district court re-referred the bankruptcy case to the
bankruptcy court, the district court no longer had jurisdiction to try the
dischargeability action.
      “The court reviews issues of jurisdiction de novo.” Espinal v. Holder, 636
F.3d 703, 705 (5th Cir. 2011).        Under 28 U.S.C. § 1334(a), bankruptcy
jurisdiction is vested in the district court. However, a district court can refer any
case or proceeding to a bankruptcy court for further proceedings. 28 U.S.C.
§ 157(a). Furthermore, “[t]he district court may withdraw, in whole or in part,
any case or proceeding referred” to the bankruptcy court “on its own motion or
on timely motion of any party, for cause shown.” Id. § 157(d).
      Here, Faidi’s challenge to the district court’s jurisdiction mistakenly
conflates the civil suit and the bankruptcy case. Specifically, Prudential filed its
civil suit, and thereafter, Faidi filed the bankruptcy case. Relevant here, two
events occurred because Faidi filed the bankruptcy case. First, the case was
automatically referred to the bankruptcy court. See In re Wilborn, 609 F.3d 748,
752 (5th Cir. 2010) (“Consistent with that broad authority, the district court for
the Southern District of Texas has issued a general order of reference, which
automatically refers all bankruptcy cases and proceedings to the bankruptcy
judges of the district.”). Second, pursuant to § 362, all claims against Faidi were
automatically stayed, including the claims alleged in the civil suit. The district
court withdrew the reference to the bankruptcy court and scheduled a hearing.
Following the hearing, the district court lifted the automatic stay of the civil suit
and re-referred the bankruptcy case. The dischargeability action was filed in the
bankruptcy case after it was re-referred. Therefore, the dischargeability action
was not in the district court when it withdrew the reference, and it was never
part of the civil case that was tried before the district court.



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                              Nos. 10-20134, 10-20423

        In sum, Faidi’s claim that the district court did not have jurisdiction to
determine the dischargeability action is unsubstantiated and conflates the civil
case and the bankruptcy case, which are two separate matters. Therefore, the
district court had subject matter jurisdiction to decide Prudential’s claims
against Faidi.
B.      Amendment
        Faidi argues that, after re-referring the case, the district court improperly
allowed Prudential to amend its proposed findings of fact and conclusions of law
to add, effectively, dischargeability as a cause of action. We disagree.
        “This court reviews a district court’s decision to allow a plaintiff to amend
her pleadings for an abuse of discretion.” See Luera v. M/V Alberta, 635 F.3d
181, 186 (5th Cir. 2011). As a general matter, courts should grant leave to
amend pleadings “freely . . . when justice so requires.” FED. R. CIV. P. 15(a).
Normally, “leave to amend is to be granted liberally unless the movant has acted
in bad faith or with a dilatory motive, granting the motion would cause
prejudice, or amendment would be futile.” Jebaco Inc. v. Harrah’s Operating Co.
Inc., 587 F.3d 314, 322 (5th Cir. 2009). Faidi has not made any allegations to
this effect, and he has not specified what amendments were improperly allowed
by the district court. Moreover, after carefully reviewing the record, including
Prudential’s complaint and the amendments to its pleadings, we can find no
amended facts or conclusions alleging a dischargeability cause of action. There
is no mention of § 523, dischargeability, or any other bankruptcy-related term
or statutory provision.      The amendments merely expand and clarify the
allegations made in the original proposed findings of fact and conclusions of law.
Thus, we conclude that the district court did not abuse its discretion by allowing
Prudential to amend its pleadings.
C.      Motions to Continue
        Faidi argues that the district court erred in denying his requests for a

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                            Nos. 10-20134, 10-20423

continuance because he was not given enough time to obtain counsel. He also
claims that the district court erred in denying his second motion because, when
he obtained counsel, his attorney was not given enough time to prepare for trial.
Finally, Faidi argues that the district court implicitly gave him a continuance
until December 30, 2009; therefore, the trial should not have commenced on
December 15, 2009, even though he retained counsel by December 9.. These
arguments are not persuasive.
      This court reviews a district court’s denial of a motion to continue for an
abuse of discretion. Ahmed v. Gonzales, 447 F.3d 433, 437 (5th Cir. 2006). In
reviewing the denial of a continuance, this court “examines the totality of the
circumstances.” United States v. Stalnaker, 571 F.3d 428, 439 (5th Cir. 2009).
However, we have made clear that we will not reverse the district court’s
determination unless a party establishes that he “suffered serious prejudice.”
United States v. Scott, 48 F.3d 1389, 1393 (5th Cir. 1995). Faidi has not shown
that he “suffered serious prejudice” as a result of the district court’s denial of
either motion.
      Specifically, Faidi has not alleged that any prejudicial consequences re-
sulted from the denial of the first motion to continue. Regarding the second mo-
tion to continue, he summarily states that “[i]f a short continuance had been
granted, . . . [he] would have had counsel [who] could have filed all necessary
pretrial materials and been ready for trial.” But Faidi has failed to show what
other pretrial materials were necessary. The parties were required to submit
their pretrial materials by September 4, and so, as the district court explained
at the September 14 hearing, the pretrial phase had largely concluded before
Faidi filed for bankruptcy and before his original counsel withdrew. Although
it is puzzling that the district court gave Faidi until December 30 to obtain
counsel, but did not move the trial date from December 15, Faidi cannot prevail
on a scheduling technicality: He was on notice since September 14 that he would

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                            Nos. 10-20134, 10-20423

need to obtain new counsel because of a conflict with the bankruptcy case. It
makes no difference that his attorney did not formally withdraw until November
10. Faidi was not prejudiced by anything other than his own dilatory tactics.
      Faidi has not established and we can find no evidence demonstrating that
the district court abused its discretion when it denied his motions to continue.
                                 *      *       *
      Thus, we conclude that none of Faidi’s challenges warrant the reversal of
the district court’s judgment.
                                       III.
      As previously noted, the bankruptcy court made two determinations—
denied Faidi’s motion to abate and granted Prudential’s motion for summary
judgment, finding Faidi’s debt nondischargeable. Faidi does not challenge the
merits of the bankruptcy court’s summary judgment. He only challenges the
denial of his motion to abate.
      Although Faidi’s motion was stylized as a motion to abate, he effectively
requested a motion to stay the bankruptcy proceedings, pending appeal of the
district court’s judgment in the civil suit. Thus, we will treat the motion as a
motion for a stay pending appeal, pursuant to Federal Rule of Bankruptcy
Procedure 8005. The decision to grant or deny a motion for stay pending appeal
lies in the sound discretion of the court whose order is being appealed. See
Arnold v. Garlock, 278 F.3d 426, 438–39 (5th Cir. 1991). Accordingly, this court
reviews the denial of a stay for an abuse of discretion. Williams v. Thaler, 602
F.3d 291, 308 (5th Cir. 2010). In exercising that discretion, however, a court is
to be guided by the four-factor test ordinarily used to evaluate motions for
preliminary injunctions. Id. at 438–39. The factors to consider are: (1) the
movant’s likelihood of success on the merits, (2) the irreparable harm to the
movant if the stay is not granted, (3) the substantial harm to other parties if the
stay is granted, and (4) the public interests implicated in granting or denying the

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                            Nos. 10-20134, 10-20423

stay. Arnold, 278 F.3d at 438–39. Faidi makes no arguments to establish any
of these factors, and after carefully reviewing the record, we can find no evidence
that the bankruptcy court erred in denying his motion. Thus, Faidi has not
articulated nor have we found any grounds for reversing the bankruptcy court’s
determination.
                                       IV.
      Accordingly, we AFFIRM the district court’s judgment and AFFIRM the
bankruptcy court’s judgment, denying the motion to abate.




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