      Case: 14-40361             Document: 00513003561   Page: 1   Date Filed: 04/13/2015




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

                                                                               FILED
                                                                             April 13, 2015
                                          No. 14-40361
                                                                             Lyle W. Cayce
                                                                                  Clerk
In the Matter of: DEAN E. BUESCHER; SHERRY R. BUESCHER,

                 Debtors

------------------------------

DEAN E. BUESCHER; SHERRY R. BUESCHER,

                 Appellants

v.

FIRST UNITED BANK AND TRUST,

                 Appellee




                     Appeals from the United States District Court
                           for the Eastern District of Texas


Before JOLLY, WIENER, and CLEMENT, Circuit Judges.
EDITH BROWN CLEMENT, Circuit Judge:
        The bankruptcy court declined to grant a discharge to defendant-
appellant Dean E. Buescher (“Dean”) and defendant-appellant Sherry R.
Buescher (“Sherry”) (collectively, “the Bueschers”). The district court affirmed
the judgment of the bankruptcy court. For the reasons explained below, we
AFFIRM the district court.
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                             FACTS AND PROCEEDINGS
       Dean operated a home-building business through Buescher Interests,
L.P. (“BIL”). Sherry, who is Dean’s spouse and a Texas-licensed attorney, often
served as the closing officer for BIL’s real estate transactions. Plaintiff-
appellee First United Bank & Trust Co. (“First United”) loaned BIL
approximately $19 million. Dean personally guaranteed the loans First United
made to BIL.
       The Bueschers filed a joint Chapter 7 bankruptcy petition. First United
filed an adversary complaint arguing, inter alia, that the bankruptcy court
should refuse to discharge both Dean and Sherry from the bankruptcy action
under 11 U.S.C. § 727(a)(2)-(5). The Bueschers moved to dismiss First United’s
adversary complaint, alleging that First United failed to timely serve process.
The bankruptcy court denied the Bueschers’ motion and granted First United’s
request for additional time to effect service. First United then served the
Bueschers.
       First United moved for summary judgment against Dean and Sherry
under § 727(a)(2)-(5). The bankruptcy court granted First United’s motion as
to Dean under § 727(a)(3) 1 and denied the motion as to Sherry. After a bench
trial, the bankruptcy court denied Sherry a discharge under § 727(a)(2), (a)(3),
and (a)(4)(a). See First United Bank & Trust Co. v. Buescher (In re Buescher),
491 B.R. 419 (Bankr. E.D. Tex. 2013). The bankruptcy court then entered a
final judgment denying a discharge to Dean and Sherry. The district court



       1 Section 727(a)(3) provides:
       The court shall grant the debtor a discharge, unless . . . the debtor has
       concealed, destroyed, mutilated, falsified, or failed to keep or preserve any
       recorded information, including books, documents, records, and papers, from
       which the debtor’s financial condition or business transactions might be
       ascertained, unless such act or failure to act was justified under all of the
       circumstances of the case[.]
Id.
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affirmed the judgment of the bankruptcy court. The Bueschers appeal the
district court’s order affirming the judgment of the bankruptcy court.
                              STANDARD OF REVIEW
      The bankruptcy court disposed of Dean’s request for discharge at the
summary judgment stage, while it disposed of Sherry’s request after a bench
trial. Thus, when considering Dean’s appeal, we review the bankruptcy court’s
decision de novo. See Deutsche Bank Nat’l Trust v. Oparaji (In re Oparaji), 698
F.3d 231, 235 (5th Cir. 2012). When considering Sherry’s appeal, we review the
bankruptcy court’s findings of fact for clear error, and its conclusions of law de
novo. See Endeavor Energy Res., L.P. v. Heritage Consol., L.L.C. (In re Heritage
Consol., L.L.C.), 765 F.3d 507, 510 (5th Cir. 2014).
                                    DISCUSSION
                                          I.
      Sherry argues that First United did not have standing to object to her
discharge, because it is not her creditor under 11 U.S.C. § 727(c)(1). Section
727(c)(1) provides that “[t]he trustee, a creditor, or the United States trustee
may object to the granting of a discharge.” We hold that First United is Sherry’s
creditor under § 727(c)(1).
      Sherry never personally guaranteed the loans First United made to BIL.
Thus Sherry is not personally liable to First United. See Tex. Fam. Code Ann.
§ 3.201(a) (providing that a party is personally liable for acts of spouse only in
specified circumstances). But Texas is a community property state, and under
Texas law, First United has an in rem claim against any community property
that Dean jointly holds with Sherry. See Tex. Fam. Code Ann. § 3.202(c)
(providing that “[t]he community property subject to a spouse’s sole or joint
management, control, and disposition is subject to the liabilities incurred by
the spouse before or during marriage”); see also United States v. Loftis, 607
F.3d 173, 179 (5th Cir. 2010) (explaining that “[§] 3.202(c) . . . renders all jointly
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                                  No. 14-40361
managed community property subject to the nontortious liabilities incurred by
[the debtor spouse]”). Because Dean and Sherry have jointly-held community
property, First United could seek repayment in Texas court through an in rem
suit against Sherry. See, e.g., Carlton v. Estate of Estes, 664 S.W.2d 322, 322-
23 (Tex. 1983) (per curiam) (holding that predecessor statute to § 3.202(c)
authorized husband’s creditor to sue deceased wife’s estate to satisfy judgment
against husband).
      The Bankruptcy Code defines “creditor” to include an “entity that has a
community claim.” 11 U.S.C. § 101(10)(C). It defines “community claim” as a
claim “for which property of the kind specified in section 541(a)(2) of this title
is liable.” Id. § 101(7). Section 541(a)(2) provides that a bankruptcy estate
includes “[a]ll interests of the debtor and the debtor’s spouse in community
property” that is either “(A) under the sole, equal, or joint management and
control of the debtor;” or “(B) liable for an allowable claim against the debtor,
or for both an allowable claim against the debtor and an allowable claim
against the debtor’s spouse, to the extent that such interest is so liable.”
Id. § 541(a)(2)(A)-(B). Read together, these provisions show that “[a]n entity
that holds a claim against the nondebtor spouse under state law but does not
hold a claim against the debtor, may nonetheless be considered a ‘creditor’ of
the debtor under section 101(10), so long as that claimant could, under state
law, satisfy the claim from community property of the type which would have
passed to the estate.” Collier on Bankruptcy ¶ 101.10 (Alan N. Resnick &
Henry J. Sommer eds., 16th ed. 2014). Because First United could satisfy its
claim against Dean through an in rem suit against Sherry, First United is
Sherry’s creditor under § 727(c)(1).
      Sherry cites an opinion from another circuit’s bankruptcy appellate
panel that reached a contrary result. See Warchol v. Barry (In re Barry), 451
B.R. 654 (B.A.P. 1st Cir. 2011). But that case was based on Massachusetts law,
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                                       No. 14-40361
which is not a community property state. Sherry also contends that the
bankruptcy court erred by assuming that Texas law creates a community debt
for which the community property is liable. But we find nothing in the
bankruptcy court’s opinion that suggests such an error. The bankruptcy court
simply interpreted Tex. Fam. Code Ann. § 3.202(c), which makes all jointly-
held community property liable for the debts of either spouse.
       We hold that First United is Sherry’s creditor under 11 U.S.C. §
702(c)(1). Accordingly, the bankruptcy court did not err by holding that First
United had standing to object to Sherry’s discharge.
                                              II.
       Dean and Sherry contend that the bankruptcy court erred by granting
First United’s request for additional time to serve them, and by denying their
motion to dismiss. We disagree.
       Federal Rule of Civil Procedure 4 governs service of process in adversary
proceedings in bankruptcy. See Fed. R. Bankr. P. 7004(a)(1). Under Rule 4(m),
a plaintiff must serve the defendant within 120 days after the complaint is
filed. “But if the plaintiff shows good cause for [a] failure” to timely serve the
defendant, “the court must extend the time for service for an appropriate
period.” Fed. R. Civ. P. 4(m). “The [bankruptcy] court’s finding of good cause is
reviewed under an abuse of discretion standard.” Resolution Trust Corp. v.
Starkey, 41 F.3d 1018, 1022 (5th Cir. 1995).
       The Bueschers filed a motion to dismiss First United’s complaint under
Rule 4(m) and Bankruptcy Rule 7004. 2 In its response, First United argued
that the Bueschers had intentionally avoided service, and asked for more time



       2 Although the Bueschers did not cite the relevant rules, defendants in an adversary
proceeding may move to dismiss a complaint for “insufficient service of process.” Fed. R. Civ.
P. 12(b)(5); see Fed. R. Bankr. P. 7012(b) (providing that Rule 12(b) is applicable in adversary
proceedings).
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to perfect service. The bankruptcy court held a hearing to consider the
Bueschers’ motion and First United’s request for more time. The bankruptcy
court found that First United had made repeated attempts to serve the
Bueschers, and “that the Bueschers either failed to update their address as
required by the bankruptcy rules or purposefully avoided service.” 3 These
findings were sufficient to support the bankruptcy court’s finding of good cause
to extend the time for First United to perfect service.
       The Bueschers argue that the bankruptcy court should have required a
written motion from First United addressing the “excusable neglect” factors
discussed in Pioneer Investment Services Co. v. Brunswick Associates Ltd.
Partnership, 507 U.S. 380 (1993). They cite no caselaw holding that Rule 4(m)
requires a written motion. Moreover, Pioneer interprets Bankruptcy Rule
9006(b), see Pioneer, 507 U.S. at 382, not Bankruptcy Rule 7004(a)(1), which
controls the time limit for service. Pioneer did not alter the “good cause” test
that applies under Rule 4(m). See McGinnis v. Shalala, 2 F.3d 548, 550 n.1
(5th Cir. 1993) (per curiam). 4
       Accordingly, we hold that the bankruptcy court did not abuse its
discretion when it granted First United’s request for additional time to serve
the Bueschers and denied the Bueschers’ motion to dismiss.
                                             III.
       Dean and Sherry further contend that First United failed to carry its
burden to show that they did not keep adequate financial records, or to show




       3 See Fed. R. Bankr. P. 4002(a)(5) (requiring debtor to “file a statement of any change
of the debtor’s address”).
        4 Indeed, even if Pioneer applied to Bankruptcy Rule 7004(a)(1), First United

necessarily satisfied the excusable neglect standard by showing good cause. See Thrasher v.
City of Amarillo, 709 F.3d 509, 511 (5th Cir. 2013) (reasoning that “[p]roof of good cause
requires at least as much as would be required to show excusable neglect” (internal quotation
marks and alteration omitted)).
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                                  No. 14-40361
that the financial records that exist are insufficient for First United to evaluate
their financial condition. We hold that First United carried its burden as to
both Dean and Sherry.
      Section 727(a)(3) provides that the bankruptcy court may refuse a
discharge if (1) the debtor fails to keep or preserve financial records, and (2)
the failure makes it impossible for the creditor to discern the debtor’s financial
condition. See 11 U.S.C. § 727(a)(3). The creditor has the initial burden to prove
both (1) and (2). See Robertson v. Dennis (In re Dennis), 330 F.3d 696, 703 (5th
Cir. 2003). Once the debtor adduces relevant evidence establishing (1) and (2),
the burden shifts to the creditor to show that the failure to keep records was
justified under the circumstances. Id.
      Dean and Sherry make various arguments in an attempt to show that
First United failed to show (1) and (2). First, the Bueschers contend that,
because First United relied on documents it obtained from the trustee, instead
of personally seeking discovery from them, First United could not have carried
its evidentiary burden to show that they failed to keep financial records. This
argument turns on a question of law: Could First United show that the
Bueschers failed to keep financial records without personally seeking discovery
from them?
      The Bankruptcy Code imposes a positive duty upon debtors to “surrender
to the trustee all property of the estate and any recorded information, including
books, documents, records, and papers, relating to property of the estate.” 11
U.S.C. § 521(a)(4). The Bankruptcy Code also requires debtors to cooperate
with the trustee. See id. at § 521(a)(3). In this case, the trustee requested
records from the Bueschers, which they failed to provide. Moreover, the
applicable civil procedure rules required the Bueschers to provide First United
with “a copy—or a description by category and location—of all documents,
electronically stored information, and tangible things that the disclosing party
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                                       No. 14-40361
has in its possession, custody, or control and may use to support its claims or
defenses.” Fed. R. Civ. P. 26(a)(1)(A)(ii); see Fed. R. Bankr. P. 7026 (making
Rule 26 applicable in adversary proceedings). Despite these various disclosure
obligations, the Bueschers never turned over relevant financial records to the
trustee or to First United. And the Bueschers fail to cite any provision of the
Bankruptcy Code that requires creditors to personally make a discovery
request before filing an objection to a debtor’s discharge. We hold that First
United was not required to personally seek discovery from the Bueschers in
order to show that they failed to keep financial records under § 727(a)(3).
       Second, Dean maintains that his testimony at the § 341 examination 5—
during which he stated that he had unspecified financial records—was
sufficient to show a genuine issue for trial. But “a party’s uncorroborated self-
serving testimony cannot prevent summary judgment, particularly if the
overwhelming documentary evidence supports the opposite scenario.”
Vinewood Capital, LLC v. Dar Al-Maal Al-Islami Trust, 541 F. App’x 443, 447-
48 (5th Cir. 2013) (per curiam) (citing Vais Arms, Inc. v. Vais, 383 F.3d 287,
294 (5th Cir. 2004)). Not only did Dean state during a deposition that he did
not keep personal financial or business records, but as discussed above, he
failed to comply with various statutes and rules requiring full disclosure of all
relevant records. Dean’s uncorroborated, self-serving testimony during the
§ 341 examination is insufficient to show a genuine issue for trial.
       Third, the Bueschers argue that First United failed to present any
evidence that it could not discern their financial condition based on the existing
financial records. But First United did adduce such evidence. The trustee


       5 11 U.S.C. § 341(a) requires the trustee to call a meeting of creditors soon after the
initiation of a bankruptcy case. Section 343 requires the debtor to “appear and submit to
examination under oath” at that meeting (thus, the examination is sometimes called a “§ 341
examination”). 11 U.S.C. § 343. The examination is intended to “assist in the administration
of the debtor’s estate.” Collier on Bankruptcy, supra page 4, at ¶ 343.02.
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averred in an affidavit that “[t]he information [that the Bueschers] provided
was insufficient to allow for a tracing of the proceeds from the sale of [their]
lake house, the liquidation of the[ir] IRA account, or the proceeds from the sale
of their investments and vehicles.” And during trial, the trustee testified that
he was not able to discern the Bueschers’ financial condition based on the
records Sherry provided. Because Dean failed to adduce contrary evidence, the
trustee’s affidavit was sufficient to support First United’s motion for summary
judgment. The bankruptcy court did not clearly err in accepting the trustee’s
testimony during trial. The Bueschers also argue that First United should have
hired an accountant to testify that it could not discern the Bueschers’ financial
condition. This court has never held that creditors are required to hire an
accountant to provide such testimony.
      Finally, Dean argues that, even if First United carried its burden to show
that (1) he failed to keep or preserve financial records, and (2) that his failure
made it impossible for First United to discern his financial condition, the
testimony in his summary judgment affidavit showed that there was a genuine
issue for trial. He cites the opening page of that affidavit and maintains that
he “provided financial records to [his] counsel (which the trustee averred w[ere]
not forwarded by said counsel to him).” The affidavit shows that Dean kept
some financial records, but that point is undisputed. The relevant question is
whether he kept adequate financial records, and whether his failure to do so
kept First United from discerning his financial condition. Nothing in Dean’s
summary judgment affidavit shows that there is a genuine issue for trial on
those points. Dean fails to argue that his failure to keep records was justified
under the circumstances.
      First United carried its relevant burden as to both Dean and Sherry, and
the bankruptcy court did not err in refusing to grant Dean or Sherry a
discharge.
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                                No. 14-40361
                                     IV.
      Sherry argues that First United failed to present legally or factually
sufficient evidence to support the bankruptcy court’s conclusion that she
violated § 727(a)(2) and (a)(4)(a). But the district court relied solely on the
bankruptcy court’s § 727(a)(3) analysis in affirming the bankruptcy court’s
denial of discharge as to Sherry. Because the district court did not consider
First United’s objection under § 727(a)(2) or (a)(4)(a), Sherry’s arguments
regarding these subsections are moot.
                                CONCLUSION
      For the reasons explained, we AFFIRM the district court.




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