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Click here for the full text of this decision FACTS:On Oct. 12, 2004, Don Royl Plunk filed for Chapter 7 bankruptcy. Plunk listed the Don R. Plunk P.S. Plan (the plan), a self-administered pension plan worth $300,000, as personal property on Schedule B. Plunk then claimed the plan as exempt property on Schedule C pursuant to Texas Property Code �42.0021. Section 42.0021 exempts a pension plan from attachment, execution or other seizure if the plan is qualified under the Internal Revenue Code. In early December 2004, Robert Yaquinto Jr., the U.S. Bankruptcy Trustee, and Comerica Bank filed objections to Plunk’s claim that the plan was exempt. Yaquinto and Comerica argued that Plunk had abused plan assets. Thus, the plan no longer qualified under I.R.C. �401(a) for an exemption from attachment, execution or other seizure in the bankruptcy proceeding. Later that month, Comerica filed a motion to lift the automatic bankruptcy stay to permit Comerica to proceed in a garnishment case in the 193rd Judicial District Court of Dallas County, styled Comerica Bank-Texas, N.A. v. Neighborhood Credit Union and Don R. Plunk, No. 02-10675-1. Comerica claimed to own, as the successor to a series of mergers, a judgment of over $750,000 against Plunk originally awarded to BancTexas Dallas NA in 1989. In this state garnishment action, Comerica sought to garnish a bank account held by the plan in order to collect on the judgment. As in the bankruptcy case, Comerica argued that the plan was not qualified under I.R.C. �401(a) and thus was not exempt from garnishment. At the time Plunk declared bankruptcy, which stayed the garnishment action, the state court had already held a number of hearings and was on the verge of trial. Comerica, therefore, asked that the stay be lifted so that the state court could make a final determination about the qualified status of the plan. The bankruptcy court held a hearing on those issues over a period of days between February 2005 and April 2005. At the hearing, Plunk put on evidence that the Internal Revenue Service determined at one time that the plan was structurally qualified under �401(a). In response, Yaquinto and Comerica argued that Plunk had misused plan assets to the extent that the plan was no longer qualified operationally. With respect to the motion to lift the stay, Comerica offered evidence that the Federal Deposit Insurance Corporation, as the receiver for BancTexas in 1990, transferred the judgment from BancTexas to Hibernia National Bank of Texas. Subsequently, Hibernia merged into Comerica. Plunk disputed that Comerica owned the judgment and argued that there was an insufficient chain of title between Hibernia and BancTexas. Comerica then put on evidence that in 1992, Hibernia relied on the judgment to bring a garnishment action against some of Plunk’s assets. Comerica argued that the principles of res judicata and collateral estoppel prevented Plunk from contesting Hibernia’s ownership of the judgment in the current proceedings. On April 15, 2005, the bankruptcy court entered an order sustaining Yaquinto and Comerica’s objections to Plunk’s claim that the plan was exempt. The bankruptcy court determined that Plunk had used plan assets to pay personal bills and that the plan was no longer qualified. The bankruptcy court also lifted the stay on May 10, 2005, to permit the state court garnishment action to proceed. In making its decision to lift the stay, the bankruptcy court ruled that collateral estoppel and res judicata precluded Plunk from arguing that Hibernia, and thus Comerica, did not own the judgment at issue. Plunk appealed both rulings to the district court. The district court affirmed the bankruptcy court’s decisions. Plunk then appealed to the 5th U.S. Circuit Court of Appeals. HOLDING:Affirmed. Plunk contended on appeal that the 5th Circuit’s 1995 precedent in Youngblood v. Federal Deposit Insurance Corp. prevented the bankruptcy court from making an independent determination of whether the plan qualified for the relevant exemption. But the 5th Circuit disagreed. It held that when disqualifying events occur after the IRS has last determined that a plan is qualified, a court may, under Texas Property Code �42.0021, determine that a plan is no longer qualified based on those events. Turning to the facts of the Plunk case, the court noted that “it had been years since the IRS determined the Plan was qualified, and then only as to its structure.” The IRS, the court stated, never considered Plunk’s abuse of plan assets or audited the plan to determine whether it was operationally qualified despite Plunk’s actions. Therefore, the court held that its new holding gave the bankruptcy court and district court the authority to reach an independent decision regarding the plan’s qualified status. The court then considered whether the bankruptcy and district courts properly determined that res judicata and collateral estoppel precluded Plunk from challenging Hibernia’s, and thus Comerica’s, ownership of the judgment against him. With respect to Plunk’s argument that there was no express finding that Hibernia owned the judgment, the court noted that under Texas garnishment law, Texas Civil Practice & Remedies Code �63.001, a plaintiff must own a judgment against the defendant in order to obtain a writ of garnishment. Furthermore, the court stated that agreed judgments in Texas have the same degree of finality and binding force as judgments reached at the end of adversary proceedings. Therefore, the court found that the agreed judgment entered in the 1992 garnishment action necessarily required that Hibernia own the judgment at issue. Consequently, the court held that the lower courts correctly determined that the 1992 garnishment action may be used to collaterally estop Plunk from contesting Hibernia’s ownership of the judgment. OPINION:Prado, J.; Davis, Dennis and Prado, J.J.

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