Cinch Energy Services, LLC v. Mendietta et al

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TEXAS
DIVISION
CINCH ENERGY SERVICES, LLC,
Appellant
v.
MICHAEL R. MENDIETTA; MARY
KAY MCGUFFIN; JUSTIN SPRENCEL,
Appellees
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Case No. 5:24-CV-01378-XR
Bankruptcy Case No. 23-51742-cag
Chapter 7
ORDER
On this date, the Court considered Appellant Cinch Energy Services, LLC’s Motion to
Dismiss and Remand to Bankruptcy Court (ECF No. 19). After careful consideration, the Motion
is GRANTED.
BACKGROUND
In December 2023, Cinch Wireline Services, LLC (“CWS”) filed a chapter 7 bankruptcy
petition. ECF No. 19-1 at 3.1 Tim Pollard signed the petition as Executive Vice President. Id.
John Patrick Lowe was appointed as the chapter 7 trustee (“Trustee”). Id.
On April 8, 2024, Trustee initiated Adversary No. 24-5011 (“Adversary 5011”) by filing
suit against several defendants, including Cinch Energy Services, LLC (“CES”). 	Id. at 13.
Adversary 5011’s substance is not relevant to this Order.
CES then initiated Adversary No. 24-5012 (“Adversary 5012”) by filing a declaratory
judgment action. Id. at 13–14. There, CES asked the bankruptcy court to find that: (1) CES and
Mary Kay McGuffin were CWS’s only members, (2) Michael Mendietta and Justin Sprencel were
1 Page numbers cited in this order reflect those generated by CM/ECF, which do not always align with page numbers
in the underlying documents.
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not members; and (3) CES was the only party with standing to file CWS’s chapter 7 petition. Id.
at 14.
Mendietta and Sprencel filed motions for summary judgment in Adversary 5012, arguing
that CES—based on its failure to respond to certain requests for admission—was deemed to have
admitted that Mendietta, Sprencel, and McGuffin were CWS’s sole members. 	Id. at 9. 	The
bankruptcy court granted the motions for summary judgment. Id. CES appealed the granting of
those motions and the denial of certain related motions to this Court. That appeal is docketed as
case number 5:24-cv-1170-XR.
After a trial on McGuffin’s membership, ECF No. 19-1 at 10, the bankruptcy court issued
a final judgment in Adversary 5012 that: McGuffin is a 30 percent member of CWS, Sprencel is a
45 percent member, Mendietta is a 20 percent member, and CES is not a member. Id. at 15. That
final judgment forms the basis of this appeal. ECF No. 1.
The bankruptcy court later determined that Pollard lacked authority to file the underlying
bankruptcy case when he purported to do so. See ECF No. 19-1. The court thus held that it lacked
jurisdiction over the bankruptcy case. Id. at 42.
The bankruptcy court also held that because the bankruptcy case was void ab initio for lack
of subject matter jurisdiction, “there is no nexus between the Bankruptcy Case and related
proceedings.” Id. at 41. As a result, there could be no “‘arising under’ or ‘related to’ jurisdiction
over related proceedings,” and “[a]ll related proceedings must . . . be dismissed.” 	Id. 	The
bankruptcy court thus dismissed both the underlying bankruptcy case and Adversary 5011.
Id. at 42.
CES filed a motion under Federal Rule of Civil Procedure 60(b)(4) to vacate the final
judgment and all related orders in Adversary 5012, arguing that they were void for lack of subject
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matter jurisdiction. ECF No. 19-2. The motion argued that the bankruptcy court’s dismissal of
the underlying bankruptcy case and Adversary 5011 extended to Adversary 5012. Id.; see ECF
No. 19-1 at 41 (“All related proceedings must therefore be dismissed.”).
When “a party files a timely motion in the bankruptcy court for relief that the court lacks
authority to grant because an appeal” is pending, “the bankruptcy court may: (1) defer considering
the motion; (2) deny the motion; (3) state that it would grant the motion if the court where the
appeal is pending remands for that purpose; or (4) state that the motion raises a substantial issue.”
FED. R. B ANKR . P. 8008(a). Here, the bankruptcy court issued an indicative ruling stating that it
would grant the Rule 60(b)(4) motion if this Court were to remand for that purpose. ECF No. 19-4.
CES then filed the instant motion, asking this Court to remand to the bankruptcy court and
to dismiss the appeal as moot. ECF No. 19. Appellees filed a response, and CES filed a reply.
ECF Nos. 20–21.
DISCUSSION
Where, as here, the bankruptcy court states that it would grant a motion if the district court
remanded for that purpose, the district court “may remand for further proceedings but retains
jurisdiction unless it expressly dismisses the appeal.” FED. R. B ANKR . P. 8008(c). An advisory
committee note to Federal Rule of Bankruptcy Procedure 8008 suggests that a district court should
terminate an appeal in this context “only when the appellant has stated clearly its intention to
abandon the appeal.” 	F ED. R. B ANKR . P. 8008 advisory committee’s note to 2014 amendment.
“Otherwise, the district court . . . may remand for the purpose of ruling on the motion, while
retaining jurisdiction to proceed with the appeal after the bankruptcy court rules, provided that the
appeal is not then moot and a party wishes to proceed.” 	Id. 	Further, as a general matter, a
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bankruptcy “appeal may be dismissed on the appellant’s motion on terms agreed to by the parties
or fixed by the district court.” FED. R. B ANKR . P. 8023(b).
The Court will remand this case based on the bankruptcy court’s indicative ruling, pursuant
to Federal Rule of Bankruptcy Procedure 8008(c). The remand will render this appeal moot, since
the bankruptcy court has indicated that it will vacate the judgment being appealed here. 	ECF
Nos. 19-2, 19-4. Further, CES, who is the appellant, moved for dismissal and has made clear that
it does not intend to pursue this appeal after the bankruptcy court vacates the underlying orders
and judgment. See ECF No. 19. In fact, it could not pursue this appeal at that time because, again,
the appeal will be rendered moot by the bankruptcy court granting CES’s Rule 60(b)(4) motion.
Dismissal 	of 	this 	appeal 	is 	thus 	proper 	under 	both 	Federal 	Rule 	of 	Bankruptcy
Procedure 8008(c) and 8023(b).
CONCLUSION
It is therefore ORDERED that the Motion to Remand and Dismiss (ECF No. 19) is
GRANTED. This case is REMANDED to the bankruptcy court, and this appeal is DISMISSED
WITHOUT PREJUDICE.
A final judgment will issue separately.
It is so ORDERED.
SIGNED this 6th day of January, 2026.
_________________________________
XAVIER RODRIGUEZ
UNITED STATES DISTRICT JUDGE
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