United States Court of Appeals for the Fifth Circuit ____________ United States Court of Appeals Fifth Circuit

No. 24-30273 FILED May 20, 2025 ____________ Lyle W. Cayce In the Matter of Ross Shaun Adair, Clerk

Debtor, Ross Shaun Adair,

Appellant,

versus Stutsman Construction, L.L.C.,

Appellee. ______________________________

Appeal from the United States District Court for the Middle District of Louisiana USDC No. 3:23-CV-625 ______________________________ Before Higginbotham, Willett, and Ho, Circuit Judges. James C. Ho, Circuit Judge: Ross Shaun Adair contracted with Stutsman Construction to repair his home from flood damage. Adair claimed that the repairs were done poorly and refused to pay the final installment to Stutsman. Stutsman responded by obtaining a default judgment against Adair in Louisiana state court. Case: 24-30273 Document: 56-1 Page: 2 Date Filed: 05/20/2025

No. 24-30273

Adair subsequently filed for bankruptcy. Stutsman sought to have its default judgment declared nondischargeable. Adair argued that Stutsman’s unclean hands barred this relief, citing various regulatory violations. The bankruptcy court held that the Louisiana judgment precluded any unclean hands defense. We disagree and accordingly vacate and remand the case to the bankruptcy court for consideration of Adair’s unclean hands defense in the first instance. I. In 2016, Adair’s home experienced severe damage from widespread flooding in Baton Rouge. He hired Stutsman, a Louisiana construction company licensed to perform home repairs up to $75,000.00. Freedom Mortgage Company paid for the repairs in four installments—together exceeding $150,000.00. The installment checks were sent to Adair with both Adair and Stutsman listed as payees. Before each check was issued, an inspector from Freedom Mortgage visited the property and determined the project’s completion percentage. Adair endorsed the first three checks and gave them to Stutsman. After a final inspection resulted in a 100% complete evaluation, Freedom Mortgage issued the final check for $71,755.48. Adair testified that, before depositing the final check, he grew concerned about the quality and completeness of the work. Stutsman’s manager testified that he believed the project was “pretty much finalized,” with only a “punch list” of minor repairs remaining. Adair endorsed the final check and deposited it into his own account. He testified that he wanted it within his control, because he felt that Stutsman’s work was poor and incomplete. Stutsman contacted Adair,

2 Case: 24-30273 Document: 56-1 Page: 3 Date Filed: 05/20/2025

No. 24-30273

offered to remediate the issues he complained of, and drafted a proposal with options to resolve the dispute. Resolution was unsuccessful. Stutsman then filed a complaint for damages in Louisiana state court. Adair did not appear at trial. A default judgment was rendered for Stutsman for the value of the final check, plus interest, fees, costs, and $5,000.00 in gene