Justia U.S. 8th Circuit Court of Appeals Opinion Summaries

Farmer William Topp raises crops and livestock in Monroe County, Iowa. After several rough years, he filed for Chapter 12 bankruptcy—intended for “family farmers.” Farm Credit Services of America had financed part of Topp’s farm operation and filed a $595,000 claim as a secured creditor. The claim arose from five loans of various durations, with interest rates ranging from 3.5% to 7.6%. Together, the loans were secured by $1.45 million of Topp’s real estate. This bankruptcy appeal arises from a dispute between the farmer and his creditor over their proposed repayment plan. The two could not agree on the appropriate discount rate that should apply to the farmer’s deferred payments so as to satisfy the creditor’s present claim. The bankruptcy court sided with the farmer.   The Eighth Circuit affirmed. The court explained that the bankruptcy court studied the Till/Doud relationship and the prevalence of postTill decisions using the prime rate. The court considered the length of the proposed maturity period, the fact that Farm Credit’s claim was substantially over-secured, and the overall risk of nonpayment. In the end, the court approved a 4% rate—the treasury rate plus 2% for risk. By focusing on the starting rate rather than the ultimate rate, Farm Credit has failed to show that the bankruptcy court clearly erred in its determination that a 4% rate was sufficient to ensure full payment on “the value, as of the effective date of the plan,” of the secured claim. View "Farm Credit Services of America v. William Topp" on Justia Law

Ritchie Capital Management, LLC fell victim to a massive Ponzi scheme. Ritchie sought recovery outside the receivership. But settlement agreements and bar orders prevent recovery. The district court approved the receivership’s final accounting and a previous bar order. Claiming abuses of discretion, Ritchie appealed.   The Eighth Circuit affirmed. The court explained that the district court ordered the receiver to prepare and file a final accounting. The district court established the requirements that, in its sound discretion, the receiver satisfied in the final accounting. Ritchie fails to identify a clear abuse of discretion in the district court’s approval of the final accounting and, regardless, waived its right to do so. Further, the court held that because bankruptcy-standing doctrine independently prevents Ritchie from bringing claims related to the bankruptcy estate, and because Ritchie can still pursue personal claims against JPMorgan, Ritchie cannot identify a protected right that is deprived here. View "United States v. Ritchie Capital Management, L.L.C." on Justia Law

Debtor filed a petition under Chapter 13 of the United States Bankruptcy Code. Debtor’s recent history of prior bankruptcy filings implicated 11 U.S.C. Section 362(c)(4)(A)(i), which provides that—by operation of law— the automatic stay shall not go into effect upon the filing of a bankruptcy case if a debtor had two or more bankruptcy cases that were pending but dismissed in the previous year. Debtor timely filed a motion to impose the stay in accordance with Section 362(c)(4)(B), which the standing trustee opposed and which the bankruptcy court denied. Debtor timely appealed. While the appeal was pending, Debtor’s bankruptcy case was dismissed.   The Bankruptcy Appellate Panel of the Eighth Circuit dismissed the appeal for lack of jurisdiction. The court explained that an appeal is considered constitutionally moot where there is no longer any live case or controversy to be decided. In ordinary parlance, an appeal is considered equitably moot and will be dismissed if implementation of the judgment or order that is the subject of the appeal renders it impossible or inequitable for the appellate court to give effective relief to an appellant. With the dismissal of Debtor’s bankruptcy case, this appeal is constitutionally moot. View "Timothy Davies v. Diana S. Daugherty" on Justia Law

Appellant petitioned for bankruptcy relief under Chapter 13 of the Bankruptcy Code on August 19, 2020. She valued her residence at $130,000 at the time, and the parties stipulated that she claimed a $15,000 homestead exemption under section 513.475 of the Missouri Revised Statutes. The bankruptcy court granted Appellant’s motion to convert from a Chapter 13 case to a Chapter 7 case. The parties stipulated that sale of Appellant’s residence would result in more than $62,000 in proceeds after satisfying the mortgage lien and paying the $15,000 homestead exemption and costs of sale. Prompted by indications that the Trustee planned to sell her residence, Goetz filed a Motion to Compel Trustee to Abandon Real Property of Debtor. The bankruptcy court denied the motion.   The Bankruptcy Appellate Panel for the Eighth Circuit affirmed. The court held that the bankruptcy court correctly concluded that postpetition preconversion nonexempt equity resulting from market appreciation and payments toward a mortgage lien accrue for the benefit of the bankruptcy estate upon conversion from a Chapter 13 case to a Chapter 7 case. Further, the court rejected Appellant’s claim that she benefits from the increase in equity in her residence because her residence was removed from the bankruptcy estate. The court explained the parties stipulated that sale of Appellant’s residence would result in more than $62,000 in proceeds after satisfying the mortgage lien and paying the $15,000 homestead exemption and costs of sale. The bankruptcy court’s determination that this sum is “of more than inconsequential value and benefit to the estate” was not an abuse of discretion. View "Machele L. Goetz v. Victor F. Weber" on Justia Law

After the bankruptcy court allowed Chapter 12 debtors – several years in a row – to modify their confirmed plan over the objection of their primary secured creditor, that creditor appealed. The issues are whether the bankruptcy court abused its discretion by confirming the debtors’ fourth modified plan under 11 U.S.C. Section 1229 without requiring the debtors to show an “unanticipated and substantial change in circumstances” and whether, under whatever standard applicable to plan modifications, the court’s factual findings were clearly erroneous.   The Eighth Circuit affirmed. The court held that, at a minimum, a substantial change in circumstances is required to justify modification of a plan under Section 1229. The bankruptcy court’s alternate ruling that the debtors met their burden of showing an unanticipated, substantial change in circumstances is not clearly erroneous, nor is the bankruptcy court’s finding that the fourth modified plan was feasible and confirmable. View "Farm Credit Services v. Steven L. Swackhammer" on Justia Law

ResCap Liquidating Trust (“ResCap”) pursued indemnification claims against originator Primary Residential Mortgage, Inc. (“PRMI”), a Nevada corporation. ResCap asserted breach of contract and indemnification claims, seeking to recover a portion of the allowed bankruptcy claims for those holding units in the liquidating trust. The district court concluded that ResCap had established each element of its contractual indemnification claim. The district court awarded ResCap $10.6 million in attorney’s fees, $3.5 million in costs, $2 million in prejudgment interest, and $520,212 in what it termed “post-award prejudgment interest” for the period between entry of judgment and the order awarding attorney’s fees, costs, and prejudgment interest. Defendant appealed.   The Eighth Circuit remanded for a recalculation of postjudgment interest but otherwise affirmed. The court explained that the district court held that, as a matter of Minnesota law governed by Section 549.09, a final judgment was not “finally entered” until its Judgment in a Civil Case resolving attorney’s fees, costs, and interest was entered on April 28, 2021, and therefore Minnesota’s ten percent prejudgment rate applied in the interim period. But Section 1961(a) does not say “final judgment,” it says “money judgment.” The district court, on August 17, 2020, entered a “money judgment.” Thus, the district court erred in applying Minnesota law to calculate interest after August 17, 2020, rather than 28 U.S.C. Section 1961(a). View "ResCap Liquidating Trust v. Primary Residential Mortgage" on Justia Law

PIRS Capital, LLC (“PIRS”), appeals the district court’s order that affirmed the bankruptcy court’s April 2021 order denying PIRS’s motion to set aside a January 2018 default judgment in the amount of $157,214. PIRS argues it is entitled to this extraordinary post-judgment relief because the bankruptcy trustee did not properly serve her adversary's complaint seeking recovery of preferential transfers. PIRS relies on provisions of Rule 7004(b)(3) of the Federal Rules of Bankruptcy Procedure, the bankruptcy counterpart to Rule 60(b) of the Federal Rules of Civil Procedure.   The Eighth Circuit affirmed. The court held that here, consistent with Espinosa, the bankruptcy court and the district court concluded the bankruptcy court had at least an arguable basis for jurisdiction. First, the trustee arguably complied with Rule 7004(b)(3) by serving PIRS in the manner directed in its Proof of Claim, a direction reinforced by the trustee’s diligent research of PIRS on the DOS website. Second, the trustee sent the summons and complaint by certified mail, return the receipt requested and received the receipt showing the summons and complaint was actually received by a PIRS employee at its Suite 403 address. The Supreme Court in Espinosa expressly stated that receiving actual notice “more than satisfied [PIRS’s] due process rights.”   Further, the court wrote that even if Rule 60(b)(6) relief is not precluded under Kemp, it agrees with the district court that “the circumstances that led to PIRS’s failure to defend were of its own making [and therefore] PIRS cannot establish the existence of exceptional circumstances” that warrant Rule 60(b)(6) relief. View "PIRS Capital, LLC v. Renee Williams" on Justia Law

A Debtor is appealing a bankruptcy court order dated June 30, 2022 (the “Order”) which disposes of a multitude of matters that were before the court. At the core of this appeal are the Debtor’s repeated motions to reopen his case. A bankruptcy court's decision whether to reopen a bankruptcy case is reviewed for an abuse of discretion.    The Eighth Circuit affirmed. The court explained that after reviewing the Order and the underlying record, it saw no need to address every one of the matters addressed by the bankruptcy court. The court wrote that Debtor states in his Appellant Brief that the bankruptcy court “blanket” denied all 27 of his motions, the Order itself belies that accusation – the court based its ruling on a thorough legal analysis of the individual pleadings and why denial of each was appropriate. A few of the matters involve letters or notices on which the Debtor is not seeking relief. With regard to many of the others, the Debtor mischaracterizes the facts or the law. Further, the court explained that the Bankruptcy Court’s analysis of each of the matters it considered in the Order was thorough and legally sound. View "Bryan Reichel v. Mary Jo A. Jensen-Carter" on Justia Law

Pocket Plus, LLC, sued Pike Brands, LLC (“Running Buddy”) for trade-dress infringement of Pocket Plus’s portable pouch. The district court granted summary judgment to Running Buddy and awarded it a portion of its requested attorney fees. Pocket Plus appealed the summary judgment, and both parties appeal the attorney fees award.   The Eighth Circuit affirmed. The court wrote there is no genuine dispute that Pocket Plus’s trade dress is functional and thus not protected by trademark law. To grant trade-dress protection for Pocket Plus would be to hand it a monopoly over the “best” portable-pouch design. Trademark law precludes that. Further, Running Buddy argued that the district court abused its discretion in awarding only a portion of the requested fees. The court found no abuse of discretion in finding that this was an exceptional case. It considered the appropriate law, reviewed the litigation history, held a hearing, and explained its decision. View "Pocket Plus, LLC v. Pike Brands, LLC" on Justia Law

Plaintiff fell victim to a massive Ponzi scheme. Plaintiff sued JP Morgan and Richter Consulting. Plaintiff’s principal theory is that these firms aided and abetted fraud. And even if they did not, the complaint alleges that the transfers to JP Morgan were fraudulent.   The Eighth Circuit affirmed the district court’s dismissal of Plaintiff's complaint. The court explained that early on, JP Morgan agreed to pay over $30 million to settle a group of claims filed by the trustees. To protect the settlement, two courts issued bar orders preventing creditors like Plaintiff from asserting any claims that belong or belonged to one or more of the bankruptcy trustees. Those orders, along with general bankruptcy-standing doctrine, prevent Plaintiff from pursuing JP Morgan separately. The same goes for the fraudulent-transfer claims against JP Morgan.   Further, Plaintiff’s aiding-and-abetting claim against Richter Consulting under New York law cannot move forward either, but for a different reason. The court explained that viewed in the light most favorable to Plaintiff, the allegations in the complaint describe no more than constructive knowledge of the fraud. View "Ritchie Spec. Cred. Investments v. JPMorgan Chase & Co." on Justia Law