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

In Seifert’s chapter 12 bankruptcy petition, sale proceeds from the current year’s crop were described as $134,661 in “farm earnings,” consisting of checks jointly payable to the Farm Services Agency (FSA), CHS, and Seifert. Seifert claimed $91,258 as exempt under Minnesota Statute 550.37(13). FSA was an over-secured creditor and did not object to Seifert’s claimed exemptions or any of the filed plans. CHS and the trustee objected to Seifert’s exemption claim and to each plan, based on 11 U.S.C. 1225(a)(4): A debtor must demonstrate that: “the value, as of the effective date of the plan, of property to be distributed … [for[ each allowed unsecured claim is not less than … would be paid … if the estate … were liquidated under chapter 7.” They argued that because Seifert was not entitled to an exemption in the farm earnings, payments to the unsecured creditors must include that value. After the parties reached an agreement that reserved the issue of the exemption for later determination, CHS asserted that the exemption dispute was moot because the checks from the sale of the crop had been given to FSA and Seifert retained no interest in those funds. The bankruptcy court agreed. The Bankruptcy Appellate Panel reversed and remanded. Payment to FSA did not override the parties’ stipulation and did not constitute a determination of what would be paid to unsecured creditors. View "Seifert v. Carlson" on Justia Law

Slominski (a friend of one of the debtor-partners) and the debtor asserted that the farmland lease between them started as a verbal lease in 2010, but just a few days before the December 6, 2010 involuntary Chapter 11 bankruptcy filing, the lease was reduced to writing and dated December 1, 2010. In an adversary proceeding, the Bankruptcy Court avoided the lease as a fraudulent transfer and held that Slominski was obligated under 11 U.S.C. 550(a) to pay the Trustee the fair market rent for the time he occupied the land prior to the avoidance, rather than the lower rent called for by the lease. The Trustee claimed that the lease was actually executed post-petition (no earlier than April 2011), and that it had been backdated to make it appear to have been entered prepetition. The court awarded Slominski an offset, as a good faith transferee, for the costs of his improvements to the land: the wheat crops he planted there and certain taxes he paid. The Eighth Circuit affirmed the determination that Slominski owes the estate $431,200 in net fair market rent, but reversed as to Slominski’s setoff. Denial of the Trustee’s motions based on newly-discovered evidence was affirmed. View "Kaler v. Slominski" on Justia Law

Diamond filed a chapter 7 bankruptcy petition. February 28, 2012 was the deadline for complaints to determine the dischargeability of certain debts under 11 U.S.C. 523(c). On February 15, Goldstein requested a 60-day “extension of proceedings” and “withholding of the entry of the discharge order,” claiming that he was a creditor but did not receive proper notice. The bankruptcy court found the request to be for “abatement of the case.” Finding no cause for relief, it denied the motion and the request to withhold discharge. The case closed. A year later Goldstein filed a dischargeability complaint in a different jurisdiction, not citing a statute, but captioned “Fraud and Defalcation.” The court transferred the matter to the original court. After a remand, that court entered an order to show cause why the complaint should not be dismissed. Goldstein responded. The court took no action on its show cause order, but scheduled a trial. Diamond filed an answer, requesting dismissal. Goldstein responded; the court dismissed, determining that the debt was not excepted from discharge. The Eighth Circuit affirmed. Goldstein had adequate time to protect his rights. He used that time to file a proof of claim and move for extension. He cannot , long after the fact, claim to have been hindered by his lack of knowledge of the case. View "Goldstein v. Diamond" on Justia Law

Petters orchestrated a $3.65 billion Ponzi scheme, operating a sham business, PCI, which purportedly purchased electronics in bulk and resold them. Ritchie advanced $189 million to PCI, in exchange for promissory notes. Ritchie assigned notes with face values totaling $25 million to VICIS. PCI and Petters made payments to Ritchie, who used part of the funds to pay VICIS $17,703,227.39 toward the assigned notes. After Petters’s scheme ended in 2008, Kelley was appointed as receiver, sought Chapter 11 bankruptcy relief, and was appointed as trustee. Kelley and the bankruptcy trustee for Petter’s wholly-owned company, Polaroid, entered into a coordination agreement. Kelley commenced an adversary proceeding against Ritchie, VICIS, and others, to recover alleged fraudulent and preferential transfers. VICIS held a claim against PCI for amounts outstanding on the promissory notes. The parties reached a settlement: VICIS paid $7.5 million to Kelley for release of all claims. The unsecured creditors’ committee supported the settlement and Kelley’s allocation, but Ritchie objected to the allocation. The bankruptcy court approved the t agreement, finding the allocation reasonable because Kelley applied an objective mathematical calculation, the unsecured creditors committee participated in the process and approved the allocation, and the circumstances in the case dealt with complex issues, unsettled law, and massively complicated factual disputes. The district court and Eighth Circuit affirmed. View "Ritchie Capital Mgmt., LLC v. Kelley" on Justia Law

The Peets sought relief under chapter 13 of the bankruptcy code on December 5, 2011. When they filed their petition for relief, the Peets and Marilynn Peet's parents held title to real property in Missouri as joint tenants, and Marilynn Peet and her father held title to a 2005 Ford half-ton pickup registered in Missouri as joint tenants. On the Peets' motion, the bankruptcy court converted the case to chapter 7 on January 23, 2014. Checkett was appointed the chapter 7 trustee. Marilynn Peet's father passed away on April 14, 2014. Her mother passed away the following day. That summer, the trustee proposed to sell the real property and the pickup. The Peets objected. The bankruptcy court overruled the Peets' objections and authorized the trustee to sell the real property and the pickup. The Eighth Circuit Bankruptcy Appellate Panel affirmed. The filing of a petition for relief does not sever a joint tenancy. The Peets' undivided estate in the real property and Marilyn Peet's undivided estate in the pickup are property of the bankruptcy estate, and the trustee is entitled to the proceeds from their sales. View "Peet v. Checkett" on Justia Law

Debtor is a talented singer. Wilson agreed to help manage the Debtor’s career. The two entered into a series of agreements. Wilson claims to have spent significant funds to advance Debtor’s career, but did not identify any related debts in his own 2008 bankruptcy. Debtor filed a Chapter 7 petition in 2012. Wilson filed an adversary proceeding and appealed bankruptcy court rulings denying his requests for: a judgment of nondischargeability under 11 U.S.C. 523; a money judgment; enforcement of a money judgment against Debtor’s non-filing spouse or her company; and denial of the Debtor’s discharge under 11 U.S.C. 727. The Eighth Circuit Bankruptcy Appellate Panel affirmed, finding that Debtor owed no debt to Wilson. Two contracts between the Debtor and Wilson were void as unconscionable; Wilson had no claim for a lost investment in the Debtor or his career. Wilson had no cause of action under section 523 and there was no basis upon which to deny the Debtor’s discharge, View "Wilson v. Walker" on Justia Law

Debtor filed a voluntary chapter 11 petition. Debtor had a program under which independent contractor drivers could lease and acquire ownership of trucks. Trucks were financed or leased from creditors, including Daimler. At the time of filing, Daimler was the lessor of 14 trucks and held security interests in 99 others and in driver lease payments and other proceeds generated by the use of such trucks. Daimler sought sequestration to prevent unauthorized use of that money. The parties submitted an agreed order, providing that Daimler would sell 21 trucks and credit the net proceeds. Debtor would retain 80 trucks subject to Daimler’s security interest and would make adequate protection payments. The order was silent about Daimler’s security interest in proceeds from the use of the trucks. The bankruptcy court confirmed a plan. The debtor appealed with respect to application of excess adequate protection payments, claiming it overpaid for erosion in the value of the trucks and argued that the court erred when it supplemented the secured portion of Daimler’s claim with an award of $51,909.40 as proceeds from the use of Daimler’s trucks. The Eighth Circuit dismissed for lack of jurisdiction. The orders were interlocutory. The debtor now possesses no trucks; no meaningful relief could be granted. Debtor did not propose a plan that was denied, so it is not an aggrieved party, and does not have standing. View "O&S Trucking, Inc. v. Mercedes Benz Fin. Servs., USA" on Justia Law

Debtors filed a Chapter 7 bankruptcy petition. The Credit Union sought Relief from Stay regarding a 2008 Chrysler van, which had been owned by Debtor’s father (Neale), but was in the Debtors’ possession. The van’s Certificate of Title lists Neale as the sole owner, but Neale had died and Debtor was the sole designee under his will, which was submitted to the court. The Bankruptcy Court found that Debtor had at least an equitable interest in the van, which interest was property of the estate, and granted the Motion. The Eighth Circuit affirmed, rejecting arguments that the Credit Union did not have a perfected security interest in the van, or that the loan could not be enforced against Debtors. The interest was evidenced by a Security Agreement signed by Neale; the lien was noted on the Certificate of Title, which issued in Texas. Texas law provides that, except for vehicles held as inventory, a person may perfect a security interest in a motor vehicle by recording the security interest on the certificate of title. The fact that Neale is now deceased, and that the Debtors may not be personally liable on the loan, does not affect the Credit Union’s security interest in the van. View "Gess v. Randolph Brooks Credit Union" on Justia Law

Debtors filed a petition for relief under chapter 11 in 1999. Debtors proposed several plans of reorganization, but none were confirmed. On the Trustee's motion, the bankruptcy court dismissed Debtors' case in 2004. Debtors did not appeal and the case was closed on the bankruptcy clerk's docket in 2005. In 2014, Debtors moved to reopen their case "to pursue Confirmation of their current Plan[.]" The Trustee and Agrifinance objected, and, without first holding a hearing, the bankruptcy court entered a text order denying Debtors' motion. The Eighth Circuit affirmed. There is no requirement in 11 U.S.C. 350 that the court provide a hearing on a motion to reopen and nothing would have been gained by holding a hearing. View "Bowman v. Casamatta" on Justia Law

Petters purported to purchase and resell electronics. His operations were a Ponzi scheme. In 2005, Petters purchased Polaroid and become Chairman of Polaroid’s board of directors. Polaroid continued to engage in legitimate business. Petters took several million dollars from Polaroid. In 2007-2008, Petters’s companies, including Polaroid, experienced major financial difficulty. Ritchie made short term loans of more than $150 million, with annual interest rates of 80 to 362.1%. Polaroid was not a signatory, although some proceeds were used to repay a Polaroid debt. When the loans were past due, Ritchie demanded collateral. Petters executed a Trademark Security Agreement (TSA) giving Ritchie liens on Polaroid trademarks. Polaroid’s CEO objected to the TSA as impeding Polaroid’s ability to raise needed capital. The TSA did allow Polaroid to grant first-priority trademark liens to secure $75 million in working capital. After the FBI raid, which resulted in Petters’s convictions for mail fraud, wire fraud, and money laundering, and sentence of 50 years in prison, Ritchie accelerated all of the loans. Polaroid filed for bankruptcy and challenged the TSA as an actual fraudulent transfer under federal and Minnesota bankruptcy law, citing the “Ponzi scheme presumption.” The bankruptcy court presumed Petters executed the liens with fraudulent intent, found Ritchie had not received them in good faith and for value, and granted summary judgment. The district court upheld the admission of expert testimony and application of the Ponzi scheme presumption. The Eighth Circuit affirmed. View "Ritchie Capital Mgmt., LLC v. Stoebner" on Justia Law