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

When debtor filed for bankruptcy, he was living in rental property owned by creditors. Creditors violated an automatic stay and evicted debtor. On appeal, creditors challenged the bankruptcy court's finding that they had willfully violated the automatic stay, and bankruptcy court's award of actual and punitive damages. The court concluded that creditors waived any right they may have had under 11 U.S.C. 362(e); creditors are barred from judicial estoppel from claiming that the stay had expired under section 362(e); the bankruptcy court's findings that creditors willfully violated the automatic stay and of actual damages are not clearly erroneous; but the bankruptcy court abused its discretion in awarding punitive damages where the bankruptcy court did not make specific findings of fact as to motive and egregious conduct in violating the stay and a creditor's failure to appear at trial does not satisfy the Eighth Circuit test of egregious, intentional, misconduct. Accordingly, the court affirmed in part and reversed in part. View "Bugg v. Gray" on Justia Law

Debtor appealed the bankruptcy court's ruling denying her request for discharge of her student loan obligations to ECMC based on undue hardship pursuant to 11 U.S.C. 523(a)(8). The bankruptcy appellate panel concluded that the bankruptcy court made detailed findings to support its decision that debtor's evidence was insufficient to substantiate a disability that would qualify as undue hardship. The bankruptcy court determined that the evidence regarding debtor and her family's alleged medical conditions concerning allergies related to mold and toxic mold exposure was insufficient to show that any of them suffered from a disability. Further, the bankruptcy court properly found and considered debtor's income limitations, future employment, and Income Contingent Repayment Plan as part of the totality-of-the-circumstances analysis. Accordingly, the panel affirmed the judgment.View "Nielsen v. ACS, Inc." on Justia Law

Steve Conway appealed the Bankruptcy Appellate Panel's (BAP) dismissal of his appeal from an adverse ruling of the bankruptcy court. The court concluded that Conway, who has not claimed to be a licensed attorney, cannot relitigate on behalf of LorCon, his company, and Conway has no standing in this bankruptcy appeal to litigate his derivative interest in LorCon's claim. Accordingly, the court dismissed the appeal and denied the motions to supplement the record. The court granted the motion to strike.View "Conway v. Heyl" on Justia Law

Noel Bisges represented debtor in her Chapter 7 bankruptcy case. United States Trustee Nancy Gargula moved to reopen the case after it was closed because she learned that debtor possibly failed to disclose in her bankruptcy petition that she owns horses. On appeal, Bisges challenged the district court's decision upholding the bankruptcy court's denial of Bisges's motion to dismiss and the imposition of sanctions against him. The court concluded that the bankruptcy court did not abuse its discretion in denying the motion where there is insufficient evidence of bad faith by Gargula. Further, the court saw no clear error in the bankruptcy judge's findings that Bisges advised debtor to omit from her bankruptcy petition a payment to her mother and Bisges violated 11 U.S.C. 707(b)(4)(C) by attaching to the bankruptcy petition schedules that significantly differed from the schedules that debtor had signed. Accordingly, the court affirmed the judgment.View "Bisges v. Gargula" on Justia Law

Debtors filed a pro se Chapter 13 bankruptcy in order to stop a pending foreclosure of their residential unit. On appeal, debtors challenged the bankruptcy court's order denying their motion for violation of an automatic stay, violation of a homestead exemption, violation of discharge, and creditor misconduct. Debtors also challenged the order dismissing their case and imposing a 180-day refiling. The panel concluded that debtors failed to provide the panel with transcripts of the relevant hearings pursuant to Federal Rules of Bankruptcy Procedure 8006 and 8009(b). Even if the panel were able to ascertain from debtors' briefs on appeal what factual errors, if any, they assert the bankruptcy court committed, the panel was unable to review the bankruptcy court's orders where debtors failed to provide an adequate record of the bankruptcy court's decision. To the extent the panel can consider debtors' legal arguments without having been provided with their factual basis, none of those legal arguments have merit. Accordingly, panel affirmed the orders.View "Carlson v. U.S. Bank, N.A." on Justia Law

Debtor filed for bankruptcy under Chapter 7 and the bankruptcy court refused to apply collateral estoppel to a state judgment, finding all the debt dischargeable. The district court reversed, finding all the debt nondischargeable, but remanded the attorney-fee debt. Debtor appealed. The court dismissed the appeal for lack of jurisdiction under 28 U.S.C. 158(d) because the district court's order was not final. In this case, the district court remanded to the bankruptcy court to determine whether the operating agreement connects the attorney fees to the nondischargeable fiduciary debt, delay does not harm the aggrieved party, and a later reversal would not require a new proceeding.View "Clear Sky Properties, LLC, et al. v. Roussel" on Justia Law

The trustee appealed from the bankruptcy court's order overruling the trustee's objection to debtor's claimed exemption in the portion of his state income tax refund which came from the Minnesota Education Credit as "government assistance based on need" under section 550.37, subd. 14 of the Minnesota Statutes. The panel concluded that the Education Credit is a direct payment or subsidy to address the basic economic needs of low-income recipients in obtaining such quality education for their children where the Education Credit is available only to individuals with relatively low income, is a refundable credit, and the credit is, in large part, intended to assist low-income individuals in obtaining quality education for their children. Accordingly, the panel affirmed the bankruptcy court's order permitting debtor's claimed exemption.View "Christians v. Dmitruk" on Justia Law

Plaintiff appealed the bankruptcy court's orders granting a motion to dismiss and denying his motion for retroactive approval to prosecute a derivative action complaint. The panel concluded that, based upon the record and applicable legal standards, the bankruptcy court did not abuse its discretion in denying derivative standing where there is no evidence that the trustee refused to undertake avoidance of the transfer, rather, he merely responded that he would need more information. Further, the bankruptcy court identified the complexity of the matters, including a three step process before any recovery could even be potentially available to the bankruptcy estate; the risks associated with litigation; and the expense of litigation in finding that the trustee was justified in his refusal to pursue avoidance of the partial assignment. These findings conform to the cost benefit analysis mandated by the law in this Circuit. The panel rejected plaintiff's remaining arguments and affirmed the bankruptcy court's orders.View "Larson, III v. Foster, et al." on Justia Law

This case involved a scenario in which a creditor holds a third mortgage that is secured only by the debtor's principal residence, but the value of the creditor's interest in the home is zero, because the value of the residence is insufficient to make whole the holders of the first and second mortgages. The bankruptcy court confirmed a Chapter 13 plan that reclassified the third-mortgage creditor's claim as unsecured and provided for avoidance of the creditor's lien upon discharge. The district court affirmed. The court agreed with other circuits that when considering the rights of creditors who hold homestead liens, the dividing line drawn by 11 U.S.C. 1322(b)(2) runs between the lienholder whose security interest in the homestead property has some value, and the lienholder whose security interest is valueless. Section 1322(b)(2) protects a creditor's right in a mortgage lien only where the debtor's residence retains enough value - after accounting for other encumbrances that have priority over the lien - so that the lien is at least partially secured under 11 U.S.C. 506(a). Accordingly, the court affirmed the judgment of the district court.View "MN Housing Finance Agency v. Schmidt, et al." on Justia Law

SHF acquired the vestiges of Sholom Rubashkin's bankrupt Agriprocessors, now rebranded Agri Star. Debtor, Nevel, is owned by Rubashkin's brother. At issue on appeal was whether SHF has any rights to a well located on land owned by Nevel. The bankruptcy court concluded that SHF did not and the district court affirmed. SHF appealed and Nevel moved to dismiss the appeal based on the so-called "equitable mootness" doctrine. The court concluded that the district court did not err in concluding that SHF had no rights to the well. The bankruptcy court correctly found that SHF never acquired any rights to the well because Agriprocessors' trustee was deemed to have rejected the contract as a matter of law. Accordingly, the court affirmed the district court's judgment and denied the motion to dismiss.View "Agri Star Meat & Poultry, et al. v. Nevel Properties Corp." on Justia Law