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

After Xurex filed for Chapter 7 bankruptcy, the trustee filed suit against defendant and others for breach of fiduciary duty and civil conspiracy. The jury returned a verdict for the trustee against defendant for conspiracy to breach fiduciary duties.The Eighth Circuit affirmed the jury's verdict and the district court's denial of defendant's motions for judgment as a matter of law, a new jury trial, the entries of judgment, and all adverse rulings. The court concluded that the evidence was sufficient to support the jury's verdict finding that defendant breached a fiduciary duty and there was no error in denying defendant's Federal Rule of Civil Procedure 50(d) motion; defendant waived several arguments he now raises about the language of the verdict director and the inconsistency of the verdict; because plaintiff's damage theories for civil conspiracy and breach of fiduciary duty were the same, the district court properly entered judgment on the larger of the two amounts; and the district court did not plainly err as to the jury instructions. View "Olsen v. Kraus" on Justia Law

Debtor, licensed under North Dakota’s pari-mutuel wagering system, filed for bankruptcy in 2004. Ten years later, the district court ruled that the state was not authorized to collect certain taxes from the Debtor. North Dakota agreed to pay the estate $15 million. Creditors asserted claims. Although the state constitution provides that “the entire net proceeds of such games of chance are to be devoted to educational, charitable, patriotic, fraternal, religious, or other public-spirited uses,” North Dakota did not raise the rights of any charities.In 2018, the bankruptcy court ruled on the claims. North Dakota filed a new proof of claim. The court concluded that the state lacked parens patriae authority to assert claims on behalf of charities. The Eighth Circuit Bankruptcy Appellate Panel (BAP) remanded. On remand, the state attempted to add a breach of contract claim. The bankruptcy court denied that motion and concluded that the contract claim had no merit. The court also rejected a constitutional-statutory claim.The BAP affirmed, rejecting arguments that North Dakota law requires that charities, not Debtor, recover the remaining tax settlement funds and that the court erred when it disallowed the contract claim. The state constitution concerns the legislature and does not govern the actions of private parties such as Debtor. Debtor paid the taxes originally; the reimbursement of those improperly-paid taxes should inure to the benefit of Debtor after distribution under the bankruptcy priority scheme. View "North Dakota v. Bala" on Justia Law

The Bankruptcy Appellate Panel dismissed debtors' appeal of the bankruptcy court's orders based on lack of standing. In this case, debtors challenged the bankruptcy court's orders (1) granting in part and denying in part the chapter 7 trustee's application to pay her law firm as attorney for the trustee, and (2) denying debtors' motion to remove the trustee, among other findings not at issue here. The court concluded that debtors are not personally aggrieved by the orders and therefore lack standing to appeal them. View "Levitt v. Jacoway" on Justia Law

The Eighth Circuit affirmed the bankruptcy appellate panel's decision affirming the bankruptcy court's determination that debtor's debt to Lariat is excepted from discharge because it was obtained by actual fraud. The court explained that, although Lariat's claim was partially disallowed against debtor's bankruptcy estate under 11 U.S.C. 502(b)(6), the landlord cap does not foreclose Lariat's argument that the claim should be excepted from discharge under section 523(a)(2)(A). Therefore, Lariat's claim is excepted from discharge under section 523(a)(2)(A) to the extent that it was obtained by actual fraud. In this case, the bankruptcy court did not clearly err in finding that debtor had received a fraudulent transfer from her husband, and the record supports the bankruptcy court's finding that debtor participated in the scheme with the requisite wrongful intent. View "Lariat Companies, Inc. v. Wigley" on Justia Law

A VeroBlue preferred shareholder, FishDish appeals the district court's order granting appellees' motions to dismiss FishDish's appeal of the bankruptcy court order confirming debtors' Chapter 11 plan of reorganization over FishDish's objections, and certain pre-confirmation orders.After determining that the district court and this court have statutory subject matter jurisdiction, the Eighth Circuit concluded that the district court erred in limiting the mandatory but non-jurisdictional timeliness requirements of Bankruptcy Rule 8002 to appeals from final bankruptcy court orders. Because FishDish has conceded that its appeal from the preconfirmation Claim Objection Order was untimely under Rule 8002, the court affirmed the grant of appellees' Partial Motion to Dismiss Appeal on this alternative ground. In regard to the equitable mootness claim, the court concluded that the district court did not apply a sufficiently rigorous test to determine when bankruptcy equities and pragmatics justify foregoing Article III judicial review of a bankruptcy court order confirming a Chapter 11 plan. Therefore, the court remanded for further district court proceedings. View "FishDish, LLP v. VeroBlue Farms USA, Inc." on Justia Law

The Bankruptcy Appellate Panel dismissed debtor's appeal as moot where he challenged the bankruptcy court's order denying his motion for relief from a previous order denying his request for a waiver of the Bankruptcy Code's credit counseling requirement. The court concluded that the bankruptcy case was subsequently dismissed, and thus a reversal of the waiver denial order would be of no benefit to debtor. View "Lincoln v. Snyder" on Justia Law

The Bankruptcy Appellate Panel affirmed the bankruptcy court's decisions that debt owed by each debtor to Madison related to U.S. Bank in the amount of $1,676,162.20, plus interest, costs and any attorney's fees awarded in the matter are nondischargeable pursuant to Bankruptcy Code 523(a)(2)(A).The panel concluded that the bankruptcy court correctly analyzed first, under nonbankruptcy law the existence of a debt to Madison and second, under federal bankruptcy law the issue of dischargeability. In this case, the bankruptcy court appropriately found with respect to damages that debtors misrepresented and concealed material facts from Madison in order to further their conspiracy. View "Madison Resource Funding Corp. v. Marsh" on Justia Law

The Eighth Circuit affirmed the bankruptcy appellate panel's decision affirming the district court's dismissal of plaintiffs' action based on issue preclusion grounds. Looking to North Dakota preclusion law for the federal common law principles of issue preclusion applicable in this case, the court concluded that its decision in Finstad II that plaintiffs do not have any interest in the property was an issue actually litigated in a prior suit between the parties that is binding on plaintiffs in this lawsuit. View "Finstad v. Gord" on Justia Law

The Bankruptcy Appellate Panel vacated the bankruptcy court's order confirming debtor's chapter 12 plan, concluding that the bankruptcy court erred by failing to hold an evidentiary hearing to determine the value of the Bank's collateral where the collateral was disputed. The panel also concluded that the Bank needed to file a proof of claim. The panel explained that, until the bankruptcy court holds the requisite evidentiary hearing and determines the value of the Bank's collateral, it is impossible to say whether under the debtor's plan the Bank will be paid not less than the allowed amount of its secured claim. Accordingly, the panel remanded for further proceedings. Finally, the panel concluded that the record amply supports the bankruptcy court's finding of disposable income under 11 U.S.C. 1225(b)(1)(B). View "Citizens State Bank v. Schiller" on Justia Law

The Eighth Circuit affirmed the bankruptcy appellate panel's decision upholding the bankruptcy court's order that fully voided Waltrip's judicial lien on debtor's homestead. In this case, after Waltrip filed suit against debtor in October 2016 for breach of contract in Missouri state court, a fire damaged debtor's home. The homeowner's insurance policy paid debtor for damages and Waltrip obtained a consent judgment that gave Waltrip a judicial lien against the homestead property. The parties do not dispute that Waltrip had a valid, avoidable lien that was affixed to debtor's property before she filed her bankruptcy petition. At issue is the extent to which Waltrip's lien impairs debtor's claimed homestead exemption.The court concluded, under Missouri law, that when property is properly exempted under 11 U.S.C. 522, a debtor is the sole owner of the insurance proceeds covering the property. Without any precedent to support Waltrip's position, the court declined to include the amount of the insurance payout when calculating the fair market value of debtor's home on the petition date, and thus the court affirmed the bankruptcy court's ruling using the $3,000 to $6,000 valuation of the unrepaired, fire-damaged property as determined on the petition date. The court also concluded that, because Waltrip's lien is smaller than the extent of the impairment, the entirety of Waltrip's lien can be avoided. Finally, the court concluded that the bankruptcy court did not abuse its discretion in reopening the case to avoid the lien or in denying Waltrip's requests for attorneys' fees and costs related to the reopening. View "David G. Waltrip, LLC v. Sawyers" on Justia Law