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

The bankruptcy court denied debtors a claimed exemption in an unliquidated personal injury claim. On appeal, debtors argued that the Eighth Circuit precedent relied upon by the bankruptcy court was erroneous and that the court should disregard and reverse. Because debtors' arguments raised issues already decided by the Eighth Circuit, the court was compelled by principles of stare decisis to affirm the bankruptcy court's disallowance of debtors' exemptions. View "Abdul-Rahim, et al v. LaBarge" on Justia Law

Debtor appealed from an order of the bankruptcy court dismissing his Chapter 13 case and an order denying his motion for a new trial. The court held that the trustee's brief was filed on the date it was due and debtor's objection, construed as a motion to strike, was denied; the proposed amicus brief had no bearing on the matters currently on appeal, so the motion for leave to file was denied; and the bankruptcy court's findings were supported by the facts of the case and it did not abuse its discretion in dismissing the Chapter 13 case nor denying the motion for new trial. View "Paulson v. Wein" on Justia Law

The bankruptcy court denied confirmation of debtor's initial Chapter 13 plan because it proposed to "strip off" second and third mortgage liens on his residence. Debtor filed a modified plan that preserved those liens, noting his objection, and appealed the bankruptcy court's confirmation of the modified plan to the Bankruptcy Appellate Panel (BAP). The BAP reversed, concluding that a Chapter 13 debtor could strip a wholly unsecured residential mortgage lien, addressing additional issues, and remanded to the bankruptcy court to consider whether debtor's plan complied with the other confirmation requirements. The trustee appealed. The court dismissed the appeal for lack of jurisdiction because the BAP's remand order was not a final order for purposes of 28 U.S.C. 158(d)(1). View "Fisette v. Keller" on Justia Law

Debtor filed for protection under Chapter 7 of the Bankruptcy Code. The United States Trustee subsequently filed a complaint seeking a denial of Debtor's discharge under 11 U.S.C. 727(a)(3) and (a)(5) based on Debtor's alleged failure to maintain adequate financial records and to satisfactorily explain a loss of assets. After Debtor filed his answer, the bankruptcy court granted the Trustee's motion for judgment on the pleadings to deny Debtor's discharge. The Eighth Circuit Court of Appeals reversed, holding (1) the pleadings contained insufficient facts to deny Debtor's discharge under section 727(a)(3) and (a)(5), and accordingly, the judgment on the pleadings motion should have been denied; and (2) collateral estoppel did not bar Debtor from denying the Trustee's allegations. View "McDermott v. Swanson" on Justia Law

Joseph Terry, who received long-term disability benefits, filed a Chapter 7 bankruptcy petition. Terry later sued the bankruptcy trustee, seeking a declaration that his disability insurance provider, Standard Insurance Company, should not have reduced his benefits by the amount of certain "voidable" payments. The bankruptcy court ruled that Standard was precluded from recouping the payments. The bankruptcy appellate panel (BAP) reversed, holding that recoupment was subject to a a "balancing of the equities." On remand, the bankruptcy court found that the equities prevented Standard from recouping the payments. The Eighth Circuit Court of Appeals reversed, holding that the BAP (1) erred by introducing a balancing of the equities test into the doctrine of recoupment and by invoking these equitable principles to deny Standard a right of recoupment; and (2) abused its discretion in how it weighed the equities. View "Terry v. Standard Ins. Co." on Justia Law

Debtor appealed the bankruptcy court's order denying Debtor's claim of an exemption for limited partnership units that she received from her employer, Kwik Trip, Inc. The Eighth Circuit Court of Appeals reversed the decision of the bankruptcy court, holding that the Kwik Trip benefit plan was similar to the plans listed in Minn. Stat. 550.37, 24, and the right to payments thereunder were on account of Debtor's length of service at Kwik Trip. Therefore, the Court held Debtor may properly claim her interests in the limited partnership units distributed under the Kwik Trip employee benefit plan as exempt. Remanded to determine whether the amount of Debtor's interest in the partnership and benefit plan over the statutory limit was reasonably necessary for her support. View "Foellmi v. Ries" on Justia Law

Contractor contracted to build a restaurant in Minnesota, promising to pay each subcontractor, upon receipt of payment from the owner, the amount to which the subcontractor was entitled. Appellant became the subcontractor for carpentry and drywall work. Upon completing its work, Appellant was not paid the full amount owed. After Contractor settled a dispute with the restaurant, it offered Appellant a smaller sum, claiming it was Appellant's pro rata share of the settlement proceeds. Appellant rejected the offer and sued Contractor and its Owner in state court. Owner and his wife subsequently filed a petition for Chapter 7 bankruptcy relief, with the debt to Appellant unsatisfied. Appellant commenced this adversary proceeding to have the debt declared nondischargeable. The bankruptcy appellate panel (BAP) determined that neither 11 U.S.C. 523(a)(4) nor 11 U.S.C. 523(a)(6) barred discharge of the debt. The Eighth Circuit Court of Appeals affirmed, holding (1) Owner was not a section 523(a)(4) fiduciary by reason of a Minnesota statute or Owner's Minnesota common law duties, nor did Contractor's use of its own property amount to embezzlement; and (2) the BAP did not err in finding no malicious injury, which resolved the section 523(a)(6) issue. View "Reshetar Sys., Inc. v. Thompson" on Justia Law

Theodore Wolk filed for Chapter 7 bankruptcy, and the trustee sought an order from the bankruptcy court authorizing the sale of the home Wolk owned as a tenant in common with his wife, Kathryn Tennyson. After several proceedings the bankruptcy court denied the motion to sell the home, concluding that the detriment of such a sale to Tennyson outweighed the benefit to the bankruptcy estate. Wolk appealed, and the bankruptcy appellate panel affirmed. The trustee appealed. The Eighth Circuit Court of Appeals affirmed, holding that the bankruptcy court had not abused its discretion in denying the trustee's motion to sell the home, as (1) the court's findings with respect to the benefit to the estate and the detriment to Tennyson were not clearly erroneous, and (2) the court carefully balanced the equities in its judgment. View "Lovald v. Tennyson" on Justia Law

Chapter 11 Debtor, an LLC, held certain parcels of undeveloped land that were included within property-owners' improvement districts (the Districts) formed in accordance with Arkansas law. After Debtor entered into bankruptcy, secured creditor National Bank of Arkansas (the Bank) filed a motion with the bankruptcy court seeking a ruling that a proposed state court action against the Districts would not violate the automatic stay. The bankruptcy court determined (1) the automatic stay applied to the Bank's proposed action and that relief from the stay was unwarranted, and (2) the Bank's motion was barred by laches. The bankruptcy appellate panel (BAP) affirmed. The Eighth Circuit Court of Appeals reversed, holding (1) the automatic stay did not apply to the Bank's proposed action against the Districts because the Districts were neither property of the Debtor nor debtors themselves, the Bank's action would only impact the value of the estate in some undetermined and indirect manner, and the action would not divest the Debtor of its property; and (2) the doctrine of laches did not apply in this situation because there was no showing of detrimental reliance by the Debtor upon the Bank's failure to raise this particular challenge in a more timely fashion. View "Nat'l Bank of Ark. v. Panther Mtn. Land Dev. " on Justia Law

In this core adversary proceeding, a Chapter 7 bankruptcy Trustee appealed an order of the Bankruptcy Appellate Panel (BAP) denying his turnover action on the ground that an unjust enrichment claim exceeds the scope of 11 U.S.C. 542(a), a remedy limited to recovering property of the bankruptcy estate in the possession, custody, or control of a third party. The Eighth Circuit Court of Appeals affirmed, holding (1) the BAP correctly concluded that the Court's In re NWFX decisions did not recognize unjust enrichment as a basis for collecting a debt under section 542(a); and (2) thus, the Trustee's claim for unjust enrichment based upon a debt owed was beyond the scope of section 542(a). View "Lovald v. Falzerano" on Justia Law