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

Debtor appealed the order of the bankruptcy court approving the Chapter 7 Trustee's "Amended Final Report, Proposed Distribution, and Motion for Abandonment," over debtors' objection. The court found that the bankruptcy court did not abuse its discretion in interpreting its order to overrule debtors' objection and to approve the Trustee's Amended Final Report. Debtors waived their rights to settlement funds under the plain language of the order. Accordingly, the court affirmed the judgment.

Appellant appealed the district court's order of the bankruptcy court denying his motion to determine his claim against the chapter 11 estate of appellees. The court held that because the bankruptcy court lacked subject matter jurisdiction to hear appellant's motion to determine his claims under the Rooker-Feldman doctrine, the court affirmed the bankruptcy court's order denying appellant's motion.

Appellants, Robert A. Sears and Korley B. Sears, appealed from the June 8th, 2011 order of the bankruptcy court overruling their objections to claims that were filed by the Sears Family Members in the bankruptcy case of the debtor and disallowing Claim No. 26 of Korley. The court held that the bankruptcy court correctly disallowed Claim No. 26 where Korley's proof of claim provided no legal basis for liability by the debtor. The court also agreed with the bankruptcy court's determination that Robert and Korely failed to overcome the presumptive validity of the proofs of claim filed by the Sears Family Members. The court finally held that there was no need for the bankruptcy court to allow Robert and Korley more time to develop the record or a hearing with testimony and cross-examination of witnesses, before it ruled on the claim objections.

Robert A. Sears appealed from a bankruptcy court order finding that the bankruptcy estate of AFY was contractually and equitably entitled to receive the cash value of a life insurance policy, owned by Sears and paid for by AFY, to reimburse AFY for policy premiums paid. The court held that the bankruptcy court possessed the jurisdiction and constitutional authority to enter final judgment and AFY was not contractually or equitably entitled to the cash value of the policy. Accordingly, the decision of the bankruptcy court was reversed.

Defendant appealed the order of the bankruptcy court granting a motion for summary judgment filed by the trustee of debtor's bankruptcy estate. The trustee sought, and the bankruptcy court entered, an order determining that defendant did not have a security interest in certain of debtor's personal property. The court held that the record supported the bankruptcy court's determination that Wells Fargo had the authority to terminate defendant's successor in interest's (NSB) financing statements. The court also affirmed on the basis that termination of the financing statements was unnecessary because NSB's security interest in the property was extinguished when Loan No. 7 was paid in full in September 2007.

Plaintiff appealed the order of the bankruptcy court determining that debt owed to it by debtor was not excepted from discharge under 11 U.S.C. 523(a)(6). The court concluded that plaintiff had presented an interpretation of the evidence which was less plausible than the bankruptcy court's interpretation, which attributed debtor's failure to repay plaintiff primarily to debtor's unanticipated loss of a higher-paying job. Therefore, the court affirmed the bankruptcy court's determination that debtor's debt was not excepted from discharge under section 523(a)(6).

John R. Stoebner was the trustee for the jointly administered chapter 7 bankruptcy estates of debtors. Stoebner filed a verified motion for authorization to use cash collateral and TLP objected to the motion. The bankruptcy court overruled TLP's objection and allowed Stoebner to use cash collateral, finding the replacement lien offered by Stoebner adequately protected TLP's interest in the cash collateral. TLP timely appealed. The court held that the bankruptcy court's order allowing Stoebner to use cash collateral had ample support in the record evidence, especially in light of TLP's failure to offer any contrary evidence. Under the circumstances, the court could not say that the bankruptcy court's oral finding of adequate protection was clearly erroneous. Accordingly, the judgment was affirmed.

Debtor appealed from the ruling of the bankruptcy court denying his discharge pursuant to 11 U.S.C. 727(a)(4). The court agreed with the bankruptcy court that even if discovery of debtor's property interests resulted in no recovery for his estate, the omissions he made were directly related to his business and his assets, defining them as material for the purposes of section 727(a)(4)(A).

Plaintiff, as trustee for a creditors' trust, held a $56 million stipulated judgment against Paul Yarrick, a former officer of Interstate Bakeries. Interstate emerged from a voluntary Chapter 11 bankruptcy reorganization. In the bankruptcy proceedings, the Trust obtained the right to bring the action that later resulted in the judgment against Yarrick. The Trust received this right in exchange for certain concessions, including an agreement to execute only against potentially liable insurers. After the Trust obtained the judgment against Yarrick, the Trust brought the present action against defendants in an attempt to collect against several director and officer policies that named Yarrick as an insured. The court held that, because the Assignment Agreement that transferred to the Trust the limited right to sue Yarrick for insurance proceeds "absolved" Yarrick from "payment," the $56 million judgment was not a "Loss" as required by the plain language of the policy. The court also rejected the abandoned-insurance argument and held that Missouri law did not allow estoppel to extend coverage over otherwise uncovered claims. Accordingly, the judgment of the district court finding no coverage and granting summary judgment in favor of the insurers was affirmed.

Plaintiff, in these related appeals, was the Trustee in the Chapter 7 bankruptcy cases of LGI Energy Solutions, Inc. and LGI Data Solutions Company, LLC, which were in the business of providing utility-management and billing services to restaurants and other customers. These consolidated appeals involved seven adversary proceedings by the Trustee to avoid payments made by LGI Energy to defendant utilities prior to the bankruptcy. The Trustee contended that such payments were preferential and/or fraudulent transfers under the Bankruptcy Code and applicable state law. The Bankruptcy Court granted summary judgment in favor of defendants based on its conclusion that the payments they received for the utilities were not an asset of either debtor. The court held that the bankruptcy court's ruling was inconsistent with Minnesota law and Eighth Circuit precedent. If a trust or agency relationship was intended to be created by the agreements between LGI Energy and its customers, then defendants were nevertheless required to prove that LGI Energy honored that relationship and treated the funds accordingly. Therefore, the court reversed and remanded.