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

Defendants appealed from an order and judgment of the bankruptcy court granting summary judgment on plaintiff's complaint to determine dischargeability pursuant to 11 U.S.C. 523(a)(2)(B). The court held that plaintiff failed to show that it was entitled to judgment as a matter of law under the plain language of the statute where plaintiff had not met several statutory requirements. Accordingly, the court reversed and remanded with instructions to enter judgment for defendants.

Appellants in these consolidated appeals were debtors in their respective chapter 7 cases. Creditor objected to debtors' homestead exemption claims and moved for relief from the automatic stay. Debtors then moved to avoid creditor's judicial liens. The bankruptcy court consolidated all of the motions and all three parties moved for summary judgment. The bankruptcy court overruled creditor's objection to debtors' exemption, denied debtors' motions to avoid creditor's judicial liens, and granted creditor relief from the automatic stay to allow it to foreclose its judicial liens. Debtors appealed. Because the court held that creditor's judicial liens were avoidable, the court reversed the bankruptcy court's decision to deny debtors' motion to avoid its liens. Because the bankruptcy court's order granting relief from the automatic stay was moot, the court dismissed the appeal as to that part of the bankruptcy court's order.

In an action for nondischargeability, creditors appealed from the judgment of the Bankruptcy Court finding that they failed to prove that they were damaged as a result of the fraud allegedly committed by debtor. The court held that the Bankruptcy Court erred in finding that creditors failed to prove that they sustained a loss as a proximate result of debtor's alleged misrepresentations. The court reversed and remanded, concluding that plaintiff offered evidence that they would not have invested any money in the first place, or that they would not have continued to invest funds, had they known of debtor's alleged fraud and that the Bankruptcy Court failed to consider whether Missouri's "out of pocket" measure of damages was applicable.

This was an appeal from an order of the bankruptcy court overruling debtors' objection to confirmation of their post-confirmation amended Chapter 13 plan. At issue was the extent to which debtors could modify the payments set forth in a confirmed plan. The court agreed with the trustee that when a confirmed plan was modified to reduce payments under 11 U.S.C. 1329(a) due to a substantial change in financial circumstances, the modification must correlate to the change in circumstances. Debtors' proposed reduction in their plan payment from $1,890.00 per month under their original confirmed plan to $100.00 per month was not reflective of their loss of income in the amount of $1,240.00 per month. Therefore, the court affirmed and held that the bankruptcy court did not abuse its discretion in overruling their objection and confirming the plan.

Trustee appealed a summary judgment order from the bankruptcy court in favor of Judgment Holders. The court held that the bankruptcy court correctly concluded the subject liens were not avoidable under 11 U.S.C. 547. The court held, however, that the district court erred in concluding Judgment Holders' post-petition registration of their judgments and the attendant creation of judgment liens against Northridge were not avoidable post-petition transfers of property of the bankruptcy estate under Section 549(a), and it did not fully assess whether the bankruptcy estate was entitled to a recovery under section 550(a) because section 551's automatic preservation of the avoidable judgment liens would not restore the bankruptcy estate's financial condition to what it was before Judgment Holders' judgments were registered on Northridge's certificate of title. Accordingly, the court affirmed in part, reversed in part, and remanded for further proceedings.

The Chapter 7 Trustee appealed from the Bankruptcy Court's judgment in favor of debtor's parents on a fraudulent transfer action, holding that debtor could not fraudulently transfer property that would have been exempt. Because the court concluded that the Bankruptcy Court erred in applying Minnesota fraudulent transfer law to the count seeking relief under section 548(a)(1)(B) of the Bankruptcy Code, the court reversed and remanded for further findings.

Debtors, owners and operators of a farm and ranch, appealed from the judgment of the bankruptcy court denying their discharge pursuant to 11 U.S.C. 727(a)(5). The court held that the bankruptcy court did not clearly err in finding that debtors failed to adequately explain the loss of cattle. Accordingly, the judgment denying debtors' discharge was affirmed.

Debtors appealed the bankruptcy court's entry of summary judgment in favor of defendant in debtors' adversary action seeking, inter alia, to avoid defendant's mortgage lien on debtors' residence. The court held that summary judgment was improper in this case because there was a material issue of fact regarding whether defendant had possession of the original promissory note.

Debtor appealed the bankruptcy court's order converting its Chapter 11 bankruptcy case to one under Chapter 7. The court affirmed the order of the bankruptcy court and held that an abuse of process was an appropriate ground for conversion under 11 U.S.C. 1112(b). Moreover, debtor had had its day in court four times where debtor was substantially the same entity as Midwest Oil, an entity that the judge barred from filing pleadings or a petition in the bankruptcy court. Therefore, the bankruptcy court's finding was not erroneous.

Reshetar Systems, Inc. appealed a judgment of the bankruptcy court determining that the debt owed to Reshetar by debtor was not excepted from discharge. The court held that the debt was not excepted from discharge as the trustee of a constructive trust was not a fiduciary within the meaning of Code. Sec. 523(a)(4) and Minnesota law did not create the fiduciary relationship required by the section. The court also held that nothing in the statute, the contract, or the subcontract gave Reshetar specific property rights in the payments Construction 70 received from Applebee's. Those payments belonged to Construction 70, and Construction 70's use of its own property did not amount to embezzlement. The court also held that Construction 70's use of its own property did not amount to larceny where the payments from Applebee's to Construction 70 belonged to Construction 70. The court finally held that, giving due regard to the bankruptcy court's opportunity to judge debtor's credibility, the court could not say that the bankruptcy court's finding was clearly erroneous.