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

The Eighth Circuit affirmed the bankruptcy court's order denying relief requested by debtor for wrongful foreclosure in equity, holding that the record supports the bankruptcy court's conclusion that debtor could not have been lulled by the Bank into a false sense of security regarding the foreclosure sale. In this case, debtor stipulated that "KeyBank advised Plaintiff that she had to contact KeyBank's foreclosure counsel to obtain a written payoff statement that included legal costs and fees;" the notes from the Bank's telephone records, a stipulated exhibit, indicate that debtor was so advised and nowhere in debtor's briefing does she dispute that; the call notes also establish that debtor called the Bank's foreclosure department as instructed; and while there is no evidence proving debtor's receipt of the Reinstatement Notice, there is evidence that the Bank advised her that the correct amount would be forthcoming in a letter. Therefore, the court found that the bankruptcy court's conclusion that debtor was advised by the Bank about the inaccuracy of the notification statement was not clearly erroneous. View "Courtney v. KeyBank N.A." on Justia Law

The Bankruptcy Appellate Panel affirmed the bankruptcy court's order granting the Bank relief from the automatic stay. The panel held that the default provisions in debtor's Chapter 12 plan were dispositive of the Bank's motion for relief from the automatic stay. In this case, debtor admits he agreed to make certain payments on January 15, 2020; he made only a portion of those payments; and thus debtor was in default under his plan and the Bank was entitled to relief from the automatic stay. View "Brooks v. First Central Bank McCook" on Justia Law

The Bankruptcy Appellate Panel reversed the bankruptcy court's order confirming the Chapter 12 plan of debtors. The panel held that the plain language of Bankruptcy Code 1232 does not allow a Chapter 12 plan to compel a taxing authority to disgorge pre-petition withholdings. In this case, contrary to debtors' position, section 1232 provides no basis to magically reverse the application of the pre-petition withheld funds when calculating the IDR's claim. View "Iowa Department of Revenue v. DeVries" on Justia Law

Years of litigation resulted from Debtor's spouse's personal guarantee of a lease of real property from Lariat. One suit resulted in a state court judgment holding Debtor and Debtor's spouse jointly and severally liable for fraudulent transfers from Debtor's spouse to Debtor. In Debtor's subsequent chapter 11 bankruptcy, Lariat asserted a claim for $1,030,916.74 based on that judgment. The bankruptcy court overruled Debtor's objection but found Lariat's claim was for damages resulting from the termination of a lease of real property (the lease Debtor's spouse had personally guaranteed) and was subject to 11 U.S.C. 502(b)(6)'s cap on such claims. The Eighth Circuit held that Lariat held a claim for $308,805.00 (plus interest). Lariat filed a complaint under 11 U.S.C. 523(a)(2)(A); the bankruptcy court excepted the Lariat claim from discharge, finding seven badges of fraudThe Eighth Circuit Bankruptcy Appellate Panel affirmed. The evidence supported findings that the transfer was to an insider; the debtor retained possession or control of the property after the transfer; before the transfer was made, the debtor had been sued or threatened with suit; the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred; the debtor was insolvent or became insolvent shortly after the transfer; the transfer occurred shortly before or shortly after a substantial debt was incurred. View "Lariat Companies, Inc. v. Wigley" on Justia Law

The Bankruptcy Court denied the State's claim filed on behalf of unnamed charities for lack of standing, and denied the State's claim on behalf of Team Makers on the equitable doctrine of laches.The Bankruptcy Appellate Panel (BAP) held that the State failed to show the requisite injury to a substantial segment of North Dakota's population, and affirmed its ruling that the State did not have parens patriae standing to file a claim on behalf of Team Makers and other charities. While the panel agreed with the Bankruptcy Court that finality is a very important interest, particularly in a case of this duration, the panel held that laches does not apply to tardily-filed claims that are filed in time to permit distribution under Section 726(a) of the Bankruptcy Code. Accordingly, the panel affirmed in part, reversed in part, and remanded for reconsideration. View "North Dakota v. Bala" on Justia Law

This case arose from a Ponzi scheme perpetrated by Thomas Petters from 1994 to 2008 through his company, PCI. These appeals involve the Trustee’s separate claw back claims against defendants. The Trustee asserted claims under 11 U.S.C. 544(b)(1), which permits a trustee to "avoid any transfer of an interest of the debtor . . . that is voidable under applicable law by a creditor holding an unsecured claim." In this case, the applicable law is the Minnesota Uniform Fraudulent Transfers Act (MUFTA).The Eighth Circuit held that the district court erred in applying the Supreme Court of Minnesota's controlling MUFTA decision in Finn v. Alliance Bank, 860 N.W.2d 638 (Minn. 2015), and the Minnesota law of void contracts. Therefore, the court reversed summary judgment against Papadimos and Kanios. The court also reversed and remanded in the Boosalis case because the district erred in instructing the jury on the MUFTA elements of "good faith" and "reasonably equivalent value." In both cases, the court held that the district court erred in concluding that Minnesota rather than federal law governed the award of prejudgment interest. The court rejected defendants' other arguments. View "Kelley v. Boosalis" on Justia Law

Luxfer appealed the bankruptcy court's decision that payments to Luxfer were not protected by the ordinary course of business defense to a preference action.The Bankruptcy Appellate Panel held that it cannot make the determination of whether the bankruptcy court properly determined that preference payments did not qualify for the ordinary course of business defense without additional explanation from the bankruptcy court. Therefore, the panel remanded this matter to the bankruptcy court to set forth the method by which it adopted 47 days as the ordinary course cut-off or, alternatively, determine which preferential transfers were made in the ordinary course. Furthermore, the court held that the adversary complaint seeks not only avoidance of preferential transfers under Bankruptcy Code section 547, but also recovery under Bankruptcy Code section 550. In this case, the bankruptcy court did not address recovery under section 550, and the panel remanded for the bankruptcy court to do so. View "Dooley v. Luxfer MEL Technologies" on Justia Law

After Slawson entered into an oil and gas exploration and production agreement with TPC, TPC's successor-in-interest filed for bankruptcy. Slawson then filed a proof of claim seeking payment, pursuant to the Promote Obligation, on all wells in which TPC's successor-in-interest elects to participate. The bankruptcy court confirmed the reorganization claim, but gave Slawson leave to commence litigation to determine whether the Promote Obligation runs with the land and is therefore not dischargeable in bankruptcy. Slawson then filed a declaratory action against Nine Point, TPC's successor-in-interest after the bankruptcy.The Eighth Circuit affirmed the district court's grant of summary judgment to Nine Point and held that the district court did not err in determining that the Promote Obligation is not a covenant running with the land because the obligation to make a payment did not directly benefit the land. The district court also did not err by determining that the obligation was not a real property interest or an equitable servitude under North Dakota law. View "Slawson Exploration Co., Inc. v. Nine Point Energy, LLC" on Justia Law

At issue in this case is whether a debtor must object to a proof of claim filed by the IRS by serving it on the Attorney General and the local United States Attorney? Or is it good enough to simply mail it directly to the IRS?The Eighth Circuit held that, according to the plain language of Bankruptcy Rule 3007, an objection need only be mailed to the "claimant." In this case, once debtor fulfilled this requirement, he did enough to bring the United States within the jurisdiction of the bankruptcy court. Therefore, the bankruptcy court and the district court erred by finding that debtor needed to serve the objection on both the Attorney General and the local United States Attorney. The court remanded for further proceedings. View "Nicolaus v. United States" on Justia Law

The Bankruptcy Appellate Panel affirmed the bankruptcy court's orders granting the trustee's second motion to compromise controversy, denying an agreed motion to seal, and denying debtor's motion to seal. The orders relate to the trustee's settlement of debtor's sexual assault claim against the Marianist Province.The panel held that the bankruptcy court did not err by determining that debtor's sexual assault claim was part of debtor's Missouri bankruptcy estate, because the bankruptcy estate was the entity that held the contingent reversionary interest in the claim. The panel also held that the bankruptcy court did not err in approving a proposed settlement, and that the bankruptcy court did not abuse its discretion in denying the motions to seal. View "Boisaubin v. Blackwell" on Justia Law