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

Debtor appealed the bankruptcy court's order overruling her objection to the chapter 7 trustee's final report and denying her motion to compel the chapter 7 trustee to abandon $16,893.44 he had received from the Ruth E. Thompson Revocable Trust. The court agreed with the bankruptcy court that pursuant to paragraph 5.3.4 of the trust agreement, debtor's interest in the Trust was fully alienable by her on the petition date, and her interest in the Trust was not excluded from the bankruptcy estate under 11 U.S.C. 541(c)(2). Accordingly, the court affirmed the bankruptcy court's order. View "Thompson-Rossbach v. Doeling" on Justia Law

Plaintiffs claimed they were lured into making investments from which their money was “appropriated” and sued Nathan and Vertical Group. The district court entered an order of default against Vertical, but did not award damages at that time. Nathan filed for Chapter 11 bankruptcy. The district court closed the matter during the bankruptcy. Nathan proposed a Chapter 11 plan. The plaintiffs objected and brought an adversary proceeding, restating their allegations and asserting that their claims were non-dischargeable. The bankruptcy court agreed, rejected Nathan’s plan, awarded actual and punitive damages, and determined that Nathan’s bankruptcy estate acquired his interest in the Kathleen Trust, into which Nathan and his wife had transferred assets before his bankruptcy, but did not identify a specific value of Nathan’s interest. The court converted Nathan’s bankruptcy to a Chapter 7 bankruptcy. The trustee tried to reach Trust assets. The court concluded that Nathan’s powers as a co-trustee were property of his bankruptcy estate, but Nathan lacked authority to act as trustee without Kathleen’s consent and only Kathleen could revoke the trust. Plaintiffs reopened the original action to determine damages and to collect the Vertical judgment from Trust assets. The district court referred the matter to the bankruptcy court, which recommended awarding actual damages, punitive damages, and attorneys’ fees in the amount awarded in the bankruptcy adversary proceeding. The district court adopted the findings and entered a default judgment against Vertical. The Eighth Circuit dismissed Nathan’s appeal for lack of standing and affirmed as to Kathleen. View "Cutcliff v. Reuter" on Justia Law

Pepper, who suffered from cerebral palsy, owned an extensive collection of Elvis Presley memorabilia as a result of his friendship with Elvis. When he moved into a nursing home in 1978, he told Nancy to “keep it.” Nancy, a nurse and a devoted Elvis fan, had cared for Pepper after the death of his father until he went into the nursing home. Nancy was not compensated for her efforts. Gary died two years later. Nancy maintained the collection until 2009, when it sold for $250,000. The estates of Pepper and his mother sued, alleging that Pepper retained ownership of the collection and that his interest passed to his heirs. A jury found that Pepper had made a conditional gift to Nancy; when he died, Nancy’s ownership was no longer subject to that reversionary interest. The Eighth Circuit affirmed. The jurors heard testimony about the care Nancy provided, read notes that Pepper wrote to Nancy, and saw photographs of the two spending time together. Nancy explained how important the Collection was to Pepper. Pepper’s relatives, who lived in California and were not Elvis fans, testified that Gary did not even tell them about the Collection. View "Estate of Pepper v. Whitehead" on Justia Law

Draper, age 18, suffered traumatic brain injury in a 2006 car accident. Draper executed a durable power of attorney, authorizing her parents to collect money; compromise claims; and “fund, transfer assets to, and to instruct and advise the trustee of any trust wherein [Draper is] or may be the trustor, or beneficiary.” Draper began receiving Supplemental Security Income payments. In February 2008, father signed a personal-injury settlement. Draper received $429,259.41. Her parents signed documents creating a Special Needs Trust, intended to qualify under 42 U.S.C. 1396p(d)(4)(A), to provide for Draper’s needs without “displac[ing] or supplant[ing] public assistance or other sources of support that may otherwise be available” and transferred $429,259.41. In September 2008, Draper received notice that she had been overpaid $3,000 in SSI benefits because her trust exceeded the SSI-eligibility limit of $2,000, and that her SSI payments would cease. An ALJ found that for the trust to be exempt from consideration as a personal asset, Draper’s parents had to act as third-party creators when establishing it, but instead acted as agents under the power of attorney. Draper’s parents obtained a state court order modifying the trust, which retroactively listed the state court, rather than Draper’s parents, as the settlor. The Appeals Council denied review, finding that the order did not provide a basis for altering the ALJ’s decision. The district court and Eighth Circuit affirmed. View "Draper v. Colvin" on Justia Law

Richard L. Brown and Susan Brown-Thill, co-trustees of the EDB Trust, signed an Arbitration Agreement for resolving a broad range of disputes. These consolidated appeals concern two awards following an initial arbitration. The March 14 award authorized distributions from family-owned limited partnerships to family trusts. The December 12 award declared invalid Brown's attempt to resign as co-trustee and name his successor, and removed Brown as co-trustee, applying the Uniform Trust Code's standards for the statutory removal of a trustee as adopted in Missouri, the situs of the controversy, and Florida, the situs of the EDB Trust. The district court denied Brown's attempt to vacate both awards and Brown-Thill's request for a contractual award of attorneys' fees in both suits. The court concluded that the March 14 award cannot be vacated on the ground of procedural irregularities and the arbitrator's procedural errors did not violate the Federal Arbitration Act (FAA), 9 U.S.C. 10(a)(2), (3), and (4). In regards to the December 12 award, the district court did not err in interpreting the EDB Trust Agreement; the arbitrator's interpretation of the Trust Agreement's removal provision is not a ground for vacating the award; the court concluded that Brown-Thill properly submitted the removal issue under the Arbitration Agreement, the arbitrator then had power to construe and apply the Trust Agreement's removal provision and to make findings regarding the statutory standards for removal which Brown-Thill could present in a judicial proceeding, but the arbitrator exceeded his powers by exercising the exclusively judicial function of removing Brown on statutory standards; however, this decision is of no practical importance because of Brown's unconditional resignation as co-trustee; and the court rejected Brown's FAA challenge. Finally, the court concluded that Brown-Thill was not entitled to recover attorneys' fees. Accordingly, the court affirmed except with a modification and denied Brown's motion to take judicial notice.View "Brown v. Brown-Thill" on Justia Law

Plaintiff filed suit against MetLife, alleging that MetLife abused its discretion in denying her claim to receive the proceeds of her late husband's life insurance policy under an employee-benefit plan governed by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq. On appeal, plaintiff challenged the district court's grant of summary judgment to MetLife. The court concluded based on the evidence - the 1991 form, the husband's will, and the November 2010 form - that MetLife did not abuse its discretion in determining that the husband's son, rather than plaintiff, was the beneficiary of the life insurance proceeds. Even assuming that the substantial-compliance doctrine was available to federal courts in the interpleader context, the court would not extend it to the circumstances presented here. Where an ERISA plan administrator is given discretion under the plan to determine eligibility for benefits, the doctrine does not deprive the administrator from requiring strict compliance with the terms of the plan. Accordingly, the court affirmed the judgment of the district court. View "Hall v. Metropolitan Life Ins., et al." on Justia Law

Plaintiff filed suit alleging that the mortgage trust that claimed to hold his mortgage was not validly assigned the mortgage, and therefore, his mortgage could not be foreclosed by the trust. The district court granted summary judgment in favor of the trustee, Wells Fargo. The court affirmed, concluding that the assignment to the mortgage trust was valid. Given the record, including the custodian's initial certification failing to list the promissory note as missing - which provided a strong inference that the note was not missing - and given the lack of any other reason to believe the note was or is missing, the court agreed with the district court that no reasonable jury could find that the original promissory note was not in the Trust's possession on the startup date of the Trust. View "Johnson, Jr. v. Wells Fargo Bank, N.A." on Justia Law

Plaintiff, acting as trustee for certain farm property pursuant to a deed of trust, brought this interpleader action seeking a determination of rights to the sales proceeds from an auction of the farm. The court held that the district court properly denied CNH's motion for summary judgment where CNH did not have a valid contract to purchase the farm; CNH could not set aside the sale to Gittaway Ranch; CNH failed to offer any evidence that its attorney's fees were reasonable and necessary or incidental to the protection or improvement of the farm; and the district court did not abuse its discretion in awarding sanctions against defendants. View "Garden, Jr. v. Central Nebraska Housing Corp., et al." on Justia Law

Plaintiff, president and owner of WestCorp, sued the government for a refund of an IRS tax penalty that he paid. At issue was the treatment of admittedly incomplete payments WestCorp made from 2000-2001. To maximize its recovery, the IRS applied those payments first toward WestCorp's non-trust fund taxes rather than dividing the payments proportionally between WestCorp's trust fund and non-trust fund taxes. The court agreed with the district court that the undisputed facts show, as a matter of law, that plaintiff willfully failed to pay the trust fund taxes at issue; the court also agreed with the district court that the IRS properly allocated the undesignated payments at issue; and the court rejected plaintiff's contention that the IRS should nonetheless have applied at least part of the undesignated payments toward WestCorp's trust fund obligations. Accordingly, the court affirmed the judgment. View "Westerman v. United States" on Justia Law

Georgina Stephens and Andrew Alexander appealed from the district court's decision affirming an order of the bankruptcy court giving possession of disputed property to the trustees of the individual bankruptcy estates of Ms. Stephens and Larry Alexander. Ms. Stephens and Mr. Alexander were previously married, Andrew is their son. This case stemmed from the separate bankruptcy petitions that Ms. Stephens and Mr. Alexander filed during their marriage and concerned the ownership and possession of certain property. Because Andrew had not challenged the district court's determination that he lacked standing to appeal the bankruptcy court's decision, the court deemed the issue waived; the court had jurisdiction to evict Ms. Stephens; the court rejected Ms. Stephens' res judicata and collateral estoppel arguments; and the court court rejected Ms. Stephens' remaining claims. Accordingly, the court affirmed the judgment of the district court. View "Alexander, et al v. Jensen-Carter, et al" on Justia Law