Articles Posted in U.S. Court of Appeals for the Eighth Circuit

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On remand to the Bankruptcy Appellate Panel, debtors challenged the bankruptcy court's order granting in part and denying in part Starion's motion to compel payment of fees under the confirmed plan of reorganizations, and granting in part and denying in part debtors' motion to disallow attorneys' fees and costs claimed by Starion. The panel affirmed the bankruptcy court's judgment and held that its prior opinion was not clearly erroneous nor did it work a manifest injustice in this case. Therefore, it is law of the case and will not be reopened. The panel also held that the relatively short delay in submitting the requests for attorneys' fees did not prejudice debtors and was not a material breach of the plan that should prohibit Starion's right to collect its fees and costs under the plan. Finally, the bankruptcy court did not abuse its discretion by reducing the fees instead of denying all fees. View "McCormick v. Starion Financial" on Justia Law

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The Bankruptcy Appellate Panel affirmed the bankruptcy court's opinion and order abstaining from hearing Roberts Broadcasting's malpractice claim against Danna McKitrick pursuant to 28 U.S.C. 1331(c)(1). McKitrick represented Roberts Broadcasting in its chapter 11 case. The Panel explained that the bankruptcy court considered and addressed each of the listed criteria, and it considered and addressed only the listed criteria. Therefore, the bankruptcy court did not abuse its discretion either by failing to consider a relevant factor that should have been given significant weight or by considering and giving significant weight to an irrelevant or improper factor. View "Roberts Broadcasting Company v. DeWoskin" on Justia Law

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The Bankruptcy Appellate Panel affirmed the bankruptcy court's grant of summary judgment to the Iowa Department of Revenue and dismissal of the adversary proceeding. The Panel held that the bankruptcy court did not abuse its discretion in denying debtor's motion to file newly discovered evidence where the motion did not deal with newly discovered evidence at all, but was just an attempt to make more arguments for why the Iowa income statute was void for vagueness; the bankruptcy court did not err when it gave res judicata effect to debtor's claim that the Iowa income tax statute is unconstitutional; the bankruptcy court did not err when it applied collateral estoppel to debtor's claim regarding the constitutionality of Iowa's income statute; debtor's void for vagueness argument lacked merit and the Rooker-Feldman doctrine prevented the bankruptcy court and the Panel from reviewing the state supreme court's decision; and Iowa is a state. Debtor's remaining arguments were frivolous and rejected by the Panel. View "Yuska v. Iowa Department of Revenue" on Justia Law

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The Bankruptcy Appellate Panel affirmed the bankruptcy court's order sustaining the objection of the Trustee and holding that monthly payments due to debtor under a single premium annuity were not exempt under Mo. Rev. Stat. 513.430.1(10)(e). In this case, it was clear that the Annuity payments were not on account of illness, disability or length of service. The Panel explained that the payments to debtor under the Annuity were not triggered by her husband's death, but by her choice to begin receiving payments within 30 days of payment of the premium. The right to receive payments was two steps removed from her husband's death, namely sale of the house and her choice of when to begin receiving payments. View "Helming v. Reed" on Justia Law

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Creditor challenged the bankruptcy court's order confirming debtor's Chapter 13 plan. In this case, Creditor did not provide the panel with a transcript of the relevant bankruptcy proceedings, specifically the confirmation hearing. The panel concluded that, because the bankruptcy court stated her findings of fact and conclusions of law on the record and the panel has no transcript of the bankruptcy court's statements made during the portion of the hearing during which she did so, there was no basis upon which the panel could say that the bankruptcy court erred. Accordingly, the panel affirmed the bankruptcy court's decision. View "Situm v. Coppess" on Justia Law

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Leigh Murphy d/b/a Murphy Cattle Co. appealed the bankruptcy court's orders holding that Sweetwater's lien in certain cattle was superior to Murphy's rights as an unpaid seller of the cattle. The panel concluded that the result in this case would be the same under either Colorado or Nebraska law and thus relied on cases from both states interpreting the relevant provisions of the UCC; Murphy signed a document transferring ownership of the cattle to Debtor Leonard, such that others could reasonably rely on Leonard's claim of ownership; Moffat County State Bank v. Producers Livestock Marketing Assoc. does not stand for the proposition that Article 2 is inapplicable here as to the passage of title, and the bankruptcy court did not err in turning to Article 2 of the UCC; pursuant to section 2-401, title passed to Leonard at the moment the cattle were shipped; Murphy's right to have title re-vest in him when the checks were dishonored was limited to his reclamation rights; under section 2-403, when Leonard received title from Murphy at the time of shipping, he received all the title Murphy had, as well as the power to transfer good title to a good faith purchaser for value (Sweetwater in this case); the panel denied Sweetwater's request to strike Murphy's electronic record filing; and the panel denied Sweetwater's oral request for sanctions. Accordingly, the court affirmed the judgment. View "Sweetwater Cattle Co. v. Murphy" on Justia Law

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Debtor challenges the district court's affirmance of the dismissal of its small business Chapter 11 bankruptcy. The court explained that the bankruptcy court's feasibility concerns would have existed even had debtor succeeded on its impairment-of-collateral argument. Even giving debtor the benefit of the impairment-of-collateral issue, the court found a sufficient basis in the record to defer to the bankruptcy court's "broad discretion" in determining whether a Chapter 11 case should be dismissed. In this case, the bankruptcy court noted primarily the issue of feasibility, that debtor's case had been pending for three years, and its failure to present a confirmable plan imposed substantial and continuing losses on its creditors. Accordingly, the court affirmed the judgment. View "Diwan, LLC v. Maha-Vishnu Corp." on Justia Law

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The Department challenges the bankruptcy court's determination that debtor's student loans are dischargeable based on undue hardship under 11 U.S.C. 523(a)(8). The bankruptcy appellate panel concluded that there is no error in the bankruptcy court's determination where the evidence supports the bankruptcy court's conclusion that debtor's income has been consistent and is unlikely to improve in the future; debtor's monthly expenses are reasonable, necessary, modest and commensurate with her income; and debtor's emotional burden related to the student loan obligations, the continued accrual of interest on the loans, the negative credit effect of the loans, and the potential tax obligation when the repayment plan expires were in error also weigh in favor of discharging the student loans for undue hardship. Accordingly, the panel affirmed the bankruptcy court's judgment. View "Fern v. FedLoan Servicing" on Justia Law

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Debtors challenge the bankruptcy court's order and decision sustaining the trustee's objection to debtors' claimed homestead exemption. 11 U.S.C. 522(o) requires the bankruptcy court to determine the extent to which the improvements debtors made to their homestead increased the value of debtors' interest in their homestead. The panel concluded that the bankruptcy court failed to do so in this case, and the panel remanded for the bankruptcy court to make this determination. View "Crabtree v. McDermott" on Justia Law

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The bankruptcy court granted summary judgment for the Department of Labor and declared that debtor's debt is nondischargeable under 11 U.S.C. 523(a)(4). Debtor appeals. The Department had obtained a pre-bankruptcy judgment against debtor in district court. The district court found that, under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., that debtor breached his fiduciary duty when the company of which he was CEO failed to remit funds withheld from its employees' paychecks for their health insurance plan. The BAP concluded that a trust res was created in this case because the trust was created when the employer withholds wages for payments to a plan providing benefits to employees; debtor had fiduciary responsibilities with respect to funds that had been withheld from wages for payment to HealthPartners; and debtor committed defalcation when he knowingly failed to remit employee contributions and instead knowingly used those funds to pay for other corporate expenses. Accordingly, the BAP affirmed the judgment. View "U.S. Department of Labor v. Harris" on Justia Law