Jeffrey Klobucar, Bassford Remele, P.A.
Contributing Editor: Kesha Tanabe, Tanabe Law
Eighth_Circuit____Cole_v__Strauss.pdf
In Cole v Straus (In re Mamtek U.S., Inc.), 732 Fed.Appx. 497 (8th cir. 2018), the Eighth Circuit affirmed the order of the District Court, which in turn had affirmed the bankruptcy court’s order holding Mr. and Mrs. Cole in contempt and requiring proceeds of the sale of their house to be transferred to the Trustee. The Eighth Circuit affirmed without comment.
The Trustee commenced the underlying adversary proceeding against the Coles in May 2012, seeking to avoid two fraudulent transfers and to impose a constructive trust upon their house. Mr. Cole was convicted and incarcerated for stealing bond proceeds from the Debtor, Mamtek U.S., Inc., and using the money to cure a default on the mortgage for his $11 million house in Beverly Hills. By August 2013, the Trustee had won a motion for partial summary judgment based on Section 547 and 548 claims, and obtained a judgment against the Coles in the amount of $868,644.33. The Coles unsuccessfully appealed that decision to the District Court, and, subsequently, to the Eighth Circuit in 2015.
The litigation continued because the house had been sold and proceeds escrowed. The Coles started a lawsuit against the escrow agent in state court seeking the release of the sale proceeds, resulting in a finding of contempt by the bankruptcy court. The bankruptcy court also entered an order authorizing the escrow agent to transfer sale proceeds in the amount of $868,644.33 from the escrow account to the Trustee. The Coles unsuccessfully appealed these decisions to the District Court, and again to the Eighth Circuit in 2018. The Coles raised many issues in their appellate brief, ranging from jurisdictional arguments to the homestead exemption, but the Eighth Circuit apparently rejected all such arguments and affirmed without comment.