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BANKRUPTCY BULLETIN Contributing Editor: Lara L. Overton, Overton Law, LLC In Dowden v. Cornerstone National Insurance Co. (In re Huchingson) , --- F.4 th ---, 2021 WL 3849404 (8 th Cir. Aug. 30, 2021), summary judgment in favor of the insurer was proper because the trustee’s waiver and estoppel arguments fail, and the insured failed to strictly comply with a condition precedent to the coverage of the automobile insurance policy when he did not promptly forward legal documents to the insurer. The trustee had sued the insurer alleging it breached the duty to defend the insured debtor when it failed to timely file an answer in a lawsuit against the ...
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BANKRUPTCY BULLETIN Contributing Editor:  Karl J. Johnson, Taft In FishDish, LLP v VeroBlue Farms USA, Inc. and Broadmoore Financial, L.P. ( In re VeroBlue Farms USA, Inc.) , 6 F.4th 880 (8th Cir. Aug. 5, 2021), on issues of first impression, the Eighth Circuit held that (1) the 14-day deadline to appeal under Rule 8002 is mandatory, but not jurisdictional, and (2) dismissal of an appeal of plan confirmation because the requested relief would be inequitable requires at least a preliminary review of the merits of the appeal, the amount of time that would likely be required to resolve the appeal, and the equitable remedies that may be available to avoid ...
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BANKRUPTCY BULLETIN Contributing Editor: David Tanabe In PW Enterprises, Inc. v. Bala (In re Racing Services, Inc.) , 854 F. App’x 777 (8th Cir. Aug. 3, 2021) (mem.), aff’g 617 B.R. 641 (D.N.D. 2020), the Eighth Circuit Court of Appeals affirmed the denial of claims for unauthorized taxes assessed on the claimants’ account wagering through the debtor.  The debtor provided pari-mutuel horse wagering services. Out of the total amount bet, the debtor deducted a percentage for revenue and expenses called the takeout. In part, the takeout was used to pay rebates and taxes. In another decision, the Eighth Circuit determined the taxes on account wagering ...
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BANKRUPTCY BULLETIN Contributing Editor:  Nauni J. Manty ,  Manty & Associates, P.A. In   In re Musel , 630 B.R. 794 (Bankr. D. Minn. July 7, 2021) (Ridgway, C.J.), the bankruptcy court denied a trustee’s motion for turnover of tribal gaming revenue payments after holding that tribal law applies and provides that the debtor has no vested property rights in the payments. The debtor is a member of a tribal nation that enacted a Gaming Revenue Allocation Plan, pursuant to the Federal Indian Gaming Regulatory Act of 1988, under which the debtor and other citizens of that tribal nation receive apportioned monthly payments of the nation’s net gaming ...
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BANKRUPTCY BULLETIN Contributing Editor: Nauni J. Manty , Manty & Associates, P.A. In Snyder v. Kohout, (In re Kohout), 2021 WL 3195811, slip op. (Bankr. D. Minn. July 28, 2021) (Sanberg, J.), discharge was not denied, rejecting objections under 11 U.S.C. §§ 727(a)(2)(B) and (a)(4)(A) . The United States Trustee commenced an adversary proceeding for a denial of the discharge of one of the debtors, under 11 U.S.C. §§ 727(a)((2)(B) and (a)(4)(A).  The trustee met all of the elements, but one—the trustee failed to prove “by a preponderance of the evidence” that the debtor “acted with the requisite intent necessary for a denial of discharge”.  ...
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BANKRUPTCY BULLETIN Contributing Editor:   Alexander J. Beeby ,  Larkin Hoffman In Finstad v. Gord (In re Finstad) , 4 F.4th 693 (8th Cir. July 21, 2021), the Eighth Circuit affirmed the decisions of the North Dakota bankruptcy court and the BAP, holding that a prior federal appellate decision that the debtors did not have any interest in certain farmland precluded any relitigation of that issue in the debtors’ reopened chapter 12 case. In their chapter 12 bankruptcy case, the debtors settled, in October of 2005, to remove the debtor’s farmland from the bankruptcy proceedings. As part of the settlement, which was approved by the bankruptcy court and ...
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BANKRUPTCY BULLETIN Contributing Editor:  Karl J. Johnson, Taft In Citizens State Bank Norwood Young America v Schiller (In re Schiller) , 629 B.R. 54 (B.A.P. 8th Cir. July 15, 2021), the BAP held that (1) the bankruptcy court erred by not holding an evidentiary hearing to determine the bank’s allowed secured claim, (2) the bank’s objection to a motion under § 364 to obtain secured credit did not qualify as an informal proof of claim, (3) whether the chapter 12 plan provides for payment of the amount of an allowed secured claim cannot be evaluated before the collateral is valued, and (4) the bank lacked standing to object to the debtor’s disposable ...
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BANKRUPTCY BULLETIN Contributing Editor: Alexander J. Beeby , Larkin Hoffman In In re Musel , --- B.R. ---, No. 20-42761, 2021 WL 2843847 (Bankr. D. Minn. July 7, 2021) (Ridgway, C.J.), the bankruptcy court denied a trustee’s motion for turnover of tribal gaming revenue payments after holding that tribal law applies and provides that the debtor has no vested property rights in the payments. The debtor is a member of a tribal nation that enacted a Gaming Revenue Allocation Plan, pursuant to the Federal Indian Gaming Regulatory Act of 1988, under which the debtor and other citizens of that tribal nation receive apportioned monthly payments of the ...
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BANKRUPTCY BULLETIN Contributing Editor:  C.J. Harayda ,  Faegre Drinker In Waltrip v. Sawyers (In re Sawyers) , 2 F.4th 1133 (8th Cir. July 2, 2021), the Court of Appeals for the Eighth Circuit considered whether it was clearly erroneous for the bankruptcy court to hold that a judicial lien could be avoided based on the value of the debtor’s homestead as of the petition date rather than the value of the property enhanced by the amount of insurance proceeds received by the debtor due to destruction by a prepetition fire. The BAP previously affirmed the grant of summary judgment in favor of the debtor. The appellant had a prepetition judicial lien ...
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BANKRUPTCY BULLETIN Contributing Editor: Lara L. Overton, Overton Law, LLC In Ritchie Special Credit Invs., Ltd. v. JPMorgan Chase & Co. , Civ. No. 14-4786 (DWF/FLN), 2021 WL 2686079, slip op. (D. Minn. August 30, 2021), Judge Frank granted the defendants’ motions to dismiss the plaintiffs’ third amended complaint and dismissed the complaint with prejudice based upon lack of standing and untimely claims. This action stems from loans plaintiffs made to Thomas Petters, which were documented as promissory notes retroactively by Petters Company, Inc. (PCI) and Petters Group Worldwide, LLC (PGW) and guaranteed by Petters. The plaintiffs allege that ...
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BANKRUPTCY BULLETIN Contributing Editor:  James C. Brand ,  Fredrikson & Byron, P.A. In Ridings v. Casamatta (In re Allen) , 628 B.R. 641, (B.A.P. 8th Cir. June 21, 2021), the Bankruptcy Appellate Panel affirmed a Missouri bankruptcy court’s decision approving only a portion of a chapter 7 debtor attorney’s fees.  The case involved an experienced chapter 7 debtor attorney who offered debtors two options to pay his fees.  The attorney would charge a debtor $1,165 if paid upfront, and $1,665 if paid on a payment plan, including up to a year post-petition.  To prevent the “pay later” fees from being discharged, the attorney divided his services ...
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BANKRUPTCY BULLETIN Contributing Editor: C.J. Harayda , Faegre Drinker In Excellent Home Properties, Inc. v. Kinard (In re Kinard) , 998 F.3d 352 (8th Cir. May 21, 2021), the Court of Appeals for the Eighth Circuit considered whether a claim could be excepted from discharge under 11 U.S.C. § 523(a)(2)(A) despite the claimant not investigating the alleged misrepresentations of the debtor on which it claimed it relied. The appellant had made a loan for $47,000 to an entity owned by the debtor’s parent, where the debtor was treated as a “business partner.”  The loan was intended for use by the entity to buy, renovate, and resell a house. The entity later ...
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BANKRUPTCY BULLETIN Contributing Editor: James C. Brand , Fredrikson & Byron, P.A. In In re Rancher’s Legacy Meat Co. , 630 B.R. 308 (Bankr. D. Minn. June 3, 2021) (Ridgway, C.J.), Judge Ridgway denied a motion for allowance of an administrative claim filed by a third-party shipping and logistics provider.  The shipper arranged for shipping services for the debtor’s products post-petition.  The debtor paid for those services until problems with one shipment resulted in a customer rejecting the debtor’s products.  After significant back and forth, during which time the shipper continued to provide services, the debtor offset its asserted damages ...
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BANKRUPTCY BULLETIN Contributing Editor: Alexander J. Beeby, Larkin Hoffman Daly & Lindgren Ltd. In Scott v. Anderson (In re Scott) , 627 B.R. 134 (B.A.P. 8th Cir. April 16, 2021), rehearing denied (May 10, 2021), the BAP affirmed a Missouri bankruptcy court’s denial of sanction and, in turn, awarded sanctions against the appellant for a frivolous appeal. This case stems from a home foreclosure, in which the debtors filed a chapter 13 petition after the unlawful detainer judgment became final, after service of the writ of execution and notice of eviction, and after the expiration of the deadline to vacate, but hours before the sheriff executed ...
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BANKRUPTCY BULLETIN Contributing Editor: Alexander J. Beeby, Larkin Hoffman Daly & Lindgren Ltd. In Lehman Bros. Holdings Inc. v. Lendingtree, LLC , No. 20-cv-1351 (SRN/HB), 2021 WL 1087695, slip op. (D. Minn. Mar. 22, 2021), Judge Nelson determined that the case should be transferred to the SDNY bankruptcy court because it relates to a bankruptcy case in that jurisdiction. This action stems from two bankruptcies—neither of which were venued in Minnesota. The plaintiff had filed a 2008 chapter ll case in the Southern District of New York and, in that case, a 2016 adversary proceeding, for indemnification, against a nonparty. That nonparty, in ...
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BANKRUPTCY BULLETIN Contributing Editor: Natasha Wells , Dorsey & Whitney LLP In In re Jundt , 623 B.R. 764 (Bankr. D. Minn. Jan 15, 2021) (Sanberg, J.), upon motion by the United States Trustee and a creditor’s joinder and response in support thereof, the court dismissed the debtors’ chapter 7 case under 11 U.S.C. § 707(b) for abuse after determining that the debtors’ disposable monthly income met 11 U.S.C. § 707(b)(2)(A)(i)’s presumption of abuse, there were no special circumstances to rebut such abuse, and the debtors’ debts were primarily consumer debts. The parties stipulated that there was a presumption of abuse and that there were no special ...
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BANKRUPTCY BULLETIN Contributing Editor: Lara L. Overton, Overton Law, LLC In Courtney v. KeyBank N.A.; Ditech Financial LLC (In re Courtney) , 623 B.R. 549 (B.A.P. 8th Cir. Jan. 14, 2021), the BAP determined that a deed-of-trust creditor did not lull debtor into false sense of security prior to foreclosing and, therefore, the debtor could not bring suit in equity to set aside the trustee’s sale and claims that the debtor failed to address in her appellate brief were abandoned and did not have to be addressed. The debtor had appealed the bankruptcy court’s entry of judgment in favor of the bank creditor defendant. In In re Courtney, the BAP affirmed the ...
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BANKRUPTCY BULLETIN Contributing Editor:  Adine S. Momoh ,  Stinson LLP In United States v. Petters , No. 08-5348, 2021 WL 71681 (D. Minn. Jan. 8, 2021), the District Court denied a request by nonparties to discover documents and other materials that had been obtained by the receiver and bankruptcy trustees in separate litigation.  The Government filed a motion to dissolve the preliminary injunction and to terminate the receivership of Thomas J. Petters, the mastermind behind one of the largest and most complex Ponzi schemes in U.S. history. Despite not objecting to the motion, nonparties to the lawsuit requested that the order terminating the Petters ...
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BANKRUPTCY BULLETIN Contributing Editor: Adine S. Momoh , Stinson LLP In Wigley v. Lariat Cos., Inc. (In re Wigley) , 624 B.R. 861 (Bankr. D. Minn. Jan. 25, 2021) (Fisher, J.), the Bankruptcy Court held that its retained post-confirmation jurisdiction to interpret and enforce a confirmed Chapter 11 plan had ended when the plan had been fully consummated and all allowed claims were paid.  An individual debtor filed for Chapter 11 bankruptcy relief after a state district court found her severally and jointly liable for a fraudulent transfer of her spouse’s assets to her. That fraudulent transfer occurred sometime after a landlord creditor received a ...
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BANKRUPTCY BULLETIN Contributing Editor: Alexander J. Beeby, Larkin Hoffman Daly & Lindgren Ltd. In Madison Resource Funding Corp. v. Marsh (In re Marsh) , 629 B.R. 473 (B.A.P. 8th Cir. July 21, 2021), the BAP affirmed two separate dischargeability decisions: Madison Resource Funding Corp. v. Marsh (In re (Jerry) Marsh) , Adv. 16-03127, 2021 WL 457675, slip op. (Bankr. D. Minn. Jan. 25, 2021) (Fisher, J.), and Madison Resource Funding Corp. v. Marsh (In re (Robert) Marsh) , Adv. 18-04198, 2021 WL 373251, slip op. (Bankr. D. Minn. Jan. 25, 2021) (Fisher, J.). The brothers’ debts were ruled nondischargeable, under 11 U.S.C. § 523(a)(2)(A), for ...
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