Larkin Hoffman Daly & Lindgren Ltd.

Lovald v. Hunter, et. al. (In re Paul), No. 11-6003, (8^th Cir. BAP filed 3/07/2011 amended 3/08/2011) (Judges Kressel, Federman, and Saladino).

Judge Federman wrote the opinion for the Eighth Circuit BAP affirming the decision denying the Chapter 7 Trustee’s attempts to recover property from the debtor’s family members pursuant to the Wyoming Fraudulent Transfer Act. Debtor transferred land and a mobile home to his sister and stepmother within one year of the petition date arguably pursuant to the oral conditions that had been placed on the property at his receipt. The BAP noted that the only issue on appeal, whether debtor had sufficient assets to accommodate the transactions at issue, remained undefined by the Wyoming state courts. However, the BAP reiterated that the trustee bore the burden and proceeded to note the evidentiary deficiencies within the record on the issue. The BAP rejected the trustee’s attempts to rely upon the schedules and SOFA as it concluded that they were reflective of his financial condition at the petition date and not necessarily at the time of the transfers. The BAP also further rejected the trustee’s arguments attempting to shift the burden to the debtor to demonstrate his financial conditions varied at the time of the transfers. 

 

 

Treadwell, et. al. v. Glenstone Lodge, Inc., (In re Treadwell), No. 10-1499, (8^th Cir. 3/09/2011) (Judges Riley, Melloy, and Colloton).

Judge Riley wrote the Eighth Circuit opinion which reversed and remanded the lower court’s decision that had discharged the debtor’s debt arising from his participation in coordinating a Red Hat Society event at the creditor’s Tennessee facility with his co-filing spouse. The Eighth Circuit reiterated the elements for such a 523(a)(2)(A) claim as initially set forth in Freier and noted that imputation of fraud was only appropriate if the creditor proved that the partner knew or should have known of his partner’s fraud. The Eighth Circuit also noted that reckless indifference is evidence the innocent debtor should have known of his partner’s fraud. The Eighth Circuit then proceeded to apply In re Walker in noting that the key issue was a matter of factual determination and required remand as the lower court had not made the necessary factual determinations for the BAP to review upon appeal. The Eighth Circuit concluded that it was necessary to reverse the BAP’s decision and to remand to the bankruptcy court for determination of whether the fraud of his co-filing spouse in their business partnership could be imputed to the debtor.

 

 

Fokkena v. Chapman, et. al., No. 10-6046, (8^th Cir. BAP 3/11/2011) (Judges Schermer, Saladino, and Nail).

Judge Schermer wrote the Eighth Circuit Bankruptcy Appellate Panel that reversed and remanded the decisions for determinations on dismissal pursuant to sections 707(b)(2) and 707(b)(3). The notable issue on appeal was whether 707(b)(1) must be applied to cases converting to Chapter 7 from Chapter 13. In reviewing the applicability of section 707(b)(1) in converting cases, the BAP noted a split of authority on the issue which resulted in different interpretations of the phrase “filed by an individual debtor under this chapter.” The BAP proceeded to apply the Eighth Circuit’s decision in Resendez v. Lindquist to find that section 707(b)(1) must be applied in cases converting from chapter 13 to chapter 7. The court noted that this precedent required such cases to be deemed to be filed under chapter 7 at the time of the initial chapter 13 filing.

 

Bates v. BAC Home Loans f/k/a Countrywide Home Loans, (In re Bates), No. 10-6084, (8^th Cir. BAP 3/23/2011) (Judges Kressel, Saladino, and Nail).