The United States Court of Appeals for the Eighth Circuit and the United States Bankruptcy Appellate Panel for the Eighth Circuit (the “BAP”) issued a number of published and unpublished decisions in the fourth quarter of 2014 that impact both consumer and business bankruptcy practice throughout the circuit.
In Pomerenke v. Bird, No. 14-1468, 578 Fed. Appx. 621 (8th Cir. Oct. 2, 2014, unpublished), the Plaintiff filed suit against an officer of the IRS and the United States for violating the Bankruptcy Code for allegedly garnishing Mr. Pomerenke’s wages in order to collect a tax liability that had been previously discharged. The court, in a one page affirmation of the United States District Court for the District of Minnesota, held that: (1) an action to recover an erroneously or illegally assessed or collected tax cannot be maintained until a claim for a refund or credit has been filed with the IRS; and (2) any such action cannot be brought against any officer or agent of the IRS.
In Behrens v. United States, No. 14-1575, 577 Fed. Appx. 633 (8th Cir. Oct. 3, 2014, unpublished), the court affirmed the decision of the United States Bankruptcy Court for the District of Nebraska concluding that that the pro se plaintiff improperly attempted to use an adversary proceeding to collaterally attack a final criminal judgment for restitution.
In Cleary Sky Properties, LLC v. Roussel, 769 F.3d 574 (8th Cir. 2014), the court held that an order issued by the United States District Court for the Eastern District of Arkansas reversing and remanding a prior order entered by the United States Bankruptcy Court for the Eastern District of Arkansas was not final and could not be appealed. At issue was whether the remand order to the bankruptcy court was final. Normally, a remand order is final if it leaves only ministerial duties for the bankruptcy court to perform. In this case, the remand order required the bankruptcy court to reconsider the dischargeability of attorney’s fees, which required both legal and factual analysis. As such, the appellate court determined that the remand order was not final and could not be appealed, and dismissed the appeal.
In In re Carlson, 519 B.R. 756 (8th Cir. BAP 2014), the BAP dismissed an appeal from pro se appellants because, while the appellants appealed three orders referring to findings of fact and conclusions of law made on the record, the appellants did not provide the BAP with transcripts of the hearings, as required by Federal Rules of Bankruptcy Procedure 8006 and 8009(b).
In In re Clink, 770 F.3d 719 (8th Cir. BAP 2014), the debtor’s attorney appealed the decision of the United States Bankruptcy Court for the Western District of Missouri awarding sanctions against him (notably, the attorney did not appeal an order for disgorgement of fees and his referral to the district court for violating disciplinary rules). In this case, it was alleged that the debtor’s attorney advised the debtor to lie about a payment made to the debtor’s mother on the eve of bankruptcy. The BAP upheld sanctions against the attorney for violating § 526(a)(2) of the Bankruptcy Code, which prohibits a debt relief agency from advising an assisted person to make a statement or file a document that is untrue or misleading. In addition, the attorney was sanctioned for violating § 707(b)(4)(C) of the Bankruptcy Code for attaching and filing bankruptcy schedules to the petition that significantly differed from the version of the schedules the debtor had signed. Importantly, the attorney did not send the revised scheduled to the debtor and did not have the debtor sign the revised schedules.
In In re Heyl, 770 F.3d 729 (8th Cir. 2014), a limited liability company filed a proof of claim against the debtor and sought to have the debt declared non-dischargeable. After an unfavorable ruling, the LLC did not appeal. Rather, the LLC and its principal sought relief under Fed. R. Bank. P. 9024 / Fed R. Civ. P. 60, which was also denied. The LLC and the principal appealed this denial to the BAP. Eventually, the LLC was voluntarily dismissed from the appeal and the principal continued pro se. The BAP dismissed the appeal declaring that the principal lacked standing to appeal. The appellate court affirmed the BAP’s dismissal of the appeal noting that: (1) the proof of claim submitted in bankruptcy proceeding showed that LLC had a claim against the bankruptcy estate, which the principal sought to enforce; (2) the principal, who has not claimed to be a licensed attorney, cannot litigate on behalf of the LLC; and (3) the principal had no standing in the to litigate his derivative interest in the LLC’s claim.
A report of additional cases will appear in a post coming next week.