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Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 

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United States Bankruptcy Appellate Panel

FOR THE EIGHTH CIRCUIT

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No. 05-6013WM

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In re: George L. Young and Professional * 

Business Services, Inc., *

*

Debtors. *

*

U.S. Bank N.A., Alan Messinger, * Appeal from the United States

Grauf Cattle Farms, Inc., Jeffry T. Grauf, * Bankruptcy Court for the 

Mary Grauf, Jimmy Hammond, Dorothy * Western District of Missouri

Hammond and United Producers, Inc. *

*

Plaintiffs-Appellees *

*

v. *

*

George L. Young, *

*

Defendant-Appellant *

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Submitted: December 20, 2005

Filed: January 12, 2006

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Before SCHERMER, MAHONEY, and McDONALD, Bankruptcy Judges

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McDONALD, Bankruptcy Judge.

Appellate Case: 05-6013 Page: 1 Date Filed: 01/12/2006 Entry ID: 1996404
1

 The Honorable Jerry W. Venters, Chief Judge for United States

Bankruptcy Court for the Western District of Missouri. 

Debtor George L. Young (“Young”) appeals from the order of the bankruptcy

court1

 granting several of Young’s creditors (collectively “Creditors”) motions for

summary judgment. We affirm.

I

Young owned and operated Professional Business Services, Inc. (“PBS)

(collectively “Debtors”). Several of Debtors’ creditors filed an involuntary action

against Debtors. Both Debtors filed an answer to the involuntary petitions stating that

although they both were farmers, they consented to the bankruptcy court entering an

order of relief. The bankruptcy court, therefore, entered an order of relief on August

21, 2001. 

Debtors then attempted to convert the involuntary Chapter 7 cases to a

proceeding under Chapter 11 pursuant to 11 U.S.C. § 706(a). One of the theories

Debtors advanced in support of their motions to convert was that because they were

both farmers, the bankruptcy court did not have subject-matter jurisdiction over the

involuntary Chapter 7 cases under 11 U.S.C. § 303(a). The bankruptcy court rejected

Debtors’ argument and denied the motions to convert on November 15, 2001.

While Debtors’ bankruptcy cases were proceeding, Young entered a plea of

guilty in the United States District Court for Western District of Missouri to several

counts of fraud relating to his management of PBS (the “Plea Agreement”). Young

conceded in the Plea Agreement that he obtained credit from the Creditors by fraud.

Creditors then filed several adversary proceedings against Young, arguing that

Young’s obligations to them were excepted from discharge under 11 U.S.C. §§

523(a)(2)(A), (a)(2)(B), (a)(4), and (a)(6). 

Appellate Case: 05-6013 Page: 2 Date Filed: 01/12/2006 Entry ID: 1996404
Creditors eventually filed motions for summary judgment, asserting that Young

was collaterally estopped by the Guilty Plea from arguing that he did not incur his

obligations to them by way of fraud. Young responded to Creditors’ motions by once

again contending that because the bankruptcy court did not have subject-matter

jurisdiction over the underlying involuntary case, it did not have jurisdiction over the

adversary cases. Young did not argue in his response to the motions for summary

judgment that he was not collaterally estopped by the Plea Agreement from asserting

that his debts to Creditors were excepted from discharge under 11 U.S.C. §§

523(a)(2)(A), (a)(2)(B), (a)(4), and (a)(6). 

The bankruptcy court once again rejected Young’s jurisdictional argument and

granted Creditors’ motions for summary judgment. This appeal follows.

II

Young identifies the following three orders in his notice of appeal: (1) the

August 21, 2001 order of relief; (2) the November 11, 2001 order denying Debtors’

motion to convert; and (3) the April 1, 2005 order granting Creditors’ motions for

summary on the their various adversary complaints. The first two orders are final

orders in that they are a full adjudication of discrete issues within the bankruptcy case.

In re McGinnis, 296 F.3d 730, 731 (8th Cir. 2002) (en banc) (involuntary order for

relief); In re Cooper, 314 B.R. 628, 630 (6th Cir. B.A.P. 2004) (order denying a

motion to convert from a Chapter 7 proceeding). Thus, Young was required to file his

notice of appeal with respect to those order within ten days after they were entered.

Bankr. R. 8002(a). This requirement is jurisdictional and if the appellant fails to

timely file his notice of appeal, the appellate court lacks subject-matter jurisdiction

over the appeal. In re Delta Eng’r Int’l., 270 F.3d 584, 586 (8th Cir. 2001). 

Young contends that this rule is inapplicable here because he is challenging the

bankruptcy court’s subject-matter jurisdiction over the adversary complaints. It is true

that as a general matter, an appellant may raise the issue of whether the trial court had

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subject-matter jurisdiction over a case at any point, even on appeal. Harmon

Industries, Inc. v. Browner, 191 F.3d 894, 903 (8th Cir. 1999). The appellate court,

however, must first have subject-matter jurisdiction over the appeal before it can

review any claim, including the issue of whether the trial court had subject-matter

jurisdiction over the underlying case. Lang v. Lang (In re Lang), 414 F.3d 1191,

1195-96 (10th Cir. 2005). Thus, an appellate court does not have subject-matter

jurisdiction over an untimely appeal claiming that the trial court lacked subject-matter

jurisdiction over the underlying case. Id. 

Because Young failed to timely file his notice of appeal under Bankr. R. 8002

(a) with respect to the order entering relief and the order denying Young’s motion to

convert, this Court does not have subject-matter jurisdiction to review those orders.

 Accordingly, this Court only has subject-matter jurisdiction to review the bankruptcy

court’s order granting Creditors’ motions for summary judgment.

III

This court will affirm the bankruptcy court’s order granting Creditors’ motions

for summary judgment if, after viewing the record in the light most favorable to

Young, there are no genuine issues of material fact in dispute so that Creditors are

entitled to judgment as a matter of law. Maxfield v. Cintas Corp. No. 2, 427 F.3d 544,

549-50 (8th Cir. 2005). We will review the bankruptcy court’s grant of the Creditors’

motions for summary judgment de novo. U.S. Fidelity & Guarantee Ins. Co. v.

Commercial Union Midwest Inc., 430 F.3d 929, 933 (8th Cir. 2005). 

IV

The sole basis for Young’s challenge to the bankruptcy court’s order granting

Creditors’ motion for summary judgment is that the court lacked subject- matter

jurisdiction over the underling involuntary Chapter 7 case. Young argues that because

he was a farmer, 11 U.S.C. § 303(a) deprived the bankruptcy court of subject-matter

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jurisdiction over the underlying Chapter 7 case. This argument misconstrues the

nature of section 303(a). 

Section 303(a) recites in relevant part that “An involuntary case may be

commenced . . . only against a person, except a farmer . . .”. The Eighth Circuit has

recently addressed the exact issue on appeal and has held that section 303(a) is not a

grant of subject-matter jurisdiction to the bankruptcy court. Marlar v. Williams (In

re Marlar), No. 052015 slip op. at 2. (8th Cir. filed Dec. 22, 2005). Rather, the

bankruptcy court’s subject-matter jurisdiction over any case under the Code is

conferred by 28 U.S.C. §§ 157 & 1334. Id. Section 303(a) simply defines the parties’

substantive rights. Id. An alleged debtor’s status as a farmer, therefore, is an

affirmative defense to an involuntary petition under section 303(a). Id. 

If the alleged debtor fails to assert his status as a farmers as a defense to an

involuntary petition prior to the bankruptcy court entering an order for relief, then he

waives that defense. Id.; 11 U.S.C. § 303(h). Accordingly, if an alleged debtor

believes he is a farmer but nonetheless consents to bankruptcy court entering an order

of relief on the involuntary petition, he waives his farmer defense to the involuntary

petition. In re McCloy, 296 F.3d 370, 376 (5th Cir. 2002). 

Here, the record reveals that although Young stated that he was a farmer in his

answers to the involuntary petition, he expressly consented to bankruptcy court

issuing an order of relief. Young did not raise his farmer status as a defense to the

involuntary petition until he filed his motion to convert his cases to a Chapter 11.

Accordingly, after reviewing the record in the light most favorable to Young, there are

no material facts in dispute that the bankruptcy court had subject- matter jurisdiction

over the Creditors’ adversary complaints. The bankruptcy court, therefore, did not err

in granting Creditors’ motions for summary judgment.

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V

Young additionally contends that the bankruptcy court somehow violated his

rights under the Fourth and Fifth Amendments. Young does not cite any specific

action or order of the bankruptcy court that deprived him of his constitutional rights.

The Court surmises that Young’s argument is premised on the fact that once the

bankruptcy court entered the order for relief, he was required to turnover his business

records to the trustee. Therefore, Young appears to maintain that because the trustee

turned those records over to the United States Attorney, the entire bankruptcy process

deprived him of his rights against illegal searches and seizures and self-incrimination.

 

Young failed to present this issue to bankruptcy court. Young also did not

advance this position at oral argument. Accordingly, Young failed to preserve this

argument for appellate review and this Court will not review that argument in the first

instance on appeal. First Bank Investors’ Trust v. Tarkio College (In re Tarkio

College), 129 F.3d 471, 476-77 (8th Cir. 1997). 

 

VI

After reviewing the record in the light most favorable to Young, it is clear that

Young explicitly consented to the bankruptcy court entering an order for relief on the

involuntary petition. The bankruptcy court, therefore, had subject-matter jurisdiction

over Young’s involuntary Chapter 7 case and the Creditors’ adversary complaints.

Accordingly, there are no material facts in dispute so that the Creditors were entitled

to judgment as a matter of law. Thus, the bankruptcy court did not err in granting the

Creditors’ motion for summary judgment. 

Young additionally failed to preserve his constitutional argument for appellate

review. Young also failed to timely appeal the bankruptcy court’s order of relief on

the involuntary petition and the order denying Young’s motion to convert his case to

a proceeding under Chapter 11. Accordingly, the judgment of the bankruptcy court

is affirmed.

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Appellate Case: 05-6013 Page: 6 Date Filed: 01/12/2006 Entry ID: 1996404