Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-19-06039/USCOURTS-ca8-19-06039-0/pdf.json

Parties Involved:
Kip and Andrea Richards Family Farm & Ranch
Not Party
Rabo AgriFinance
Appellee
Andrea Richards
Appellant
Kip L. Richards
Appellant

Document Text:

United States Bankruptcy Appellate Panel

For the Eighth Circuit 

___________________________ 

No. 19-6039 

___________________________ 

In re: Kip and Andrea Richards Family Farm & Ranch, LLC, doing business as 

Richards Farm & Ranch, LLC

 Debtor

------------------------------

Kip L. Richards; Andrea Richards

 Interested parties - Appellants

v. 

Rabo AgriFinance, LLC

 Creditor - Appellee

____________ 

Appeal from United States Bankruptcy Court 

for the District of Nebraska - Lincoln

____________ 

Submitted: April 8, 2020

 Filed: May 4, 2020 

____________ 

Before SCHERMER, SHODEEN and SANBERG, Bankruptcy Judges. 

____________ 

SCHERMER, Bankruptcy Judge

Appellate Case: 19-6039 Page: 1 Date Filed: 05/04/2020 Entry ID: 4909137
2 

Kip L. Richards and Andrea Richards appeal the bankruptcy court’s1

 decision

that they were equitably estopped from asserting ownership of machinery and 

equipment in the bankruptcy case of Kip and Andrea Richards Family Farm Ranch, 

LLC (Debtor), and its denial of their request for the bankruptcy court to alter or 

amend its ruling or for a new trial.

2

 We have jurisdiction over this appeal from the 

final orders of the bankruptcy court. See 28 U.S.C. § 158(b). For the reasons that 

follow, we affirm. 

ISSUES 

 The central issue on appeal is whether the bankruptcy court properly held that 

Kip and Andrea Richards were equitably estopped from claiming ownership of 

certain machinery and equipment. We hold that it did. We also hold that the 

bankruptcy court did not abuse its discretion when it denied the request of Kip and 

Andrea Richards to alter or amend its ruling or for a new trial. 

BACKGROUND

The Debtor filed its Chapter 11 bankruptcy petition in January 2015. Rabo 

AgriFinance, LLC (Rabo) was a secured creditor and Kip and Andrea Richards were 

members of the Debtor. At the commencement of the Debtor’s bankruptcy case, 

Kip Richards signed the Debtor’s bankruptcy schedules and statement of financial 

affairs as its managing member. He also authorized the Debtor to file monthly 

operating reports, which were prepared by Andrea Richards. Kip reviewed the list 

of property in each operating report and never told Andrea to revise it. In each 

document filed with the court Kip Richards represented that the Debtor owned the 

machinery and equipment that is at issue in this appeal.3

 The Debtor’s post-petition

1

 The Honorable Shon Hastings, Chief Judge, United States Bankruptcy Court for 

the District of North Dakota, sitting by designation.

2

 The bankruptcy court’s orders also addressed procedural and other issues about 

which no argument was made in this appeal. We deem arguments concerning these 

issues to be abandoned.

3 In response to the statement of financial affairs item requiring disclosure of all 

property owned by another person that the Debtor holds, the Debtor checked 

“None.” 

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3 

tax returns, signed by Kip Richards, also claim ownership of many pieces of the 

machinery and equipment at issue. The 2015 individual tax return of Kip and Andrea 

Richards included no entry for depreciation. The depreciation listed on their 2016 

tax return did not pertain to farm equipment. The Debtor did not abandon any 

machinery and equipment at issue.

The Debtor confirmed its Third Amended Chapter 11 bankruptcy plan with

an addendum (Plan), in February 2017. The Plan required liquidation of 

substantially all the Debtor’s assets including substantially all the Debtor’s 

equipment, in cooperation with Rabo. Unfortunately, no list of equipment was 

attached to the Plan. The Plan states that (other than specifically provided) Rabo 

would be entitled to the proceeds of the liquidation. Pursuant to the Plan, the Debtor 

and Rabo would dismiss a pending appeal and “[i]n exchange, for the dismissal of 

the appeal, Rabo has agreed to dismiss any and all lawsuits against the individual 

members of [the Debtor].” The Plan also included injunction, exculpation, and 

limitation of liability causes. 

During plan negotiations, Rabo’s attorney and the Debtor’s attorney discussed 

the possibility of Rabo’s dismissal of litigation against the Debtor’s guarantors 

(including Kip and Andrea Richards). On November 30, 2016, Rabo’s attorney sent 

an email to the Debtor’s attorneys stating that Rabo would need signed and verified 

balance sheets from the guarantors before it would consider dismissing litigation 

against them. Shortly thereafter on December 10, 2016, Kip and Andrea Richards 

signed an individual balance sheet itemizing their fixed assets which did not include

the machinery and equipment that is at issue in this appeal. The Third Amended 

Plan was filed on December 16, 2016. In January 2017, Rabo dismissed its pending 

state court action against the Richards without prejudice. 

Post-confirmation litigation ensued concerning ownership of machinery and 

equipment. Because the parties are familiar with the history of that litigation, we do 

not recite it in its entirety.

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In an August 2018 order on Rabo’s motion to direct the Debtor to comply with 

the Plan, the bankruptcy court granted Rabo’s request to compel the Debtor to sell 

(or deliver to Rabo) machinery and equipment owned by the Debtor on the 

confirmation date, conditioned on Rabo’s timely filing of a list of machinery and 

equipment with evidence that the Debtor owned the machinery and equipment at 

confirmation. At a December 2018 hearing also on Rabo’s motion, the court 

received evidence regarding machinery and equipment owned by the Debtor. It then 

entered an order requiring the Debtor to deliver to an auction company machinery 

and equipment identified on an amended list filed on the court docket or turn the 

machinery and equipment over to Rabo by a date certain. 

When the Debtor failed to comply with the court’s order to deliver the 

machinery and equipment to the auction company or Rabo, Rabo filed a Motion for 

civil contempt and sanctions (Civil Contempt and Sanctions Motion). In a separate 

filing allowed by the bankruptcy court, Rabo sought as its remedy a “writ of 

execution [] forcing the debtor to divest its title in . . . equipment previously ordered 

to be conveyed and/or sold and vest that title in the creditor Rabo.” After hearings, 

the bankruptcy court granted Rabo’s Civil Contempt and Sanctions Motion (Civil 

Contempt and Sanctions Order) and entered a writ of execution (Writ of Execution) 

granting authority to repossess and sell the machinery and equipment on the 

amended list filed with the court by Rabo as a sanction for the Debtor’s failure to 

either turn the machinery and equipment over to Rabo or sell the machinery and 

equipment and submit the proceeds to Rabo.

Kip and Andrea Richards filed a motion to amend the Civil Contempt and 

Sanctions Order (Motion to Amend), to which Rabo objected. It is the order 

disposing of the Motion to Amend that is the focus of this appeal.

The bankruptcy court held two hearings on the Motion to Amend. At the first 

hearing, the court stated that it determined at the December 2018 hearing on Rabo’s 

motion to direct compliance with the Plan that the Debtor owned the property listed 

on the Writ of Execution. The bankruptcy court recognized that Nebraska law 

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5 

allows a third party to contest ownership after a writ is executed. Neither party 

objected to the court’s determination of the issue of ownership before the writ was 

executed and in the context of the Motion to Amend. Pursuant to the court’s 

instructions, Kip and Andrea Richards then submitted a list of equipment they 

claimed to own. They claim ownership of numerous pieces of equipment on the 

Writ of Execution. After a second hearing, the court determined that Kip and Andrea

Richards were equitably estopped from asserting ownership to most of the 

equipment.4

 The court also denied the relief they requested in their motion to amend 

or for a new trial brought under Federal Rule of Bankruptcy Procedure 9023, which 

makes Federal Rule of Civil Procedure 59 applicable in bankruptcy proceedings 

(Rule 59 Motion).

STANDARD OF REVIEW

We review “the bankruptcy court’s factual findings for clear error and its legal 

conclusions de novo.” Snyder v. Dykes (In re Dykes), 954 F.3d 1157, 1159 (8th Cir.

2020). A ruling on a motion to alter or amend a judgment under Rule 59(e) or for a 

new trial under Rule 59(a) is reviewed for an abuse of discretion. Ryan v. Ryan, 889 

F.3d 499, 508-09 (8th Cir. 2018); Larson v. Farmers Co-op. Elevator of Buffalo Ctr., 

211 F.3d 1089, 1095 (8th Cir. 2000). 

DISCUSSION

Jurisdiction

We reject Rabo’s argument that we lack jurisdiction to hear this appeal 

because it was untimely filed. According to Rabo, the issue of ownership of the 

machinery and equipment was before the bankruptcy court on multiple occasions

and the failure by Kip and Andrea Richards to appeal any of the court’s prior rulings 

prevents them from filing this appeal. The two bankruptcy court orders appealed are 

the: (1) September 30, 2019 order on the Motion to Amend; and (2) November 14, 

4

 The Writ of Execution was amended to exclude some items for which the court 

found that Kip and Andrea Richards were not equitably estopped from asserting an 

ownership interest and that are not at issue in this appeal.

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2019 order on the Rule 59 Motion. Rabo may not recast the orders being appealed. 

Kip and Andrea Richards timely filed their notice of appeal on November 27, 2019. 

See FED. R. BANKR. P. 8002 (Fourteen-day time to appeal runs from entry of an order 

disposing of a motion under Federal Rule of Bankruptcy Procedure 9023, which rule 

makes Federal Rule of Civil Procedure 59 applicable). 

Equitable estoppel

At the hearings on their Motion to Amend, Kip and Andrea Richards claimed 

ownership of several pieces of equipment listed on the Writ of Execution. Kip 

Richards testified that he transferred machinery and equipment he now claims to 

own to the Debtor at its formation in 2010 when other members of the Debtor also 

transferred property into the Debtor in exchange for membership units. He believed

the property was transferred to the Debtor because a prior lender “needed the 

equipment to operate us.” Kip and Andrea Richards claim that the collateral for the

Debtor’s loan from Rabo included only real estate and cattle, not machinery and 

equipment. They also maintain that based on a document they offered into evidence 

and the understanding that Rabo did not need equipment as collateral for its loan, in 

July 2012 the members of the Debtor transferred the property back to Kip Richards. 

To the contrary, the list of equipment in the Debtor’s annual balance sheet submitted 

to Rabo at the end of 2012 included equipment that the Richards now claim to own. 

The Debtor’s bankruptcy schedules, operating reports, and corporate tax 

returns include items in the Writ of Execution and at issue in this appeal as property 

owned by the Debtor. Kip and Andrea Richards maintain that these documents are 

inaccurate. We hold that the bankruptcy court properly applied equitable estoppel

to disallow Kip and Andrea Richards from claiming ownership of the items at issue.

Equitable estoppel under Nebraska law requires Rabo to prove six elements: 

(1) conduct which amounts to a false representation or concealment of 

material facts or, at least, which is calculated to convey the impression 

that the facts are otherwise than, and inconsistent with, those which the 

party subsequently attempts to assert; (2) the intention, or at least the 

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expectation, that such conduct shall be acted upon by, or influence, the 

other party or other persons; (3) knowledge, actual or constructive, of 

the real facts; (4) lack of knowledge and of the means of knowledge of 

the truth as to the facts in question; (5) reliance, in good faith, upon the 

conduct or statements of the party to be estopped; and (6) action or 

inaction based thereon of such a character as to change the position or 

status of the party claiming the estoppel.

Woodard v. City of Lincoln, 588 N.W.2d 831, 836 (Neb. 1999) (citation omitted).

5

 

“Under Nebraska law, the party asserting an estoppel, . . . , must prove each element 

by clear and convincing evidence.” Roeder v. Metro. Ins. and Annuity Co., 236 F.3d 

433, 438 (8th Cir. 2001) (citing Double K, Inc. v. Scottsdale Ins. Co., 515 N.W.2d 

416, 422 (1994)).” “[E]quitable estoppel turns on all the facts and circumstances of 

a particular case.” Id. at 437-438 (citing Franksen v. Crossroads Joint Venture, 515 

N.W.2d 794, 803 (1994)). 

Kip and Andrea Richards did not specifically dispute before the bankruptcy 

court or before us that Rabo established the first element of equitable estoppel. We 

agree with the bankruptcy court’s decision that Rabo proved this element. As the 

bankruptcy court pointed out, in the Debtor’s bankruptcy schedules and corporate 

tax returns, Kip Richards represented that the Debtor owned most of the machinery 

and equipment in the Writ of Execution. And he authorized the Debtor to file 

operating reports (prepared by Andrea Richards) with the court that included the 

machinery and equipment. Kip and Andrea Richards did not include most of the 

machinery and equipment in their personal tax returns for years 2015 and 2016 or in 

an individual balance sheet they provided to Rabo shortly before confirmation of the 

Plan. Switching gears, at a June 2019 hearing on the Motion to Amend, Kip 

Richards testified that he owned many of the pieces of machinery and equipment. 

5

 The bankruptcy court analyzed the equitable estoppel issue under Nebraska law. 

Kip and Andrea Richards state in their brief that the bankruptcy court properly 

identified the six elements of proof of equitable estoppel. Both parties analyze the 

issue using the elements applied by the bankruptcy court. 

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According to Kip and Andrea Richards, the bankruptcy court erroneously 

stated that they did not contest establishment of the second element of equitable 

estoppel, the intention or expectation that Rabo would act on their conduct or be 

influenced by it. They believe that the court erred in finding intent because they 

presented testimony on the issue of intent and Rabo’s evidence showed carelessness

or mistake, not intent. The bankruptcy court, after reviewing the evidence, was 

unconvinced by the argument of Kip and Andrea Richards that the 

misrepresentations were the result of mistake or neglect. It explained that Kip 

Richards, acting in both his individual and corporate representative capacities in the 

Debtor’s case, on multiple occasions and in multiple contexts, made 

misrepresentations about ownership of the machinery and equipment. We see no 

error in the bankruptcy court’s decision.

The bankruptcy court also properly held that Rabo established the third 

element of equitable estoppel, knowledge of the real facts. Kip and Andrea Richards 

do not contest this. As the bankruptcy court determined, Kip Richards was the 

person with the most detailed knowledge of the Debtor’s assets. We agree with the 

bankruptcy court’s logical decision that, if as Kip and Andrea Richards represented, 

the document transferring the machinery and equipment from the Debtor back to Kip 

Richards in 2012 was genuine, the signature of Kip and Andrea on that document 

shows that they knew that representations filed with the bankruptcy court concerning 

the Debtor’s ownership of the same machinery and equipment were incorrect.

 Rabo also met its burden of proving the fourth element of equitable estoppel, 

lack of knowledge or the means of knowledge of the true facts. The bankruptcy 

court properly determined that Rabo exercised reasonable prudence and did not have 

knowledge of the falsity of the misrepresentations. And we agree with the 

bankruptcy court that Rabo did not have a duty to inquire further or investigate 

whether the Debtor owned the assets for which Kip Richards represented to Rabo 

and the court under oath that the Debtor held an ownership interest. The record 

shows that there was nothing prior to plan confirmation that should have created a 

reason for Rabo to inquire further, especially where the parties were working 

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together in good faith to have the plan confirmed. Although Kip Richards testified 

at the meeting of creditors that he and his father owned a few pieces of equipment,

he did not assert an interest in the other machinery and equipment now at issue in 

this appeal. And the individual balance sheet provided by Kip and Andrea Richards 

during plan negotiations also did not include the machinery and equipment at issue. 

Contrary to the assertions of Kip and Andrea Richards, we see no reason how 

the fact that the Debtor’s schedules state that some of the machinery and equipment 

was acquired before the Debtor’s formation should have required Rabo to inquire 

further. It is logical that a third party acquired items prior to the Debtor’s formation 

and later transferred them to the Debtor. Kip and Andrea Richards also believe that

Rabo should have done a search of public records that would have shown that titled 

vehicles listed on the Debtor’s schedules were not titled in the Debtor’s name. They 

assert that this would then have put Rabo on inquiry notice to check the Debtor’s 

schedules more carefully. We see no error in the fact that the bankruptcy court did 

not require Rabo to take the multiple steps proposed to verify the accuracy of the 

Debtor’s schedules signed under penalty of perjury. 

Rabo met its burden of showing the fifth element of equitable estoppel, good 

faith reliance on the statements of Kip and Andrea Richards. Rabo relied on the 

representations made by Kip Richards as a representative of the Debtor in the 

Debtor’s bankruptcy filings when it agreed to a stipulated plan for the Debtor. It

also relied on representations made by Kip and Andrea Richards on their individual 

balance sheet when it dismissed litigation against them as guarantors. 

 

Rabo proved that it relied in good faith on representations made in the 

Debtor’s bankruptcy court filings that the Debtor owned its machinery and 

equipment when it negotiated with the Debtor to reach a stipulated plan. The 

Debtor’s Plan required sale of substantially all the Debtor’s equipment. We see no 

error in the bankruptcy court’s determination that Rabo was entitled to rely as a 

matter of law, and it did in fact rely, on the listing of machinery and equipment on 

the Debtor’s schedules (as reiterated throughout the Debtor’s case in its operating 

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reports) as the machinery and equipment to be sold under the Plan. The entitlement 

to rely on representations made in a Debtor’s schedules and statements is clear. 

Mertz v. Rott, 955 F.2d 596, 598 (8th Cir. 1992) (“[T]he petition, including schedules 

and statements, must be accurate and reliable, without the necessity of digging out 

and conducting independent examinations to get the facts.”) (citation and internal 

quotation marks omitted); Bauer v. Iannacone (In re Bauer), 298 B.R. 353, 357 

(B.A.P. 8th Cir. 2003) (“The debtor's duty of disclosure requires updating schedules 

as soon as reasonably practical after he or she becomes aware of any inaccuracies or 

omissions.”); Raml v. Raml, No. 4:15-CV-04154-RAL, 2017 WL 4279656, at *6 (D. 

N.D. Sept. 25, 2017) (recognizing that creditors rely on debtor’s disclosures in 

schedules); In re Grasso, 586 B.R. 110, 145 (Bankr. E.D. Pa. 2018) (same). In fact, 

“the bankruptcy system as a whole, and each particular case which forms a 

component part of it, cannot function without the honest and forthcoming efforts of 

its debtors.” Kaler v. McLaren (In re McLaren), 236 B.R. 882, 894 (Bankr. D. N.D. 

1999). In addition to its recognition of Rabo’s entitlement to rely on the Debtor’s 

bankruptcy filings, we also agree with the bankruptcy court’s determination that the 

Debtor’s confirmed Plan, which was reached after lengthy negotiations of the parties 

and which included the Debtor’s promise to sell its machinery and equipment, is 

evidence that Rabo actually relied on those representations. 

The bankruptcy court also correctly held that Rabo proved that when 

dismissing the guarantor litigation, it relied in good faith on the personal balance 

sheet provided by Kip and Andrea Richards shortly before confirmation. As the 

bankruptcy court stated, Rabo’s attorney testified that Rabo was only willing to 

dismiss the action against the guarantors after receiving the balance sheets 

confirming that the individuals were not claiming an interest in the Debtor’s assets. 

Kip and Andrea Richards argue that Rabo failed to prove the sixth element of 

equitable estoppel, action or inaction based on the misrepresentations of Kip and 

Andrea Richards that caused it to change its position or status. Like the bankruptcy 

court, we see no merit in the argument that Rabo would not be harmed by a ruling 

that Kip and Andrea Richards own the machinery and equipment at issue because 

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11 

Rabo did not perfect a security interest in it. As the bankruptcy court recognized, 

Rabo agreed to the terms of the Plan on the understanding that the equipment to be 

liquidated was represented to be owned by the Debtor on its schedules and operating 

reports. And we point out that by the misstatements in the Debtor’s court filings, 

Kip and Andrea Richards harmed not only Rabo, but also the integrity of the 

bankruptcy system. We also disagree with the argument that because Rabo 

dismissed the guarantor litigation without prejudice, it took no action or inaction 

based on the individual balance sheet submitted by Kip and Andrea Richards. 

Having allowed the misrepresentations concerning the Debtor’s assets to 

continue throughout the Debtor’s bankruptcy case, Kip and Andrea Richards now 

seek to protect their alleged pecuniary interests by painting Rabo as a trickster. They 

believe the bankruptcy court erred when it applied equitable estoppel because 

Rabo’s own inequitable conduct disqualifies it from seeking that form of relief. The 

arguments made by Kip and Andrea Richards lack merit or were not properly 

presented to the court below.

Rule 59 motion 

Kip and Andrea Richards also appeal the bankruptcy court’s order on their

Rule 59 Motion in which they asked the bankruptcy court to amend its ruling on 

their Motion to Amend to deny relief under equitable estoppel to Rabo or, in the 

alternative, hold a new trial to allow them to present evidence regarding Rabo’s 

equitable estoppel claim. “Motions under Rule 59(e) ‘serve the limited function of 

correcting manifest errors of law or fact or to present newly discovered evidence’ 

and ‘cannot be used to introduce new evidence, tender new legal theories, or raise 

arguments which could have been offered or raised prior to entry of judgment.’ ” 

Ryan, 889 F.3d at 507 (quoting United States v. Metro. St. Louis Sewer Dist., 440 

F.3d 930, 933 (8th Cir. 2006)). “A motion for new trial will be granted when a 

miscarriage of justice occurred in the first trial.” Larson, 211 F.3d at 1095. Other 

than arguments we already discussed concerning the merits of the bankruptcy court’s 

ruling on their Motion to Amend, Kip and Andrea Richards do not state specifically 

how the bankruptcy court erred in denying their Rule 59 Motion. Our review shows 

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12 

that the bankruptcy court carefully considered the arguments in the Rule 59 Motion 

and, as supported by the record, exercised its discretion to deny the requested relief. 

CONCLUSION

For the reasons stated, we AFFIRM.

____________________________ 

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