Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-90-03205/USCOURTS-ca10-90-03205-0/pdf.json

Parties Involved:
Dixon Eugene Law
Appellant
Sandra Kay Law
Appellant
The Farm Credit Bank of Wichita
Appellee

Document Text:

{ 

• • 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

- .-;, • 1 

;,,. J 

Unitoo St \.A , 

In re: DIXON EUGENE LAW and 

SANDRA KAY LAW, 

Debtors, 

) 

) 

) 

) 

) 

) 

DIXON EUGENE LAW and SANDRA KAY LAW, ) 

Appellants, 

v. 

THE FARM CREDIT BANK OF WICHITA, 

formerly known as The Federal Land 

Bank of Wichita, 

Appellee. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

ORDER AND JUDGMENT* 

'I'errl:i "' ·, , 

1 1 \J .. . 1S 1 '-' ••I l '-.L 

ROBERT L. HC :-r·--:-'l 

Clerk 

No. 90-3205 

(D.C. No. 89-4118-S) 

(D. Kansas) 

Before LOGAN, SEYMOUR, and TACHA, Circuit Judges. 

After examining the briefs and appellate record, this panel 

has determined unanimously to honor the parties' request for a 

decision on the briefs without oral argument. See Fed. R. App. P. 

34(f); 10th Cir. R. 34.1.9. 

submitted without oral argument. 

* 

The case is therefore ordered 

This order and judgment has no precedential value and s ha l l not 

be cited, or used by any court within the Tenth Circuit, except 

for purposes of establishing the doctrines of the law of the case, 

res judicata, or collateral estoppel. 10th Cir. R. 36.3. 

Appellate Case: 90-3205 Document: 010110076380 Date Filed: 01/14/1991 Page: 1 
Debtors Dixon Eugene Law and Sandra Kay Law appeal the United 

States district court's decision affirming a ruling by the 

bankruptcy court giving particular treatment to the e xcess 

realized in a foreclosure sale of certain real estate mortgaged to 

the Farm Credit Bank of Wichita. Debtors filed a Chapter 11 

bankruptcy plan, confirmed in 1988. Under the plan debtors did 

not retain the land at issue in the instant case, which was in 

foreclosure, although they did retain certain property mortgaged 

to the Farm Credit Bank. The foreclosure sale of the tract at 

issue here was stayed by the filing of the bankruptcy petition. 

Because the sale had not been completed, debtors assigned a value 

to the property for purposes of determining the amount owed to the 

Farm Credit Bank following its sale. This value was set and 

approved at $65,110, leaving the Farm Credit Bank with an 

unsecured claim of $139,181.45. 

When the original pre-bankruptcy sale was finally completed 

after confirmation of debtors' reorganization plan, the sale 

realized $22,498.58 more than the $65,110 set value. The 

bankruptcy court then had to determine whether debtors had any 

interest in this excess and how it should be used. Debtors 

claimed that because the approval of the sale was postconfirmation, the excess amount should be used first to reduce the 

unsecured debt owed to the Farm Credit Bank after confirmation 

(under the plan debtors were to pay only ten percent of the Farm 

Credit Bank's original unsecured claim), with the remainder 

offsetting the debt owed on the mortgaged land retained under the 

plan. The Farm Credit Bank argued that the order confirming 

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Appellate Case: 90-3205 Document: 010110076380 Date Filed: 01/14/1991 Page: 2 
debtors' Chapter 11 plan, which stated that the debtor was "making 

no claims as to this property [at issue in the instant proceeding ] 

under the Confirmed Plan," R. doc. 196 p. 3, barred debtors from 

claiming any interest in the proceeds of the sale. The bankruptcy 

and district courts accepted neither of these arguments, but 

treated the excess as apparently a mistaken calculation in value 

(though it is characterized by the parties as appreciation s i nce 

the filing of the debtors' bankruptcy petition in 1984, nearl y 

four years before). To account for the mistaken calculation, 

these courts made an adjustment in the amount of the bank's preconfirmation unsecured claim, reducing it by the $22,498.58. The 

Farm Credit Bank's ten percent post-confirmation unsecured claim 

apparentl y was then adjusted by this reduction. 

The Farm Credit Bank makes two res judicata arguments on 

appeal. First, it argues that the waiver of claims provisi on i n 

the confirmation order was res judicata and, therefore, the court 

should not have made any adjustment whatsoever. Second, it argues 

that fail ure of debtors to seek redemption or to raise the 

appreciation issue in the state court's sale approval proceedings 

barred debtors from bringing a subsequent action in the bankruptcy 

court. 

We do not comment on the Farm Credit Bank's res judicata 

arguments. It admits that it did not appeal the adjustment order 

and hence is foreclosed from making these arguments. We do agree, 

however, that debtors were entitled to no more consideration with 

respect to the excess money than the bankruptcy and d i strict 

courts gave them. A court handling a reorganization in bankruptcy 

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Appellate Case: 90-3205 Document: 010110076380 Date Filed: 01/14/1991 Page: 3 
is essentially a court of equity. In re Chicago, Milwaukee, St. 

Paul and Pac. R.R. Co., 891 F.2d 159, 162 (7th Cir. 1989). 

Although finality is paramount after the orders of confirmation 

and consummation have been entered, "the finality principles must 

be balanced against the general equitable power of the court to 

avoid unfairness." Id. at 162-63. In the instant case, we agree 

with the bankruptcy and district courts' apparent conclusion that 

the balance of equities favors using the excess to reduce the Farm 

Credit Bank's unsecured claim. Because of their disclaimer 

debtors should not be allowed to claim an interest in the 

property--just as the Farm Credit Bank would not have been 

entitled to argue for an increased claim against debtors had the 

property brought less at foreclosure than the valuation it did not 

object to in the bankruptcy court. Debtors had no more interest 

than the court gave them in reopening the issue of the proper 

value of the bank's unsecured claim. 

Insofar as the appeal turns upon a fact determination, we do 

not find that the determinations of the bankruptcy and district 

courts were clearly erroneous. See In re Branding Iron Motel, 

Inc., 798 F.2d 396, 399-400 (10th Cir. 1986). We also do not find 

the decision to reduce the Farm Credit Bank's unsecured claim an 

abuse of discretion. In re Chicago, 891 F.2d at 163. 

AFFIRMED. 

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Entered for the Court 

James K. Logan 

Circuit Judge 

Appellate Case: 90-3205 Document: 010110076380 Date Filed: 01/14/1991 Page: 4