United States Bankruptcy Appellate Panel

FOR THE EIGHTH CIRCUIT

No. 06-6077WM

In re: *

*

Tanna LaTisha Suggs, *

*

Debtor. *

*

* Appeal from the United States

Tanna LaTisha Suggs, * Bankruptcy Court for the 

* Western District of Missouri

Plaintiff - Appellant. *

*

v. *

*

Regency Financial Corp., *

*

Defendant - Appellee. *

*

Submitted: September 12, 2007

Filed: November 5, 2007

BeforeKRESSEL, Chief Judge, MAHONEY, andMCDONALD,Bankruptcy Judges.

MAHONEY, Bankruptcy Judge.

This is an appeal of two orders of the bankruptcy court which arose from an

order granting relief from the automatic stay to creditor Regency Financial

Corporation (“Regency”). The order granting relief has not been appealed. The debtor
2

filed an adversary proceeding against Regency alleging violation of the automatic

stay. She appeals a text order filed October 6, 2006, memorializing an oral ruling

granting Regency’s motion to dismiss the adversary proceeding and denying the

debtor’s motion for summary judgment, and a memorandum opinion and order filed

November 30, 2006, denying the debtor’s motion for new trial or amendment of the

October 6th order.

We reverse the decision of the bankruptcy court on the order dismissing the

adversary proceeding.

I. Procedural Background

Regency held a perfected first lien on the debtor's 1998 Ford Windstar van

securing its purchase-money security interest in the vehicle. Debtor filed a Chapter

13 bankruptcy case in March 2005. Early in the case, Regency moved for adequate

protection on the vehicle and specifically referred to the debtor’s contractual

obligation to maintain casualty insurance on the vehicle. That motion was denied. In

the meantime, the debtor suspended her plan payments from April 16, 2005, through

May 14, 2005. The debtor then obtained confirmation of a plan in May 2005. The

plan called for weekly $202 payments to Regency, but the debtor was unable to make

those payments as scheduled. In August 2005, the debtor moved to suspend the plan

payments from May 14, 2005, through October 1, 2005. The motion was granted over

Regency’s objection. Regency, having received only one plan payment during the

pendency of the case and knowing that the debtor’s automobile insurance coverage

was about to expire, then moved for relief from the automatic stay on October 6,

2005. That motion was denied. 

In April 2006, aware that insurance coverage on the vehicle had lapsed and was

not reinstated, Regency sent notice to the debtor that insurance coverage on the

vehicle must be in place by a date certain or Regency would take steps to protect its
1United States Bankruptcy Court for the Western District of Missouri Local

Rule of Practice 4070-1.D.:

D. Motor Vehicles. For a motor vehicle retained by debtor and subject

to a creditor’s allowed secured claim (including a mobile home or trailer

designed for or capable of travel on public roads) in addition to

requirements stated in Paragraphs A, B and C, if debtor fails to provide

proof of insurance or for any reason insurance terminates, debtor is

enjoined from using the vehicle so long as it is uninsured and the

following applies:

1. The secured creditor shall serve debtor, personally or by mail,

at the address in the bankruptcy petition, and debtor’s attorney,

written notice of the lapse of insurance.

2. If debtor fails to provide the creditor proof of insurance within

three business days after service of the notice in subsection (1),

debtor shall surrender the vehicle or the secured creditor may take

possession and hold it pending presentation of proof of insurance.

3. Within five days after taking possession of a vehicle pursuant

to subsection (2), the creditor shall file a motion for lift of stay,

with an affidavit stating compliance with this Rule. The Court

may grant the creditor relief from § 362 without further hearing

or notice.

4. Absent agreement between the debtor and the lienholder, the

debtor shall prepay at least three months of insurance on the

vehicle; the collision and comprehensive deductible shall not

exceed five hundred dollars ($500); and the insurance policy shall

name the lienholder as a loss payee.

3

collateral. This was based on a local rule in the Western District of Missouri requiring

debtors to maintain insurance coverage on vehicles serving as collateral and

permitting secured creditors, prior to obtaining relief from the stay, to take possession

of such vehicles pending presentation of proof of insurance.1 After receiving no

response, Regency sent a reminder letter to the debtor’s attorney, setting a new

deadline for providing proof of insurance. On May 2, 2006, Regency repossessed the

vehicle due to the debtor’s failure to provide proper insurance coverage. On May 3rd,
2Her causes of action also included conversion, negligence, and a civil rights

violation. Each cause of action was predicated on Regency’s alleged stay violation.

3The order, at Filing #69 in the bankruptcy case, is as follows:

Order of the Court Granting the Motion for Relief from Stay regarding

1998 Ford Windstar GL filed by Regency Financial Corporation. No

attorneys’ fees are awarded to Movant in this proceeding, without

prejudice. So ORDERED by /s/ Arthur B. Federman. . . . .

. . . 

This Notice of Electronic Filing is the Official ORDER for this entry.

No document is attached.

4

Regency wrote to the debtor’s attorney, informing him of the repossession and

advising him that the vehicle could be returned to the debtor if she provided proof of

three months of pre-paid insurance coverage, signed a stipulation agreeing to

maintain the insurance or surrender the vehicle to Regency without further action, and

paid the repossession and filing fees incurred by Regency. On May 4th, the debtor

filed an adversary complaint seeking damages for Regency’s violation of the

automatic stay in repossessing the van.2 On May 5th, Regency filed a motion for relief

from the automatic stay pursuant to Local Rule 4070-1.D., setting out the reasons for

the repossession and seeking an order permitting it to foreclose its security interest.

The debtor objected, asserting, inter alia, that Regency violated 11 U.S.C. § 362(a),

failed to comply with the terms of the local rule regarding submission of an affidavit

in support of the relief motion, and, moreover, that the local rule is invalid because

it conflicts with and is inconsistent with the Bankruptcy Code and Rules, particularly

§ 362(a) and Federal Rule of Bankruptcy Procedure 4001. After a hearing on June 5,

2006, the bankruptcy court granted Regency’s motion for relief, via a text entry on

the docket.3

 That order was not appealed.

In late June 2006, Regency filed a motion to dismiss the adversary proceeding,

asserting that by granting the motion for relief, the bankruptcy court had created law
5

of the case with regard to the debtor’s allegations in the adversary complaint and the

issue should not be subject to relitigation. The debtor responded with her own motion

for summary judgment. The court held a hearing and ruled from the bench,

subsequently entering a text order granting Regency’s motion to dismiss and denying

the debtor’s motion for summary judgment. The debtor moved to reconsider, which

was treated as motion to amend or for a new trial pursuant to Federal Rules of Civil

Procedure 59(a), 59(e), and 60(b), which the court denied in an oral ruling. In that

oral ruling, the court said there could be no violation of the automatic stay if

Regency’s action was authorized by the order granting Regency’s motion for relief

from the automatic stay. The court went on to explain that Regency would not have

been entitled to relief from the stay unless it had complied with the local rule. The

issue of compliance was necessarily ruled on when the court granted the motion for

relief, the court said, and therefore, the issue was “actually litigated” and was not

subject to collateral attack. Tr. of Oct. 10, 2006, 9:1-14. For the same reason, the

debtor could not relitigate the issue of the validity of the local rule because the court

necessarily overruled that claim when it granted the motion for relief. Id. 9:18-10:6.

The court thereafter filed a memorandum opinion and order denying the

motion. The memorandum opinion clarifies the court’s findingthat collateral estoppel

precluded the debtor’s attempt to relitigate the constitutionality of and Regency’s

compliance with the local rule, because the order granting relief from stay

“necessarily resolved those issues in Regency’s favor.” Mem. Op. at 4 (Appellant’s

App. at 145). This appeal followed.

II. Standard of Review

The parties agree that no facts are in disputes here. The trial court’s legal

conclusions are reviewed de novo. Apex Oil Co. v. Sparks (In re Apex Oil Co.), 406

F.3d 538, 541 (8th Cir. 2005).
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In reviewing de novo an order granting a motion to dismiss, the appellate court

must accept all well-pled facts as true and draw all reasonable inferences in favor of

the appellant. Weaver v. Clarke, 45 F.3d 1253, 1255 (8th Cir. 1995); Foss v. Hall

County Child Support Office (In re Foss), 328 B.R. 780, 782 (B.A.P. 8th Cir. 2005).

The bankruptcy court’s application of collateral estoppel is reviewed de novo.

Osborne v. Stage (In re Stage), 321 B.R. 486, 491 (B.A.P. 8th Cir. 2005).

A bankruptcy court’s denial of a motion for new trial, or to alter or amend a

judgment, is reviewed with deference and will not be reversed absent a clear abuse

of discretion. Browder v. Director, Dep't of Corrections, 434 U.S. 257, 263 n.7

(1978); Guy v. Danzig (In re Danzig), 233 B.R. 85, 93 (B.A.P. 8th Cir. 1999). “An

abuse of discretion occurs if the court bases its ruling on an erroneous view of the law

or on a clearly erroneous assessment of the evidence.” PW Enter., Inc. v. Kaler (In re

Racing Servs., Inc.), 332 B.R. 581, 584 (B.A.P. 8th Cir. 2005).

Because the order denying the debtor’s motion to alter or amend and the

underlying order granting the motion to dismiss have both been appealed, our review

of the merits of the dismissal order will be dispositive under the circumstances. 

III. Discussion

As noted above, the merits of the order granting the motion for relief are not

before us. The issue on appeal is whether the bankruptcy court properly dismissed the

debtor’s adversary proceeding on the basis of collateral estoppel. This decision will

necessarily entail a ruling on the validity of the local rule because the bankruptcy

court, in dismissing the adversary proceeding, determined that the relief order

encompassed a finding that the local rule is valid. In the memorandum opinion on the

motion to alter or amend, the court decided that issue again. Therefore, it forms the

basis for the appeal and must be dealt with. 
7

The debtor concedes that Regency was entitled to relief from stay for cause

based on lack of adequate protection as a result of her failure to keep the vehicle

insured. However, the debtor argued in opposition to the motion for relief that the

only way Regency could have legally taken possession of the vehicle prior to

obtaining stay relief is if the local rule is valid. She contends that the local rule is not

valid, and that the judge dealing with the motion for relief from stay did not rule on

that issue in the context of the motion for relief, yet a different judge dealing with the

adversary proceeding used the relief ruling to collaterally estop her from pursuing the

issue in the adversary proceeding. The judge dealing with the adversary proceeding

held that the validity and legitimacy of the local rule were implicitly ruled on by the

order granting Regency relief from the stay, although the judge did not address the

merits of the debtor's arguments until ruling on her motion for new trial.

It is clear from the record that a stay violation did occur, and the violation was

at no time addressed by the bankruptcy court. The violation occurred when Regency

repossessed the vehicle before obtaining a court order authorizing it to do so. The

debtor could have filed a motion for sanctions, at which point the court could have

determined that a violation had occurred and the violation was willful but the

violation was excused by operation of the local rule. However, no such determination

was made. 

The only stated basis for granting the relief from stay, according to the

transcript of the hearing, was the debtor’s failure to have three months’ worth of

prepaid insurance in place. After Regency’s counsel explained to the bankruptcy

judge the lack of insurance as the basis for the motion, the following exchange

occurred between the judge and the debtor’s attorney:

[DEBTOR’S COUNSEL]: Well, Your Honor, my client pays for her

insurance the way she uses it, one month at a time.

. . .
8

THE COURT: Well, unfortunately the local rule doesn’t allow your

client to do that.

[DEBTOR’S COUNSEL]: Doggone that. She just believes she doesn’t

want to have money tied up in insurance.

THE COURT: I understand. She has much better uses for the money.

She probably has it invested somewhere, right?

[DEBTOR’S COUNSEL]: Well, now she is using it for taxis.

THE COURT: Okay. I’ll grant the motion for relief. Thank you. . . . 

Tr. of June 5, 2006, at 3:10-23 (Appellant’s App. at 122). The bankruptcy judge could

and did grant relief for cause without validating the local rule. There was no

discussion of or apparent ruling on the debtor’s objections based on the validity of or

Regency’s compliance with the local rule, so the subsequent dismissal order was

erroneously based on a finding which had not been made. For that reason, it should

be reversed and remanded to the bankruptcy court for further consideration.

The broader scope of the appeal concerns the application of the doctrine of

collateral estoppel. In ruling on Regency’s motion to dismiss the adversary, the

bankruptcy court based its decision on the proposition that Regency did not violate

the automatic stay because its repossession of the vehicle was authorized by the court

order granting relief. Regarding the debtor’s assertion that Regency did not comply

with the local rule because it did not file its affidavit in support of the motion with the

motion as required by the local rule, the court found that the late filing of the affidavit

not only was sufficient, but it also benefitted the debtor because the court scheduled

a hearing on the motion, which it would not otherwise have done:

[The debtor] argues that . . . Regency failed to comply with the local rule

in that it did not file with the motion an affidavit establishing the facts

asserted in the motion. However, Regency did file an affidavit

supporting its motion prior to the hearing and before the entry of the

order granting its motion. Had Regency filed the affidavit with the

motion, it would, under the terms of the rule, ha[ve] been entitled to stay

relief without hearing. As it was, debtor obtained the benefit of a court
9

hearing on the motion. Despite debtor’s apparent contention to the

contrary, relief was granted to Regency predicated solely upon its

compliance with and debtors’ failure to comply with Local Rule 4070[-

]1[D.] In its motion, Regency focused solely upon the provisions of the

rule as justification for the relief sought and did not request relief for

other cause. In addition, the transcript of the hearing reveals that the

only argument made, abbreviated as it was, centered on whether debtor

had complied with the provision of the rule with the insurance she had

obtained. Accordingly, had Regency not complied with the rule, it

would not have been entitled to relief from stay. Debtor raised this very

issue in her response. It was therefore necessarily overruled by the Court

in granting the Motion for Relief from Stay.

Tr. of Oct. 10, 2006, 8:6-9:5. 

The bankruptcy court held on this basis that the issue of Regency’s compliance

with the local rule had been actually litigated, was final, and was not subject to

collateral attack. The bankruptcy court applied the same reasoning in rejecting the

debtor’s argument that the local rule is inconsistent with § 362(a). The court made the

same findings regarding the effect of the relief order in its memorandum opinion on

the motion to alter or amend. 

By assuming that the bankruptcy judge who ruled on the motion for relief

implicitly held that the local rule was valid, the judge who ruled on the debtor’s

motion to reconsider relied on what he considered the implicit rejection of the

debtor’s contentions regarding the stay violation and the rule’s validity in using

collateral estoppel to bar the debtor from going forward with her adversary

proceeding. 

That approach, however, gives too much weight to the underlying order for

relief from stay. The stated cause for granting relief was the debtor’s failure to have

three months of insurance in place. The bankruptcy judge did not in any manner
10

address the debtor’s affirmative defenses regarding the local rule and stay violation.

Because it is unclear whether the debtor’s arguments were in fact overruled by the

order granting relief from the stay, collateral estoppel should not have been employed

against her.

The collateral estoppel doctrine bars relitigation of a previously resolved

factual issue in a subsequent proceeding. A prior finding is conclusive in all

subsequent proceedings if it meets five requirements: (1) the party sought to be

precluded was a party, or in privity with a party, to the previous proceeding; (2) the

current issue is identical to that involved in the prior proceeding; (3) the issue was

actually litigated; (4) the issue was determined by a valid and final judgment; and (5)

the determination was essential to the judgment. Anderson v. Genuine Parts Co., Inc.,

128 F.3d 1267, 1272-73 (8th Cir. 1997); Sells v. Porter (In re Porter), ___ B.R. ___,

2007 WL 2736541, at *2 (Sept. 21, 2007). 

In the memorandum opinion on the debtor’s motion to alter or amend, despite

ruling that the debtor was estopped from litigating the local rule’s validity, the court

nevertheless addressed the merits of the debtor’s argument in that regard and found

that the local rule was not inconsistent with § 362 because the local rule authorizes

creditors to obtain retroactive relief from the stay commensurate with § 362(d).

Whether a local bankruptcy rule is in conflict with a federal rule is a legal

question subject to de novo review. McGowan v. Ries (In re McGowan), 226 B.R. 13,

16 (B.A.P. 8th Cir. 1998). The standard for evaluating the validity of a local rule was

recently set out by the Eighth Circuit in United States v. Mink, 476 F.3d 558 (8th Cir.

2007) (finding a Nebraska rule of criminal procedure to exceed the scope of federal

law): 

When assessing whether a local rule is valid, courts “have

confined their analyses to four inquiries: whether the rule conflicts with
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an Act of Congress; whether the rule conflicts with the rules of

procedure promulgated by [the Supreme Court]; whether the rule is

constitutionally infirm; and whether the subject matter governed by the

rule is not within the power of a lower federal court to regulate.” Frazier

v. Heebe, 482 U.S. 641, 654, 107 S. Ct. 2607, 96 L. Ed. 2d 557 (1987).

Mink, 476 F.3d at 564. 

The McGowan case specifically addressed the validity of a local bankruptcy

rule, and the B.A.P. set out the following standard: 

As a general rule of law, any local rule of bankruptcy procedure

that conflicts with a federal rule of bankruptcy procedure is invalid and

of no effect. In re Falk, 96 B.R. 901, 903 (Bankr. D. Minn. 1989) (en

banc). A local rule “may only be upheld if (a) it is consistent with the

Bankruptcy Code in that it does not ‘abridge, enlarge, or modify any

substantive right,’ as required by 28 U.S.C. § 2075 and (b) it is ‘a matter

of procedure not inconsistent with’ the Bankruptcy Rules as required by

Bankruptcy Rule 9029.” Id. at 904. If a local rule fails either prong of

the two-pronged test, it is invalid. Id. “Consistent is defined as

‘coexisting and showing no noteworthy opposing, conflicting,

inharmonious, or contradictory qualities or trends’ or ‘jointly assertable

so as to be true or not contradictory.’” Id. at 905 (quoting Webster's

[T]hird New International Dictionary 484 (1976)).

McGowan, 226 B.R. at 19.

Regency specifically did not request retroactive relief from or annulment of the

stay, presumably because under the provisions of the local rule such relief would

necessarily be retroactive. 

The debtor argues that the local rule eases the restrictions on obtaining

retroactive relief from stay in the face of case law that requires a showing of
4The Bankruptcy Code, at 11 U.S.C. § 362(a), protects property of the debtor

and of the bankruptcy estate from creditors’ collection efforts:

(a) . . . [A] petition filed under section 301, 302, or 303 of this

title . . . operates as a stay, applicable to all entities, of – 

(1) the commencement or continuation, including the

issuance or employment of process, of a judicial, administrative,

or other action or proceeding against the debtor that was or could

(continued...)

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“compelling circumstances” before retroactive relief may be granted. LaBarge v.

Vierkant (In re Vierkant), 240 B.R. 317, 325 (B.A.P. 8th Cir. 1999) (citing Soares v.

Brockton Credit Union (In re Soares), 107 F.3d 969, 976 (1st Cir. 1997)). In Soares,

the First Circuit Court of Appeals explained that the automatic stay is a fundamental

protection for debtors and should be set aside only for good reason. “Undoing the stay

retroactively should require a measurably greater showing.” 107 F.3d at 977. 

[I]f congressional intent is to be honored and the integrity of the

automatic stay preserved, retroactive relief should be the long-odds

exception, not the general rule. In our view, only a strict standard will

ensure the accomplishment of these objectives. . . . We conclude,

therefore, that although courts possess a limited discretion to grant

retroactive relief from the automatic stay, instances in which the

exercise of that discretion is justified are likely to be few and far

between.

Id. The circuit court went on to state that appropriate circumstances for such relief

must be determined on a case-by-case basis. It gave two examples of “unusual and

unusually compelling” facts which would likely support retroactive relief: a creditor's

inadvertent violation of the stay and a debtor’s bad faith. Id.

We agree with the debtor that Local Rule 4070-1.D. enlarges creditors’ rights

beyond the scope permitted by § 362 and Federal Rule 4001(a).4 The practical effect
4

(...continued)

have been commenced before the commencement of the case

under this title, or to recover a claim against the debtor that arose

before the commencement of the case under this title;

. . .

(3) any act to obtain possession of property of the estate or

of property from the estate or to exercise control over property of

the estate[.]

Federal Rule of Bankruptcy Procedure 4001(a) provides:

(a) Relief from stay; prohibiting or conditioning the use, sale, or

lease of property.

(1) Motion. A motion for relief from an automatic stay

provided by the Code or a motion to prohibit or condition the use,

sale, or lease of property pursuant to § 363(e) shall be made in

accordance with Rule 9014 . . . .

(2) Ex parte relief. Relief from a stay under § 362(a) . . .

may be granted without prior notice only if (A) it clearly appears

from specific facts shown by affidavit or by a verified motion that

immediate and irreparable injury, loss, or damage will result to

the movant before the adverse party or the attorney for the

adverse party can be heard in opposition, and (B) the movant’s

attorney certifies to the court in writing the efforts, if any, which

have been made to give notice and the reasons why notice should

not be required. The party obtaining relief under this subdivision

and § 362(f) or § 363(e) shall immediately give oral notice

thereof to the trustee or debtor in possession and to the debtor and

forthwith mail or otherwise transmit to such adverse party or

parties a copy of the order granting relief. On two days notice to

the party who obtained relief from the stay without notice or on

shorter notice to that party as the court may prescribe, the adverse

party may appear and move reinstatement of the stay . . . . In that

(continued...)

13
4

(...continued)

event, the court shall proceed expeditiously to hear and determine

the motion.

14

of this local rule is to permit a creditor to obtain property of the estate or of the debtor

without permission from the court and without even filing a motion, in derogation of

the limited ex parte relief allowed under Rule 4001(a). The local rule does not

explicitly say compliance with the rule automatically grants relief, and it does require

the filing of a motion to obtain a judge’s order for relief, but the upshot is that the

creditor can avail itself of instant self-help relief from the stay by taking possession

of the collateral without filing a motion in advance or following the procedure for

receiving ex parte relief.

The local rule therefore violates both prongs of the test set out in McGowan

because its enlargement of creditors’ rights is inconsistent with the Code and the

Federal Rules. For this reason, we find the Western District of Missouri’s Local Rule

of Practice 4070-1.D. invalid.

IV. Conclusion

The bankruptcy court’s order granting Regency’s motion to dismiss the

adversary proceeding is reversed. The matter is remanded for further proceedings

consistent with this opinion.