United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 96-3967

___________

In re: Yukon Energy Corporation, *

*

Debtor. *

________________________ *

*

Yukon Energy Corporation, *

*

Appellee, *

* Appeal from the United

States

v. * District Court for the

* District of Minnesota.

Brandon Investments, Inc., *

*

Appellant, *

*

Charles Clayton, *

*

Defendant, *

*

Kent Knudson, *

*

Appellant, *

*

John Doe; Jane Roe, *

*

Defendants. *

___________

Submitted: December 8, 1997

 Filed: March 17,

1998

___________
The Honorable Michael J. Davis, United States District Judge for the District 1

of Minnesota.

The Honorable Nancy C. Dreher, United States Bankruptcy Judge for the

2

District of Minnesota.

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Before McMILLIAN, MAGILL, and MURPHY, Circuit Judges.

___________

MAGILL, Circuit Judge.

Brandon Investments, Inc. (Brandon) and its

president, Kent Knudson, appeal the district court's1

adoption of the bankruptcy court's decision that held

2

Knudson liable for fraudulently reviving an extinguished

lien against the bankruptcy estate of Yukon Energy

Corporation (Yukon) but absolved Brandon from respondeat

superior liability. In an earlier order that was not

appealed to this Court, the bankruptcy court had

determined that the lien was without value. Because

Brandon's interests were not adversely affected by the

district court's ruling presently before us, we dismiss

Brandon's appeal. Appealing pro se, Knudson claims that

the bankruptcy court erred when it exercised jurisdiction

over the fraud claim, denied his request for a jury

trial, and excluded Knudson from a proceeding because of

Knudson's repeated disruptions in court. Knudson also

claims that the district court erred in adopting the

bankruptcy court's report and recommendation. We affirm.

I.

Yukon engaged in the wholesale heating and air

conditioning business. In 1991, Yukon entered into a

contract with L.A.W. Machining and Manufacturing, Inc.

(LAW), in which LAW agreed to manufacture a large number

of furnaces for Yukon. The sale price was calculated by
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a certain formula, subject to an agreed-upon maximum

amount. Almost immediately LAW began charging Yukon in

excess of the maximum price. Yukon responded by paying

LAW only in part and withholding the remainder.
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Determined to continue their relationship despite their

price disagreement, in February 1992 Yukon granted LAW a

security interest on Yukon's inventory and equipment "to

secure payment to LAW . . . of all indebtedness of Yukon

to LAW for completed furnaces delivered to Yukon and

invoiced to Yukon." Yukon Energy Corp. v. Brandon Invs.,

Inc. (In re Yukon Energy Corp.), Case No. 4-93-7221, Adv.

No. 4-94-33, slip op. at 3 (Bankr. Minn. Mar. 15, 1995)

(quotations and emphasis omitted) (Yukon I).

In September 1992, LAW's creditors initiated

involuntary bankruptcy proceedings against LAW. The

amount of Yukon's indebtedness to LAW remained in

dispute; the trustee alleged that the debt was $250,000,

while Yukon claimed it owed no more than $33,000. Also

in the fall of 1992, Knudson, an investor in Yukon,

helped instigate a power struggle for control of Yukon.

Using proxy statements that a state court later found

deceptive, Knudson was elected to Yukon's board of

directors. With Yukon under the control of Knudson and

his associates, Yukon and LAW agreed to settle Yukon's

debt to LAW for $56,657.07 in return for a release and

discharge of the security interest held by LAW. Both

Knudson and Charles Clayton, Yukon's attorney at the

time, were involved in the negotiations leading to the

settlement. 

By February 1993, Yukon was facing tough financial

times of its own. Unable to pay for the LAW settlement

from its own funds but desiring to clear the lien on its

assets, Yukon (through Knudson) solicited funds from

Yukon shareholders and outside investors. In return for

their loans, the investors were told they would receive

a new secured position. However, hoping to lure new

creditors with lien-free assets, Knudson did not secure
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the position of the new investors. Yukon used the new

funds to pay off the LAW lien, which was released by the

bankruptcy court on February 11, 1993. See Yukon Energy

Corp. v. Brandon Invs., Inc. (In re Yukon Energy Corp.),

Case No. 4-93-7221, Adv. No. 4-94-33, slip op. at 7-8

(Bankr. Minn. Sept. 19, 1995) (Yukon II).

In March 1993, a Minnesota state court invalidated

the shareholders election which had placed Knudson on

Yukon's board of directors, partly because of false and
According to the bankruptcy court, "[t]he proxy statement represented that

3

Knudson was a 'securities investment broker'; in fact, he has never been such and rather

has been employed by at least 16 different employers since 1969." Yukon II, slip op.

at 6.

The bankruptcy court found that Knudson's actions were "fueled solely by

4

personal animosity and self-serving motivations aimed at destroying [rival directors in

Yukon], and perhaps Yukon, in the process." Yukon II, slip op. at 16.

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misleading information in the proxies concerning

Knudson's professional background. The state court also 3

invalidated all actions taken by the illegallyconstituted board, subject to ratification by the court.

Undeterred in his effort to control Yukon's fate, Knudson

4

devised a plan to revive the extinguished lien by

treating the lien's release as an assignment to a dummy

corporation controlled by Knudson. This would enable the

dummy corporation to hold the priority lien on Yukon's

assets. Knudson enlisted Clayton's help in activating a

corporate shell entitled Brandon Investments, Inc., with

Knudson as president and sole director. Knudson and

Clayton then issued shares of Brandon stock to the

investors in proportion to their original investments

used to finance the LAW settlement. The Brandon shares

were backdated to the date on which the investors had

advanced the funds, a date prior to the creation of the

Brandon corporate entity.

Acting in concert with Knudson, Clayton--still

attorney of record for Yukon--petitioned the bankruptcy

court for an amendment to the February 11, 1993 approval

of the settlement of the LAW lien. Knudson and Clayton,

purportedly acting on Yukon's behalf, requested that the

order be modified to state that the lien had been

assigned to Brandon. Clayton did not inform Yukon's new

directors of the pending change, and as a result Yukon
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failed to object to the motion. On May 11, 1993, the

bankruptcy court entered an order as requested. 

On December 30, 1993, Yukon filed for bankruptcy

protection under Chapter 11 of the Bankruptcy Code. On

February 15, 1994, Yukon commenced an adversarial
Yukon also alleged that Clayton had committed malpractice and breached his 5

fiduciary duty to Yukon. In finding for Yukon, the bankruptcy court determined that,

"[i]n seeking the amended order, Clayton was acting in the interests of and at the

direction of Knudson, not Yukon, whose best interests were unquestionably divergent

from that of Yukon." Yukon II, slip op. at 16. These claims have been subsequently

settled, and Clayton does not present an appeal for our consideration.

We note that the resolution of the fraud claim was not dependent on a ruling on 6

the lien issue, because the fraudulent conduct pertained to whether the lien continued

to exist, while the lien issue involved a calculation of the value of the goods that LAW

had sold to Yukon.

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proceeding against Knudson, Clayton, and Brandon,

alleging under several different theories of recovery

that Brandon's revived lien was valueless and that

Knudson and Clayton had fraudulently revived the

extinguished lien. The proceedings were converted to

5

Chapter 7 proceedings on May 12, 1994. In August 1994,

Alpha American Company (Alpha) paid $29,500 for virtually

all of Yukon's assets, on condition that Alpha bear the

expenses of the adversarial proceeding against Brandon.

Alpha and Yukon agreed to split the proceeds of any

recovery. Because the purported lien "diminished the

price at which Yukon's trustee could sell the assets of

the bankruptcy estate," Yukon II, slip op. at 20, $1500

of the purchase price was specifically allocated for

machinery, equipment, and inventory, the fair market

value of which totaled in excess of $275,000.

The bankruptcy judge severed the claim pertaining to

the valuation of the lien from the fraud claim and tried

the lien valuation issue first. On March 15, 1995, the 6

bankruptcy court entered an order in favor of Yukon

declaring that the lien against Yukon's estate was

without value. See Yukon I, slip op. at 11. Taking core

jurisdiction over the claim as a proceeding to determine
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"the validity, extent, or priority of liens" under 28

U.S.C. § 157(b)(2)(K), the bankruptcy court calculated

that Yukon owed less to LAW than the amount by which LAW

had overcharged Yukon under the contract. Yukon thus

owed nothing to LAW and the LAW lien had no value.
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Knudson and Brandon moved the district court for

"leave to appeal from the final and interlocutory Order

of the bankruptcy court dated March 15, 1995." Defs.'

Second Combined Mot. for Leave to Appeal Final and

Interlocutory Order (Apr. 24, 1995) at 1, reprinted in

Brandon's App. at Tab 18. The district court denied this

motion, noting that "[i]f the Defendants seek to appeal

from the Bankruptcy Court's final Order in this case,

they may file an appeal pursuant to [Bankruptcy] Rule

8001 and this District's local rules. The present Motion

is not the proper vehicle for initiating such an appeal."

Brandon Invs. v. Yukon Energy Corp. (In re Yukon Energy

Corp.), Civ. No. 3-95-580, slip op. at 3 (D. Minn. Dec.

5, 1995). Neither Knudson nor Brandon appealed the

bankruptcy court's ruling on the lien issue as a final

order.

The bankruptcy court then heard the remaining claim

of fraud against Knudson and Brandon, taking jurisdiction

over the claim as a noncore proceeding under 28 U.S.C. §

157(c)(1). In regard to Knudson's efforts to revive the

extinguished lien, the bankruptcy court held that Knudson

committed fraud under Minnesota law, finding that he

"purposefully omitted to tell Yukon a material fact and

intentionally misrepresented this information with the

intention of preventing Yukon from opposing the motion to

amend and the concomitant assignment to Brandon." Yukon

II, slip op. at 16-17. However, because Knudson was not

acting within the scope of his employment at Brandon but

rather acted with the intent of serving his own

interests, the bankruptcy court held that Brandon was not

liable for fraud under the doctrine of respondeat

superior. Id., slip op. at 27. The district court,

after conducting a de novo review of the record, adopted

the bankruptcy judge's report and recommendation. Yukon
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Energy Corp. v. Brandon Invs., Inc. (In re Yukon Energy

Corp.), Civ. No. 3-95-993, slip op. at 3 (D. Minn. Sept.

19, 1996). 

 Presently before this Court are appeals by Brandon

and Knudson of the district court's adoption of the

bankruptcy court's report and recommendation disposing of

the fraud claim. On appeal, however, Brandon contends

that the bankruptcy court lacked jurisdiction over the

lien valuation claim as well as the fraud claim and that

Brandon
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was entitled to a jury trial. Appealing pro se, Knudson

incorporates the same issues plus a due process claim

arising from his ejection from the proceedings because of

his unruly conduct and a claim that the district court

improperly conducted a de novo review of the bankruptcy

record. 

II.

We first address whether the bankruptcy court's

ruling that the LAW lien had no value was a final order

sufficient to trigger this Court's jurisdiction. Courts

of appeals have jurisdiction over appeals "from all final

decisions, judgments, orders, and decrees" in bankruptcy

proceedings. 28 U.S.C. § 158(d). Unlike district

courts, which may in their discretion hear appeals from

interlocutory bankruptcy court orders, the jurisdiction

of this Court is limited to final orders. See In re

Woods Farmers Coop. Elevator Co., 983 F.2d 125, 127 (8th

Cir. 1993). Even if jurisdiction is not properly raised

by the parties, "this court is obligated to address

jurisdictional problems on its own if it perceives any."

In re Bank Bldg. & Equip. Corp., 23 F.3d 1390, 1392 (8th

Cir. 1994). 

"[F]inality for bankruptcy purposes is a complex

subject and courts deciding appealability questions must

take into account the peculiar needs of the bankruptcy

process." In re Koch, 109 F.3d 1285, 1287 (8th Cir.

1997) (quotations and alterations omitted). To determine

the finality of an order in a bankruptcy proceeding, we

consider "the extent to which (1) the order leaves the

bankruptcy court nothing to do but execute the order; (2)

delay in obtaining review would prevent the aggrieved

party from obtaining effective relief; and (3) a later

reversal on that issue would require recommencement of
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the entire proceeding." In re Apex Oil Co., 884 F.2d

343, 347 (8th Cir. 1989). This is a more liberal

standard of finality than is generally applied to

nonbankruptcy proceedings. See Currell v. Taylor, 963

F.2d 166, 167 (8th Cir. 1992) (per curiam).
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We conclude that the bankruptcy court's valuation of

the lien was a final order. Once the lien was held to be

worthless, no further action was needed to determine

Brandon's status as a creditor of Yukon. See Woods, 983

F.2d at 127 ("[A]n order entered before the conclusion of

a complex bankruptcy proceeding is not appealable under

§ 158(d) unless it finally resolves a discrete segment of

that proceeding." (emphasis added)). Because all other

liens against Yukon had been satisfied by funds raised

from the investors, see Yukon II, slip op. at 10, the

rights of all the creditors with regard to the estate

were "on the verge of being completed . . . [and] a delay

in review . . . would serve no purpose." First Nat'l

Bank v. Allen, 118 F.3d 1289, 1294 (8th Cir. 1997).

Furthermore, lien valuation orders have typically been

considered final. See, e.g., In re Morse Elec. Co., 805 F.2d

262, 264 (7th Cir. 1986) ("A disposition of a creditor's

claim in a bankruptcy is 'final' for purposes of § 158(d)

when the claim has been accepted and valued, even though

the court has not yet established how much of the claim

can be paid given other, unresolved claims."); In re Saco

Local Dev. Corp., 711 F.2d 441, 448 (1st Cir. 1983)

("[A]s long as an order allowing a claim or priority

effectively settles the amount due the creditor, the

order is 'final' even if the claim or priority may be

reduced by other claims or priorities."). Accordingly,

we hold that the lien valuation was a final order.

By failing to timely appeal the lien order as a final

order, Brandon has waived any objection to the

determination that the lien was valueless. In this

appeal, we therefore review only the district court's

approval of the bankruptcy court's resolution of the

fraud claim--which held Brandon not liable under
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respondeat superior. Because the fraud order did not

cause injury to Brandon, Brandon's appeal will not be

heard by this Court. Cf. Deposit Guar. Nat'l Bank v.

Roper, 445 U.S. 326, 335 (1980) ("A party may not appeal

from a judgment or decree in his favor . . . ."

(quotations omitted)); Spencer v. Casavilla, 44 F.3d 74,

78 (2d Cir. 1994) ("Ordinarily, a party to a lawsuit has

no standing to appeal an order unless he can show some

basis for arguing that the challenged action causes him

a cognizable injury, i.e., that he is 'aggrieved' by the

order."). Accordingly, Brandon's appeal is dismissed,

and the remainder of this appeal
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concerns only the district court's approval of the

bankruptcy court's recommendation on the fraud claim.

III.

Knudson's appeal of the adverse determination on the

fraud claim raises several issues. Knudson argues that

the bankruptcy court lacked jurisdiction to hear the

fraud claim, erred in denying his request for a jury

trial, and denied Knudson due process by ejecting Knudson

from the proceedings for his unruly conduct. Knudson

also argues that the district court erred in conducting

its de novo review. We hold that the bankruptcy court

properly exercised jurisdiction over the fraud claim as

a noncore proceeding and that Knudson waived any right to

a jury trial by failing to make a timely demand. We also

find no error in the ejection of Knudson or in the

district court's review of the bankruptcy court's report

and recommendation.

Knudson first contends that the bankruptcy court

lacked subject matter jurisdiction over this proceeding.

The Bankruptcy Code authorizes bankruptcy courts to hear

and determine core proceedings, which include

"determinations of the validity, extent, or priority of

liens" and "other proceedings affecting the liquidation

of the assets of the estate or the adjustment of the

debtor-creditor or the equity security holder

relationship, except personal injury tort or wrongful

death claims." 28 U.S.C. § 157(b)(2)(K), (O). For

proceedings that are not core proceedings but are

"otherwise related to" a bankruptcy case, the bankruptcy

court submits proposed findings of fact and conclusions

of law to the district court for de novo review. 28

U.S.C. § 157(c)(1). In its analysis of its jurisdiction
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over the fraud claim in the present case, the bankruptcy

court noted "indices of both core and/or non-core

proceedings," and "in an abundance of caution" issued a

report and recommendation for the district court's

consideration. Yukon II, slip op. at 22.
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We therefore must address whether the fraud claim was

properly within the bankruptcy court's noncore

jurisdiction. For a bankruptcy court to exercise noncore

jurisdiction, "the proceeding at issue must have some

effect on the administration of the debtor's estate."

Abramowitz v. Palmer, 999 F.2d 1274, 1277 (8th Cir. 1993)

(quotations omitted). As we have stated:

The test for determining whether a civil

proceeding is related to bankruptcy is whether

the outcome of that proceeding could conceivably

have any effect on the estate being administered

in bankruptcy. An action is related to

bankruptcy if the outcome could alter the

debtor's rights, liabilities, options, or

freedom of action and which in any way impacts

upon the handling and administration of the

bankrupt estate.

In re Dogpatch U.S.A., Inc., 810 F.2d 782, 786 (8th Cir.

1987) (quotations and alterations omitted). Designed to

streamline the disposition of a debtor's entire

bankruptcy estate, see Abramowitz, 999 F.2d at 1278, the

statutory grant of noncore jurisdiction should be read to

"promote judicial economy by aiding in the efficient and

expeditious resolution of all matters connected to the

debtor's estate." In re Lemco Gypsum, Inc., 910 F.2d

784, 787 (11th Cir. 1990). 

We conclude that the bankruptcy court properly

exercised noncore jurisdiction over the fraud claim in

this case because the resolution of that claim impacted

the administration of Yukon's bankruptcy estate.

Although Alpha purchased Yukon's assets subject to the

lien, Yukon retained a one-half interest in any recovery

for fraud against Knudson or Brandon. See Order

Approving Sale at ¶ 2 (Bankr. Minn. Aug. 23, 1994),
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reprinted in Brandon's App. at Tab 4. Furthermore, the

underlying misconduct clearly affected Yukon, as the

bankruptcy court determined that the fraudulent revival

of the lien "impaired Yukon's ability to reorganize" and

"necessarily diminished the price at which Yukon's

trustee could sell the assets of the bankruptcy estate."

Yukon II, slip op. at 19, 20. The presence of the

fraudulently revived lien reduced to $29,500 the amount

received for the sale of over $250,000 of Yukon's assets.

While we have
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held that "even a proceeding which portends a mere

contingent or tangential effect on a debtor's estate

meets the broad jurisdictional test," In re Titan Energy,

Inc., 837 F.2d 325, 330 (8th Cir. 1988), Yukon's

continuing stake in the outcome of the fraud claim

combined with the lien's effect on the asset sale price

rendered the fraud's effect far more direct.

Accordingly, the bankruptcy court properly exercised

noncore jurisdiction over the fraud claim. 

Knudson next argues that he was improperly denied the

right to a trial by jury. Yukon originally filed its

adversarial complaint against Knudson on February 14,

1994. Knudson demanded a jury trial on January 31, 1995.

Yukon amended its complaint several times during this

period, including an amended complaint dated January 31,

1995. The bankruptcy court denied the motion for a jury

trial, noting that the "[d]efendants have fought a war of

attrition for one year" and that "[t]his is simply

another tactic employed to delay this trial." Yukon I,

slip op. at 10.

We do not decide whether Knudson was in fact entitled

to a jury trial, because any right has long since been

waived. Under the local bankruptcy court rules, the

failure of a party to demand a jury trial on a given

issue within ten days of service of the last pleading on

that issue constitutes a waiver of the right to a jury

trial. U.S. Bankr. Ct. Minn. Local R. 203(a), (e). Even

if Knudson requested a jury trial within ten days of

Yukon's final amended complaint, the essence of Yukon's

allegation against Knudson was not changed by this

amendment and remained unchanged throughout the course of

the litigation. See Williams v. Farmers and Merchants

Ins. Co., 457 F.2d 37, 38 (8th Cir. 1972) ("Once waived,
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the right [to a jury trial] is revived by amendments to

the pleadings only if new issues are raised in such

amendments and in such event the right is revived only as

to the new issues." (citations omitted)). Because the

amended complaints did not raise new issues concerning

Knudson, his failure to timely demand a jury trial

following the filing of the initial complaint resulted in

a waiver of this right.
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The remainder of Knudson's claims can be addressed

briefly. Knudson argues that the bankruptcy court

violated due process by ejecting him from the courtroom

after Knudson had asked a witness a question concerning

Santa Claus and the Easter Bunny and despite the court's

repeated urging throughout the entire proceeding that

Knudson behave with civility. The bankruptcy court has

authority to "issue any order, process, or judgment that

is necessary or appropriate to carry out the provisions"

of the Bankruptcy Code, see 11 U.S.C. § 105(a), which

includes the power to maintain decorum within the

courtroom. We find no abuse of discretion in the

bankruptcy court's action. Cf. Chambers v. NASCO, Inc.,

501 U.S. 32, 43 (1991) ("Courts of justice are

universally acknowledged to be vested, by their very

creation, with power to impose silence, respect, and

decorum, in their presence, and submission to their

lawful mandates." (quotations omitted)).

Knudson also claims that the district court--which

explicitly stated that it had reviewed the record de

novo--failed to apply the proper standard of review of

the bankruptcy court's decision. Knudson argues that the

district court improperly adopted the bankruptcy court's

recommendation in its entirety because the district court

noted that neither the bankruptcy court's findings of

fact nor its conclusions of law were "contrary to law."

Knudson's hypertechnical reading of the district court's

word choice fails to demonstrate that the district

court's review was not de novo. See In re Dillon Constr.

Co., 922 F.2d 495, 497 (8th Cir. 1991) (burden of proof

rests on party claiming district court failed to review

bankruptcy court's report and recommendation de novo).

Accordingly, this claim is without merit.
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Finally, Knudson claims that the adverse

determination on the fraud claim was not adequately

supported by the evidence. To the contrary, we find the

evidence of Knudson's fraudulent conduct overwhelming.

See Specialized Tours, Inc. v. Hagen, 392 N.W.2d 520, 532

(Minn. 1986) (stating prima facie case for fraud under

Minnesota law). Accordingly, we affirm on this claim as

well.
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IV.

Because the only final judgment adverse to Brandon's

interests was not properly appealed, we dismiss Brandon's

appeal. Finding jurisdiction proper and no error in

denying Knudson's request for a jury trial, we affirm the

district court's approval of the bankruptcy court's

decision holding Knudson liable for the fraudulent

revival of the LAW lien. We also hold that Knudson's due

process claim and improper review claim are without

merit.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.