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 Unite d 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

___________TheHonorable Michael J. Davis, United States District Judge for the District 1 of Minnesota. The Honorable Nancy C. Dreher, United States Bankruptcy Judge for th e 2 District of Minnesota.
-2- Before McMILLIAN, MAGILL, and MURPHY, Circuit Judges.

___________ MAGILL, Circuit Judge.
Brandon Investments, Inc. (Brandon) and it s pr esident, Kent Knudson, appeal the district court's 1 adopt ion of the bankruptcy court's decision that hel d 2 Knudson li able for fraudulently reviving an extinguished lien against the bankruptcy estate of Yukon Energ y Corporatio n (Yukon) but absolved Brandon from respondeat super ior liability. In an earlier order that was no t appe aled to this Court, the bankruptcy court ha d de termined that the lien was without value. Becaus e Bran don's interests were not adversely affected by th e dist rict court's ruling presently before us, we dismis s Brandon's appeal. Appealing pro se, Knudson claims that the bankruptcy court erred when it exercised jurisdiction
ove r the fraud claim, denied his request for a jur y trial, andexcluded Knudson from a proceeding because of Knud son's repeated disruptions in court. Knudson als o cl aims that the district court erred in adopting th e bankruptcy court's report and recommendation. We affirm.

I.

Yukon engaged in the wholesale heating and ai r conditi oning 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 furnace s for Yukon. The sale price was calculated by-3-

a ce rtain formula, subject to an agreed-upon maximu m amount. Almost immediately LAW began charging Yukon i n excess of the maximum price. Yukon responded by payin g LAW only in part and withholding the remainder.-4-

Determined to continue their relationship despite thei r price disa greement, in February 1992 Yukon granted LAW a security i nterest on Yukon's inventory and equipment "to secure pay

ment to LAW . . . of all indebtedness of Yukon to LAW for completed furnaces delivered to Yukon an d invoiced to Yukon." Yukon Energy Corp. v. Br andon Invs., Inc. (In re Yukon Energy Corp.) , Case No. 4-9 3-7221, 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 initiate d invo luntarybankruptcy proceedings against LAW. Th e
amou nt of Yukon's indebtedness to LAW remained i n dispute; t he trustee alleged that the debt was $250,000, while Yukon claimed it owed no more than $33,000. Als o in the fall of 1992, Knudson, an investor in Yukon , helped instigate a power struggle for control of Yukon

. Using p roxy statements that a state court later foun d dece ptive, Knudson was elected to Yukon's board o f directo rs. With Yukon under the control of Knudson an d his associates, Yukon and LAW agreed to settle Yukon' s debt to LAW for $56,657.07 in return for a release an d disch arge of the security interest held by LAW. Bot h Knud son and Charles Clayton, Yukon's attorney at th e time , were involved in the negotiations leading to th e settlement.

By February 1993, Yukon was facing tough financia l tim es of its own. Unable to pay for the LAW settlemen t from its o wn funds but desiring to clear the lien on its
asse ts, Yukon (through Knudson) solicited funds fro m Yukon shar eholders and outside investors. In return for their loans, the investors were told they would receiv e
a ne w secured position. However, hoping to lure ne w cred itors with lien-free assets, Knudson did not secur e-5-

the position of the new investors. Yukon used the ne w funds to p ay off the LAW lien, which was released by the bankruptcy

court on February 11, 1993. See Yukon Energy Corp. v. B randon 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 invalidate d the shareholders election which had placed Knudson o n Yukon's board of directors, partly because of false andAccording 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 ba nkruptcy court found that Knudson's actions were "fueled solely b y

4 personal animosity and sel f-serving motivations aimed at destroying [rival directors in Yukon], and perhaps Yukon, in the process." Yukon II , slip op. at 16.
-6- misleading information in the proxies concernin g Knudson's professional backgro und. The state court also 3 inval idated all actions taken by the illegally

constitute d board, subject to ratification by the court. Undeterredin his effort to control Yukon's fate, Knudso n 4 dev ised a plan to revive the extinguished lien b y treatin g the lien's release as an assignment to a dummy corporation controlled by Knudson. This woul d enable the dumm ycorporation to hold the priority lien on Yukon' s assets. K nudson enlisted Clayton's help in activating a corporate shell entitled Brandon Investments, Inc., with Kn udson as president and sole director. Knudson an d Clayton then issued shares of Brandon stock to th e inves tors in proportion to their original investment s used to finance the LAW settlement. The Brandon share s
were backdated to the date on which the investors ha d advan ced the funds, a date prior to the creation of th e Brandon corporate entity.
Acting in concert with Knudson, Clayton--stil l attorney of record for Yukon--petitioned the bankruptc y court for an amendment to the February 11, 1993 approval of the set tlement of the LAW lien. Knudson and Clayton, purportedl y acting on Yukon's behalf, requested that the order be modified to state that the lien had bee n assigned t o Brandon. Clayton did not inform Yukon's new direct ors of the pending change, and as a result Yuko n-7-

failed to object to the motion. On May 11, 1993, th e bankruptcy court entered an order as requested.

On December 30, 1993, Yukon filed for bankruptc y protect ion under Chapter 11 of the Bankruptcy Code. O n February 15, 1994, Yukon commenced an adversarialYukon 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 th e direction of Knudson, not

Yukon, whose best interests were unquestionably divergent from th at 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 li en issue, because the fraudulent conduct pertained to whether the lien continued to exist, while the lien issue involve d a calculation of the value of the goods that LAW had sold to Yukon.
-8- proceeding against Knudson, Clayton, and Brandon , alleg ing under several different theories of recover y that Brandon's revived lien was valueless and tha t Knudson and Clayton had fraudulently revived th e extin guished lien. The proceedings were converted t o 5 Chapt er 7 proceedings on May 12, 1994. In August 1994 , Alpha American Company (Alpha) paid $29,500 f or virtually all of Yukon's assets, on condition that Alpha bear th e expenses of the adversarial proceeding against Brandon

. Alp ha and Yukon agreed to split the proceeds of an y reco very. Because the purported lien "diminished th e price a t which Yukon's trustee could sell the assets o f the ban kruptcy estate," Yukon II , slip op. at 20, $150 0 of t he purchase price was specifically allocated fo r mach inery, equipment, and inventory, the fair marke t value of which totaled in excess of $275,000.
The bankruptcy judge severed the claim pertaining to the valuat ion of the lien from the fraud claim and tried the lien valuation issue first. On March 15, 1995, the 6 bankr uptcycourt entered an order in favor of Yuko n decl aring that the lien against Yukon's estate wa s without value. See Yukon I , slip op. at 11. Taking core jurisdicti on over the claim as a proceeding to determine-9-

"the va lidity, extent, or priority of liens" under 2 8 U.S.C. § 157(b)(2)(K), the bankruptcy court calculate d that Yukonowed less to LAW than the amount by which LAW had ove rcharged Yukon under the contract. Yukon thu s owed nothing to LAW and the LAW lien had no value.-10-

Knudson and Brandon moved the district court fo r "leave to appeal from the final and interlocutory Orde r of the bankruptcy court dated March 15, 1995." Defs. ' Second Combined Mot. for Leave to Appeal Final an d Inte rlocutoryOrder (Apr. 24, 1995) at 1, reprinted i n Brandon's App. at Tab 18. The district court denied this motion, noting that "[i]f the Defendants seek to appea l from th e Bankruptcy Court's final Order in this case , they ma y file an appeal pursuant to [Bankruptcy] Rul e 8001 and this District's local rules. The pr esent Motion is not the proper vehicle for initiating suchan appeal." Brandon Invs. v. Yukon Energy Corp. (In re Yukon Energ y Corp. ) , Civ. No. 3-95-580, slip op. at 3 (D. Minn. Dec

. 5, 19 95). Neither Knudson nor Brandon appealed th e bankru ptcycourt's ruling on the lien issue as a fina l order.

The bankruptcy court then heard the remaining clai m of fraud against Knudson and Brandon, taking jurisdiction over the c laim 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
comm itted fraud under Minnesota law, finding that h e "purposefully omitted to tell Yukon a material fact an d intentionallymisrepresented this information with th e intention of preventing Yukon from opposing t he motion to amend and the concomitant assignment to Brandon." Yukon II , slip o p. at 16-17. However, because Knudson was not acting wit hin the scope of his employment at Brandon but rather acted with the intent of serving his ow n interests, the bankruptcy court held that Bra ndon was not liab le for fraud under the doctrine of respondea t superior. Id. , slip op. at 27. The district court , after cond ucting a de novo review of the record, adopted the bankru ptcy judge's report and recommendation. Yukon-11-

Energy Corp. v. Brandon Invs., Inc. (In re Yukon Energ y Corp.) , Ci v. No. 3-95-993, slip op. at 3 (D. Minn. Sept. 19, 1996).
Presently before t his Court are appeals by Brandon and K nudson of the district court's adoption of th e bankruptcy court's report and recommendation disposing of the fraud claim. On appeal, however, Brandon contend s that the bankruptcy court lacked jurisdiction over th e lien valua tion claim as well as the fraud claim and that Brandon-12-

was entitl ed to a jury trial. Appealing pro se, Knudson incorpo rates the same issues plus a due process clai m arising from his ejection from the proceeding s because of his un ruly conduct and a claim that the district cour t improperly conducted a de novo review of the bankruptc y record.

II.

We fi rst address whether the bankruptcy court' s rul ing that the LAW lien had no value was a final orde r sufficient to trigger this Court's jurisdiction. Courts of appeals have jurisdiction over appeals "fr om all final decisions, judgments, orders, and decrees" in bankruptcy proceedings. 28 U.S.C. § 158(d). Unlike distric t courts, which may in their discretion hear appeals fro m interlocutorybankruptcy court orders, the jurisdictio n of this C ourt is limited to final orders. See In r e Woods Farm ers Coop. Elevator Co. , 983 F.2d 125, 127 (8th Cir. 1993) . Even if jurisdiction is not properly raised by th e parties, "this court is obligated to addres s jurisdicti onal problems on its own if it perceives any." In re Bank Bldg. & Equip. Corp. , 23 F.3d 1390, 1392 (8th Cir. 1994). "[F]inalityfor bankruptcy purposes is a comple x subject an d courts deciding appealability questions must take into account the peculiar needs of the bankruptc y process." In re Koch , 109 F.3d 1285, 1287 (8th Cir

. 1997) (quotations and alterations omitted). To determine the fin ality of an order in a bankruptcy proceeding, w e consid er "the extent to which (1) the order leaves th e bankruptcy court nothing to do but execute th e order; (2) dela yin obtaining review would prevent the aggrieve d part yfrom obtaining effective relief; and (3) a late r
reve rsal on that issue would require recommencement o f-13-

the e ntire proceeding." In re Apex Oil Co. , 884 F.2 d 343, 347 (8th Cir. 1989). This is a more libera l stan dard of finality than is generally applied t o nonb ankruptcyproceedings. See Currell v. Taylor , 96 3 F.2d 166, 167 (8th Cir. 1992) (per curiam).-14-

We conclude that the bankruptcy court's valuation of the lien was a final order. Once the lien wa s held to be wort hless, no further action was needed to determin e Brandon's status as a creditor of Yukon. See Woods , 983 F.2d at 127 ("[A]n order entered before the c onclusion of
a co mplex bankruptcy proceeding is not appealable unde r § 158(d) unless it finally resolves a discret e segment of that proceeding ." (emphasis added)). Because all othe r lien s against Yukon had been satisfied by funds raise d from the investors, see Yukon II , slip op. at 10, th e right s of all the creditors with regard to the estat e were "on the verge of being completed . . . [ and] a delay in revi ew . . . would serve no purpose." First Nat' l Ban k v. Allen , 118 F.3d 1289, 1294 (8th Cir. 1997)

. Furthermore, lien valuation orders have typically bee n considered final. See, e.g., In re Morse Elec. Co. , 805 F.2 d 262, 264 ( 7th Cir. 1986) ("A disposition of a creditor's claim in a bankruptcy is 'final' for purposes of § 158(d) when the c laim has been accepted and valued, even though the c ourt has not yet established how much of the clai m can be paid given other, unresolved claims.") ; In re Saco Loc al Dev. Corp. , 711 F.2d 441, 448 (1st Cir. 1983 ) ("[A ]s long as an order allowing a claim or priorit y effe ctivelysettles the amount due the creditor, th e order is 'final' even if the claim or priority may b e redu ced 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 fina l orde r, Brandon has waived any objection to th e deter mination that the lien was valueless. In thi s appe al, we therefore review only the district court' s appr oval of the bankruptcy court's resolution of th e fraud claim--which held Brandon not liable unde r-15-

respond eat superior. Because the fraud order did no t
cause i njury to Brandon, Brandon's appeal will not b e 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 j udgment or decree in his favor . . . . " (quotation s 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 som e basis for arguing that the challenged action causes hi m a cognizab le injury, i.e. , that he is 'aggrieved' by the order."). Accordingly, Brandon's appeal is dismissed , and the remainder of this appeal-16-

conc erns only the district court's approval of th e 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 tha t the bankruptcy court lacked jurisdiction to hear th e frau d claim, erred in denying his request for a jur y trial, and denied Knudson due process by ejec ting Knudson from th e proceedings for his unruly conduct. Knudso n also argues that the district court erred in conductin g its de novo review. We hold that the bankruptcy cour t prop erlyexercised jurisdiction over the fraud claim a s a noncore proceeding and that Knudson waived any right to a jury trial by failing to make a timely dema nd. We also find no error in the ejection of Knudson or in th e district c ourt's review of the bankruptcy court's report and recommendation.

Knudson first contends that the bankruptcy cour t lacked sub ject matter jurisdiction over this proceeding. The Bankru ptcy Code authorizes bankruptcy courts to hear and determine core proceedings, which includ e "det erminations of the validity, extent, or priority o f liens" and "other proceedings affecting the liquidatio n of the assets of the estate or the adjustment of th e debtor-creditor or the equity security holde r relat ionship, except personal injury tort or wrongfu l dea th claims." 28 U.S.C. § 157(b)(2)(K), (O). Fo r proc eedings that are not core proceedings but ar e "otherwise related to" a bankruptcy case, the bankruptcy
cour t submits proposed findings of fact and conclusion s of law to the district court for de novo review. 2 8 U.S.C. § 1 57(c)(1). In its analysis of its jurisdiction-17-

over the f raud claim in the present case, the bankruptcy
cour t noted "indices of both core and/or non-cor e proceedings," and "in an abundance of caution" issued a
re port and recommendation for the district court' s consideration. Yukon II , slip op. at 22.-18-

We therefore must address whether the fraud claim wa s properlywithin the bankruptcy court's noncor e jurisdiction. For a bankruptcy court to exer cise noncore juri sdiction, "the proceeding at issue must have som e effe ct on the administration of the debtor's estate. " Abramowitz v. Palmer , 999 F.2d 1274, 1277 (8t h Cir. 1993) (quotations omitted). As we have stated:

The test for determining whether a civi l proc eeding is related to bankruptcy is whethe r the outcome of that proceeding could conceivably have any effect on the estate being administered in ba nkruptcy . An action is related t o bankr uptcyif the outcome could alter th e deb tor's rights, liabilities, options, o r freedomof action and which in any way impact s upon the handling and administration of th e bankrupt estate.
In re Dogp atch U.S.A., Inc. , 810 F.2d 782, 786 (8th Cir. 1987) (quo tations and alterations omitted). Designed to strea mline the disposition of a debtor's entir e bankruptcy

estate, see Abramowitz , 999 F.2d at 1278, the statutory grant of noncore jurisdiction shoul d be read to "promote j udicial economy by aiding in the efficient and expe ditious resolution of all matters connected to th e debto r's estate." In re Lemco Gypsum, Inc. , 910 F.2 d 784, 787 (11th Cir. 1990).

We c onclude that the bankruptcy court properl y exer cised noncore jurisdiction over the fraud claim i n this case because the resolution of that claim impacte d the administration of Yukon's bankruptcy estate

. Alth ough Alpha purchased Yukon's assets subject to th e lien, Yuko n retained a one-half interest in any recovery for fr aud against Knudson or Brandon. See Orde r App roving Sale at ¶ 2 (Bankr. Minn. Aug. 23, 1994) ,-19-

reprint ed in Brandon's App. at Tab 4. Furthermore, th e unde rlying misconduct clearly affected Yukon, as th e bankruptcy court determined that the fraudulent reviva l of the lie n "impaired Yukon's ability to reorganize" and "n ecessarilydiminished the price at which Yukon' s trustee co uld sell the assets of the bankruptcy estate." Yu kon II , slip op. at 19, 20. The presence of th e frau dulentlyrevived lien reduced to $29,500 the amoun t received for the sale of over $250,000 of Yuk on's assets. While we have-20-

held that "even a proceeding which portends a mer e cont ingent or tangential effect on a debtor's estat e meets the broad jurisdictional test," In re T itan Energy, Inc. , 837 F.2d 325, 330 (8th Cir. 1988), Yukon' s continuing stake in the outcome of the fraud clai m combine d with the lien's effect on the asset sale pric e
re ndered the fraud's effect far more direct

. Accordingly, the bankruptcy court properly exercise d noncore jurisdiction over the fraud claim.

Knudsonnext argues that he was improperly denied th e right to a trial by jury. Yukon originally filed it s adver sarial complaint against Knudson on February 14 , 1994. Knudson demanded a jury trial on Janua ry 31, 1995. Yuko n amended its complaint several times during thi s period, in cluding an amended complaint dated January 31, 1995. The bankruptcy court denied the motion for a jury trial, noting that the "[d]efendants have fou ght a war of attrition for one year" and that "[t]his is simpl y another tactic employed to delay this trial." Yukon I , slip op. at 10.

We do not decide whether Knudson was in fact entitle d to a jury trial, because any right has long since bee n
wa ived. Under the local bankruptcy court rules, th e failure o f a party to demand a jury trial on a give n issue with in ten days of service of the last pleading on that issue constitutes a waiver of the right to a jur y trial. U.S. Bankr. Ct. Minn. Local R. 203(a) , (e). Even if K nudson requested a jury trial within ten days o f Yuko n's final amended complaint, the essence of Yukon' s alle gation against Knudson was not changed by thi s amendment and remained unchanged throughout t he course of the litigation. See Williams v. Farmers and Merchant s Ins. Co. , 457 F.2d 37, 38 (8th Cir. 1972) ("Once waived,-21-

the r ight [to a jury trial] is revived by amendments t o the pleadings only if new issues are raised in suc h amendments and in such event the right is rev ived only as to t he new issues." (citations omitted)). Because th e amen ded complaints did not raise new issues concernin g Knudson, his failure to timely demand a jury tria l following the filing of the initial complaint resulted in a waiver of this right.-22-

The remainder of Knudson's claims can be addresse d brie fly. Knudson argues that the bankruptcy cour t violated due process by ejecting him from the courtroo m after Knudson had asked a witness a question concernin g Santa Clau s and the Easter Bunny and despite the court's repea ted urging throughout the entire proceeding tha t Knudson behave with civility. The bankruptcy court ha s authority to "issue any order, process, or judgment that is necessa ry or appropriate to carry out the provisions" of th e Bankruptcy Code, see 11 U.S.C. § 105(a), whic h incl udes the power to maintain decorum within th e courtroom. We find no abuse of discretion in th e bankruptcy

court's action. Cf. Chambers v. NASCO, Inc. , 501 U.S. 32, 43 (1991) ("Courts of justice ar e univ ersallyacknowledged to be vested, by their ver y crea tion, with power to impose silence, respect, an d deco rum, in their presence, and submission to thei r lawful mandates." (quotations omitted)).

Kn udson also claims that the district court--whic h
ex plicitlystated that it had reviewed the record d e
novo --failed to apply the proper standard of review o f the bankruptcy court's decision. Knudson arg ues that the district c ourt improperly adopted the bankruptcy court's recommendation in its entirety because the di strict court note d that neither the bankruptcy court's findings o f fact no r its conclusions of law were "contrary to law. " Knudson's hypertechnical reading of the district court's word choice fails to demonstrate that the distric t court's review was not de novo. See In re Di llon Constr. Co. , 922 F.2d 495, 497 (8th Cir. 1991) (burden of proo f rests on party claiming district court failed to revie w bankruptcycourt's report and recommendation de novo)

. Accordingly, this claim is without merit.-23-

Finally, Knudson claims that the advers e dete rmination on the fraud claim was not adequatel y 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 (Min n. 1986) (stating prima facie case for fraud unde r Minnesota law). Accordingly, we affirm on this claim as well.-24- IV.
Because the only fin al judgment adverse to Brandon's interests was not properly appealed, we dismi ss Brandon's ap peal. Finding jurisdiction proper and no error i n denying Knudson's request for a jury trial, w e affirm the dis trict court's approval of the bankruptcy court' s de cision holding Knudson liable for the fraudulen t revival of the LAW lien. We also hold that K nudson's due proc ess claim and improper review claim are withou t merit.

A true copy.

Attest:

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

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