United States Court of Appeals

For the Eighth Circuit

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No. 11-3523

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In re: Dennis E. Hecker

lllllllllllllllllllllDebtor

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Dennis E. Hecker

lllllllllllllllllllllAppellant

v.

Randall L. Seaver, Trustee

lllllllllllllllllllllAppellee

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 Appeal from United States District Court 

for the District of Minnesota - Minneapolis

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 Submitted: October 18, 2012

 Filed: January 11, 2013

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Before LOKEN, BEAM, and SMITH, Circuit Judges.

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LOKEN, Circuit Judge.
In September 2005, GELCO Corporation (“GELCO”) entered into a salescommission agreement (“SCA”) with Dennis Hecker and two of Hecker’s companies

whereby GELCO acquired vehicle fleet-leasing assets in exchange for $20 million

plus a series of deferred, formula-based incentive payments. Hecker petitioned for

protection under Chapter 7 of the Bankruptcy Code in June 2009, listing the SCA as

non-exempt personal property with an estimated value of $6 million. He did not claim

that payments owed under the SCA were exempt property on Schedule C of the

petition. Hecker twice amended Schedule C, but never claimed an exemption for the

SCA or its proceeds. 

Hecker’s Chapter 7 Trustee and two secured creditors, CorePointe Capital

Finance LLC and U.S. Bank, asserted claims against GELCO for monies allegedly

owed under the SCA. Following extensive negotiations, GELCO and these claimants

agreed to a settlement in which GELCO would pay $2.07 million to the bankruptcy

estate, $500,000 to CorePointe, and $1.53 million to U.S. Bank in exchange for a

complete release of liability for all claims related to the SCA. On May 23, 2011, the

Trustee filed a motion for bankruptcy court approval of the settlement. On June 10,

the last day for filing objections, bankruptcy debtor Hecker filed an objection, arguing

for the first time that the SCA was an employment agreement and therefore some

payments owed by GELCO were exempt earnings under Minnesota law. 

On June 15, the bankruptcy court held a hearing on the Trustee’s motion to

approve the settlement. Conceding that Hecker had not filed a motion to amend

Schedule C to claim an exemption for SCA payments, counsel for Hecker moved to

continue the settlement approval hearing so that he could file that motion. The

bankruptcy court1

 denied this oral request for a continuance, overruled Hecker’s

objection, and approved the settlement, explaining:

1

The Honorable Robert J. Kressel, United States Bankruptcy Judge for the

District of Minnesota. 

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[T]oday is about the settlement. . . . Mr. Hecker is making [claims]

based on something that hasn’t happened. He could have claimed this

exempt [property] any time in the last two years. He didn’t. As we sit

here . . . whatever claims there are is property of the estate. . . .

[W]hether [Hecker] . . . can make a claim later or not, I don’t know and

I express no opinion on that. But certainly the settlement is a terrific one

. . . . 

So all the Loomis v. Drexel [settlement approval] factors have

been met here which is really all . . . I’m required to address today. 

Seems to me Mr. Hecker has no standing. He has no interest in any of

this money. . . . Really no right to make any claims here. [His] claims

and arguments . . . are outside the scope of today’s hearing . . . . But the

settlement’s a good one. It’s certainly deserving of approval . . . . 

Hecker appealed to the district court,2

 which granted the Trustee’s motion to dismiss

the appeal. Hecker appeals, arguing the bankruptcy court erred by disregarding his

request to amend his schedule of exempt property and approving the settlement.

Concluding that the bankruptcy court did not abuse its discretion in denying a

continuance and approving the settlement, we affirm. 

1. Bankruptcy Rule 9019 provides: “On motion by the trustee and after notice

and a hearing, the court may approve a compromise or settlement.” Here, the Trustee

moved to approve a settlement of disputed claims against GELCO, giving proper

notice. In ruling on that motion at the June 15 hearing, the bankruptcy court properly

looked to discretionary settlement approval factors first set forth by this court in

Drexel v. Loomis, 35 F.2d 800, 806 (8th Cir. 1929). 

Hecker has never disputed that the settlement was an appropriate compromise

of disputed claims against GELCO for payments under the SCA. Rather, Hecker’s

2

The Honorable Paul A. Magnuson, United States District Judge for the District

of Minnesota. 

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objection to the settlement was based on his allegation that Minnesota exemption law

gave him a superior interest in all or part of the settlement proceeds. The bankruptcy

court overruled that objection because Hecker had no “standing,” that is, no legitimate

basis to object to the settlement at the time of the June 15 hearing, because he had

never claimed the exemption. That conclusion was of course correct. In prior

bankruptcy filings and representations to creditors, Hecker as bankruptcy debtor had

repeatedly disclaimed any personal interest in the SCA and its proceeds. No motion

or request to amend his claimed exemptions was pending, simply counsel’s assertion

that Hecker might have an exemption-based interest in the settlement proceeds some

time in the future. As counsel for Hecker conceded at oral argument, if his request for

a continuance was properly denied, Hecker had no valid ground for objecting to

approval on June 15. Thus, the critical issue on appeal is whether the bankruptcy

court erred in denying Hecker’s oral request for a continuance at the June 15 hearing.

2. “The decision to grant a continuance of a hearing is within the discretion of

the trial court and is only reversible upon showing abuse of discretion.” In re Rice,

357 B.R. 514, 517 (B.A.P. 8th Cir. 2006), aff’d per curiam, 271 Fed. App’x 538 (8th

Cir. 2008). Here, Hecker listed the SCA as non-exempt personal property worth an

estimated $6 million when he filed for bankruptcy in 2009. Over the next two years,

he twice amended his Schedule C exemptions without claiming an exemption for

payments owing under the SCA, and he repeatedly represented to creditors that he was

“self-employed” or “unemployed” and had no prospective “wages, salary or

commissions.” Relying on these representations, the Trustee on behalf of the

bankruptcy estate, GELCO, and two secured creditors negotiated a multi-million

dollar settlement resolving SCA payment disputes. Hecker, promptly served notice

of the settlement, waited until the last day to file an objection, claiming for the first

time that payments owed under the SCA are earnings of the debtor that are exempt

under Minnesota law. But he did not file or move for leave to file an amended

exemption schedule, instead seeking a last-minute continuance at the June 15 hearing

to resolve the Trustee’s motion to approve the settlement. “The debtor’s duty of

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disclosure requires updating schedules as soon as reasonably practical after he or she

becomes aware of any inaccuracies or omissions.” In re Bauer, 298 B.R. 353, 357

(B.A.P. 8th Cir. 2003). In this case, Hecker’s lack of diligence (if not outright

deception) is apparent, as is the prejudice to the parties to the settlement agreement

had a continuance been granted. 

Hecker argues that the bankruptcy court ignored Bankruptcy Rule 1009(a),

which provides that a debtor may amend his bankruptcy schedules “as a matter of

course at any time before the case is closed.” This contention puts the cart before the

horse. Hecker did not move to amend his schedule of exemptions before the June 15

hearing. Therefore, whether to allow an amendment was not before the bankruptcy

court. Hecker complains that counsel was not retained until just before his last-minute

objection and did not have time to file a motion to amend his claimed exemptions. 

We are unmoved. The delay and any resulting prejudice were attributable entirely to

Hecker’s own lack of diligence. See In re Rice, 357 B.R. at 517-18; accord In re

Martwick, 60 F.3d 482, 483-84 (8th Cir. 1995). In these circumstances, we have no

difficulty concluding that the bankruptcy court did not abuse its discretion in denying

Hecker’s last-minute oral request for a continuance of the settlement approval hearing. 

Relying on In re Woodson, 839 F.2d 610 (9th Cir. 1988), Hecker further argues

that the bankruptcy court erred in refusing to consider his potential exemption claim

before approving the settlement. But in Woodson, a major creditor objected to the

debtor’s amended claim of a $1 million exemption and then objected to a proposed

settlement disbursing most of the $1 million to the debtor. The bankruptcy court

concluded the creditor’s original objection was untimely and therefore did not

consider its objection to the settlement. The Ninth Circuit concluded the creditor’s

objection to the exemption was not untimely, and therefore the bankruptcy court erred

in refusing to consider the merits of the objection before approving a settlement that

put the proceeds at issue beyond the reach of creditors. Here, by contrast, there was

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no claim by Hecker to the SCA proceeds pending when the motion for settlement

approval was submitted for decision to the bankruptcy court. Moreover, as the

bankruptcy court expressly recognized, a significant portion of the settlement

proceeds would be paid to the bankruptcy estate, and the court in approving the

settlement did not decide whether Hecker might in the future be able to establish a

superior right to that portion of the proceeds.3

 

3. On appeal, the Trustee argues, as he did to the district court, that we should

dismiss the appeal for lack of subject matter jurisdiction because (i) Hecker’s claim

of an exemption is not ripe for judicial review, and (ii) Hecker lacks standing to object

to settlement approval because the SCA is an asset of the bankruptcy estate. We

disagree. The Trustee gave Hecker notice of the Trustee’s motion to approve the

settlement. Hecker objected and appeared at the June 15 hearing to oppose the

motion. Hecker had standing to object to the motion, the bankruptcy court had

jurisdiction to rule on the motion and Hecker’s objection, and both the district court

and this court have subject matter jurisdiction to review the bankruptcy court’s order

denying Hecker’s request for a continuance and approving the settlement. Cf. In re

Marlar, 267 F.3d 749, 753 n.1 (8th Cir. 2001). We also deny the Trustee’s motion to

dismiss the appeal as moot because the settlement proceeds have been distributed, a

contention based on facts not contained in the record on appeal. See Fed. R. App.

P. 10(a); United States for Use of Lighting and Power Servs., Inc. v. Interface Constr.

Corp., 553 F.3d 1150, 1155 n.4 (8th Cir. 2009). 

3

Like the bankruptcy court, we do not consider whether Hecker may amend his

Schedule C to claim an exemption for SCA proceeds and, if so, whether he is entitled

to the claimed exemption. See generally In re Kaelin, 308 F.3d 885, 889 (8th Cir.

2002) (recognizing exceptions to Rule 1009(a)’s liberal rule for “bad faith on the part

of the debtor and prejudice to the creditors”); In re Harris, 886 F.2d 1011, 1015-16

(8th Cir. 1989) (making clear that the two issues are distinct). We do not affirm the

district court’s statement that the bankruptcy court “correctly denied Hecker’s request

to amend his Schedule C.” As no “request” was filed prior to the June 15 hearing, that

issue remains unresolved. 

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We affirm the bankruptcy court’s Order dated June 15, 2011, and deny the

Trustee’s motion to dismiss the appeal. 

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