# U ni te d S ta te s B an kr up tc y A pp el la te P an el For the Eig hth Circu it

__ __ __ __ __ __ __ __ __ __ __ __ __ _ No. 1 3- 60 30

__ __ __ __ __ __ __ __ __ __ __ __ __ _ In re: Tri-S ta te Fin an ci al , LLC, do in g b us in es s as Nort h C ou nt ry Eth an ol

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----- ----- ----- ----- ----- ----- Tho m as D. Stal na ke r, Trus te e
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ff - App el la nt

v.
Geo rg e All is on ; Fr an k C ern ik ; Ph y ll is Cern ik ; Ch ris Dani el ; Am y Dani el ; Dis te fan o F am il y

LTD Partn ers hi p; MarkE. Ehrh art ; Ro be rt G. Gri ffi n; Jo hn Hoi ch ; Den is e Hoi ch ; J am es G. Jan dr ai n; Am eri can Int ers ta te Ban k; Geor ge Kram er; Bern ie Marq ua rd t; Rad io Eng in eeri ng Ind us tri es , Inc .; J os ep h Vac an ti ,

Trus te e o f The Jo se ph an d C ynt hi a Vaca nt i Tru st ;
ll ll ll ll ll ll ll ll ll ll l Defe nd

an ts - App el le es
Cen tri s Fe de ral Cred it Uni on
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an t - Ap pe ll an t

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Cen tri s Fe de ral Cred it Uni on
ll ll ll ll ll ll ll ll ll ll l Co un te rcl ai m an d C ro ss -Cl ai m Pla in ti

ff - App el la nt

v.Tho m as D. Stal na ke r
ll ll ll ll ll ll ll ll ll ll l Co un te rcl ai m Defe nd an t - Ap pe ll an t

an d

Geo rg e All is on ; Fr an k C ern ik ; Ph y ll is Cern ik ; Ch ris Dani el ; Am y Dani el ; Dis te fan o F am il y

LTD Partn ers hi p; MarkE. Ehrh art ; Ro be rt G. Gri ffi n; Jo hn Hoi ch ; Den is e Hoi ch ; J am es G. Jan dr ai n; Am eri can Int ers ta te Ban k; Tim ot hy Ja ck es ; Geo rg e Kram er; Bern ie Marq ua rd t; Rad io Eng in eeri ng Ind us tri es , Inc .; Jo se ph Vacan ti , Trus te e o f The Jo se ph an d C y nt hi a Vaca nt i Tru st
ll ll ll ll ll ll ll ll ll ll l Cro ss -Cl ai m Defe nd an ts - App el le es

__ __ __ __ __ __ __ __ __ __ __ __ __ _ No. 1 3- 60 36

__ __ __ __ __ __ __ __ __ __ __ __ __ _ In re: Tri-S ta te Fin an ci al , LLC, do in g b us in es s as Nort h C ou nt ry Eth an ol

ll ll ll ll ll ll ll ll ll ll lDeb to r

----- ----- ----- ----- ----- ----- Tho m as D. Stal na ke r, Trus te e
ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el le e

v.
Geo rg e All is on ; Fr an k C ern ik ; Ph y ll is Cern ik ; Ch ris Dani el ; Am y Dani el ; Dis te fan o F am il y

LTD Partn ers hi p
ll ll ll ll ll ll ll ll ll ll l Defe nd

an ts - App el la nt

s
Mar k E. Ehrha rt; Ro be rt G. Gri ffi n; Jo hn Hoi ch ; Den is e Hoi ch

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t sJa m es G. Jan dr ai n; Geor ge Kram er; Bern ie Marq ua rd t
ll ll ll ll ll ll ll ll ll ll l Defe nd

an ts - App el la nt

s
Rad io Eng in eeri ng Ind us tri es , Inc .; J os ep h Vac an ti , Trus te e o f The Jo se ph an d

Cynt hi a Vaca nt i Tru st ; Am eri can Int ers ta te Ban k

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t s
Cen tri s Fe de ral Cred it Uni on
ll ll ll ll ll ll ll ll ll ll l Defe nd

an t - Ap pe ll ee

----- ----- ----- ----- ----- -----
Cen tri s Fe de ral Cred it Uni on
ll ll ll ll ll ll ll ll ll ll l Co un te rcl ai m an d C ro ss -Cl ai m Pla in ti

ff - App el le e

v.
Tho m as D. Stal na ke r
ll ll ll ll ll ll ll ll ll ll l Co un te rcl ai m Defe nd an t - Ap pe ll ee

----- ----- ----- ----- ----- -----
Geo rg e All is on ; Fr an k C ern ik ; Ph y ll is Cern ik ; Ch ris Dani el ; Am y Dani el ; Dis te fan o F am il y

LTD Partn ers hi p
ll ll ll ll ll ll ll ll ll ll l Cro ss -Cl ai m Defe nd an ts - App el la nt

s
Mar k E. Ehrha rt; Ro be rt G. Gri ffi n; Jo hn Hoi ch ; Den is e Hoi ch

ll ll ll ll ll ll ll ll ll ll l Cro ss -Cl ai m Defe nd an t s
Ja m es G. Jan dr ai nll ll ll ll ll ll ll ll ll ll l Cro ss -Cl ai m Defe nd an t - Ap pe ll an t
Am eri can Int ers ta te Ban k

ll ll ll ll ll ll ll ll ll ll l Cro ss -Cl ai m Defe nd an t
Tim ot hy Jack es ; Geo rg e Kram er; Bern ie Marq ua rd t
ll ll ll ll ll ll ll ll ll ll l Cro ss -Cl ai m Defe nd an ts - App el la nt

s
Rad io Eng in eeri ng Ind us tri es , Inc .; J os ep h Vac an ti , Trus te e o f The Jo se ph an d Cynt hi a Vaca nt i Tru st
ll ll ll ll ll ll ll ll ll ll l Cro ss -Cl ai m Defe nd an t s

__ __ __ __ __ __ App eal fro m

Uni te d S ta te s B an krup tc y Co ur t fo r th e Dis tri ctof Ne br as ka - Om ah a

__ __ __ __ __ __ Subm it te d: Decem

be r 10 , 20 13 Fil ed : Fe brua ry

5, 2 01 4

__ __ __ __ __ __ Befo re KRESSEL, SCHERM ER an d NAIL, Ban kr up tc y Ju dg es

.

__ __ __ __ __ __ NAIL, Ban krup tc y

Ju dg e.

Trus te e Tho m as St al na ke r an d Cent ri s Fe de ra l Cr ed it Uni on ap pe al th e May 21 , 20 13 jud gm en t of th e ba nk rupt cy co ur t to th e ex te nt it de te rm in ed cert ai n fu nd s were
no t pr op ert y of th e ba nk rupt cy es ta te

. Ja m es G. Ja nd rai n, Dis te fan o Fam il y Ltd

. Part ne rs hi p, Geo rg e All is on , Jr

. , Fran k an d Ph y ll is Cern ik , Ch ris an d Am y Dan ie l, Tim ot hy Ja ck es , Geo rg e Kram er, an d Bern ie Mar qu ard t ap pe al th e sa m e jud gm en t to th e ex te nt it award ed St al na ke r cert ai n fees an d exp en se s and su rch arg ed th os e fees

-4

-an d ex pe ns es ag ai ns t th e fu nd s th e ba nk rupt cy co ur t de te rm in ed were no t pr op ert y of

th e ba nk rupt cy es ta te

. W e rev ers e an d rem an d fo r fu rth er pr oc eed in gs co ns is te nt wit h th is op in io n.

BACKGROUND

In Ju ne an d Ju ly 20 03 , a gr ou p of in ve st or s refe rred to as "t he Om ah a Gro up " tra ns ferr ed $2 ,00 0,0 00 .00 to Tri- St at e Fi na nc ia l, LLC. Ove r th e fo ll owi ng y ear, TriSt at e Fi na nc ia l tra ns ferr ed $7 93 ,65 4.4 2 of th os e fu nd s to Tri- St at e Eth an ol Co m pa ny, LLC, whi ch was in ch ap te r 11 ba nk rupt cy in th e Dis tri ct of So ut h Dak ot a, an d $1 ,19 0,0 00 .00 of t ho se fun ds to on e o f Tri- St at e Eth an ol 's v en do rs

.

In Ju ly 20 04 , Tri- St at e Eth an ol 's cas e was co nv ert ed to ch ap te r 7 , an d Jo hn Lov al d was ap p o i n t e d ch ap te r 7 tru st ee. Tri- St at e Fi na nc ia l fil ed a req ue st fo r pa ym en t of an ad m in is tra ti ve ex pe ns e an d a pr oo f of cl ai m se ek in g reco ve ry of bo th th e $7 93 ,65 4.4 2 an d th e $1 ,19 0,0 00 .00

. In Ju ly 2006, L oval d pa id Tri- St at e Fi na nc ia l th e $7 93 ,65 4.4 2. Tri- St at e Fi na nc ia l di st rib ut ed th e en ti re su m to th e Om ah a Gro up

.

In Nov em

be r 20 08 , Tri- St at e Fi na nc ia l fil ed a pe ti ti on fo r r e l i ef un de r ch ap te r 11 of th e ba nk rupt cy co de

. In Ja nu ary 20 09 , St al na ke r was ap po in te d ch ap te r 11 tru st ee. So m et im e th erea fte r, Lov al d p ai d S ta ln ak er t he $1 ,19 0,0 00 .00

.

In Sep te m

be r 20 10 , St al na ke r fi l e d an ad ve rs ary pr oc eed in g to de te rm in e
own ers hi p of th e $1 ,19 0,0 00 .00

. St al na ke r cl ai m ed th e fu nd s w ere pr op ert y of th e ba nk rupt cy es ta te

. Cen tri s ag reed th e fu nd s were pr op ert y of th e ba nk rupt cy es ta te , bu t it cl ai m ed th e fu nd s w e r e s u b ject to it s bl an ke t se cu rit y in te res t in Tri- St at e Fi na n c i a l ' s as se ts

. Ja m es G. Ja nd rai n, Dis te fan o Fam il y Ltd

. Part ne rs hi p, Geo rg e All is on , Jr ., Fran k an d Ph y ll is Cern ik , Ch ris an d Am y Dan ie l, Tim ot hy Ja ck es , Geo rg e Kram er, an d B ern ie Marq ua rd t (c ol le ct iv el y , "J an dr ai n, et al

. ") cl ai m ed th e fu nd s were he ld in tru st by Tri- S t a t e Fi na nc ia l an d were th us no t pr op ert y of th e

-5

-es ta te

. The m at te r was tri ed , an d on Feb ru ary 13 , 20 13 , th e ba nk rupt cy co ur t en te red

an or de r: (1 ) de te rm in in g th e fu nd s wer e n ot pro pe rty of th e ba nk rupt cy es ta te ; (2 ) de te rm in in g t h e b a n k ru pt cy es ta te was en ti tl ed to be rei m bu rs ed bo th fo r th e le ga l fees an d ex pe ns es it in cu rred in li ti ga ti ng an d ev en tu al ly se tt li ng wit h Lov al d an d fo r th e at to rn ey fees , co st s, an d ex pe ns es it in cu rred in th e ad ve rs ary pr oc eed in g; an d (3 )

ou tl in in g th e pr oc edur e fo r St al na ke r to req ue st rei m bu rs em en t fo r th os e fees , co st s,
an d e xp en se s.

St al na ke r reque st ed $3 5,9 44 .45 fo r th e le ga l fees an d ex pe ns es th e ba nk rupt cy
es ta te in cu rred in li ti ga ti ng an d ev en tu al ly s et tl in g wit h Lov al d an d $6 1,8 86

. 9 0 fo r th e at to rn ey fees , co st s, an d ex pe ns es th e ba nk rupt cy es ta te in cu rred in th e ad ve rs ary pr oc eed in g. No pa rty in in te res t o b je c t e d to th e am ou nt s req ue st ed or to th e $3 5,9 44 .45 be in g su rch arg ed ag ai ns t th e $1 ,19 0,0 00 .00

. Howev er, se ve ral pa rti es in in te res t, in cl ud in g Ja nd rai n, et al

. , ob jecte d to t h e $6 1,8 86 .90 be in g su rch arg ed ag ai n s t th e $1 ,19 0,0 00 .00

. The m at te r was he ard , an d on May 21 , 20 13 , th e ba nk rupt cy

co ur t en te red an ord er al lo win g th e am ou nt s req ue st ed an d s ur ch arg in g bo th th e $ 35 ,94 4.4 5 a nd th e $ 61 ,88 6.9 0 a ga in st th e $ 1,1 90 ,00 0.0 0.

On May 21 , 20 13 , th e ba nk rupt cy co ur t en te red a jud gm en t in co rp or at in g th e te rm s of it s Feb ru ary 13 , 20 13 an d May 21 , 20 13 or de rs

. St al na ke r an d Cen tri s ti m el y fil eda no ti ce o f ap pe al . Jan dr ai n, et al

. , ti m el y

fil eda no ti ce o f cro ss ap pe al

.

STANDARD OF REVIEW

W e rev ie w th e b an krup tc y co ur t's fin di ng s of fact for c le ar erro r an d i ts leg al

co nc lu si on s de no vo
. Is la mov v. Ung ar ( In re Ung ar ), 63 3 F.3 d 67 5, 67 8- 79 (8 th Ci r. 20 11 ).

-6

-DISCUSS ION

St al na ke r an d Cen tri s id en ti fy fif te en is su es pr es en te d on ap pe al

. Ja nd rai n, et al

. , id en ti fy an ad di ti on al fif te en is su es pr es en te d on ap pe al an d id en ti fy th ree is su es pr es en te d on cro ss -ap pe al

. The se is su es m ay al l be bo il ed do wn to two : (1 ) whe th er th e ba nk rupt cy co ur t erred in co nc lu di ng th e $1 ,19 0,0 00 .00 was no t pro pe rty of th e ba nk rupt cy es ta te ; an d (2 ) whe th er th e ba nk rupt cy co ur t e r red in su rch arg in g S t a ln ak er's at to rn ey fees , co st s, an d ex pe ns es ag ai ns t th e $1 ,19 0,0 00 .00

. Ha v i n g
rev ie wed th e reco rd an d ha vi ng co ns id ered th e arg um en ts of th e pa rti es , we be li ev e
an y co ns id erat io n o f ei th er i ss ue is pre m at ur e.

In th ei r po st -tr ia l br ie f, St al na ke r an d Cen tri s arg ue d, in te r al ia , "[ Tr i

- S ta te Fi na nc ia l] is jud ic ia ll y es to pp ed fro m ha vi ng an y in te nt or po si ti on im pu te d up on it ot he r t h a n t h e [$ 1,1 90 ,00 0.0 0] be lo ng [s ] to [Tri -St at e Fi na nc ia l]." St al na ke r an d Cen tri s al so arg ue d a "s weep in g rel eas e" ex ecu te d in Aug us t 20 06 by al l b ut two

m em be rs of t he Om ah a Gro up –J an dr ai n an d Rad io Eng in eeri ng In du st rie s, In c.– "i nc lu de s an y c l a i med ob li ga ti on of [Tri -St at e Fi na nc ia l] to tu rn ov er th e [$ 1,1 90 ,00 0.0 0] to [th os e pa rti es .] " Fi na ll y , St al na ke r an d Cen tri s arg ue d th e Om ah a Gro up "s ho ul d be es to pp ed fro m as se rti ng own ers hi p to th e [$ 1,1 90 ,00 0.0 0]." Bo th th e ba nk rupt cy co ur t's Feb ru ary 13 , 20 13 or de r an d it s May 21 , 20 13 or de r are si le nt wit h re sp ect to th es e arg um en ts

.

W e co ul d, pe rh ap s, in te rp ret th e ba nk rup t cy co ur t's si le nc e as an im pl ic it reject io n of S t a l n a k e r an d Cen tri s's arg um en ts an d ren de r an op in io n on th at ba si s. Howev er, we b e l i e v e th e be tt er co ur se is to affo rd th e ba nk rupt cy co ur t an op po rtu ni ty to co ns id er th os e arg um en ts , if it di d no t in fa c t d o s o , an d ex pl ai n it s
reas on in g fo r acc ep ti ng or r eject in g t he m

.

-7

-CONCLUSION

Fo r th e fo reg oi ng reas on s, we rev ers e an d rem an d fo r fu rth er pr oc eed i ng s
co ns is te nt wit h t hi s o pi ni on

.

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