United States Bankruptcy Appellate Panel

For the Eighth Circuit

___________________________

No. 14-6018

___________________________

In re: Tri-State Financial, LLC, doing business as North Country Ethanol

lllllllllllllllllllllDebtor

------------------------------

Thomas D. Stalnaker, Trustee

lllllllllllllllllllll Plaintiff - Appellee

v.

George Allison; Frank Cernik; Phyllis Cernik; Chris Daniel; Amy Daniel;

Distefano Family LTD Partnership

lllllllllllllllllllll Defendants - Appellants

Mark E. Ehrhart; Robert G. Griffin; John Hoich; Denise Hoich

lllllllllllllllllllll Defendants

Timothy Jackes; James G. Jandrain;

llllllllllllllllllllll Defendants - Appellants

American Interstate Bank

llllllllllllllllllllll Defendant

George Kramer; Bernie Marquardt
lllllllllllllllllllll Defendants - Appellants

Radio Engineering Industries, Inc.; Joseph Vacanti, Trustee of The Joseph and

Cynthia Vacanti Trust

lllllllllllllllllllll Defendants

Centris Federal Credit Union

lllllllllllllllllllll Defendant - Appellee

------------------------------

Centris Federal Credit Union

lllllllllllllllllllllCounterclaim and Cross-Claim Plaintiff - Appellee

v.

Thomas D. Stalnaker, Trustee

lllllllllllllllllllllCounterclaim Defendant - Appellee

George Allison; Frank Cernik; Phyllis Cernik; Chris Daniel; Amy Daniel;

Distefano Family LTD Partnership

lllllllllllllllllllllCross-Claim Defendants - Appellants

Mark E. Ehrhart; Robert G. Griffin; John Hoich; Denise Hoich

lllllllllllllllllllllCross-Claim Defendants

Timothy Jackes; James G. Jandrain; George Kramer; Bernie Marquardt

lllllllllllllllllllllCross-Claim Defendants - Appellants

Radio Engineering Industries, Inc.; Joseph Vacanti, Trustee of The Joseph and

Cynthia Vacanti Trust

lllllllllllllllllllllCross-Claim Defendants
___________________________

No. 14-6019

___________________________

In re: Tri-State Financial, LLC, doing business as North Country Ethanol

lllllllllllllllllllllDebtor

------------------------------

Thomas D. Stalnaker, Trustee

lllllllllllllllllllll Plaintiff

v.

George Allison, Jr.; Frank Cernik; Phyllis Cernik; Chris Daniel; Amy Daniel;

Distefano Family LTD Partnership; Mark E. Ehrhart; Robert G. Griffin; John

Hoich; Denise Hoich; Timothy Jackes; James G. Jandrain; American Interstate

Bank; George Kramer; Bernie Marquardt

lllllllllllllllllllll Defendants

Radio Engineering Industries, Inc.

lllllllllllllllllllll Defendant - Appellant

Joseph Vacanti, Trustee of The Joseph and Cynthia Vacanti Trust

lllllllllllllllllllll Defendants

Centris Federal Credit Union

lllllllllllllllllllll Defendant - Appellee

------------------------------

Centris Federal Credit Union
lllllllllllllllllllllCounterclaim and Cross-Claim Plaintiff - Appellee

v.

Thomas D. Stalnaker, Trustee

lllllllllllllllllllllCounter-Claim Defendant

George Allison; Frank Cernik; Phyllis Cernik; Chris Daniel; Amy Daniel;

Distefano Family LTD Partnership; Mark E. Ehrhart; Robert G. Griffin; John

Hoich; Denise Hoich; Timothy Jackes; James G. Jandrain; George Kramer; Bernie

Marquardt

lllllllllllllllllllllCross-Claim Defendants

Radio Engineering Industries, Inc.

lllllllllllllllllllllCross-Claim Defendant - Appellant

Joseph Vacanti, Trustee of The Joseph and Cynthia Vacanti Trust

lllllllllllllllllllllCross-Claim Defendant

___________________________

No. 14-6020

___________________________

In re: Tri-State Financial, LLC, doing business as North Country Ethanol

lllllllllllllllllllllDebtor

------------------------------

Thomas D. Stalnaker, Trustee

lllllllllllllllllllll Plaintiff

v.

George Allison; Frank Cernik; Phyllis Cernik; Chris Daniel; Amy Daniel;
Distefano Family LTD Partnership; Mark E. Ehrhart; Robert G. Griffin

lllllllllllllllllllll Defendants

John Hoich; Denise Hoich

lllllllllllllllllllll Defendants - Appellants

Timothy Jackes; James G. Jandrain; American Interstate Bank; George Kramer;

Bernie Marquardt; Radio Engineering Industries, Inc.; Joseph Vacanti, Trustee of

The Joseph and Cynthia Vacanti Trust

lllllllllllllllllllll Defendants

Centris Federal Credit Union

lllllllllllllllllllll Defendant - Appellee

-----------------------------

Centris Federal Credit Union

lllllllllllllllllllllCounterclaim and Cross-Claim Plaintiff - Appellee

vs.

Thomas D. Stalnaker, Trustee

lllllllllllllllllllllCounterclaim Defendant

George Allison; Frank Cernik; Phyllis Cernik; Chris Daniel; Amy Daniel;

Distefano Family LTD Partnership; Mark E. Ehrhart; Robert G. Griffin

lllllllllllllllllllllCross-Claim Defendants

John Hoich; Denise Hoich

lllllllllllllllllllllCross-Claim Defendants - Appellants

Timothy Jackes; James G. Jandrain; George Kramer; Bernie Marquardt; Radio
Engineering Industries, Inc.; Joseph Vacanti, Trustee of The Joseph and Cynthia

Vacanti Trust

lllllllllllllllllllllCross-Claim Defendants

___________________________

No. 14-6025

___________________________

In re: Tri-State Financial, LLC, doing business as North Country Ethanol

lllllllllllllllllllllDebtor

------------------------------

Thomas D. Stalnaker, Trustee

lllllllllllllllllllll Plaintiff - Appellee

v.

George Allison; Frank Cernik; Phyllis Cernik; Chris Daniel; Amy Daniel;

Distefano Family LTD Partnership; Mark E. Ehrhart; Robert G. Griffin; John

Hoich; Denise Hoich; Timothy Jackes; James G. Jandrain

lllllllllllllllllllll Defendants

American Interstate Bank

lllllllllllllllllllll Defendant - Appellant

George Kramer; Bernie Marquardt; Radio Engineering Industries, Inc.; Joseph

Vacanti, Trustee of The Joseph and Cynthia Vacanti Trust

lllllllllllllllllllll Defendants

Centris Federal Credit Union

lllllllllllllllllllll Defendant - Appellee
------------------------------

Centris Federal Credit Union

lllllllllllllllllllllCounterclaim and Cross-Claim Plaintiff

v.

Thomas D. Stalnaker, Trustee

lllllllllllllllllllllCounterclaim Defendant

George Allison; Frank Cernik; Phyllis Cernik; Chris Daniel; Amy Daniel;

Distefano Family LTD Partnership; Mark E. Ehrhart; Robert G. Griffin; John

Hoich; Denise Hoich; Timothy Jackes; James G. Jandrain; George Kramer; Bernie

Marquardt; Radio Engineering Industries, Inc.; Joseph Vacanti, Trustee of The

Joseph and Cynthia Vacanti Trust

lllllllllllllllllllllCross-Claim Defendants

____________

 Appeal from United States Bankruptcy Court 

for the District of Nebraska - Omaha

____________

 Submitted: August 27, 2014

 Filed: October 23, 2014

____________

Before KRESSEL, SCHERMER, and NAIL, Bankruptcy Judges.

____________

NAIL, Bankruptcy Judge.

James G. Jandrain, Distefano Family Ltd. Partnership, George Allison, Jr.,

Frank and Phyllis Cernik, Chris and Amy Daniel, Timothy Jackes, George Kramer,

and Bernie Marquardt (collectively, "Jandrain, et al.") appeal the May 22, 2014

judgment of the bankruptcy court determining certain funds were property of the
bankruptcy estate, awarding Trustee Thomas D. Stalnaker certain fees and expenses,

and surcharging those fees and expenses against the funds the bankruptcy court

determined were property of the bankruptcy estate. Radio Engineering Industries,

Inc. ("REI"), John Hoich and Denise Hoich, and American Interstate Bancorporation

("American Interstate") each separately appeal the same judgment. We reverse and

remand for further proceedings consistent with this opinion.

BACKGROUND

In June and July 2003, a group of investors referred to as "the Omaha Group"

transferred $2,000,000.00 to Tri-State Financial, LLC. Over the following year, TriState Financial transferred $793,654.42 ofthose funds to Tri-State EthanolCompany,

LLC, which was in chapter 11 bankruptcy in the District of South Dakota, and

$1,190,000.00 of those funds to one of Tri-State Ethanol's vendors.

In July 2004, Tri-State Ethanol's case was converted to chapter 7, and John S.

Lovald was appointed chapter 7 trustee. Tri-State Financial filed a request for

payment of an administrative expense and a proof of claim seeking recovery of both

the $793,654.42 and the $1,190,000.00. In July 2006,Lovald paid Tri-State Financial

the $793,654.42. Tri-State Financial distributed the entire sum to the Omaha Group.

In November 2008, Tri-State Financial filed a petition for relief under

chapter 11 ofthe bankruptcy code. In January 2009, Stalnaker was appointed chapter

11 trustee. Sometime thereafter, Lovald paid Stalnaker the $1,190,000.00.

In September 2010, Stalnaker filed an adversary proceeding to determine

ownership of the $1,190,000.00. Stalnaker claimed the funds were property of the

bankruptcy estate. Centris Federal Credit Union ("Centris") agreed the funds were

property of the bankruptcy estate, but it claimed the funds were subject to its blanket

security interest in Tri-State Financial's assets. Jandrain, et al. claimed the funds were

held in trust by Tri-State Financial and were thus not property of the estate. The

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matter was tried, and on February 13, 2013, the bankruptcy court entered an order: 

(1) determining the funds were not property of the bankruptcy estate; (2) determining

the bankruptcy estate was entitled to be reimbursed both for the legal fees and

expenses it incurred in litigating and eventually settling with Lovald and for the

attorney fees, costs, and expenses it incurred in the adversary proceeding; and (3)

outlining the procedure for Stalnaker to request reimbursement for those fees, costs,

and expenses.

Stalnaker requested $35,944.45 for the legal fees and expensesthe bankruptcy

estate incurred in litigating and eventually settling with Lovald and $61,886.90 for

the attorney fees, costs, and expenses the bankruptcy estate incurred in the adversary

proceeding. No party in interest objected to the amounts requested or to the

$35,944.45 being surcharged against the $1,190,000.00. However, several partiesin

interest, including Jandrain, et al., objected to the $61,886.90 being surcharged

against the $1,190,000.00. The matter was heard, and on May 21, 2013, the

bankruptcy court entered an order allowing the amounts requested and surcharging

both amounts against the $1,190,000.00.

On that same date, the bankruptcy court entered a judgment incorporating the

terms of its February 13, 2013 and May 21, 2013 orders. Stalnaker and Centris

1

timely filed a notice of appeal. Jandrain, et al. timely filed a notice of cross-appeal.

On appeal, the parties identified a plethora of issues they believed were

presented by the appeal and the cross-appeal. We boiled those issues down to two:

(1) whether the bankruptcy court erred in concluding the $1,190,000.00 was not

property of the bankruptcy estate; and (2) whether the bankruptcy court erred in

surcharging Stalnaker's attorney fees, costs, and expenses against the $1,190,000.00. 

According to the judgment, the amounts awarded were $35,944.45 and

1

$61,286.90.

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After reviewing the record and considering the parties' arguments, we determined any

consideration of either issue would have been premature.

In their post-trial brief, Stalnaker and Centris argued, inter

alia, "[Tri-State Financial] is judicially estopped from

having any intent or position imputed upon it other than the

[$1,190,000.00] belong[s] to [Tri-State Financial]." 

Stalnaker and Centris also argued a "sweeping release"

executed in August 2006 by all but two members of the

Omaha Group–Jandrain and Radio Engineering Industries,

Inc.–"includes any claimed obligation of [Tri-State

Financial] to turn over the [$1,190,000.00] to [those

parties.]" Finally, Stalnaker and Centris argued the Omaha

Group "should be estopped fromasserting ownership to the

[$1,190,000.00]." Both the bankruptcy court's February

13, 2013 order and its May 21, 2013 order are silent with

respect to these arguments. 

We could, perhaps, interpret the bankruptcy court'ssilence

as an implicit rejection of Stalnaker and Centris's

arguments and render an opinion on that basis. However,

we believe the better course is to afford the bankruptcy

court an opportunity to consider those arguments, if it did

not in fact do so, and explain its reasoning for accepting or

rejecting them.

Stalnaker v. Allison (In re Tri-State Financial, LLC), 512 B.R. 209, 211-12 (B.A.P.

8th Cir. 2014) ("Stalnaker I"). We therefore reversed and remanded the matter for

further proceedings. Id. at 212.

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On remand, the bankruptcy court reconsidered its earlier ruling, and on May 2

22, 2014, it entered an order determining the $1,190,000.00 was in fact property of

the bankruptcy estate and was subject to Centris's blanket security interest. The

bankruptcy court's order specifically left unaffected its May 21, 2013 order awarding

Stalnaker $35,944.45 for the legal fees and expenses the bankruptcy estate incurred

in litigating and eventually settling with Lovald and $61,886.90 for the attorney fees,

costs, and expenses it incurred in the adversary proceeding and surcharging both

amounts against the $1,190,000.00.

On that same date, the bankruptcy court entered a judgment incorporating the

terms of its May 22, 2014 and May 21, 2013 orders. Jandrain, et al., REI, the

3

Hoiches, and American Interstate each timely filed a notice of appeal.

STANDARD OF REVIEW

We review the bankruptcy court's findings of fact for clear error and its legal

conclusions de novo. Islamov v. Ungar(In re Ungar), 633 F.3d 675, 678-79 (8th Cir.

2011).

DISCUSSION

The parties again identify a plethora of issuesthey believe are presented by the

several appeals. Those issues may be condensed and restated asfollows: (1) whether

the bankruptcy court exceeded its mandate on remand; (2) whether the bankruptcy

court disregarded the law of the case; (3) whether the bankruptcy court failed to

In January 2014, while Stalnaker I was still pending, the bankruptcy judge 2

originally assigned to this case retired. In February 2014, the case was assigned to

a different judge.

According to the judgment, the amounts awarded were $35,944.45 and

3

$61,286.90.

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comply with Fed.R.Civ.P. 63 and Fed.R.Bankr.P. 9028; (4) whether the bankruptcy

court erred in concluding the $1,190,000.00 was property of the bankruptcy estate;

and (5) whether the bankruptcy court erred in surcharging Stalnaker's attorney fees,

costs, and expenses against the $1,190,000.00.

With respect to the first issue, Jandrain, et al. argue in reconsidering its earlier

ruling that the $1,190,000.00 was not property of the estate, the bankruptcy court

failed to follow our mandate on remand. We disagree.

The question of whether the bankruptcy court exceeded our mandate is a

question of law and isthussubject to de novo review. Gourley v. Usery (In re Usery),

242 B.R. 450, 456 (B.A.P. 8th Cir. 1999) (citation therein), aff'd 242 F.3d 378 (8th

Cir. 2000). 

When a case has been decided . . . on appeal and remanded,

every question decided by the appellate court, whether

expressly or by necessary implication, isfinally settled and

determined, thus creating a mandate for the lower court. 

The mandate of the appellate court is completely

controlling as to all matters within its compass, but on

remand the trial court is free to pass upon any issue that

was not expressly or impliedly disposed of on appeal.

Id. at 457 (citations omitted) (first emphasis in original; remaining emphasis added).

In Stalnaker I, we did not address–much less expressly or impliedly dispose

of–either of the issuesframed by the partiesto that appeal. To the contrary, we stated

unambiguously "any consideration of either issue is premature." Stalnaker, 512 B.R.

at 211. Consequently, on remand, the bankruptcy court was free to pass upon those

issues.

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With respect to the second issue, Jandrain, et al. and REI argue in

reconsidering its earlier ruling that the $1,190,000.00 was not property of the estate, 

the bankruptcy court disregarded the law of the case. Again, we disagree.

Under the law-of-the-case doctrine, "when a court decides upon a rule of law,

that decision should continue to govern the same issues in subsequent stages in the

same case." Alexander v. Jensen-Carter, 711 F.3d 905, 909 (8th Cir. 2013) (citations 

therein). The doctrine "applies to both appellate decisions and [trial] court decisions

that have not been appealed." Id. (citation therein).

It is this latter point that precludes application of the law-of-the-case doctrine

in this case. The bankruptcy court's earlier decision was appealed. On remand, "[a]

lower court is not bound by its own earlier rulings unless explicitly or implicitly

adopted by the appellate court." Usery, 242 B.R. at 457 (citations therein). In

remanding the matter, we did not explicitly or implicitly adopt any of the bankruptcy

court's rulings. Consequently, the bankruptcy court was not bound by its earlier

rulings. And this is so, even though the case was transferred to a different judge

around the time of our remand. Id. at n.7 (citation therein).

With respect to the third issue, American Interstate argues following the

retirement of the bankruptcy judge originally assigned to this case, the bankruptcy

court did not comply with Fed.R.Civ.P. 63 and Fed.R.Bankr.P. 9028. We agree.

Pursuant to Rule 63, 

If a judge conducting a hearing or trial is unable to

proceed, any other judge may proceed upon certifying

familiarity with the record and determining that the case

may be completed without prejudice to the parties. In a

hearing or a nonjury trial, the successor judge must, at a

party's request, recall any witness whose testimony is

material and disputed and who is available to testify again

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without undue burden. The successor judge may also

recall any other witness.

Fed.R.Civ.P. 63.

4

In this case, the bankruptcy court did not certify familiarity with the record and

determine the case could be completed without prejudice to the parties before

entering its judgment. The bankruptcy court's familiarity with the record is

abundantly demonstrated by its detailed recitation of the facts in its decision. 

However, without the requisite certification, there is no suggestion that the parties

had any reason to believe a decision was imminent and the time within which they

might exercise their right under Rule 63 and Rule 9028 to ask the bankruptcy court

to recall witnesses whose testimony was material and disputed was passing. Under 5

the circumstances, we will remand the matter to allow the bankruptcy court to comply

with Rule 63 and Rule 9028.

In reaching this conclusion, we are mindful of the opinion of the Eighth Circuit

Court of Appeals in Higginbotham v. The Corner Stone Bank (In re Higginbotham),

917 F.2d 1130 (8th Cir. 1990), in which the court of appeals recognized the

possibility that a party could waive its rights under Rule 9028. However, in that case,

the court of appeals was considering an earlier version of Rule 9028 that did not

require the bankruptcy court to certify familiarity with the record or afford the parties

an opportunity to ask the bankruptcy court to recall any witnesses. That earlier

version, as quoted by the court of appeals, provided:

Rule 63 applies in bankruptcy cases. Fed.R.Bankr.P. 9028.

4

No other party to this appeal responded to American Interstate's argument

5

regarding Rule 63 and Rule 9028. In any event, the record in this case is voluminous,

and the parties could reasonably have expected it would take some time for the

bankruptcy court to familiarize itself with the record.

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If by reason of death, sickness or other disability, a judge

before whom an involuntary petition or an adversary

proceeding has been tried or a hearing conducted is unable

to perform the duties to be performed by the court under

these rules after a verdict is returned, or findings of fact

and conclusions of law or a memorandum isfiled, then any

other judge regularly sitting in or assigned to the court in

which the trial or hearing was conducted may perform

those duties; but if the other judge is satisfied that he

cannot perform those duties because he did not preside or

for any other reason, he may in his discretion grant a new

trial.

Id. at 1131-32 (without emphasis in original). 

Moreover, in that case, the party complaining about the bankruptcy court's

failure to comply with Rule 9028 had sought affirmative relief from the successor

judge, thereby demonstrating, at least implicitly, "a willingness to accept that judge's

authority to decide the case." Id. at 1133. In this case, Centris filed a motion asking

the bankruptcy court to accept briefs summarizing the parties' respective positions

regarding the issues of estoppel and release discussed in Stalnaker I. Thus, Centris

might be said to have implicitly demonstrated a willingness to accept the bankruptcy

court's authority to decide the case on the record it inherited. However, the same

cannot be said about American Interstate or any of the other parties.

We are also mindful of the opinion of the Eighth Circuit Court of Appeals in

Littleton v. Pilot Travel Centers, LLC, 568 F.3d 641 (8th Cir. 2009), in which the

court of appeals stated a party who does not make a Rule 63 request to recall

witnesses "has no right to sit back and await decision of the case before objecting to

the procedure." Id. at 648 (quoting Higginbotham, 917 F.2d at 1133). However, we

cannot tell from that opinion whether the successor judge in that case made the

requisite certification.

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In any event, in this case, American Interstate cannot be said to have sat back

and awaited a decision before objecting to the procedure, because, as noted above,

there is no suggestion the parties had any reason to believe a decision was imminent. 

There is likewise no suggestion there was any "procedure" to which American

Interstate might have objected. The bankruptcy court simply entered its judgment,

at which point it was too late for American Interstate–or any other party–to object.

In light of our decision to remand this matter, we do not reach the remaining

issues. We are not expressly or impliedly disposing of those remaining issues, and

on remand the bankruptcy court is again free to pass upon them. Likewise, we are not

explicitly or implicitly adopting any of the bankruptcy court'srulings regarding those

remaining issues, and on remand the bankruptcy court is still not bound by its earlier

rulings regarding them.

CONCLUSION

For the foregoing reasons, we again reverse and remand for further proceedings

consistent with this opinion.

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