Court Opinion

ID: 624994
Source: CourtListenerOpinion
Date Created: 2012-03-09 19:25:30+00
Date Added: 2024-06-11T09:14:18.850052
License: Public Domain

United States Bankruptcy Appellate Panel
                        FOR THE EIGHTH CIRCUIT
                             _______________

                                 No. 11-6077
                              ________________

In re:                              *
                                    *
Gregory Jay Boyher and Dorothy May *
Boyher,                             *
                                    *
       Debtors.                     *
                                    *
Gregory Jay Boyher                  *
                                    * Appeal from the United States
       Debtor – Appellant           * Bankruptcy Court for the Eastern
                                    * District of Missouri
             v.                     *
                                    *
Stuart J. Radloff                   *
                                    *
       Trustee – Appellee           *
                                  _____

                           Submitted: March 5, 2012
                             Filed: March 9, 2012
                                    _____

Before FEDERMAN, VENTERS, AND NAIL, Bankruptcy Judges.
                            _____

VENTERS, Bankruptcy Judge.

      Debtor Gregory Boyher appeals the order of the bankruptcy court approving
the Chapter 7 Trustee’s “Amended Final Report, Proposed Distribution, and Motion
for Abandonment,” over Mr. Boyher’s objection. For the reasons stated below, we
affirm the bankruptcy court’s order.1

                                BACKGROUND
      This matter arises out of a Chapter 7 bankruptcy case originally filed on
February 18, 1999, and closed, without controversy, on August 22, 2000.

        On May 31, 2007, the Debtors filed a motion to reopen the case to obtain the
administration of the Debtors’ potential interest in the proceeds of a settlement of a
class action lawsuit entitled David C. McLean, et al. v. First Horizon Home Loan
Corporation, Case No. 00-CV-228530, then pending in the Circuit Court of Jackson
County, Missouri. The Debtors filed an amended Schedule B to disclose their interest
in the settlement. The bankruptcy court granted the Debtors’ motion and Stuart
Radloff was reappointed as the Chapter 7 trustee (“Trustee”) of their bankruptcy
estate.

       Several months later, the Trustee filed a “Motion to Approve Compromise,”
stating, inter alia, that the Debtors expected to receive approximately $22,870.13
based on their claim in the class action lawsuit; that the Trustee and Debtors
disagreed over the estate’s interest in the settlement proceeds; that the parties agreed
to split the settlement proceeds, regardless of the ultimate recovery; and that the
Debtors waived their right to make a claim to the amounts paid into the bankruptcy
estate by exemption or otherwise, except as provided for in the agreement.

       On October 20, 2008, the bankruptcy court granted the Trustee’s motion.
Paragraphs 5 and 8 of the order are of particular relevance to this appeal. Paragraph
5 states: “Debtors received a settlement check in payment of the Claim in the

      1
        The Honorable Barry S. Schermer, Chief Bankruptcy Judge for the Eastern
District of Missouri.
                                           2
approximate amount of $22,870.13, (‘the Settlement Proceeds’) and turned over that
check to Trustee.”

      Paragraph 8 states:
      Debtors and Trustee reached a compromise settlement regarding the
      disposition of the Settlement Proceeds, subject to approval of this Court,
      on the following terms:

             A. Trustee shall retain one-half (½) of the Settlement Proceeds
             and will distribute the other one-half (½) to Debtors; and,

             B. Debtors, by accepting said share of the Settlement Proceeds,
             waive all claims to any part of Trustee’s portion of the Settlement
             Proceeds, including without limitation, any claim of exemption in
             the Settlement Proceeds;

       On December 12, 2008, the Court issued (on the Trustee’s request) an
Amended Order providing that the Trustee would distribute the Debtors’ share of the
Settlement Proceeds only after a final unappealable order was entered in the class
action lawsuit and it was determined that the Settlement Proceeds were not subject
to recoupment by First Horizon. The Amended Order incorporated all of the other
findings of fact and conclusions of law in the October 20, 2008 order and specifically
reiterated that the Debtors, “upon accepting said share of the Settlement Proceeds, are
deemed to have waived all claims to any part of Trustee’s portion of the Settlement
Proceeds, including without limitation, any claim of exemption in the Settlement
Proceeds. . . .”

       On October 21, 2009, Trustee filed a Final Report and Account, indicating that
he received $25,165.29 – not $22,870.13 as had been anticipated – from the
settlement with First Horizon, and from that amount he paid $2,200 to the IRS and
$800 to the Missouri Department of Revenue in “estimated” tax payments, and
$11,091.37, representing one-half of the remainder of the Settlement Proceeds, to the

                                          3
Debtors.2 The Final Report was approved, without objection, on December 7, 2009,
and the case was closed (again) on September 8, 2010.

      On May 4, 2011, the Trustee filed a motion to reopen the case to administer
$1,972.35 that the IRS had refunded from the estimated tax payments.3 And on
August 28, 2011, the Trustee filed an Amended Final Report proposing to distribute
the $1,972.35 to creditors that had timely filed claims in the Debtors’ bankruptcy
case. The Amended Final Report was approved – without objection from the Debtor
– on September 23, 2011.4

      On October 12, 2011, Mr. Boyher filed an objection5 to the Amended Final
Report arguing that the money refunded by the IRS should go back to the IRS in
payment of Mr. Boyher’s 2008 income tax liability. The bankruptcy court held a
hearing on Mr. Boyher’s objection, after which it entered a written order overruling
the objection and approving the Trustee’s Amended Final Report. The order stated
that Mr. Boyher’s objection was overruled “on the merits,” as well as being in

      2
        After deducting the estimated tax payments, one half of the remainder
would actually be $11,082.65 ($25,165.29 - $3,000 = $22,165.29; $22,165.29 / 2
= $11,082.65). This slight discrepancy ($8.72) is not at issue in this appeal and
has no effect on our analysis.
      3
        No clear explanation has been given for the refund, although it appears
from the pleadings that the IRS determined that the Debtor has greater liability
than the bankruptcy estate for the settlement proceeds.
      4
        The Debtors’ failure to timely object to the Amended Final Report despite
having notice (as evidenced by an attached Certificate of Service) is grounds alone
to affirm the bankruptcy court. In the interest of clarity and finality, however, we
affirm on the merits as well.
      5
        The pleading filed by the Debtor was actually titled “Motion for
Clarification,” but the bankruptcy court generously treated it as an objection to the
Trustee’s Amended Final Report.
                                          4
contravention of the bankruptcy court’s December 12, 2008 order which stated that
“the Debtors, upon accepting said share of the Settlement Proceeds are deemed to
have waived all claims to any part of Trustee's portion of the Settlement Proceeds. .
. .”
                            STANDARD OF REVIEW
       The bankruptcy court overruled Mr. Boyher’s objection to the Trustee’s
Amended Final Report based largely on the language of the court’s December 12,
2008 order. A bankruptcy court’s interpretation of its own order is reviewed under
an abuse of discretion standard.6 An abuse of discretion will be found only if the
court's judgment was based on clearly erroneous factual findings or on erroneous
legal conclusions.7 In its application, the abuse of discretion standard is nearly
indistinguishable from the clearly erroneous standard.8 “A finding is ‘clearly
erroneous’ when although there is evidence to support it, the reviewing court on the
entire evidence is left with a definite and firm conviction that a mistake has been
committed.”9

       For the reasons stated below, we find that the bankruptcy court did not abuse
its discretion in interpreting its December 12, 2008 order, to overrule the Debtor’s
objection and to approve the Trustee’s Amended Final Report.

      6
       See JCB, Inc. v. Union Planters Bank, NA, 539 F.3d 862, 870 (8th Cir.
2008) (citing Gen. Elec. Capital Corp. v. Dial Bus. Forms, Inc. (In re Dial Bus.
Forms, Inc.), 341 F.3d 738, 744 (8th Cir. 2003)).
      7
          See In re Bowman, 253 B.R. 233, 237 (B.A.P. 8th Cir. 2000).
      8
        See In re Crossroads Ford, Inc., 449 B.R. 366, 367 (B.A.P. 8th Cir. 2011)
(citing Gourley v. Usery (In re Usery), 242 B.R. 450, 457 (8th Cir. BAP 1999)).
      9
       Anderson v. Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 1511, 84
L.Ed.2d 518 (1985) (quoting United States v. United States Gypsum Co., 333 U.S.
364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948)).
                                          5
                                    DISCUSSION
      As noted above, the bankruptcy court approved the Amended Final Report
based on the statement in the December 12, 2008 order that “upon accepting said
share of the Settlement Proceeds [Debtors] are deemed to have waived all claims to
any part of Trustee's portion of the Settlement Proceeds.” Implied in this ruling is a
finding that the money the Trustee used to make the estimated tax payments to the
IRS came from the Trustee’s portion of the Settlement Proceeds. That finding was
neither clearly erroneous nor based on an erroneous legal conclusion.

        Although the motion to compromise controversy and the December 12, 2008
Amended Order (incorporating the consistent terms of the October 20, 2008 order)
granting the motion are silent on the issue of taxes, the Debtors did not object to the
Trustee’s October 21, 2009 Final Report, which unambiguously noted that the $2,200
distribution to the IRS for taxes on the Settlement Proceeds was “estimated.” If the
Debtors wanted to reserve their right to claim all or a portion of a potential refund of
excess taxes, it was incumbent on them to negotiate that at the time they compromised
their dispute with the Trustee or to object to the 2009 Final Report; they did neither.
The Debtors’ acquiescence to the 2009 Final Report is tantamount to an
acknowledgment that the funds used to pay the estimated federal taxes constituted the
“Trustee’s portion of the Settlement Proceeds.” Consequently, the Debtors waived
their rights in those funds under the plain language of the Court’s December 12, 2008
order.

       We recognize that the Trustee’s motion to compromise controversy and the
October 20, 2008 order contain language suggesting that the parties intended to
evenly split the Settlement Proceeds, regardless of the amount eventually received in
the settlement, and that the parties likely expected that the taxes on the Settlement
Proceeds would be extinguished by the Trustee’s estimated tax payments. But those
facts do not mitigate or supercede the clear language in the bankruptcy court’s
December 12, 2008 order that the Debtors waived any claim to receive – or to direct

                                           6
the distribution of – any portion of the Settlement Proceeds beyond the amount they
received pursuant to their settlement with the Trustee.

      Therefore, for the reasons stated above, we affirm the order of the bankruptcy
court overruling Mr. Boyher’s objection to the Trustee’s Amended Final Report,
Proposed Distribution, and Motion for Abandonment.

                                         7