Court Opinion

ID: 2817716
Source: CourtListenerOpinion
Date Created: 2015-07-16 15:03:33.138921+00
Date Added: 2024-06-11T11:30:44.296866
License: Public Domain

United States Bankruptcy Appellate Panel
                               For the Eighth Circuit
                     ___________________________

                             No. 15-6003
                     ___________________________

                          In re: Jessica Lynn Robb

                           lllllllllllllllllllllDebtor

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

                             Jessica Lynn Robb

                     lllllllllllllllllllllDebtor - Appellant

                                        v.

                              Janice A. Harder

                     lllllllllllllllllllllTrustee - Appellee
                                  ____________

                Appeal from United States Bankruptcy Court
            for the Western District of Missouri - Jefferson City
                              ____________

                         Submitted: June 2, 2015
                           Filed: July 16, 2015
                              ____________

Before KRESSEL, SALADINO and SHODEEN, Bankruptcy Judges.
                          ____________
KRESSEL, Bankruptcy Judge

       The debtor appeals from an order of the bankruptcy court 1 overruling her
objection to the chapter 7 trustee’s unsecured priority claim filed in her converted
chapter 13 case. We dismiss the appeal for lack of jurisdiction.

BACKGROUND
       On March 6, 2014, Jessica Lynn Robb filed a petition under chapter 7 of the
Bankruptcy Code. Janice Harder was appointed the trustee. Following the meeting
of creditors, Harder discovered a defect in the deed of trust securing the debt
associated with the debtor’s home. Once the debtor found out about the defect she
quickly made a motion to convert her case to one under chapter 13. The court
granted the motion and the case was converted on June 24, 2014.

       The model chapter 13 plan for the Western District of Missouri provides for
six different treatments of non-priority unsecured creditors, including: 100%
dividend, 0% dividend, base plan, liquidation analysis pot, 60-month disposable
income pot and 36-month disposable income pot. The plan instructs the debtor to
choose one type of treatment. On September 10, 2014, the debtor filed a liquidation
analysis pot plan 2.

1
   The Honorable Dennis R. Dow, United States Bankruptcy Judge for the Western District of
Missouri.
2
    The model plan states that the liquidation analysis pot “shall first be used to satisfy pre-
confirmation debtor’s attorney’s fees being paid from the plan payments and filed and allowed
priority claims. Any funds remaining in the LAP after the satisfaction of those claims shall be
paid to filed and allowed non-priority unsecured claims. If the LAP is less than or equal to the
sum of the pre-confirmation debtor’s attorney’s fees being paid from the plan payments and the
filed and allowed priority claims, the filed and allowed non-priority unsecured claims shall
receive zero percent (0%), unless the plan runs short of the applicable commitment period...”
                                                2
       Harder filed a proof of claim in the amount of $450 in the debtor’s chapter 13
case. She described her claim as an unsecured priority claim for “time spent by
trustee in examining documents regarding avoidance of lien, preparing objection to
homestead exemption, and filing objection to conversion to chapter 13 case, and
tracking debtors’ [sic] conversion to chapter 13.” The debtor objected to the claim.
She argued that trustee compensation is subject to 11 U.S.C. § 326 and because
Harder did not disburse any moneys prior to conversion she was not entitled to
payment under the Bankruptcy Code3.

       Following a hearing, the bankruptcy court overruled the objection and allowed
the claim holding that § 326(a) is not the only method of compensation for a trustee.
According to the bankruptcy court, allowing the claim despite that fact that no
money was distributed encourages trustees to be diligent in looking for assets and
also discourages debtors from concealing assets. The debtor appeals.

JURISDICTION
       Though neither party has raised the issue, we have an independent duty to
examine our own jurisdiction. Nebraska v. Strong (In re Strong), 305 B.R. 292, 295
(B.A.P. 8th Cir. 2004) (citing Weihs v. Kenkel (In re Weihs), 229 B.R. 187, 189
(B.A.P. 8th Cir. 1999)).

3
    Section 326(a) provides, “[i]n a case under chapter 7 or 11, the court may allow reasonable
compensation under section 330 of this title of the trustee for the trustee’s services, payable after
the trustee renders such service, not to exceed 25 percent on the first $5,000 or less, 10 percent
on any amount in excess of $5,000 but not in excess of $50,000, 5 percent on any amount in
excess of $50,000 but not in excess of $1,000,000, and reasonable compensation not to exceed 3
percent of such moneys in excess of $1,000,000, upon all moneys disbursed or turned over in the
case by the trustee to parties in interest, excluding the debtor, but including holders of secured
claims.”
                                                  3
      Appellate standing in a bankruptcy appeal is narrower than Article III standing
or ordinary prudential standing. Sears v. Badami (In re AFY), 734 F.3d 810, 819-20
(8th Cir. 2013). The appellant has the burden to make an independent showing that
he or she is aggrieved by the challenged order. See LaBarge v. Brenda (In re
Merrifield), 214 B.R. 362, 365 (B.A.P. 8th Cir. 1997). The person aggrieved
doctrine limits standing “‘to persons with a financial stake in the bankruptcy court’s
order,’ meaning they were ‘directly and adversely affected pecuniarily by the
order.’” In re AFY at 819 (quoting Williams v. Marlar (In re Marlar), 252 B.R. 743,
748 (B.A.P. 8th Cir. 2000)). A party is a person aggrieved if an order “diminishes
their property, increases their burdens, or impairs their rights.” Williams v. Marlar
(In re Marlar), 267 F.3d 749 (8th Cir. 2001). The person aggrieved standard serves
the acute need to limit collateral appeals in the bankruptcy context. Seaver v. New
Buffalo Auto Sales (In re Hecker), 496 B.R. 541 (B.A.P. 8th Cir. 2013).

      “Typically, a debtor has no standing to object to claims or orders relating to
them because the debtor does not have a pecuniary interest in the distribution of the
assets of the estate. This is because an objection to a proposed distribution only
affects how much each creditor will receive and does not affect the debtor’s rights.”
Kieffer v. Riske (In re Kieffer), 226 B.R. 204, 208 (B.A.P. 8th Cir. 1998) (internal
citations omitted). However, there is an exception to this general rule - a debtor
may have standing if there is a surplus of assets that may be returned to the debtor
after distribution. Id. Most of the time this issue arises in the context of a chapter 7
case, however, the principle can be applied equally in a chapter 13 case where the
debtor is proposing to pay creditors less than the full amount of their claims.

      In this case, the debtor’s May 23, 2014 plan was a liquidation analysis pot
plan. It requires her to pay the trustee $590.00 per month for the duration of the
                                           4
plan. The trustee makes prescribed payments for attorney’s fees, other priority
creditors, a student loan creditor and a secured creditor. What is left goes to the non-
priority unsecured creditors pro rata. Under this particular treatment of non-priority
unsecured creditors, the amount of money distributed to creditors may be affected
by the payment of other claims. See e.g., In re Donahue, 520 B.R. 782 (Bankr. W.D.
Mo. 2014). Nevertheless, nothing on the face of the debtor’s plan suggests that the
creditors would be receiving a 100% distribution. While payment of Harder’s claim
will diminish the distribution to other creditors, it has no effect on the debtor’s
obligations under the plan. Regardless of the allowance of Harder’s claim the
debtor’s obligations remain the same: $590.00 per month.

      The debtor has failed to satisfy her burden as she has not pled or shown any
facts establishing that the bankruptcy court’s order diminished her property,
increased her burdens, or impaired her rights. If the debtor had made an independent
showing that all creditors would be paid in full and the length of the plan could have
been shortened, then it is possible that she would have been an aggrieved party.

      The requirement of standing is an indispensable part of the debtor’s objection.
Because the debtor was not aggrieved by the bankruptcy court’s order, we dismiss
her appeal for lack of jurisdiction.
                         ____________________________

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