Court Opinion

ID: 2653107
Source: CourtListenerOpinion
Date Created: 2014-02-13 01:01:11.749247+00
Date Added: 2024-06-11T12:56:02.323926
License: Public Domain

United States Bankruptcy Appellate Panel
                         For the Eighth Circuit
                     ___________________________

                             No. 13-6052
                     ___________________________

                            In re: Bryan S. Behrens

                             lllllllllllllllllllllDebtor

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

                               Bryan S. Behrens

                     lllllllllllllllllllll Plaintiff - Appellant

                                         v.

                           United States of America

                    lllllllllllllllllllll Defendant - Appellee
                                   ____________

                Appeal from United States Bankruptcy Court
                   for the District of Nebraska - Omaha
                              ____________

                          Submitted: January 14, 2014
                           Filed: February 12, 2014
                                ____________

Before SCHERMER, NAIL and SHODEEN, Bankruptcy Judges.
                           ____________

NAIL, Bankruptcy Judge.
      Debtor Bryan S. Behrens appeals the September 10, 2013 order of the
bankruptcy court1 dismissing his adversary complaint for failure to state a claim upon
which relief could be granted. We affirm.

                                  BACKGROUND

       In July 2008, as part of a consent judgment entered against Behrens in a civil
action brought by the Securities and Exchange Commission, the United States District
Court for the District of Nebraska appointed a receiver for Behrens and a related
entity. In March 2009, on the receiver's motion, the district court stayed–with three
enumerated exceptions–"[a]ll litigation and/or proceedings naming . . . Behrens . . .
as [a] part[y] . . . until further order" of the district court. One of the enumerated
exceptions was the civil action brought by the Securities and Exchange Commission
that resulted in the consent judgment and the receiver's appointment.

       In April 2009, Behrens was indicted on federal criminal charges, and in
November 2011, the district court entered a judgment that sentenced Behrens to sixty
months in prison and ordered him to make restitution. According to Behrens, the
restitution was to benefit the same individuals who were to benefit from the civil
receivership.

       In March 2013, Behrens filed a pro se petition for relief under chapter 11 of the
bankruptcy code. After first dismissing the case, the bankruptcy court later reinstated
it and converted it to chapter 7.

     Behrens then commenced an adversary proceeding against the United States
of America. By his complaint, which he entitled "Adversary Complaint to Determine

      1
       The Honorable Thomas L. Saladino, Chief Judge, United States Bankruptcy
Court for the District of Nebraska.

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the Validity of the Claim of the Justice Department," Behrens asked the bankruptcy
court to void the government's restitution lien and order the government to return all
the funds and property it had collected. Behrens contended the government's criminal
prosecution of him and its continued efforts to collect on the restitution judgment
violated both the district court's March 2009 order staying litigation and proceedings
against him and the automatic stay provided for by 11 U.S.C. § 362. The United
States moved to dismiss, in part because it alleged Behrens was attempting to
collaterally attack the validity of the criminal judgment, as he had already
unsuccessfully attempted to do in the district court.

      The bankruptcy court dismissed Behrens's complaint under Fed.R.Civ.P. 12(b)
for his failure to state a claim upon which relief could be granted, concluding
"[Behrens's] complaint seeks to collaterally attack the validity of a pre-petition
judgment entered by the United States District Court. [Behrens] may not use a
bankruptcy adversary proceeding to collaterally attack a pre-petition judgment."
Behrens timely appealed the bankruptcy court's order, raising several issues, all of
which relate to his claim that the criminal judgment is invalid because the government
allegedly failed to obtain the district court's permission before commencing the
criminal case against him.

                            STANDARD OF REVIEW

       We review de novo the bankruptcy court's grant of a motion to dismiss for
failure to state a claim. See Brown v. Mortgage Electronic Registration Systems, Inc.,
738 F.3d 926, 934 (8th Cir. 2013).

                                   DISCUSSION

      The bankruptcy court correctly dismissed Behrens's adversary complaint. If
he has "a valid and compelling argument" challenging the validity of the criminal

                                         -3-
judgment from which the restitution debt and attendant lien arose, Behrens will need
to make that argument to the district court that entered the judgment. Mitrano v.
United States (In re Mitrano), 468 B.R. 795 (E.D. Va. 2012). Any lien held by the
United States arose from the criminal judgment, and Congress has specifically given
criminal judgments, including restitution awards and attendant liens, special
protection from discharge in bankruptcy. See, e.g., 11 U.S.C. § 523(a)(13) and
18 U.S.C. §§ 3613(e), 3663, 3663A, and 3664. Behrens did not challenge the
validity, priority, or extent of the government's lien on any grounds other than his
contention that the government's criminal action violated the district court's stay of
actions and proceedings against him. He thus failed to present any issues the
bankruptcy court could appropriately decide.

      Finally, Behrens did not specifically identify or quantify under 11 U.S.C.
§ 362(k) any damages arising from the government's alleged violation of the
automatic stay for the bankruptcy court to consider.2 Any alleged damages to which
Behrens alluded in his complaint arose only from his criminal conviction and the
alleged violation of the district court's stay.

       "A bankruptcy proceeding may not be used as a forum to mount a collateral
attack on a final criminal judgment." Terry v. Sparrow, 328 B.R. 442, 448 (M.D.N.C.
2005). That is all Behrens's adversary complaint did. Consequently, the bankruptcy
court did not err in dismissing it.

      2
       The government stated in its brief it did not receive timely notice of the filing
of Behrens's bankruptcy and is not currently attempting to collect on the restitution
judgment.

                                          -4-
                                  CONCLUSION

      For the foregoing reasons, we affirm the bankruptcy court's order dismissing
Behrens's adversary complaint for failure to state a claim upon which relief could be
granted.

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