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Judges differ on allowance of trustee's appeal

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Judges on the 7th Circuit Court of Appeals, including Northern District Judge Joseph Van Bokkelen - who was sitting in designation - disagreed whether a bankruptcy trustee's appeal should be dismissed for lack of appellate jurisdiction because he didn't file a petition for permission to appeal.

Judge Diane Sykes dissented from Judges Richard Posner and Van Bokkelen in their decision in In Re: Joel Anthony Turner,  No. 08-2163, that the bankruptcy trustee's failure to file the petition doesn't prevent the Circuit Court from reaching a decision on the merits of the case. The two reversed the bankruptcy court's decision to allow Chapter 13 filer Joel Anthony Turner to continue to deduct more than $1,500 in monthly mortgage payments when he stated he planned to abandon the house to the mortgagee. The trustee in bankruptcy, representing the unsecured creditors, objected to the plan, and the Bankruptcy judge rejected the objection. The Bankruptcy judge certified his order for a direct appeal to the 7th Circuit.

That direct appeal is what caused the judges to dissent. The trustee didn't follow the specified temporary procedures in place at the time of the appeal under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 because he failed to file a petition for permission to appeal. The trustee filed his notice of appeal within the specified time, the bankruptcy court entered its certification order, and the clerk transmitted to the 7th Circuit the certification order and the trustee's request for certification.

Judges Posner and Van Bokkelen, who concurred in part and in the judgment with Judge Posner, determined none of the parties were harmed or inconvenienced by the trustee's failure to file the petition. Judge Posner wrote the filing in the 7th Circuit was both complete and timely, and that in essence, the petition was transferred by the court of the bankruptcy clerk rather than the trustee. The information sent by the clerk contained the same information the trustee would have sent.

"We don't mean to trivialize the requirement of filing a petition for review; in another case the failure to comply might well be fatal," wrote Judge Posner. "...Had Turner challenged the request for certification, it would have behooved the trustee to meet the challenge in a petition for review lodged with this court. But there was, as we said, no challenge, and hence the petition would have said nothing that was not in the request for certification-the request transmitted to us and treated by us as the petition for review, which in every respect except label it was."

The majority reversed the bankruptcy court's decision, agreeing with the 8th Circuit Court of Appeals that while the calculation of disposable income is a starting point for determining a debtor's projected disposable income, the final calculation can take into account changes that have occurred in the debtor's financial circumstances.

In her dissent, Judge Sykes would have dismissed the appeal for lack of appellate jurisdiction because of the trustee's failure to follow the act's requirements that he file a petition for permission to appeal.

"The trustee did not file the functional equivalent of a petition for permission to appeal within the applicable time limit for filing a petition; indeed, he did not file anything within the time limit for filing a petition," she wrote. "The majority permits the bankruptcy clerk's premature transmittal of a portion of the record to stand as the trustee's 'petition.' This is a significant and unwarranted expansion of the functional-equivalence principle."

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  1. What is this, the Ind Supreme Court thinking that there is a separation of powers and limited enumerated powers as delegated by a dusty old document? Such eighteen century thinking, so rare and unwanted by the elites in this modern age. Dictate to us, dictate over us, the massess are chanting! George Soros agrees. Time to change with times Ind Supreme Court, says all President Snows. Rule by executive decree is the new black.

  2. I made the same argument before a commission of the Indiana Supreme Court and then to the fedeal district and federal appellate courts. Fell flat. So very glad to read that some judges still beleive that evidentiary foundations matter.

  3. KUDOS to the Indiana Supreme Court for realizing that some bureacracies need to go to the stake. Recall what RWR said: "No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!" NOW ... what next to this rare and inspiring chopping block? Well, the Commission on Gender and Race (but not religion!?!) is way overdue. And some other Board's could be cut with a positive for State and the reputation of the Indiana judiciary.

  4. During a visit where an informant with police wears audio and video, does the video necessary have to show hand to hand transaction of money and narcotics?

  5. I will agree with that as soon as law schools stop lying to prospective students about salaries and employment opportunities in the legal profession. There is no defense to the fraudulent numbers first year salaries they post to mislead people into going to law school.

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