Richard D. Myers v. Maureen Raynor ( 2009 )

United States Bankruptcy Appellate Panel
FOR THE EIGHTH CIRCUIT
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No. 09-6012
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In re: John Patrick Raynor, *
*
Debtor. *
*
Richard D. Myers, Trustee, *
*
Plaintiff – Appellee, *
* Appeal from the United States
v. * Bankruptcy Court for the
* District of Nebraska
Maureen Raynor, *
*
Defendant – Appellant, *
*
John Patrick Raynor, *
*
Intervenor defendant – *
Appellant. *
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Submitted: April 27, 2009
Filed: June 4, 2009
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Before KRESSEL, Chief Judge, SCHERMER and VENTERS, Bankruptcy Judges.
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KRESSEL, Chief Judge.
Maureen Raynor and John P. Raynor appeal the bankruptcy court’s1 stipulated
judgment order of March 9, 2009. Because we defer to the previous appellate
decision of the district court2 that the trustee’s suit was not time-barred, we affirm.
BACKGROUND
John Patrick Raynor filed a voluntary chapter 11 bankruptcy petition on
September 13, 2004. On June 2, 2005, the court granted John’s motion to convert his
case from chapter 11 to chapter 7. Richard D. Myers was appointed trustee. On
September 13, 2006, the second anniversary of the filing of John’s petition, Myers
filed an adversary proceeding against John’s wife, Maureen Raynor, seeking to avoid
several transfers3 of real property and marketable securities made by John to Maureen.
On November 6, 2006, Maureen filed a motion to dismiss the trustee’s suit as time-
barred. On January 26, 2007, the court denied the motion. On February 5, 2007,
Maureen filed a motion for reconsideration. The motion was denied on March 27,
2007.
Maureen brought an interlocutory appeal to the district court. The issue
considered by the district court was whether the trustee’s suit was time-barred under
1
The Honorable Timothy J. Mahoney, United States Bankruptcy Judge for
the District of Nebraska.
2
The Honorable Richard G. Kopf, United States District Judge for the
District of Nebraska.
3
The complaint included five counts: I, preferential transfers to or for the
benefit of an insider within one year of date of bankruptcy petition (11 U.S.C. § 547);
II, III and IV, avoidance and recovery of constructively fraudulent transfers (11 U.S.C.
§§ 544, 548, 550, & 551 and § 36-705 of the Nebraska UFTA); and V, improper,
unauthorized post-petition transfers.
2
11 U.S.C. § 546(a). On November 21, 2007, the district court affirmed4 the
bankruptcy court’s orders denying Maureen’s motions to dismiss and for
reconsideration. The district court concluded that the adversary proceeding had been
filed timely because “11 U.S.C. § 546(a) is not jurisdictional, the time-computation
rules of Bankruptcy Rule 9006(a) apply, and calculation of the limitations period in
11 U.S.C. § 546(a) would begin on the day following the date the petition was
filed—September 14, 2004—and end on the anniversary date of the petition
filing—September 13, 2006.” Maureen petitioned the Eighth Circuit Court of Appeals
for writ of mandamus. Her petition was denied on January 4, 2008. Maureen then
petitioned to the Supreme Court for a writ of certiorari, but the petition was denied on
May 27, 2008.
John intervened5 in the suit against Maureen and filed his own motion to
dismiss the suit on June 30, 2008, on the basis that the trustee’s pleadings “do not state
with particularity the circumstances constituting fraud in violation of F. R. Civ. Pro.
9(b) (“Rule 9”) (made applicable by F. R. Bankr. P. 7009)” and “are baseless and
unsupportable allegations filed in violation of F. R. Bankr. P. 9011 (Rule 11”).” On
July 10, 2008, John withdrew his motion to dismiss and filed a motion to strike the
trustee’s pleadings pursuant to Bankruptcy Rules 7009 and 9011. John’s motion to
strike was denied on September 19, 2008.
On October 6, 2008, John filed another motion to dismiss on the basis that the
trustee’s motion was time-barred, arguing that there existed “New law stemming from
the passage of the BAPCPA, the Bright Line Rule, which is determinative of this
matter” and on the basis of “Authority of the Eighth Circuit Bankruptcy Appellant
Panel, not previously considered by this Court which is determinative of this matter.”
4
Myers v. Raynor (In re Raynor), No. 8:07CV151, 2007 U.S. Dist.
LEXIS 86324 (D. Neb. Nov. 21, 2007).
5
John’s standing is unclear to us, since the complaint seeks no relief against
him.
3
On October 27, 2008, the bankruptcy court denied John’s motion. The court
addressed John’s arguments but declined to reconsider its previous determination that
the suit was not time-barred. The Raynors jointly appealed the October 27, 2008
order to the bankruptcy appellate panel. However, on December 4, 2008, we denied
the Raynors’ motion for leave to take an interlocutory appeal and dismissed the
appeal. The Raynors filed a petition with the Eighth Circuit Court of Appeals for
permission to appeal our October 27, 2008 order. On January 16, 2009, the Court of
Appeals denied the Raynors’ petition.
On March 9, 2009, the trustee and Maureen filed a stipulated judgment, settling
the avoidance suit for $76,391.12. It stated that “no appeal of any issue will be taken
except that the Defendant and Intervenor shall maintain the right to file an appeal to
the Eighth Circuit Bankruptcy Appellate Panel (“BAP”), limited to the statute of
limitations issue, and the Plaintiff shall maintain the right to argue that the decisions
issued in the prior appeal on the statute of limitations issue should be controlling in
this case.” The stipulated judgment further provided, “Any party to this adversary
may pursue such further appeal of the BAP's decision to the Eighth Circuit and/or the
U.S. Supreme Court as may be permitted under controlling law” and that the judgment
constituted “a final appealable order resolving claims that were or could have been
brought in the above captioned adversary proceeding.”
The Raynors appeal from the March 9, 2009 stipulated order. The sole issue
on appeal is whether the complaint was time-barred.
Standard of Review
“The issue of whether a suit is time-barred is a question of law . . . .” McCord
v. Minn. Mut. Life Ins. Co. (In re Minn. Mut. Life Ins. Co. Sales Practices Litig.), 346
F.3d 830, 835 (8th Cir. 2003). We review questions of law de novo. DeBold v. Case,
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452 F.3d 756, 761 (8th Cir. 2006); Green Tree Servicing, LLC v. Coleman (In re
Coleman), 392 B.R. 767, 769 (B.A.P. 8th Cir. 2008).
DISCUSSION
The order for relief in the Raynor case was entered on September 13, 2004. The
trustee initiated the adversary proceeding against Maureen by filing a complaint on
September 13, 2006. The Raynors argue that the trustee’s suit against Maureen is
time-barred by section 546 of the Bankruptcy Code, which provides:
(a) An action or proceeding under section 544, 545, 547,
548, or 553 of this title may not be commenced after the
earlier of--
(1) the later of--
(A) 2 years after the entry of the order for
relief; or
(B) 1 year after the appointment or election of
the first trustee under section 702, 1104, 1163,
1202, or 1302 of this title if such appointment
or such election occurs before the expiration
of the period specified in subparagraph (A); or
(2) the time the case is closed or dismissed.
11 U.S.C. § 546(a). The Raynors maintain that September 12, 2004 was the last day
the trustee could have timely filed his complaint. The trustee argues that the statute
of limitations had not run until after September 13, 2004, so that a complaint filed on
the anniversary date of the entry of the order for relief is timely.
5
Under the Doctrine of Law of the Case, We Defer to the District Court’s
Determination that the Trustee’s Suit was Timely.
The sole issue appealed by the Raynors is whether the trustee’s suit against
Maureen is time-barred by 11 U.S.C. § 546(a). That precise issue was addressed by
the bankruptcy court and the district court, and both courts concluded that the suit was
not time-barred. The Raynors now hope for a different outcome on the same issue, and
the trustee argues that the law of the case doctrine should operate to prevent the
bankruptcy appellate panel from revisiting the issue previously decided by the district
court.
The Raynors misunderstand the doctrine of law of the case, and argue that
because a decision of a single district court in the Eighth Circuit is not binding
precedent as to the bankruptcy appellate panel, this panel should not defer to the
district court’s earlier decisions. The issue of whether decisions of the district court
are binding on the bankruptcy appellate panel is a separate and unrelated question
from the one presented in the Raynors’ appeal.
“Law of the case” is a policy of deference under which “a court should not
reopen issues decided in earlier stages of the same litigation.” Agostini v. Felton, 521
U.S. 203, 236 (1997); see also Little Earth of the United Tribes, Inc. v. United States
Dep't of Hous. & Urban Dev., 807 F.2d 1433, 1438 (8th Cir. 1986) (“The law of the
case doctrine applies to issues implicitly decided in earlier stages of the same case.”).
Although reviewing courts are not required to refrain from revisiting their own
decisions “if substantially different evidence is subsequently introduced or the
decision is clearly erroneous and works manifest injustice,” the doctrine of law of the
case “prevents the relitigation of settled issues in a case, thus protecting the settled
expectations of parties, ensuring uniformity of decisions, and promoting judicial
efficiency.” Little Earth, 807 F.2d at 1441; see also Woods v. Kenan (In re Woods),
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215 B.R. 623, 625 (B.A.P. 10th Cir. 1998) (where appellants in a bankruptcy case,
who had previously appealed to the United States District Court, sought further review
from a different order of the same issues, the bankruptcy appellate panel found “that
the law of the case doctrine should be applied to limit our review to issues not
previously decided by the District Court”); 5 Am. Jur. 2d, Appellate Review § 566
(2008) (“issues decided in earlier appellate stages of the same litigation should not be
reopened, except by a higher court, absent some significant change in circumstances,”
so long as “there was a hearing on the merits and that there have been no material
changes in the facts since the prior appeal”).
The procedural history of the Raynors’ appeal highlights the appellate choices
afforded in bankruptcy cases in the Eighth Circuit. Aggrieved parties may appeal to
either the district court or the bankruptcy appellate panel. 28 U.S.C. § 158(a). A party
may not appeal a decision of the district court to the bankruptcy appellate panel or
vice versa. Rather, after taking the intermediary appeal, the next court of review is the
court of appeals. While a party electing to appeal to the district court may appeal a
later bankruptcy court judgment to the bankruptcy appellate panel, we are not
empowered to review decisions of the district court. The statute of limitations issue
was fully examined by the district court, which ruled that the trustee initiated his
adversary proceeding within the limitation period. We defer to the earlier decision of
the district court and decline to revisit the issue of whether the trustee’s suit was time-
barred.
The policy considerations raised by a bankruptcy appellate panel’s review of
an issue previously decided in the same litigation by a district court are comparable
to the policy considerations that the Supreme Court addressed in dictum in its
Christianson decision. Christianson v. Colt Indus. Operating Corp., 486 U.S. 800
(1988). In Christianson, the Court of Appeals for the Federal Circuit and the Court
of Appeals for the Seventh Circuit had each disavowed jurisdiction over a particular
7
case and transferred the case to the other. The Court reasoned that the law of the case
doctrine “applies as much to the decisions of a coordinate court in the same case as
to a court's own decisions.” Id. at 816. The Court observed that although a “court has
the power to revisit prior decisions of its own or of a coordinate court,” “as a rule
courts should be loathe to do so in the absence of extraordinary circumstances such
as where the initial decision was ‘clearly erroneous and would work a manifest
injustice.’” Id. at 817 (quoting Arizona v. California, 460 U.S. 605, 618 n. 8 (1983)).
Not only would our review of an issue decided by the district court upset the settled
expectations of parties and uniformity of decisions, but it would hamper the judicial
efficiency of the bankruptcy appeals process.
The District Court’s Decision Is Not Clearly Erroneous and
Does Not Result in Manifest Injustice
The Raynors invoke the clearly erroneous and manifest injustice exceptions to
the law of the case doctrine. Not only do we think the district court’s decision is not
clearly erroneous, we agree with the result reached by the district court.
There is really no need to resort to Rule 9006(a) or to consider whether § 546(a)
is jurisdictional. Courts only look beyond the statute itself where the terms of the
statute are ambiguous. “When we find the terms of a statute unambiguous, judicial
inquiry is complete . . . .” Rubin v. United States, 449 U.S. 424, 430 (1981). Under 11
U.S.C. § 546(a), the specified avoidance actions “may not be commenced after the
earlier of the later of 2 years after the entry of the order for relief . . . .” 11 U.S.C. §
546(a) (emphasis added). The language is inelegant, but it is unambiguously inclusive
of the two-year anniversary of the entry of the order for relief. The trustee’s
complaint was timely so long as it was filed before midnight on the anniversary date
of the entry of the order for relief. See Callahan v. Moore (In re Gen. Creations, Inc.),
343 B.R. 548, 552 (Bankr. W.D. Va. 2006) (where order for relief was entered on July
8
22, 2003, “the statute of limitations set forth in 11 U.S.C. § 546(a)(1)(A) ended at
midnight on July 22, 2005.”); In re Steck, 298 B.R. 244, 249 (Bankr. D. N.J. 2003)
(where the order for relief was entered on October 10, 2000, “the trustee had to
commence an avoidance action no later than October 10, 2002”) (emphasis added).
The statute clearly says that the last day to commence this proceeding was “2
years after the entry of the order for relief . . . .” 11 U.S.C. 564(a) (emphasis added).
It seems clear to us that two years after September 13, 2004 is September 13, 2006,
not September 12, 2006. If the Raynors’ interpretation were correct, one day after a
day would be the same day. Clearly this is both legally and grammatically
nonsensical.
Case Law Does Not Require a Different Result.
Finally, the Raynors argue that the district court’s determinations must be
reconsidered in light of 1) “New law stemming from the passage of the BAPCPA, the
Bright Line Rule, which is determinative of this matter”; and 2) “Authority of the
Eighth Circuit Bankruptcy Appellant Panel, not previously considered by this Court
which is determinative of this matter.” As to the first argument, this case was filed
before BAPCPA’s effective date, so any changes made by that statute do not apply.
Besides, BAPCPA made no changes to the portion of § 546 at issue here. Although
“the law of the case does not apply when an intervening decision from a superior
tribunal clearly demonstrates the law of the case is wrong,” the Raynors cannot avail
themselves of that exception. Morris v. Am. Nat’l Can Corp., 988 F.2d 50, 52 (8th
Cir. 1993). First, none of the cases cited by the Raynors were intervening. The
decisions were all issued prior to the district court order. Second, the bankruptcy
appellate panel is not superior to the district court. Third, the cases cited by the
Raynors do not demonstrate that the district court’s conclusions were wrong.
9
The Graham County case required the Supreme Court to reconcile two plausible
constructions of a statute of limitations, but there is only one plausible construction
of 11 U.S.C. § 546(a). Graham County Soil & Water Conservation Dist. v. United
States, 545 U.S. 409, 419 (2005) (“where, as the case is here, there are two plausible
constructions of a statute of limitations, we should adopt the construction that starts
the time limit running when the cause of action . . . accrues.”). The district court’s
conclusions are consistent with Graham County. Even if the Graham County rule of
construction were applied to the time limitation in § 546(a), under the Raynors’
theory, it would not change the outcome. Avoidance actions accrue when a debtor
commences a case by filing a bankruptcy petition, which “constitutes an order for
relief . . . .” 11 U.S.C. § 301(b). The avoidance actions therefore accrue on the same
day as the order for relief is issued.
The Raynors also misread the Bay Area Laundry case, and have extrapolated
a universal rule and urged its application in a manner that would be inconsistent with
the plain meaning of § 546(a). Bay Area Laundry & Dry Cleaning Pension Trust
Fund v. Ferbar Corp. of Cal., 522 U.S. 192 (1997). In Bay Area Laundry, the Court
construed a statute of limitations to avoid the absurd result that the limitations period
might begin to run before a cause of action had ever accrued. The Court later wrote,
“The question presented in Bay Area Laundry was whether a statute of limitations
could commence to run on one day while the right to sue ripened on a later day. We
answered that question, and only that question, ‘no,’ unless the statute indicates
otherwise.” TRW Inc. v. Andrews, 534 U.S. 19, 34 n. 6 (2001) (emphasis added). The
Bay Area Laundry holding is consistent with the district court’s conclusions.
The Raynors’ reliance on the Eighth Circuit’s McCuskey decision is similarly
misplaced. McCuskey v. Cent. Trailer Servs., Ltd., 37 F.3d 1329 (8th Cir. 1994).
Because the sole issue considered by the McCuskey court was “whether the district
court erred in concluding that the two-year statute of limitations started to run anew
10
when [the chapter 7 trustee] was appointed” following the conversion of the case from
chapter 11, the court’s holding is not instructive on the issue raised in the Raynors’
appeal. Id. at 1330-31.
The Raynors rely heavily on our opinion in Lee v. Nat’l Home Centrs., Inc. (In
re Bodenstein), 253 B.R. 46 (B.A.P. 8th Cir. 2000). In Bodenstein, the issue was
whether the statute of limitations under 11 U.S.C. § 546(a) was equitably tolled during
the pendency of the debtors’ chapter 13 case. Although the precise expiration of the
limitation period was not related to the holding of that case, we stated, “The Debtors
filed their petition on November 21, 1996 and the order for relief was entered that
same day. In accordance with Section 547(a)(1)(A), the period of two years after the
entry of the order for relief expired on November 21, 1998.” Id. at 50. In that context,
we understand the term “expire” to mean that the avoidance action could not have
been brought later than November 21, 1998.
CONCLUSION
We decline to revisit the issue of the timeliness of the trustee’s complaint
because that issue has already been decided by the district court. The bankruptcy
court’s March 9, 2009 order and judgment are affirmed.
11