In re Edwards

• Court: U.S. Bankruptcy Appellate Panel, Eighth Circuit
• Writing for the Court: Before KRESSEL, Chief Judge, SCHERMER, and NAIL, Bankruptcy Judges.
• Citation: In re Edwards, 446 B.R. 276 (B.A.P. 8th Cir. 2011)
• Decision Date: 12 April 2011
• Docket Number: BAP No. 10–6065.
• Parties: In re Douglas R. EDWARDS; Saundra S. Edwards, Debtors.Douglas R. Edwards; Saundra S. Edwards, Plaintiffs–Appellants,v.R.G. Edmondson, Trustee of the Jewell Edmondson Testamentary Trust, Defendant–Appellee.

446 B.R. 276

In re Douglas R. EDWARDS; Saundra S. Edwards, Debtors.Douglas R. Edwards; Saundra S. Edwards, Plaintiffs–Appellants,

v.R.G. Edmondson, Trustee of the Jewell Edmondson Testamentary Trust, Defendant–Appellee.

BAP No. 10–6065.

United States Bankruptcy Appellate Panel of the Eighth Circuit.

Submitted: March 15, 2011.Decided: April 12, 2011.

The appellants, Douglas and Saundra Edwards of Cassville, Missouri, were not represented by counsel.Norman E. Rouse, Joplin, MO, for appellee.Before KRESSEL, Chief Judge, SCHERMER, and NAIL, Bankruptcy Judges.NAIL, Bankruptcy Judge.

Douglas R. Edwards and Saundra S. Edwards appeal the August 26, 2010 order of the bankruptcy court ¹ allowing the claim of R.G. Edmondson, Trustee of the Jewell Edmondson Testamentary Trust. We affirm.

BACKGROUND

On June 27, 2002, the Circuit Court of Barry County, Missouri entered judgment in favor of Edmondson, giving the Edwardses 30 days to “demolish, destroy, or remove” a pond and restore a stream bed to the conditions that existed prior to the Edwardses' construction of the pond. If they failed to comply, the Edwardses were ordered to pay Edmondson a penalty of $50.00 per day. The Edwardses appealed, and on August 15, 2003, the Missouri Court of Appeals affirmed the circuit court's judgment.²

On March 16, 2004, pursuant to Edmondson's “Amended Motion for Contempt” and the Edwardses' “Motion to Dissolve Preliminary and/or Permanent Injunction,” the circuit court found the Edwardses to be in contempt of court and entered judgment in favor of Edmondson for $26,850.00 ($50.00 per day from July 27, 2002 through January 16, 2004) plus $50.00 per day from January 17, 2004. ³ The circuit court awarded Edmondson attorney fees of $1,800.00.

On June 21, 2007, pursuant to the Edwardses' second “Motion to Dissolve Preliminary and/or Permanent Injunction,” the circuit court again found the Edwardses to be in contempt of court and entered judgment in favor of Edmondson for $59,500.00 ($50.00 per day from March 17, 2004 through June 20, 2007). The judgment, however, permitted the Edwardses to purge themselves of contempt by demolishing the pond by July 20, 2007.

On October 2, 2007, pursuant to Edmondson's “Motion for New Trial/Motion to Amend Judgment [P]ursuant to Missouri Civil Rule 78.04,” the circuit court found the Edwardses had substantially complied with its June 21, 2007 judgment ⁴ and entered an amended judgment setting aside the $59,500.00 previously awarded to Edmondson. The circuit court awarded Edmondson attorney fees of $12,860.10 and litigation expenses of $709.23. Both Edmondson and the Edwardses appealed, and on April 3, 2009, the court of appeals: (1) reversed the circuit court's decision to set aside the $59,500.00 previously awarded to Edmondson; (2) remanded the matter to allow the circuit court to determine whether the Edwardses had complied with the circuit court's earlier orders to destroy the pond and restore the stream bed and, if so, the date on which that actually occurred; and (3) otherwise affirmed the circuit court's judgment. ⁵

On September 21, 2009, in compliance with the court of appeals' directive, the circuit court found the Edwardses were in contempt from January 17, 2004 until July 20, 2007 (1,279 days) and entered judgment in favor of Edmondson for $63,950.00. The circuit court denied Edmondson's request for additional attorney fees and expenses incurred in connection with the second appeal and in preparation for the hearing following remand.

On December 4, 2009, the Edwardses filed a petition for relief under chapter 13 of the bankruptcy code. Edmondson filed a proof of claim for $104,799.41 secured by a judgment lien. The Edwardses filed an objection to Edmondson's claim, and on May 25, 2010, the bankruptcy court entered an order overruling their objection. The Edwardses did not appeal the bankruptcy court's order.

On March 10, 2010, Edmondson filed an amended proof of claim for $56,759.18 secured by a judgment lien. The Edwardses did not file an objection to Edmondson's amended claim. The bankruptcy court—with the consent of both Edmondson and the Edwardses—nevertheless received evidence and heard argument regarding the validity of Edmondson's amended claim in connection with the hearing on confirmation of the Edwardses' chapter 13 plan.

Specifically, the bankruptcy court heard the testimony of Attorney Donald Cupps, who represented Edmondson in the state court litigation outlined above, and received several exhibits, including, inter alia, a March 18, 2010 letter from Attorney Cupps to Attorney Kevin Checkett, who at the time represented the Edwardses in their chapter 13 case.⁶ Attorney Cupps explained in detail—both on the witness stand and in his March 18, 2010 letter to Attorney Checkett—how he calculated the amount of Edmondson's claim. The Edwardses offered no contrary testimony and expressly declined to testify.

The bankruptcy court first reduced Edmondson's amended claim by $229.28, the amount of post-judgment interest that would have accrued after the Edwardses filed their chapter 13 petition, to arrive at the amount Edmondson was owed on the petition date. The bankruptcy court then determined Edmondson was entitled to post-petition interest on the reduced amount at the “local rule rate” pursuant to 11 U.S.C. § 506(b).⁷ On August 26, 2010, the bankruptcy court entered an order allowing Edmondson's amended claim in the amount of $56,529.90. The Edwardses timely appealed.

STANDARD OF REVIEW

We review the bankruptcy court's legal conclusions de novo and its findings of fact for clear error. See R & R Ready Mix v. Freier (In re Freier), 604 F.3d 583, 587 (8th Cir.2010) (citing First Nat'l Bank of Olathe, Kansas v. Pontow, 111 F.3d 604, 609 (8th Cir.1997)).

DISCUSSION

The first issue the Edwardses raise on appeal is whether they should be permitted to submit for our consideration a variety of documents that were not offered to the bankruptcy court. In general, “documents presented for the first time at the appellate stage of any proceeding are ... not considered part of the record for review by the appellate court.” Hartford Fire Ins. Co. v. Norwest Bank Minnesota (In re Lockwood Corp.), 223 B.R. 170, 174 (8th Cir. BAP 1998) (citing Huelsman v. Civic Ctr. Corp., 873 F.2d 1171, 1175 (8th Cir.1989)). An exception may be made in those rare cases in which the interests of justice demand it. Wendover Financial Services v. Hervey (In re Hervey), 252 B.R. 763, 766 (8th Cir. BAP 2000) (citing Dakota Inds., Inc. v. Dakota Sportswear, Inc., 988 F.2d 61, 63 (8th Cir.1993); and Lockwood, 223 B.R. at 174 n. 3). However, we do not believe this to be such a case. The Edwardses' unsubstantiated allegations of conspiracy, fraud, and malpractice are implausible and thus do not implicate the interests of justice. ⁸ Consequently, we will not enlarge the record on appeal by considering documents that were not offered to the bankruptcy court.

The Edwardses also raise a number of issues they did not raise in the bankruptcy court, i.e., whether the attorney fees included in Edmondson's amended proof of claim should be allowed; whether the Edwardses should receive credit for a $3,937.62 payment Edmondson received from an unrelated third party in connection with his efforts to execute on his judgment; and whether the costs Edmondson incurred in executing his judgment and included in his amended proof of claim should be allowed.⁹ “[I]ssues raised for the first time on appeal are ordinarily not considered by an appellate court as a basis for reversal.” Hervey, 252 B.R. at 767 (citing Von Kerssenbrock–Praschma v. Saunders, 121 F.3d 373, 375–76 (8th Cir.1997); Kelley v. Crunk, 713 F.2d 426, 427 (8th Cir.1983) ( per curiam ); and Guy v. Danzig (In re Danzig), 233 B.R. 85, 96 (8th Cir. BAP 1999), aff'd, 217 F.3d 620 (8th Cir.2000)). An exception may be made in “ exceptional cases where the obvious result would be a plain miscarriage of justice or inconsistent with substantial justice,” Kelley, 713 F.2d at 427 (citations therein) (emphasis added); in cases in which “the resolution of the legal issues is beyond any doubt,” Hervey, 252 B.R. at 768 (citing Miller v. FEMA, 57 F.3d 687, 689 (8th Cir.1995); and Thompson v. Brule, 37 F.3d 1297, 1302 (8th Cir.1994)) (internal quotation marks omitted); and in cases in which the newly raised issue “involves a purely legal issue as to which additional evidence would not affect the outcome,” Krigel v. Sterling Nat'l Bank (In re Ward), 230 B.R. 115, 119 (8th Cir. BAP 1999). Again, however, we do not believe this to be such a case. The Edwardses have not demonstrated how our not considering these issues will result in a miscarriage of justice or is otherwise inconsistent with substantial justice. The Edwardses have likewise not demonstrated these issues are purely legal or—to the extent they are legal—the resolution of these issues is beyond any doubt. Under the circumstances, “[t]he only injustice that would occur here is if we were to consider [these] arguments.” Hervey, 252 B.R. at 768. Consequently, we will not consider issues that were not raised in the bankruptcy court.

The Edwardses do raise one issue they raised in the bankruptcy court, i.e., whether Edmondson is entitled to the post-judgment interest he included in his amended proof of claim.¹⁰ The bankruptcy court allowed the post-judgment interest that accrued prior to the filing of the Edwardses' chapter 13 petition. We agree with the bankruptcy court's conclusion.

Under Missouri law, “[i]n all nontort actions, interest shall be allowed on all money due upon any judgment or order of any court from the date judgment is entered by the trial court until satisfaction be made by payment, accord or sale of property[.] ” Mo.Rev.Stat. § 408.040.1 (2011) (emphasis added). With the exception of those judgments and orders that are premised on a contract that provides a higher rate, all such “judgments and orders for...