In re Thompson, BAP No. KS-99-010. Bankruptcy No. 98-10568.
Decision Date | 15 November 1999 |
Docket Number | BAP No. KS-99-010. Bankruptcy No. 98-10568. |
Parties | In re Charles M. THOMPSON, Debtor. Charles M. Thompson, Appellant, v. Bruce A. Unruh; Cheryl A. Semmler; Grace, Unruh & Pratt; and Royce E. Wallace, Trustee, Appellees. |
Court | U.S. Bankruptcy Appellate Panel, Tenth Circuit |
James T. McIntyre, Wichita, Kansas, for Appellant.
Jeffrey E. Goering (Jeffery C. Dahlgren with him on the brief) of Triplett, Woolf & Garretson, LLC, Wichita, Kansas, for Appellees.
Before McFEELEY, Chief Judge, BOULDEN, and CORNISH, Bankruptcy Judges.
This court has before it for review the order of the Bankruptcy Court denying confirmation of the debtor's chapter 13 plan, which provided for the avoidance of a lien on the debtor's homestead. For the reasons set forth below, we affirm the order of the Bankruptcy Court.
Barbara Unruh, now deceased, was married to the debtor on March 21, 1992. Prior to the marriage, Ms. Unruh and the debtor entered into an antenuptial agreement. The agreement provided, in pertinent part, as follows:
At the time of the marriage, Ms. Unruh owned free and clear real property at 6524 University, Wichita, Kansas. Ms. Unruh mortgaged the property for $50,000.00 for the purpose of making a down payment on the marital residence located at 10001 W. 12th, Wichita, Kansas. The parties agree that a portion of the mortgage proceeds was used for the down payment. The property located at 10001 W. 12th was held in the names of Barbara Unruh and Charles Thompson, as joint tenants with rights of survivorship. On September 3, 1994, Ms. Unruh died intestate.
On September 12, 1994, Bruce Unruh, Barbara's son, initiated probate proceedings in the District Court of Sedgwick County, Kansas, and on that same date, he was appointed Administrator of the estate of Barbara Unruh. On October 25, 1994, Bruce Unruh filed a Petition for Instructions seeking "instruction from the probate court concerning the effect of the antenuptial agreement on the administration of the estate." Appellant's Appendix, p. 16. On November 17, 1994, the debtor filed an Answer alleging that the antenuptial agreement was invalid "based on misrepresentations contained in the agreement and by reason of his lack of understanding of provisions of the agreement." Id. On December 9, 1994, the state court conducted an evidentiary hearing on the Petition for Instructions. The court ruled that the antenuptial agreement was clear and unambiguous and that the debtor failed to demonstrate that the agreement was invalid in any respect.
On October 10, 1995, Bruce Unruh filed a Petition to Settle Lien Amount. The district court issued a memorandum decision determining the amount of the lien to be $41,154.97. Thereafter, on September 26, 1996, the court entered a Journal Entry of Final Settlement which provided as follows:
The debtor filed a chapter 13 petition on February 12, 1998. The debtor currently resides at 10001 W. 12th, Wichita, Kansas and has declared this property as his exempt homestead in the bankruptcy proceeding. The debtor filed a chapter 13 plan in which he sought to avoid the lien of Bruce Unruh and Cheryl Semmler, pursuant to 11 U.S.C. § 522(f). Both creditors have objected. The Bankruptcy Court heard oral argument based on stipulated facts and denied avoidance of the lien and denied confirmation of the chapter 13 plan. This appeal followed.
The Bankruptcy Appellate Panel has jurisdiction to hear appeals from "final judgments, orders, and decrees" of Bankruptcy Courts within the Tenth Circuit. 28 U.S.C. § 158; Fed. R. Bankr.P. 8001; 10th Cir. BAP L.R. 8001-1(a). On the face of this order, it appears to be interlocutory since the debtor was allowed fifteen (15) days within which to file an amended plan. However, in the opinion, the Bankruptcy Court effectively denied a motion to avoid lien, which is a final order. Mohring v. Avco Fin. Servs. (In re Mohring), 1994 WL 192075, 24 F.3d 247 (9th Cir.1994) (table); Expeditors Int'l v. Citicorp N. Am., Inc. (In re Colortran, Inc.), 218 B.R. 507, 510 (9th Cir. BAP 1997).
Findings of fact shall not be set aside unless clearly erroneous. Fed. R. Bankr.P. 8013; see First Bank v. Reid (In re Reid), 757 F.2d 230, 233-34 (10th Cir. 1985). The clearly erroneous standard does not apply to the Bankruptcy Court's conclusions of law, which are reviewed de novo. Pierce v. Underwood, 487 U.S. 552, 558, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988). This matter was submitted to the Bankruptcy Court on stipulated facts; therefore, the facts are not at issue in this appeal. Thus, the Bankruptcy Court's conclusions will be reviewed de novo.
The Bankruptcy Court noted that the debtor did not use the proper procedure in which to avoid a lien. See Fed. R. Bankr.P. 4003(d). Debtor attempted to avoid the lien through the plan confirmation process. Courts are split on the issue of the proper procedure to avoid a lien, and the Bankruptcy Court noted this split in its order. However, the Bankruptcy Court further noted that in the interest of judicial economy, it would rule on the lien avoidance issue. This court has jurisdiction since the denial of the motion to avoid lien is a final order.
The Bankruptcy Court determined that collateral estoppel applied and found that the antenuptial agreement was valid, as had been determined by the probate court. "Under Kansas law, collateral estoppel may be invoked as a bar to litigation when the following is shown: (1) a prior judgment on the merits which determined the rights and liabilities of the parties on the issue, based upon ultimate facts as disclosed by the pleadings and judgment; (2) the parties are the same or in privity; and (3) the issue was actually determined and was necessary to support the judgment." Phelps v. Hamilton, 122 F.3d 1309, 1318 (10th Cir.1997) (citing Jackson Trak Group, Inc. v. Mid States Port Auth., 242 Kan. 683, 751 P.2d 122, 128 (1988)). It is well established "that `where a court has jurisdiction of the parties to an action and of the subject matter thereof, and renders a judgment within its competency, such judgment is final and conclusive, unless corrected or modified on appeal.'" Id. (quoting McFadden v. McFadden, 187 Kan. 398, 357 P.2d 751, 755-56 (1960)). In this case, the state probate court entered a final judgment which determined the validity of the antenuptial agreement.
Secondly, the parties must be the same or in privity. When deciding if the parties are privies, a careful examination of the facts and circumstances of the case is required. Id. at 1319 (citing Goetz v. Bd. of Trustees, 203 Kan. 340, 454 P.2d 481 (1969)). The general rule in Kansas is that a judgment cannot be rendered against one who is not a party or who does not intervene. Id. (citing Winsor v. Powell, 209 Kan. 292, 497 P.2d 292, 297 (1972)). An exception exists when a person, who is not a party, controls the action. Id. The Tenth Circuit in Phelps noted that "control," as it applies to issue preclusion and as set forth in the Restatement of Judgments, is "the ability to exercise `effective choice as to the legal theories and proofs to be advanced,' as well as `control over the opportunity to obtain review.'" Id. (...
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