Serafini, In re

Decision Date16 July 1991
Docket NumberNo. 90-1151,90-1151
Citation938 F.2d 1156
Parties25 Collier Bankr.Cas.2d 489, 21 Bankr.Ct.Dec. 1490, Bankr. L. Rep. P 74,092 In re Edwin Max SERAFINI a/k/a E. Max Serafini, d/b/a Cottonwood Farms, and Doris Ann Serafini, Debtors. The FIRST NATIONAL BANK OF GORDON, Plaintiff-Appellant, v. Edwin Max SERAFINI a/k/a E. Max Serafini, d/b/a Cottonwood Farms, and Doris Ann Serafini, Defendants-Appellees.
CourtU.S. Court of Appeals — Tenth Circuit

Russell O. Stewart (Michael J. Cook of Faegre & Benson, with him on the brief), Denver, Colo., for plaintiff-appellant.

Richard L. Harring (Virginia Moses Dalton of Calkins, Kramer, Grimshaw & Harring, with him on the brief), Denver, Colo., for defendants-appellees.

Before ANDERSON and McWILLIAMS, Circuit Judges, and ALLEY, * District Judge.

McWILLIAMS, Circuit Judge.

This is an appeal from a district court judgment affirming a bankruptcy court's order granting E. Max Serafini and Doris Ann Serafini a discharge under 11 U.S.C. Sec. 727.

On June 8, 1987, Max Serafini and Doris Serafini filed a voluntary joint petition under Chapter 7 of Title 11 of the Bankruptcy Code. On October 13, 1987, the First National Bank of Gordon, an unsecured creditor of the Serafinis, filed a complaint objecting to the Serafinis' discharge. On February 9 and 10, 1988, trial was held before a bankruptcy judge, who, after the Bank had presented its evidence, dismissed the complaint under Fed.R.Civ.P. 41(b). In so doing, the bankruptcy judge concluded, inter alia, that the Bank had not met its burden of proof to show by "clear and convincing evidence" such fraud on the part of the Serafinis as would trigger the provisions of 11 U.S.C. Sec. 727(a)(2).

Pursuant to 28 U.S.C. Sec. 158(a), the Bank appealed the judgment of the Bankruptcy Judge to the United States District Court for the District of Colorado. On April 26, 1990, the district court affirmed the judgment of the bankruptcy court, stating on several occasions in its Memorandum Opinion and Order that the Bank had to establish its claim under Sec. 727 by "clear and convincing evidence." The district court's Memorandum Opinion and Order now appears as In re Serafini, 113 B.R. 692 (D.Colo.1990). Background facts detailed there will not be repeated here. The Bank now seeks review of the district court's order and judgment.

Subsequent to the date of the judgment of the district court, the United States Supreme Court in Grogan v. Garner, --- U.S. ----, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991) reversed the Eighth Circuit Court of Appeals and held that a "preponderance of the evidence" standard, rather than a "clear and convincing" standard, applies to all exceptions from the dischargeability of debts contained in Bankruptcy Code Sec. 523(a), including the nondischargeability for fraud provision. 1 Grogan, --- U.S. at ----, 111 S.Ct. at 661.

Grogan is concerned with 11 U.S.C. Sec. 523 rather than 11 U.S.C. Sec. 727(a)(2). However, we perceive no good reason to apply a different standard where Sec. 727(a)(2) is involved. It would be incongruous to apply a "preponderance of the evidence" standard to Sec. 523(a) and a "clear and convincing" standard to Sec. 727(a)(2). Such would be clearly at odds with the rationale in Grogan. 2

Hence, it is apparent that in evaluating the Bank's evidence, both the bankruptcy court and the district court used the wrong standard. We reject the suggestion of the Serafinis that the bankruptcy court and the district court would have reached the same result had it used the lesser preponderance of the evidence standard. Such is not for us to say. We also decline the invitation by the Bank to rule on its collateral estoppel argument. So far as we can tell, that issue was not raised below. In our view, the collateral estoppel issue should first be raised below on remand.

Judgment reversed and case remanded for further proceedings.

* Honorable Wayne E. Alley, U.S. District Judge for the District of Oklahoma, sitting by designation.

1 In Farmers Co-operative Association of Talmage, Kansas v. Strunk, 671 F.2d 391, 395 (10th Cir.1982), we were concerned with Section 14(c) of the old Bankruptcy Act, 11 U.S.C. Sec. 32(c) (repealed 1978) which required a court to grant discharge of a debt unless the court is satisfied that the debtor has committed an offense punishable by imprisonment under 18 U.S.C. Sec. 152, which,...

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  • In re Walters
    • United States
    • U.S. Bankruptcy Court — Northern District of Indiana
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    ... ...         It has been held since Grogan v. Garner, that the standard or degree of proof in a proceeding to revoke a general discharge pursuant to ? 727(d) is by a preponderance-of-the-evidence rather than by clear and convincing evidence. In re Serafini, 938 F.2d 1156, 1157 (10th Cir.1991); In re Wolfson, 139 B.R. 279, 282-85 (Bankr.S.D.N.Y.1992); In re Essres, 139 B.R. 958, 961 (D.Col.1992); In re Lawler, 141 B.R. 425, 428-20 (9th Cir. BAP 1992). The Court agrees with the conclusions reached by the Courts in the above cases, and will no ... ...
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    ... ... See In re Sheets, 269 B.R. 339, 340 (Bankr.M.D.Pa.2001) (citing In re Adams, 31 F.3d 389 (6th Cir.1994); Farouki v. Emirates Bank International, Ltd., 14 F.3d 244 (4th Cir.1994); In re Beaubouef, 966 F.2d 174 (5th Cir.1992); In re Serafini, 938 F.2d 1156 (10th Cir.1991), and noting that cases which opt for clear and convincing evidence standard were all decided prior to the U.S. Supreme Court's decision in Grogan v. Garner, 498 U.S. 279, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991)); 6 Collier on Bankruptcy ¶ 727.14[7] at 727-72 ... ...
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  • Protecting Marital Obligations from Bankruptcy
    • United States
    • Colorado Bar Association Colorado Lawyer No. 23-1, January 1994
    • Invalid date
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