Filed: Aug. 05, 2009
Latest Update: Mar. 02, 2020
Summary: United States Bankruptcy Appellate Panel FOR THE EIGHTH CIRCUIT _ No. 09-6018 _ In re: * * Larry Grimlie, * * Debtor. * * * Terri A. Running, * Appeal from the United States * Bankruptcy Court for the Plaintiff - Appellee, * District of Minnesota * v. * * Larry Grimlie, * * Defendant - Appellant. * * _ Submitted: July 17, 2009 Filed: August 5, 2009 _ Before FEDERMAN, MAHONEY, and SALADINO, Bankruptcy Judges. _ SALADINO, Bankruptcy Judge. Larry Grimlie appeals the judgment of the bankruptcy cou
Summary: United States Bankruptcy Appellate Panel FOR THE EIGHTH CIRCUIT _ No. 09-6018 _ In re: * * Larry Grimlie, * * Debtor. * * * Terri A. Running, * Appeal from the United States * Bankruptcy Court for the Plaintiff - Appellee, * District of Minnesota * v. * * Larry Grimlie, * * Defendant - Appellant. * * _ Submitted: July 17, 2009 Filed: August 5, 2009 _ Before FEDERMAN, MAHONEY, and SALADINO, Bankruptcy Judges. _ SALADINO, Bankruptcy Judge. Larry Grimlie appeals the judgment of the bankruptcy cour..
More
United States Bankruptcy Appellate Panel
FOR THE EIGHTH CIRCUIT
____________
No. 09-6018
____________
In re: *
*
Larry Grimlie, *
*
Debtor. *
*
*
Terri A. Running, * Appeal from the United States
* Bankruptcy Court for the
Plaintiff - Appellee, * District of Minnesota
*
v. *
*
Larry Grimlie, *
*
Defendant - Appellant. *
*
______
Submitted: July 17, 2009
Filed: August 5, 2009
______
Before FEDERMAN, MAHONEY, and SALADINO, Bankruptcy Judges.
______
SALADINO, Bankruptcy Judge.
Larry Grimlie appeals the judgment of the bankruptcy court1 dated April 9,
2009, declaring a settlement agreement void and dismissing the remaining counts of
Plaintiff’s complaint. We have jurisdiction over this appeal from the final order of the
bankruptcy court. See 28 U.S.C. § 158(b). For the reasons stated below, we affirm.
FACTUAL BACKGROUND
Terri A. Running, the Chapter 7 Trustee of the bankruptcy estate of Larry
Grimlie, brought an adversary proceeding seeking a declaration that a settlement
agreement and certain deeds issued pursuant to the settlement agreement are void.
Mr. Grimlie filed his Chapter 7 bankruptcy petition on September 29, 2004. On
January 3, 2005, the trustee initiated Adversary Proceeding No. 05-4001 against Mr.
Grimlie seeking a denial of his discharge based on 11 U.S.C. § 727. On February 17,
2005, the trustee brought Adversary Proceeding No. 05-4041 against Mr. and Mrs.
Grimlie, their daughter, Erica Johnson, and Mr. Grimlie’s son, Craig Grimlie
(collectively the “Grimlies”). That adversary sought the avoidance of allegedly
preferential transfers made by Mr. Grimlie to his wife and children and recovery of
certain property of the bankruptcy estate.
On September 8, 2005,2 the Grimlies and the trustee entered into a settlement
agreement which provided, among other things, for the Grimlies to convey to the
trustee 40 acres of land. The bankruptcy court subsequently approved the agreement
and the adversary proceedings were dismissed pursuant to its terms.
1
The Honorable Robert J. Kressel, United States Bankruptcy Court for the
District of Minnesota.
2
There are several references in the record to this settlement agreement being
dated September 8, 2005, but it appears it was signed by the Grimlies on August
26, 2005.
2
On January 27, 2006, the trustee initiated a further adversary proceeding (No.
06-4034) in an attempt to force the Grimlies to comply with the settlement agreement
and to attend mediation to determine the division of the property. With the assistance
of mediation, a further settlement was negotiated which provided for the division of
the Grimlies’ land and which provided the trustee an access road across the Grimlies’
remaining property to the property to be conveyed to the trustee. On March 21, 2006,
the parties signed an Agreement Regarding Property Conveyance which modified the
earlier settlement and established the location of the access road and division of the
property. As a result of the modified settlement, Adversary Proceeding No. 06-4034
was dismissed. On September 5, 2006, Mr. and Mrs. Grimlie executed a quitclaim
deed in favor of the trustee for 40 acres to be conveyed to the trustee under the
settlement agreement and for an access road as defined in the settlement agreement.
The deed was recorded in Wright County, Minnesota, on October 23, 2006.
Subsequently, the Wright County Office of Planning and Zoning sent a letter
to the trustee informing her that the division of property as set forth in the deed filed
pursuant to the settlement agreement was illegal because it was not in compliance with
the Wright County zoning ordinance. The trustee attempted to obtain a variance from
the county, but was unsuccessful. Mr. Grimlie refused to relocate the access road in
the manner requested by the trustee in order to make the conveyance of property
acceptable to the county. Therefore, the trustee brought Adversary Proceeding No. 07-
4086 against the Grimlies seeking to enforce and modify the settlement agreement by
compelling the Grimlies to execute a quitclaim deed conveying the property in a
manner that would be acceptable to the county.
After a trial, the bankruptcy court issued its Memorandum Opinion and Order
for Judgment dated November 1, 2007, which denied the trustee’s request to enforce
and modify the settlement agreement. Specifically, the bankruptcy court found that
the inability of the trustee to obtain official approval of the division of property had
frustrated the settlement agreement’s purpose. In particular, the bankruptcy court
3
found “[b]ecause all three criteria for frustration of purpose have been met, the
contract has been frustrated and performance of the contract is excusable.” The court
further found that the parties were mutually mistaken about the acceptability of the
property’s division and the location of the access road and that reformation of the
settlement agreement was inappropriate. Specifically,“the parties’ mutual mistake
regarding the zoning ordinances of Wright County and their ability to obtain a
variance of those zoning ordinances make the settlement agreement voidable.” None
of the parties appealed that judgment.
The trustee subsequently filed Adversary Proceeding No. 08-4176, from which
this appeal arose. In her complaint, the trustee sought declaratory relief that the
September 8, 2005, settlement agreement and the deed issued pursuant thereto are
void. The trustee also sought vacation of the orders dismissing the trustee’s prior
adversary proceedings seeking denial of discharge and recovery of preferential
transfers. Finally, the complaint sought to vacate the order of discharge received by
Mr. Grimlie in his bankruptcy case.
In ruling on the trustee’s motion for summary judgment, the bankruptcy court
determined that its November 1, 2007, Memorandum Opinion and Order for Judgment
established all of the grounds for declaring the settlement agreement void, and that
summary judgment should be granted. As a result, the court also voided the deed
issued pursuant to the settlement agreement. The bankruptcy court dismissed the
remaining counts (for reinstatement of the dismissed adversary proceedings and for
revocation of discharge), determining that a new adversary proceeding was not the
proper forum to address those issues. This appeal by Mr. Grimlie followed.
4
STANDARD OF REVIEW
"We review de novo the [bankruptcy] court's determination of state law, its
conclusions of law, and its grant of summary judgment[.]" MSK EyES Ltd. v. Wells
Fargo Bank, 546 F.3d 533, 540 (8th Cir. 2008). See also Blocker v. Patch (In re
Patch),
526 F.3d 1176, 1179 (8th Cir. 2008) (“Like the B.A.P., we review the
bankruptcy court's entry of summary judgment de novo.”).
DISCUSSION
Mr. Grimlie apparently wants the trustee to be bound by the September 8, 2005,
settlement agreement despite the illegal division of the property. He simply wants to
bring an end to the lengthy litigation that has arisen from his bankruptcy case.
However, in order to rule in favor of Mr. Grimlie, the bankruptcy court would have
had to review issues it already decided and overrule findings in its earlier order in
Adversary Proceeding No. 07-4086.3 Collateral estoppel bars such review. Collateral
estoppel has five elements:
(1) the party sought to be precluded in the second suit must
have been a party, or in privity with a party, to the original
lawsuit;
(2) the issue sought to be precluded must be the same as the
issue involved in the prior action;
(3) the issue sought to be precluded must have been
actually litigated in the prior action;
(4) the issue sought to be precluded must have been
determined by a valid and final judgment; and
(5) the determination in the prior action must have been
essential to the prior judgment.
3
Which order found that the purpose of the settlement agreement had been
frustrated and that the parties’ mutual mistake regarding the zoning ordinances
made the settlement agreement voidable.
5
Anderson v. Genuine Parts Co., Inc., 128 F.3d 1267, 1273 (8th Cir. 1997).
All five elements exist here. The Grimlies were parties to Adversary Proceeding
No. 07-4086 and the issue in that case also dealt with enforcement of the September
8, 2005, settlement agreement. The enforceability of that settlement agreement was
actually tried in the bankruptcy court and it was determined to be unenforceable by
a valid and final judgment dated November 1, 2007. No appeal was filed. The
determinations regarding frustration of purpose and mutual mistake were essential to
the prior judgment refusing to enforce the settlement agreement.
All five elements having been met, Mr. Grimlie is barred from now attacking
those findings by the doctrine of collateral estoppel. Accordingly, the bankruptcy
court properly determined that the trustee was, as a matter of law, entitled to judgment
declaring the settlement agreement dated September 8, 2005, void. Further, since the
quitclaim deed was executed in furtherance of the void settlement agreement, the
bankruptcy court also properly declared the quitclaim deed to be void.
The bankruptcy court’s judgment also dismissed Counts II and III of the
trustee’s complaint in the underlying adversary proceeding. Count II sought to
reinstate earlier adversary proceedings filed by the trustee which were dismissed as
a result of the settlement agreement. Count III sought vacation of the order of
discharge. According to the transcript of the proceedings, the bankruptcy court
dismissed those counts because the relief requested should have been brought in the
applicable cases (the dismissed adversary cases and the underlying bankruptcy case)
instead of in a new adversary proceeding. It is not entirely clear, but it seems doubtful
that Mr. Grimlie meant to appeal that portion of the bankruptcy court’s judgment since
he was the successful party. In any event, Mr. Grimlie failed to address that portion
of the bankruptcy court’s judgment in his notice of appeal or in his brief. To be
reviewable, the issue must be presented in the brief with some specificity. Leonard v.
6
Dorsey & Whitney LLP, 553 F.3d 609, 637n.11 (8th Cir. 2009) (Colloton, J.,
dissenting) (citing JCB, Inc. v. Union Planters Bank, NA,
539 F.3d 862, 875 n.8 (8th
Cir. 2008)); Fed. R. App. P. 28(a)(5).
DECISION
Accordingly, we affirm the judgment of the bankruptcy court.
______________________________
7
