Asbury v. Alliant Bank (In Re Asbury)

423 B.R. 525, 63 Collier Bankr. Cas. 2d 279, 2010 Bankr. LEXIS 301, 2010 WL 431716
CourtUnited States Bankruptcy Appellate Panel for the Eighth Circuit
DecidedFebruary 9, 2010
DocketBankruptcy 09-6026
StatusPublished
Cited by7 cases

This text of 423 B.R. 525 (Asbury v. Alliant Bank (In Re Asbury)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Appellate Panel for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Asbury v. Alliant Bank (In Re Asbury), 423 B.R. 525, 63 Collier Bankr. Cas. 2d 279, 2010 Bankr. LEXIS 301, 2010 WL 431716 (bap8 2010).

Opinions

MAHONEY, Bankruptcy Judge.

The debtor appeals from an order of the United States Bankruptcy Court for the Western District of Missouri1 entered on July 14, 2009, denying court approval of a written waiver of his right to a discharge under 11 U.S.C. § 727(a)(10). For the reasons stated below, we affirm.

Facts and Procedural History

The debtors filed a voluntary Chapter 7 bankruptcy petition on October 31, 2008. The scheduled amounts of assets and liabilities were large, and claims in excess of $11 million were filed. Creditors filed a number of adversary proceedings against the debtors; some objected to the dis-chargeability of particular debts under 11 U.S.C. § 523, some objected to entry of a discharge under 11 U.S.C. § 727, and some objected to both. The debtors moved to dismiss the Chapter 7 case, asserting they did not have the resources to litigate all of the adversary proceedings. After objections were filed but before a hearing was held, the debtors withdrew the motion to dismiss and filed the debtor Kevin As-bury’s waiver of discharge. Three creditors objected, arguing that the debtor was attempting to escape the effect of having judgments entered against him in the adversary proceedings and force the creditors to pursue him outside of bankruptcy, likely in his new home state of Florida. After two hearings, the bankruptcy court denied the waiver of discharge, finding that the debtor did not clearly understand the legal consequences of a waiver and a waiver would prejudice the creditors, and further finding that it had proper jurisdiction to adjudicate the nondischargeability claims and enter a money judgment. This appeal, on the issue of whether the bankruptcy court properly refused to approve the debtor’s waiver of discharge, followed.

Standard of Review

The appropriate appellate standard of review was set forth in Official Committee of Unsecured Creditors v. Farmland Indus., Inc. (In re Farmland Indus., Inc.), 397 F.3d 647, 650-51 (8th Cir.2005):

We review the bankruptcy court’s interpretation of the Bankruptcy Code de novo and its findings of fact for clear error. [Hold-Trade Int'l, Inc. v. Adams Bank & Trust (In re Quality Processing, Inc.) ] In re Quality Processing, 9 F.3d 1360, 1363 (8th Cir.1993). We review issues committed to the bankruptcy court’s discretion for an abuse of that discretion. [Jones Truck Lines, Inc. v. Foster’s Truck & Equip. Sales, Inc. (In re Jones Truck Lines, Inc.) ] In re Jones Truck Lines, Inc., 63 F.3d 685, 686 (8th Cir.1995). The bankruptcy court abuses its discretion when it fails [528]*528to apply the proper legal standard or bases its order on findings of fact that are clearly erroneous. Stalnaker v. DLC, Ltd., 376 F.3d 819, 825 (8th Cir.2004).

Waiver of a right is an intentional relinquishment of that right, so whether a waiver has occurred is a factual determination that is reviewed for clear error. First Nat’l Bank v. Allen, 118 F.3d 1289, 1294 (8th Cir.1997); Tatge v. Tatge (In re Tatge), 212 B.R. 604, 609 (8th Cir.B.A.P. (Iowa),1997). A factual finding is “ ‘clearly erroneous’ when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” Anderson v. City of Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948)).

Discussion

The Bankruptcy Code provides for a debtor’s discharge from liability on his debts, unless the debtor has engaged in conduct to thwart the collection, administration, and distribution of his assets to his creditors, previously received a discharge within the time frame prohibited by the Code, fails to complete a course on personal financial management, or obtains approval by the court of a written waiver of discharge. 11 U.S.C. § 727(a). Specifically, § 727(a)(10) states: “The court shall grant the debtor a discharge, unless —... (10) the court approves a written waiver of discharge executed by the debtor after the order for relief under this chapter[.]”

The debtor argues that the bankruptcy court improperly refused to approve his waiver because the court exceeded the scope of its authority under § 727(a)(10) by considering the best interests of the parties. In the debtor’s view, the court should approve a waiver whenever a debt- or establishes the waiver was made voluntarily and intentionally. He argues that the drafters of the Bankruptcy Code knew how to instruct a judge to consider a party’s best interests, and did so in numerous provisions of the Code. That they did not so instruct the court in § 727(a)(10) is telling, according to the debtor, and indicates Congressional intent to constrain the judge’s weighing of factors such as the debtor’s good faith or motivation, or the potential harm to creditors.

The Bankruptcy Code imposes four requirements for an effective discharge waiver: (1) the waiver must be in writing; (2) it must be signed by the debtor; (3) it must be filed post-petition; and (4) it must be approved by the court. § 727(a)(10); In re Eliscu, 163 B.R. 335, 340 (Bankr.N.D.Ill.1994); Cheripka v. Republic Ins. Co. (In re Cheripka), 122 B.R. 33, 37 (Bankr.W.D.Pa.1990).

Contrary to the debtor’s argument, this waiver is not self-effectuating. It requires the approval of the bankruptcy court. The debtor seems to be operating under the impression that the court’s approval is merely a formality, that the judge is to simply rubber-stamp the waiver —;no more, no less—and let the debtor be on his way. If this were the case, the Code would not need to require court approval; the clerk could automatically enter an order approving such a waiver, for instance, without the judge ever seeing it. Instead, Congress deemed review by the court to be essential before judicial authority could be exercised to approve the waiver.

A waiver is the intentional relinquishment or abandonment of a known right. Kontrick v. Ryan, 540 U.S. 443, 458 n. 13, 124 S.Ct. 906, 157 L.Ed.2d 867 (2004). No one can be bound by a waiver [529]*529of one’s rights unless it was made with full knowledge of the rights intended to be waived. Cameron v. Norfolk & W. Ry.,

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Asbury v. Alliant Bank (In Re Asbury)
423 B.R. 525 (Eighth Circuit, 2010)

Cite This Page — Counsel Stack

Bluebook (online)
423 B.R. 525, 63 Collier Bankr. Cas. 2d 279, 2010 Bankr. LEXIS 301, 2010 WL 431716, Counsel Stack Legal Research, https://law.counselstack.com/opinion/asbury-v-alliant-bank-in-re-asbury-bap8-2010.