Gibson v. Tucker (In re G & S Livestock Co.)

478 B.R. 906
CourtDistrict Court, S.D. Indiana
DecidedSeptember 5, 2012
DocketNo. 2:12-cv-0095-JMS-MJD; Bankruptcy No. 11-58007
StatusPublished
Cited by3 cases

This text of 478 B.R. 906 (Gibson v. Tucker (In re G & S Livestock Co.)) is published on Counsel Stack Legal Research, covering District Court, S.D. Indiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gibson v. Tucker (In re G & S Livestock Co.), 478 B.R. 906 (S.D. Ind. 2012).

Opinion

ORDER

JANE MAGNUS-STINSON, District Judge.

Appellants-Defendants Paul Gibson, Sr. (“Paul Sr.”) and Melinda Hart (collectively, “Defendants”) have filed a Notice of Appeal, [dkt. 4-1], from the Bankruptcy Court’s order denying their Motion for Leave to File Appeal Pursuant to Bankruptcy Rule 8002(c)(2), [dkt. I].1 In addition to arguing that the Bankruptcy Court erred by finding that they did not possess the requisite level of excusable neglect to pursue a belated appeal, Defendants challenge the Bankruptcy Court’s authority to enter final judgment on the fraudulent transfer claim that Trustee William J. Tucker (the “Trustee”) brought against them. [Dkt. 9 at 4-10 (relying on Stern v. Marshall, — U.S. -, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011) (holding that although a bankruptcy court had the statutory authority to enter judgment on a state law counterclaim, it lacked the constitutional authority to enter final judgment under Article III of the United States Constitution)).]

For the following reasons, the Court concludes that although the Bankruptcy Court had the statutory authority to enter final judgment on the Trustee’s fraudulent conveyance claim against the Defendants, it lacked the constitutional authority to do so under Article III of the United States Constitution. Because the constitutional authority at issue is not jurisdictional, however, and the Defendants either expressly or by their conduct consented to the Bankruptcy Court ruling on the Trustee’s fraudulent transfer claim, the Court concludes that the Bankruptcy Court’s judgment was final. The Court affirms the Bankruptcy Court’s conclusion that the Defendants failed to show excusable neglect sufficient to file a belated appeal pursuant to Bankruptcy Rule 8002(c)(2). Accordingly, the judgment of the Bankruptcy Court is affirmed and the Defendants’ appeal is dismissed with prejudice.

I.

Background2

G & S Livestock Company (“G & S”) was a wholesale hog dealer that operated in Indiana for almost 30 years, until it ceased doing business in August 2010. [Dkt. 14-6 at 2.] Paul Sr. started the business, and his son Paul Gibson, Jr. (“Paul Jr.”), became active in the business in the mid-1980s. [Id.] G & S’s business involved the purchase of hogs from suppliers, the sale and transportation of hogs to packers, the collection of invoices sent to packers, and the payment of hog suppliers [909]*909and transportation costs. [M] Seven businesses (the “Petitioning Creditors”) did business with G & S for many years, supplying it with hogs and transportation services. [Id]

Between mid-July and mid-August 2010, G & S purchased and received hogs from the Petitioning Creditors at a cost of $1,116,311 and incurred transportation charges of $78,220. [Id] G & S sold the hogs to a packer in New Jersey; however, G & S failed to pay the amounts owed to the Petitioning Creditors and, instead, abruptly closed its business. [Id]

On September 2, 2010, the Petitioning Creditors filed an involuntary petition against G & S. [Id at 3.] The Bankruptcy Court entered a relief order on October 8, 2010, adjudicating G & S to be a Chapter 7 debtor partnership. [Id] No party appealed the relief order. [Id]

The Trustee was appointed the Chapter 7 trustee on October 19, 2010, and filed an adversary proceeding against Paul Sr., Paul Jr., and Melinda Hart on February 7, 2011. [Dkts. 14-2; 14-6 at 3.] In relevant part, the Trustee alleged that during 2010, when it became apparent that G & S would not be able to repay its obligations to its creditors, Paul Sr. transferred all or a significant portion of his real estate to his girlfriend, Ms. Hart. [Dkt. 14-2 at 4.] The Trustee alleged that Paul Sr. received nothing in exchange for the transfer. [Id] Additionally, the Trustee alleged that Paul Jr. transferred a 120-acre farm to Ms. Hart that had a value of at least $344,000 at the time of the transfer and that Paul Jr. received inadequate consideration in exchange. [Id] Based on these allegations, the Trustee asserted a fraudulent transfer claim against Paul Sr., Paul Jr., and Ms. Hart, alleging that they violated Indiana Code §§ 32-18-2-14 and -15. [Id at 5.] In relevant part, the Trustee requested that the Bankruptcy Court avoid and set aside the Gibsons’ transfers to Ms. Hart.

In response to the Trustee’s Complaint, the Defendants admitted the Bankruptcy Court’s authority over the proceedings pursuant to 28 U.S.C. §§ 157 and 1334. [Dkt. 14-3 at 2.] The Defendants again admitted the Bankruptcy Court’s authority in their trial brief, filed in October 2011, in which they stipulated that the Bankruptcy Court “has jurisdiction over them as defendants and the matters contained therein pursuant to 28 U.S.C. § 157 and 28 U.S.C. § 1334 and 11 U.S.C. § 723(a).” [Dkt. 14-5 at 3.]

The Bankruptcy Court conducted a trial on November 2, 2011, and the Defendants were present when the court announced its adverse ruling against them. [Dkts. 5-10 at 5; 14-6 at 1.] The Bankruptcy Court issued a written decision on December 15, 2011, finding that the Gibsons’ transfers to Ms. Hart were voidable under 11 U.S.C. § 544(b) and Indiana Code § 32-18-2-15. [Dkt. 14-6 at 10.] The Bankruptcy Court entered final judgment the same day. [Dkt. 5-1.]

The Defendants admit that they received a copy of the Bankruptcy Court’s order on or about December 19, 2011, but allege that their attorney did not inform them of the deadline for filing a notice of appeal, which was December 29, 2011. [Dkt. 1 at 1.] Instead, the Defendants met with five other lawyers regarding their right to appeal and, ultimately, retained counsel and sought leave to file a belated appeal on January 12, 2012. [Dkt. 1 at 1-2.] The Bankruptcy Court held a hearing on the Defendants’ motion and issued a decision on February 24, 2012, denying their motion after finding that they failed to set forth sufficient evidence of excusable neglect as required by Bankruptcy Rule 8002(c)(2). [Dkt. 5-10 at 2, 8.] On March 8, 2012, the Defendants filed a notice of [910]*910appeal from the Bankruptcy Court’s decision denying their motion to file belated appeal.3 [Dkt. 5-11.]

II.

Discussion4

In addition to arguing that the Bankruptcy Court erred by concluding that they did not meet the standard for excusable neglect to file a belated appeal, the Defendants challenge the authority of the Bankruptcy Court to enter final judgment on the Trustee’s fraudulent conveyance claim, relying on the recent decision of the United States Supreme Court in SteRN v. Marshall, — U.S. -, 131 S.Ct.

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478 B.R. 906, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gibson-v-tucker-in-re-g-s-livestock-co-insd-2012.