Morgan v. Goldman

573 F.3d 615, 62 Collier Bankr. Cas. 2d 728, 2009 U.S. App. LEXIS 16712, 2009 WL 2226026
CourtCourt of Appeals for the Eighth Circuit
DecidedJuly 28, 2009
Docket07-3782
StatusPublished
Cited by15 cases

This text of 573 F.3d 615 (Morgan v. Goldman) is published on Counsel Stack Legal Research, covering Court of Appeals 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
Morgan v. Goldman, 573 F.3d 615, 62 Collier Bankr. Cas. 2d 728, 2009 U.S. App. LEXIS 16712, 2009 WL 2226026 (8th Cir. 2009).

Opinion

MELLOY, Circuit Judge.

Jo-Ann Goldman, a Chapter 13 bankruptcy trustee, appeals a Bankruptcy Appellate Panel (“BAP”) decision that affirmed a bankruptcy court 2 order removing her as trustee from all cases assigned to her in the Eastern and Western Districts of Arkansas. We affirm.

I.

Goldman was appointed trustee for James and Linda Morgan, who filed a voluntary Chapter 13 bankruptcy petition on March 3, 2003. On July 30, 2003, the bankruptcy court confirmed a plan for the Morgans providing that: (1) the Morgans would pay $775 per month for 58 months to Goldman, the trustee; (2) the Morgans’ residential-mortgage lender, DeWitt Bank & Trust, would be paid the full value of its secured claim, $32,500 with interest; (3) the remaining unsecured creditors would “receive a pro-rata dividend from funds remaining after payment of administrative, secured, priority, child support, and special nonpriority unsecured claims”; and (4) the Morgans would “submit all projected disposable income for the benefit of unsecured creditors during the first 36 months of the plan.”

On March 29, 2005, the Morgans moved for the bankruptcy court’s approval to settle a tort claim that they had listed in their schedules as an unliquidated claim with an unknown value. According to their motion, the Morgans intended to submit their proceeds from the proposed settlement, which amounted to approximately $30,000, to Goldman “to be distributed pursuant to [their] confirmed plan with the exception that [they would] be allowed to request a refund in a sum sufficient to replace the roof on their home and repair [their] vehicle.”

After the Morgans submitted their motion but before the court ruled, Goldman and one of the Morgans’ lawyers, Jeremy Bueker, further discussed the disbursement of the Morgans’ proposed settlement proceeds. In a series of emails, Bueker told Goldman that, rather than paying the proposed settlement proceeds to unsecured creditors, the Morgans wanted Goldman to use the proceeds to pay off their secured mortgage with DeWitt Bank & Trust. Goldman responded that the proceeds were “disposable income” earned within thirty-six months of the plan’s confirmation and that, under the terms of the confirmed plan, the proceeds had to be paid to unsecured creditors. Goldman stated, however, that she could pay the secured mortgage if the Morgans’ increased their base payments and the settlement proceeds came to her office without specific instructions from the bankruptcy court. Bueker, who was drafting a proposed settlement-approval order for the bankruptcy court, replied to Goldman:

If I state [in the proposed order] that the money comes to your office period, *619 will you first pay off secured and then priority claims before money is disbursed to unsecured creditors? If not, I think the [Morgans] are better off dismissing or converting to Chapter 7. I advised them to proceed this way so that their house would be paid off.

Goldman responded, “I will pay it out but add whatever the amount is to the base, so the unsecured creditors are being paid with monthly payments.” Bueker then sent Goldman a proposed court order authorizing the Morgans’ tort settlement, which he subsequently submitted to the bankruptcy court. The order simply instructed the Morgans to pay their settlement proceeds to Goldman and provided that the Morgans could “apply for a refund from said funds.” The court entered the order without objection.

In May 2005, Goldman received the Morgans’ settlement proceeds. The Morgans requested approximately $9,000 of the proceeds to repair their home and car, and Goldman refunded the Morgans approximately $10,000 for those purposes. Goldman later testified that she had intended to place a notation in the Morgans’ file instructing her employees not to disburse the remaining $20,000 to unsecured creditors, but she failed to make such a notation. Thus, Goldman’s office distributed the Morgans’ remaining settlement proceeds to the Morgans’ unsecured creditors instead of paying the .Morgans’ secured mortgage with DeWitt Bank & Trust.

On August 30, 2005, the Morgans sued Goldman and their unsecured creditors to recover the disbursed settlement proceeds. The Morgans argued that turnover of the proceeds was necessary because the confirmed plan required Goldman to pay their secured creditors first and, alternatively, because Goldman had agreed with Bueker to use the proceeds to pay off their secured mortgage. Goldman responded that the distribution of the proceeds to the unsecured creditors had been appropriate because the proceeds were disposable income earned within thirty-six months of the bankruptcy court’s confirmation of the Morgans’ bankruptcy plan.

On May 10, 2006, the bankruptcy court held a hearing regarding the Morgans’ claim. As relevant to this matter, one of the Morgans’ attorneys cross-examined Goldman concerning her agreement with Bueker. They had the following exchange:

Q: The conversation that you talked about with Mr. Bueker, this was after the order had been entered of record and the funds disbursed?
A: Oh, no. We had telephone conversations during the course of the email correspondence. Our total conversations were not limited to e-mail.
Q: Okay. But you agree that the email is very clear as—
A: Yes.
Q: —that you would disburse the money to the secureds first?
A: Yes.
Q: But your e-mail with Mr. Bueker was that you would pay [the settlement proceeds] to secured [sic]?
A: As a professional courtesy, and with the meeting of the minds that the debtor intended on staying in 58 months, I was willing to grant his request.
Q: Okay. But then it didn’t happen?
A: Unfortunately, I didn’t docket that in the docket.
Q: Okay.
A: And my staff, it disbursed as it normally would pursuant to office procedure.

The bankruptcy court also questioned Goldman regarding her disputed agreement with Bueker and, in response to the *620 court’s questions, Goldman gave the following testimony:

THE COURT: Okay. So what happened here is you agreed to, with Mr. Bueker, if he would give you the money you would disburse it to the secured creditor and then you didn’t make that proper note or something in the docket, and the money went out contrary to your agreement?
THE WITNESS: Well, realize though this wasn’t to get the money.
THE COURT: Okay. I understand.
THE WITNESS: I knew I was going to get the money. THE COURT: That’s right.
THE WITNESS: So it was just under the terms we don’t want that to be a restrictive order telling the Trustee how to disburse, so we always request that it come in and it be disbursed pursuant to the confirmed plan.

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Bluebook (online)
573 F.3d 615, 62 Collier Bankr. Cas. 2d 728, 2009 U.S. App. LEXIS 16712, 2009 WL 2226026, Counsel Stack Legal Research, https://law.counselstack.com/opinion/morgan-v-goldman-ca8-2009.