Cockhren v. MidWestOne Bank (In re Cockhren)

Citation:
Cockhren v. MidWestOne Bank, Case No. 11-6067 (8th Cir. B.A.P. Apr. 9, 2012)
Tag(s):
Ruling:
The U.S. Bankruptcy Appellate Panel for the Eighth Circuit (the “8th Circuit B.A.P.”) affirmed the decision of the U.S. Bankruptcy Court for the Northern District of Iowa (the “Bankruptcy Court”) approving the Chapter 7 Trustee’s motion for approval of compromise or settlement of controversy. The Chapter 7 Trustee entered into a settlement with MidWestOne Bank (the “Bank”) in connection with lender liability and discrimination claims asserted by James Arthur Cockhren and Margaret Louise Cockhren (the “Debtors”). In affirming the decision and responding to the four issues raised by the Debtors on appeal, the 8th Circuit B.A.P. ruled that: (1) the Bank had standing to file a brief on appeal and did not file a brief on behalf of the Chapter 7 Trustee; (2) the Debtors had no absolute right to dismiss their Chapter 7 case and nothing obligated the Bankruptcy Court to dismiss the case based upon the Debtors’ intentional filing deficiencies; (3) the Bankruptcy Court did not abuse its discretion in denying the Debtors’ motion for a continuance and holding the hearing in the Debtors’ absence where the Debtors’ motion failed to comply with local rules and, further, offered no detail as to the “unforeseen health concerns” upon which the request for a continuance was based; and (4) the Bankruptcy Court did not abuse its discretion in approving the Chapter 7 Trustee’s settlement with the Bank where it found the Debtors’ claims against the Bank to be speculative at best. Finally, the Debtors sought oral argument on appeal, which request the 8th Circuit B.A.P. denied.
Procedural context:
The 8th Circuit B.A.P. affirmed the Bankruptcy Court’s decision granting the Trustee’s motion for approval of compromise or settlement of controversy and denied the Debtors’ request for oral argument. The Debtors raised four issues on appeal: (1) the Bank filed a brief on appeal on behalf of the Trustee; (2) the Bankruptcy Court erred in denying the Debtors’ motion to dismiss their Chapter 7 bankruptcy case; (3) the Bankruptcy Court deprived the Debtors of their due process and civil rights when it denied the Debtors’ motion for continuance; and (4) the Bankruptcy Court erred in approving the Trustee’s settlement with the Bank.
Facts:
Litigious, pro se Debtors appealed the decision of the Bankruptcy Court granting the Chapter 7 Trustee’s motion for approval of compromise or settlement of controversy, i.e. lender liability and discrimination claims asserted against the Bank by the Debtors. The Bank held a mortgage on the Debtors’ residence and an adjacent commercial lot as security for a loan. The Debtors and the Bank were involved in litigation over the loan since 2007. The Debtors brought claims against the Bank in an Iowa District Court case, a Chapter 13 bankruptcy case, a second Iowa District Court case, and the instant Chapter 7 bankruptcy case, and further asserted counterclaims in the two foreclosure actions brought by the Bank in an Iowa District Court. In approving the Trustee’s motion, the Bankruptcy Court found that “[t]he Debtors’ claims against the Bank were ‘speculative at best,’ that the Trustee was not willing to incur the expenses associated with prosecuting the seemingly unsubstantiated lender liability and discrimination claims, and that the Debtors were not represented by counsel in the District Court Action.” Based on its findings, the Bankruptcy Court approved the Bank’s settlement offer of $5,000 and found it to be a satisfactory, and not de minimis, settlement amount.
Judge(s):
Schermer, Federman, Venters

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