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Summarizing by Jaden Banks


Summarizing by Amir Shachmurove

Cutcliff v. Reuter

Cutcliff v. Reuter, __ F.3d __, 2105 WL 3953147 (8th Cir. June 30, 2015)
The individual debtor did not have standing to appeal default judgment entered against a related limited liability company, although the co-trustee of a trust did have sufficient standing to do so. Regardless, the matter was related to the bankruptcy and the court dismissed the appeal as to the debtor and affirmed the district court as to the co-trustee's appeal.
Procedural context:
The U.S. District Court for the Western District of Missouri adopted the bankruptcy court's recommendations as to default judgment against a company alleged to have been involved in the individual debtor's fraudulent investment scheme, and awarded damages to the victims. The individual debtor and the co-trustee of his trust appealed. The Eighth Circuit Court of Appeals concluded that the individual debtor lacked standing to appeal. The co-trustee had standing, but the Court rejected the trustee's arguments for reversal. Affirmed in part and appeal dismissed in part.
Victims of the individual debtor's fraudulent investment scheme brought an action against both him and a limited liability company owned by him. A default judgment was entered against the company, and the court awarded damages to the victims. The victims hoped to use this judgment as part of their effort to reach the assets of a trust. The individual debtor and the co-trustee of the trust appealed (rather than the limited liability company itself). On appeal, the Court of Appeals found that the individual debtor lacked standing to pursue the appeal of a judgment against the company, because his powers as co-trustee of the trust had become property of the bankruptcy estate and he did not demonstrate how he was personally aggrieved by the judgment solely as a member of the company. Because the creditors hoped to obtain the trust assets, however, the co-trustee was aggrieved by the judgment and had standing to appeal. On the merits of the trustee's appeal, the Court found that (i) the underlying action was sufficiently "related to" the bankruptcy case and the matter was properly referred to the bankruptcy court for consideration and (ii) that actual and punitive damages were justified. Appeal affirmed in part and dismissed in part.
Loken, Melloy, and Gruender

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