In re: SCOTT WARREN JENCKS AND LINDA LEE JENCKS
- Case Type:
- Consumer
- Case Status:
- Reversed and Remanded
- Citation:
- 24-6010 (8th Circuit, Aug 12,2025) Published
- Tag(s):
-
- Ruling:
- In the context of a debtor's right to exempt their homestead, a bankruptcy court may not make an adverse inference against the debtor even if the debtor purchased new property before bankruptcy and failed to disclose this new property in their schedules and statements. The bankruptcy court thus improperly granted a creditor summary judgment on the debtors' request to sanction the creditor for violating the discharge injunction where the bankruptcy court found, without evidence, that the property exempted by the debtors as their homestead lost that status upon the purchase of the new property.
- Procedural context:
- After a creditor foreclosed on property that the debtors had declared as exempt, the debtors asked the bankruptcy court to reopen their case and to sanction the creditor for violating the discharge injunction. The creditor filed a motion to dismiss the debtors' sanctions proceedings, which the bankruptcy court granted.
The debtors appealed.
- Facts:
- The debtors/appellants, Scott Warren Jencks and Linda Lee Jencks, borrowed money from AgVantage FS, a division of Growmark, Inc. ("AgVantage"). Before the debtors filed their bankruptcy petition, Agvantage obtained a judgment of $830,910.47 against the debtors.
Twelve days before filing their bankruptcy case, the debtors bought real property at 344 South Sheakly Avenue in New Hampton, Iowa. The seller signed a deed showing a purchase price of $195,000, but the deed was not recorded until three months later.
In their bankruptcy statements and schedules, the debtors listed another property, consisting of three parcels (the "Waucoma Property"), as their principal residence and claimed that the Waucoma Property was fully exempt under Iowa law. No one objected to the debtors' assertion that the Waucoma Property was exempt. The debtors, however, did not schedule or otherwise disclose the South Sheakly Avenue property.
The debtors scheduled an unsecured and undisputed non-priority debt of $598,077.00 to Agvantage.
At the debtors' 341 meeting, the trustee announced the intention to abandon all of the debtors' property, apparently without knowledge of the debtors' interests in the South Sheakly Avenue property.
The next day, the debtors signed a Declaration of Homestead, listing only two of the three parcels that comprised the Waucoma Property. The debtors served the declaration on Agvantage and then filed it, and a declaration of service, with the Fayette County, Iowa, Recorder.
The Chickasaw County, Iowa, Recorder, did not file the debtors' deed to the South Sheakly Avenue property until more than three months after the debtors purchased the South Sheakly Avenue property.
Five days later, the debtors sold two of the three parcels that comprised the Waucoma Property. The debtors then received a bankruptcy discharge about two weeks later.
Agvantage then sought, in state court, to execute against and sell the remaining parcel of the Wacoma Property. The debtors applied for a stay of the sheriff's sale. The state court granted the stay, and then lifted the stay after the debtors failed to support their injunction request.
Eighteen months after the debtors received their discharge, Agvantage obtained title to the remaining parcel of the Waucoma Property by entering a successful credit bid of $500,000 at the sheriff's sale.
Before the sheriff's sale was concluded, the debtors moved to reopen their bankruptcy case so that they could file a motion to avoid AgVantage's judicial lien. The bankruptcy court reopened the debtors' case and conducted a hearing on the debtors' motion to avoid AgVantage's judicial lien.
In December 2023, the debtors filed a complaint against AgVantage, seeking contempt sanctions for AgVantage's alleged violation of the discharge injunction. AgVantage responded by filing a motion to dismiss under Fed. R. Civ. P. 12(b)(1) and 12(b)(6).
Following a hearing, the bankruptcy court ruled in favor of AgVantage, noting the debtors' failure to disclose the South Sheakly Avenue property and finding that the Waucoma Property lost its homestead status when the debtors purchased the South Sheakly Avenue property.
- Judge(s):
- HASTINGS, Chief Judge, SURRATT-STATES AND CONSTANTINE, Bankruptcy Judges
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