- US Court of Appeals 8th Cir (Case No. 11-1653)
- The Court of Appeals affirmed the Bankruptcy Appellate Panel's ruling. See 8th Cir. R 47 B. Specifically, the court refused to consider an argument from the trustee indicating the burden of proof in a fraudulent transfer shifted to the debtors based on state common law since the argument was never argued at the bankruptcy court or bankruptcy appellate panel level.
- Procedural context:
- The trustee, John Lovald, appealed the Bankruptcy Appellate Panel's ruling in favor of the debtors, Jeremiah Joseph Paul and Stacy Marie Paul.
- The trustee brought an adversary proceeding against Mr. Paul's step mother and sister seeking to avoid transfers made within 2 years of filing claiming that they were fraudulent pursuant to Wyoming state statute (see Wyo. Stat. Ann. Section 34-14-205). The bankruptcy court held a bench trial found that the trustee failed to prove one of the necessary elements of fraudulent transfer pursuant to the statute. The trustee appealed the decision to the BAP which also resulted in a similar verdict. Neither at the bankruptcy court hearing nor at the bankruptcy appellate panel did the trustee raise issue to who bears the burden of proof. On appeal with the Court of Appeals, the trustee argued that Wyoming common law creates a presumption of fraud under the circumstances in this cases and that the burden shifted to on the defendants. Because this argument was not presented to the lower courts, the court of appeals refused to consider it.
- Riley, Beam and Bye.
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