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The Security National Bank of Sioux City, IA v. Vera T. Welte Testamentary Trust

Summarizing by Amir Shachmurove

Schwab v. Oscar (In re SII Liquidation Co.)

Citation:
Schwab v. Oscar (In re SII Liquidation Co.), Case No. 14-8009 (6th Cir. B.A.P. Sept. 15, 2014).
Tag(s):
Ruling:
The Sixth Circuit Bankruptcy Appellate Panel (BAP) affirmed the bankruptcy court's denial of a motion for relief from judgment. The bankruptcy court had previously dismissed movants' malpractice claim for lack of standing, and the movants did not appeal. Subsequently, the movants sought relief from the judgment under Fed. R. Bankr. P. 9024 based on allegedly newly discovered evidence. The bankruptcy court denied the motion. On appeal of the denial of the 9024 motion, the BAP found that the new evidence asserted by movants did not affect the movants' lack of standing, and, therefore, the law of the case doctrine barred movants' request for relief.
Procedural context:
Appeal to the Sixth Circuit Bankruptcy Appellate Panel of a ruling by the United States Bankruptcy Court for the Northern District of Ohio denying a motion for relief from judgment under Fed. R. Bankr. P. 9024, incorporating Fed. R. Civ. P. 60(b).
Facts:
The debtor, Schwab Industries, Inc. filed a chapter 11 bankruptcy petition authorized by the debtors' board of directors. Approximately two years later, the movants, members of debtors' board of directors, filed an adversary proceeding against debtor's bankruptcy counsel asserting malpractice relating to an allegedly undisclosed conflict of interest with Bank of America. The bankruptcy court dismissed the adversary proceeding on the grounds of lack of standing and res judicata. The movants did not appeal. Later, the movants sought relief from the dismissal of the adversary proceeding under Fed. R. Bankr. P. 9024, incorporating Fed. R. Civ. P. 60(b). As grounds for its 60(b) relief, movants alleged newly discovered evidence in the form of another conflict of interest by debtor's counsel, this time with Huntington National Bank. The bankruptcy court denied the motion for relief from the judgment because the movants' new evidence did not challenge the court's prior ruling that they lacked standing. Therefore, the movants remained bound by the court's earlier ruling. The bankruptcy court also found that the allegedly newly discovered evidence was neither new nor newly discovered, and that, in any event, the motion was not timely because movants had information which could have led to the discovery of the alleged conflict much earlier. Movants appealed to the 6th Circuit Bankruptcy Appellate Panel.
Judge(s):
HUMPHREY, OPPERMAN, and PRESTON

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