Robert J. Blackwell v. Ronald U. Lurie ( 2003 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 03-1325
___________
In re: Popkin & Stern, *
*
Debtor. *
*
Robert J. Blackwell, Liquidating *
Trustee of the Popkin & Stern *
Liquidating Trust, * Appeal From the United States
* Bankruptcy Appellate Panel.
Appellee, *
*
v. *
*
Ronald U. Lurie, *
*
Appellant. *
___________
Submitted: September 11, 2003
Filed: October 10, 2003
___________
Before LOKEN, Chief Judge, HEANEY and HANSEN, Circuit Judges.
___________
HEANEY, Circuit Judge.
Robert U. Lurie appeals the United States Bankruptcy Appellate Panel’s (BAP)
decision upholding the United States Bankruptcy Court’s order of July 19, 2002,
finding that a 1994 judgment against Lurie is subject to collection and execution, has
been accruing interest since 1994, and that administrative costs can be added to the
judgment. For the reasons set forth below, we affirm the BAP’s decision and
determine that the administrative costs were properly added to what Lurie owes to the
Liquidating Trust.
BACKGROUND
This appeal comes to us after years of litigation stemming from the bankruptcy
of Popkin & Stern, a Missouri law firm. The facts of this case are not in dispute and
have been reported at length below. In re Popkin & Stern, 287 B.R. 738, 740-41
(B.A.P. 8th Cir. 2003). Lurie was a general partner of Popkin & Stern and agreed to
contribute $361,704.00 to the firm’s Liquidating Trust as part of the Chapter 11
reorganization plan. Lurie defaulted on the terms of the trust agreement allowing
Robert J. Blackwell, the Liquidating Trustee, to bring suit against him for any
deficiency in the Liquidating Trust and estate obligations. That suit resulted in a
judgment against Lurie in the amount of $1,121,743.00 (1994 Judgment). In re
Popkin & Stern, No. 92-42218-293, slip op. (Bankr. E.D. Mo. Oct. 20, 1994). This
judgment also provided that “[i]f the amount of the deficiency is ultimately
determined to be less than the amount of this judgment, the Liquidating Trustee shall
move this Court to reduce this judgment.” Id.Lurie appealed the 1994 Judgment to the district court, but the appeal was
dismissed due to Lurie’s failure to file a brief. In 1997, the 1994 Judgment was
revived by the bankruptcy court and Lurie appealed that revival. Both the BAP and
the Eighth Circuit affirmed. In re Popkin & Stern, 266 B.R. 772 (B.A.P. 8th Cir.
1998), aff’d, 168 F.3d 494 (8th Cir. 1998) (unpublished table decision). In 2000, the
1994 Judgment was revived a second time and Lurie did not appeal that decision.
In 2002, Lurie filed a motion with the bankruptcy court, requesting a hearing
on two previous motions filed in October 2001 and April 2002. The primary relief
sought by Lurie in his motions was a declaration by the bankruptcy court that the
-2-
1994 Judgment was not a final judgment for a sum certain, that it could be adjusted
to reflect reductions in claims, and to stay Blackwell’s attempts to further collect on
the 1994 Judgment. The bankruptcy court denied all relief and assessed Lurie the
reasonable costs of the accounting and supplemental accounting in the amount of
$14,224.50, and $12,955.00 as reasonable attorneys’ fees incurred by the Trustee in
the defense of the motions.
Lurie now appeals the BAP’s decision, which affirmed the bankruptcy court’s,
holding that the 1994 Judgment was for a sum certain, was not subject to modification
or adjustment, and was subject to collection and execution. Also before us is the
BAP’s determination that the administrative and legal expenses could not be added
to the 1994 Judgment.
We apply the same standard of review as the BAP, reviewing the bankruptcy
court’s findings of fact for clear error and its conclusions of law de novo. In re
Popkin & Stern, 223 F.3d 764, 765 (8th Cir. 2000).
ANALYSIS
In his appeal to this court, Lurie concedes that the 1994 Judgment is a final
judgment, but argues that Blackwell cannot execute the judgment until all of Popkin
& Stern’s assets are liquidated and the actual deficiency of the Liquidating Trust is
determined. The 1994 Judgment was for $1,121,743.00, plus interest. This is a final
and certain sum creating in Lurie an immediate obligation to pay. The bankruptcy
court did allow for a reduction in this amount if the “amount of the deficiency is
ultimately determined to be less than the amount of this judgment.” In re Popkin &
Stern, No. 92-42218-293, slip op. (Bankr. E.D. Mo. Oct. 20, 1994) (emphasis added).
In other words, Lurie must pay into the Liquidating Trust the maximum amount of
$1,121,743.00, plus interest. If, when the Liquidating Trust is closed, this amount
exceeds the actual deficiency of the Liquidating Trust, the court may reduce the
-3-
amount of the judgment owed by Lurie. This potential reduction, however, does not
negate the fact that the 1994 Judgment is final, is for a sum certain, creates in Lurie
an immediate obligation to pay, and grants Blackwell a right to immediately execute
the judgment.
The BAP also did not err in applying interest to the Lurie judgment. The 1994
Judgment is for the final and certain sum of $1,121,743.00, “plus interest from the
date of entry of judgment at the rate provided by 28 U.S.C. § 1961.” Id. We agree
with the BAP that based on the plain language of § 1961(a), interest began accruing
on the 1994 Judgment the day it was entered. This fact is not altered by the
possibility that the 1994 Judgment may ultimately be reduced if the actual deficiency
of the Liquidating Trust is found to be less than the judgment. Should that situation
occur, the court hearing that case can take the added interest into consideration when
reducing Lurie’s obligation.
Lurie next directs our attention to the administrative costs and attorneys’ fees
incurred by Blackwell on behalf of the Liquidating Trust. The bankruptcy court
found that the Liquidating Trustee incurred reasonable costs in the amount of
$14,224.50 for preparation of the accounting and supplemental accounting and
reasonable attorneys’ fees in the amount of $12,955.00 for defense of Lurie’s October
and April motions, and held that these fees should be added to the judgment against
Lurie. The BAP stated that because the bankruptcy court’s order only denied Lurie’s
motions, the bankruptcy court’s findings on this issue was dictum and did not
constitute reversible error. The BAP did add, however, that it disagreed with the
bankruptcy court that the fees could be added to the judgment against Lurie because
the judgment is a final and unalterable sum certain. We disagree with the BAP’s
ruling that the bankruptcy court’s findings on administrative costs and fees is dictum.
We also do not read the bankruptcy court’s decision as adding the costs and fees to
the 1994 Judgment. Instead, we read the bankruptcy court’s decision as merely
-4-
assessing the administrative costs against Lurie and adding those costs to the amount
Lurie still owes to the Liquidating Trust from the 1994 Judgment.1
To summarize, we hold that: (1) the 1994 Judgment is a final judgment for a
sum certain; (2) Lurie has an immediate obligation to pay and Blackwell has a right
to execute the judgment; (3) interest on the full $1,121,743.00 has been accruing
since the judgment was entered and will continue to accrue until Lurie pays in full;
(4) the costs and fees incurred by Blackwell in defending against the October and
April motions were assessed against Lurie by the bankruptcy court and were not
added to the 1994 Judgment, but were merely added to what Lurie owes to the
Liquidating Trust; and (5) the reasonable administrative costs Blackwell has incurred
as Trustee can be included in determining the actual deficiency, if any, of the
Liquidating Trust. We trust that the ongoing litigation between these parties will now
come to an end. Lurie must recognize his obligation to pay in accord with the 1994
Judgment and do so without further litigation. Moreover, it is time for Blackwell to
close the books on the Liquidating Trust and stop incurring ongoing costs and fees
which continue to increase the deficiency of the Trust.
______________________________
1
It appears from Lurie’s briefs that he makes two additional arguments
concerning administrative costs. Lurie argues that administrative costs should not
have been included in the deficiency calculation when the 1994 Judgment was
originally entered. It is too late to raise this argument and we refuse to hear it. In
addition, Lurie argues that the administrative costs and attorneys’ fees incurred by the
Liquidating Trust cannot be used when calculating the ultimate actual deficiency of
the Liquidating Trust. We disagree. All creditors’ rights and reasonable costs and
fees incurred by Blackwell are part of the Liquidating Trust’s obligations and should
be included when calculating the actual deficiency of the Liquidating Trust when the
Trust is finally closed.
-5-