Andrew Alexander v. Mary Jo Jensen-Carter ( 2013 )

United States Court of Appeals
For the Eighth Circuit
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No. 12-2476
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Andrew Will Alexander and
Georgina Yvonne Stephens
lllllllllllllllllllllAppellants
v.
Mary Jo A. Jensen-Carter
and John A. Hedback
lllllllllllllllllllllAppellees
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Appeal from United States District Court
for the District of Minnesota
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Submitted: February 11, 2013
Filed: April 2, 2013
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Before MELLOY, ARNOLD, and SMITH, Circuit Judges.
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ARNOLD, Circuit Judge.
Georgina Stephens and Andrew Alexander appeal from the decision of the
district court1 affirming an order of the bankruptcy court giving possession of disputed
property to John Hedback and Mary Jo Jensen-Carter, trustees of the individual
bankruptcy estates of Ms. Stephens and Larry Alexander (Mr. Alexander),
respectively. Ms. Stephens and Mr. Alexander were previously married, and Andrew
is their son. We affirm.
This case originates from the separate bankruptcy petitions that Ms. Stephens
and Mr. Alexander filed during their marriage, and it concerns the ownership and
possession of a house in St. Paul, Minnesota (the house). Ms. Stephens and Andrew
also rely on a quit-claim deed by which Mr. Alexander purportedly transferred the
house to them shortly before filing his bankruptcy petition in 1998. (The deed is dated
March 15, 1998, but was not recorded until June 30, 2003.) The litigation over the
house has involved numerous appeals and parallel proceedings in state courts,
bankruptcy courts, district courts, and our court. Because the parties assert that
various preclusion doctrines – law-of-the-case, collateral estoppel, and res judicata –
control the outcome here, we recount some of the case's long procedural history.
When Mr. Alexander married Ms. Stephens in 1990, he owned the house. The
couple lived there in 1998, when Mr. Alexander moved out and filed for divorce.
About a week later, Mr. Alexander filed an individual bankruptcy petition and later
unsuccessfully claimed a homestead exemption in the house, see Minn. Stat. § 510.01;
11 U.S.C. § 522(b)(3)(A). Ms. Stephens filed for bankruptcy a few months after her
husband; she said in her bankruptcy filings that she lived in the house and paid rent
to Mr. Stephens, and she did not then claim a homestead exemption.
1
The Honorable John R. Tunheim, United States District Judge for the District of
Minnesota.
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In 2001, Ms. Jensen-Carter filed a state-court action under Minnesota's
unlawful-detainer statute, see Minn. Stat. § 504B.301, to obtain possession of the
house and evict Ms. Stephens. Ms. Stephens removed the action to federal court, but
the district court2 remanded it, saying that it was a state court action for possession "as
to which no independent federal jurisdiction exist[ed]." During that state proceeding
and several parallel federal proceedings, Ms. Stephens asserted that she had a
homestead interest in the house and that Mr. Alexander had transferred his interest in
the house to her and Andrew by signing the above-mentioned quitclaim deed. In the
unlawful detainer action, the state court denied possession of the house to Ms. Jensen-
Carter: It concluded that Ms. Stephens had made out a prima facie case that she
acquired a homestead interest upon marriage to Mr. Alexander and continued to live
in the house as her homestead, and that Ms. Jensen-Carter failed to meet her burden
of producing evidence to create a material fact question as to whether Ms. Stephens
had abandoned the homestead interest or it had otherwise been extinguished.
Ms. Jensen-Carter voluntarily dismissed her appeal of the state court decision.
In 2004, Ms. Jensen-Carter reopened Ms. Stephens's bankruptcy case and filed
an adversary action against Ms. Stephens, Mr. Hedback, and Mr. Alexander, alleging
that the quitclaim deed was an avoidable fraudulent conveyance, see 11 U.S.C. § 549,
and asking the court to evict Ms. Stephens and to declare Mr. Alexander's bankruptcy
estate to be the sole owner of the house. Ms. Stephens removed the case from
bankruptcy court to district court and moved for summary judgment, arguing, in part,
that the action to avoid the deed as fraudulent was time-barred by 11 U.S.C. § 549(d).
2
The Honorable Richard H. Kyle, United States District Judge for the District of
Minnesota, adopting the report and recommendation of The Honorable John M.
Mason, United States Magistrate Judge for the District of Minnesota.
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The district court3 denied Ms. Stephens's motion for summary judgment. In
addressing her arguments, the court indicated its belief that an order evicting
Ms. Stephens would essentially "vacate" the state court's ruling that Ms. Stephens "has
a possessory interest" in the house and thus contravene the Rooker-Feldman doctrine,
see Rooker v. Fidelity Trust Co., 263 U.S. 413, 415-16 (1923); District of Columbia
Ct. of App. v. Feldman, 460 U.S. 462, 476 (1983). At the same time, the court
recognized that the state court had decided only that Ms. Stephens had an "immediate
possessory right" in the house, not "to what extent, if any," she had a legal or equitable
ownership interest in it or whether the house was part of, or exempted from, her
bankruptcy estate. After denying summary judgment, the district court referred the
case to the bankruptcy court for further proceedings.
On referral, the bankruptcy court determined that Ms. Stephens had not
properly claimed any exemption in the house in her bankruptcy filings. The court
concluded that it could not determine the timeliness of the § 549 action on summary
judgment because there was insufficient evidence as to when Ms. Jensen-Carter first
knew that the deed existed and that Ms. Stephens intended to rely on it. But the court
said that it saw no reason to postpone the "inevitable sale" of the house because
Ms. Stephens had no ownership interest in it and Andrew's potential "joint tenancy
possessory interest" was not protected when the joint tenancy was severed by his
father filing bankruptcy. The bankruptcy court held that Ms. Stephens and
Mr. Alexander had neither an exemption nor an ownership interest in the house, and
that Ms. Jensen-Carter was authorized to sell it under 11 U.S.C. § 363, "free and clear
of any claims, liens, or encumbrances as may be claimed by either [Ms. Stevens or
Mr. Alexander] or anyone acting on their behalf." The district court4 affirmed the
3
The Honorable Paul A. Magnuson, United States District Judge for the District of
Minnesota.
4
The Honorable Patrick J. Schiltz, United States District Judge for the District of
Minnesota.
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bankruptcy court, and we affirmed the district court's decision, Stephens v. Hedback,
No. 07-3342, 2009 WL 1054532 (8th Cir. April 21, 2009) (unpublished per curiam).
In 2009, Ms. Jensen-Carter and Mr. Hedback settled the adversary actions that
Ms. Jensen Carter had filed and agreed to sell the house and divide the proceeds
between the bankruptcy estates. The bankruptcy court approved the settlement, over
Ms. Stephens's objection, and Ms. Stephens appealed. A bankruptcy appellate panel
affirmed, reiterating that Ms. Stephens lacked an interest in the house, In re Stephens,
425 B.R. 529, 63 Collier Bankr. Cas. 2d 764 (B.A.P. 8th Cir. 2010), and we affirmed
that order, see Alexander v. Hedback, No. 10-1667/10-1855, 2010 WL 3894638 (8th
Cir. Oct. 6, 2010) (unpublished per curiam).
In 2011, the bankruptcy court, on Ms. Jensen-Carter's motion, declared the two
trustees to be the sole owners of the house and evicted Ms. Stephens and
Mr. Alexander. Ms. Stephens and Andrew appealed to the district court. After
dismissing Andrew's appeal because it determined that he lacked standing to appeal
the bankruptcy court's order, the district court affirmed. Ms. Stephens and Andrew
then filed this appeal.
II.
Because Andrew has not challenged the district court's determination that he
lacked standing to appeal the bankruptcy court's decision, we deem the issue waived.
See XO Mo., Inc. v. City of Md. Heights, 362 F.3d 1023, 1025 (8th Cir. 2004).
Andrew has thus conceded that he did not have standing in the district court, and we
therefore conclude that he has no standing to appeal its merits decision and dismiss
his appeal. See United States v. 24.30 Acres of Land, No. 03-3678, 2004 WL
1717361, at *1 (8th Cir. 2004) (unpublished per curiam).
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III.
Ms. Stephens offers several arguments to support her contention that the
bankruptcy court lacked jurisdiction to evict her. We summarily reject most of her
jurisdictional arguments because of the law-of-the-case doctrine: "[W]hen a court
decides upon a rule of law, that decision should continue to govern the same issues in
subsequent stages in the same case." Arizona v. California, 460 U.S. 605, 618 (1983);
see also Morris v. American Nat'l Can Corp., 988 F.2d 50, 52 (8th Cir.1993). This
principle applies to both appellate decisions and district court decisions that have not
been appealed. First Union Nat'l Bank v. Pictet Overseas Trust Corp., 477 F.3d 616,
620 (8th Cir. 2007) (internal citation omitted). We thus follow earlier decisions,
making an exception only if " 'clear error or manifest injustice' " appears in the court's
"assertion of jurisdiction." See Ritchie Special Credit Invs., Ltd. v. U.S. Trustee, 620
F.3d 847, 856 (8th Cir. 2010) (Colloton, J., concurring) (quoting McCuen v. American
Cas. Co., 946 F.2d 1401, 1403 (8th Cir. 1991)).
As we have said, District Judge Schiltz affirmed the bankruptcy court's ruling
that Ms. Stephens had no ownership or exemption interest in the house and that
Ms. Jensen-Carter could sell it without any encumbrances. In so doing, the judge
explained Ms. Stephens's arguments on appeal: That the state court's refusal to evict
her in the unlawful detainer action "forever cut off anyone else's claims to the
property," and that the federal courts' "disposition of various cases related in some
way" to the unlawful-detainer action meant that the district court had already decided
that she was entitled to the house and could not "revisit that purported decision."
Judge Schiltz concluded generally that these arguments lacked merit and specifically
rejected the contentions that the federal courts lacked jurisdiction because of the
district court's remand of the unlawful detainer action to state court and because of the
Rooker-Feldman doctrine, the same contentions that Ms. Stephens advances here. We
affirmed that judgment. Stephens, 2009 WL 1054532, at *1.
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By affirming Judge Schiltz's decision, we have already held that the bankruptcy
court had jurisdiction to evict her. See id. Because we detect no clear error or
manifest injustice in these holdings, they continue to govern this case.
IV.
Ms. Stephens also relies on non-jurisdictional grounds for her contention that
the district court was barred from evicting her, and we conclude that our affirmance
of Judge Schiltz's ruling compels us to reject her res judicata and collateral estoppel
arguments. Ms. Stephens contends that the unlawful-detainer decision and federal
court rulings (including remand of that case to the state court) prevented the federal
courts from evicting her. But, as we have said, Judge Schiltz rejected her assertion
that the state's unlawful-detainer decision "cut off" anyone else's right to the house,
and disagreed that the federal courts' decisions somehow meant that the district court
had decided that she was entitled to the house. By affirming, we summarily held that
the state court decision did not prevent federal courts from determining that
Ms. Stephens had no interest, and therefore no right of possession, in the property.
Ms. Stephens's law-of-the-case argument is somewhat different: She argues
that Judge Magnuson's 2005 order denied Ms. Jensen-Carter's request to evict
Ms. Stephens and is the law of the case, precluding the bankruptcy court from
ordering her eviction. In the order denying summary judgment, Judge Magnuson
stated that Ms. Jensen-Carter, by asking that Ms. Stephens be evicted, "appear[ed]"
to be seeking "to vacate" the state court ruling that Ms. Stephens "has a possessory
interest" in the house and "[a]ny attempt by this Court to do so would run afoul of the
Rooker-Feldman doctrine." But Ms. Stephens's reliance on Judge Magnuson's
statement fails because the law-of-the-case doctrine does not apply to interlocutory
orders, see First Union Nat'l Bank, 477 F.3d at 620, and Judge Magnuson's 2005
remark regarding an eviction order was, at best, an interlocutory order, because it did
not resolve several issues on the merits; he instead referred the case to the bankruptcy
court to decide the unresolved claims. The comment on eviction was thus not a
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decision that left "nothing for the court to do but execute the judgment." Maristuen
v. National States Ins. Co., 57 F.3d 673, 676 (8th Cir. 1995). Indeed, we dismissed
Ms. Stephens's appeal of Judge Magnuson's order for lack of jurisdiction because it
was not a final, appealable decision. See Stephens, et al. v. Jensen-Carter, el al., No.
05-2167 (8th Cir. May 20, 2005).
We also reject Ms. Stephens's contention that "the entire adversary proceeding
should be dismissed" because Ms. Jensen-Carter's action to avoid the deed as a
fraudulent conveyance was time-barred, see 11 U.S.C. § 549(d). As the district court
noted, the bankruptcy court's order from which Ms. Stephens appeals simply does not
address and is not based on Ms. Jensen-Carter's § 549 action. And we have affirmed
-- via our affirmance of Judge Schiltz's 2007 order -- the bankruptcy court's holding
that the outcome of the § 549 action does not affect Ms. Stephens's ownership
interests in (and thus her right of possession to) the house. See Stephens, 2009 WL
1054532, at *1. We note too that Ms. Jensen-Carter and Mr. Hedback settled the
adversary action, and we affirmed the bankruptcy court's approval of the settlement
over Ms. Stephens's objections, agreeing with the bankruptcy appellate panel that
Ms. Stephens had no interest in the house. See Alexander, 2010 WL 3894638, at *1.
We do not consider, because he lacks standing, how Andrew could be affected by the
outcome of the § 549 action. Therefore, Ms. Jensen-Carter's § 549 action is irrelevant
to the order under appeal.
We do not address Ms. Stephens's contention that the bankruptcy court's lack
of personal jurisdiction over Andrew prohibited it from ordering the house sold and
the seizure of any property that he left in the house. That argument is based on
Andrew's rights, we have dismissed his appeal, and his mother lacks standing to
protect his purported interests here, see 13B Charles Alan Wright et al., Federal
Practice & Procedure § 3531.9 (3d ed. 2011).
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Ms. Stephens also challenges Mr. Hedback's standing. She argues that
Mr. Hedback's lack of participation in some of the many proceedings regarding the
house somehow divests him of standing. But Mr. Hedback, as trustee, has a duty to
"collect and reduce to money the property of the estate for which" he serves,
11 U.S.C. § 704(a)(1); In re Senior Cottages of Am., LLC, 482 F.3d 997, 1001 (8th
Cir. 2007), and this statutory duty confers standing upon bankruptcy trustees to
protect the interests of bankruptcy estates in claims affecting property possibly
belonging to them. The outcome of the case plainly affects whether Mr. Hedback can
sell the house and collect the proceeds on behalf of the bankruptcy estate. Insofar as
Ms. Stephens contends that Mr. Hedback lacks standing because of the state's
unlawful-detainer decision or because of the Rooker-Feldman doctrine, such
arguments are foreclosed by our previous holding that neither the Rooker-Feldman
doctrine nor, relatedly, the state court decision divests the federal courts of jurisdiction
over the house. See Stephens, 2009 WL 1054532, at *1. Finally, Ms. Stephens
provides no authority (and we find none) for her assertion that Mr. Hedback lacks
standing in this case for not filing permissive cross-claims under Fed. R. Civ. P. 13(g).
Affirmed.
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