Anthony Gales v. City of Des Moines

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 99-1318
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In re: Anthony Wayne Gales; Sherry *
Kay Gales, *
*
Debtors, *
*
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*
Anthony Wayne Gales, and Sherry * On Appeal from the United States
Kay Gales, * District Court for the
* Southern District of Iowa.
Appellants, *
* [Not to be Published]
v. *
*
City of Des Moines, Iowa, *
*
Appellee. *
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Submitted: September 27, 1999
Filed: October 12, 1999
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Before WOLLMAN, Chief Judge, RICHARD S. ARNOLD and BEAM, Circuit
Judges.
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PER CURIAM.
The City of Des Moines filed with the Bankruptcy Court1 a motion to reopen the
bankruptcy estate of Anthony and Sherry Gales. The Bankruptcy Court granted the
motion. The District Court2 affirmed, and the Galeses now appeal.
The Galeses did not list on their bankruptcy schedules or mention at the meeting
of creditors a potential cause of action Mr. Gales had against the City arising from his
pre-petition arrest by two City police officers. Upon hearing of the potential claim
against the City, the trustee asked the Galeses’ attorney about the claim and, assured
by the attorney that the Galeses were not pursuing it, abandoned the estate’s interest
in the claim. Although the Galeses argue that the Bankruptcy Court erred in reopening
the case because an abandonment is generally irrevocable, see In re Nebel, 175 B.R.
306, 312 (Bankr. D. Neb. 1994), the Bankruptcy Court has the power to modify or set
aside an abandonment if the debtor concealed information from the trustee or the
trustee was given incomplete or false information about the asset, and there is no
prejudice to an innocent owner. See In re Lintz West Side Lumber, 655 F.2d 786, 789-
91 (7th Cir. 1981); see also Tschirn v. Secor Bank, 123 B.R. 215, 218 (E.D. La. 1991)
(abandonment revocable where trustee was misled regarding existence and value of
property, preventing trustee from making informed, procedurally correct abandonment);
In re Ozer, 208 B.R. 630, 634 (Bankr. E.D.N.Y. 1997) (if trustee was misled with
respect to asset, so that abandonment was not knowing and intentional, abandonment
can be revoked).
Under the facts of this case--the omission of the claim from the schedules and
the representation that the claim would not be pursued--we conclude the Bankruptcy
Court did not abuse its discretion by deciding to revoke the abandonment and reopen
1
The Honorable Lee M. Jackwig, United States Bankruptcy Judge for the
Southern District of Iowa.
2
The Honorable R. E. Longstaff, Chief Judge, United States District Court for
the Southern District of Iowa.
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the case, thus allowing the trustee to administer the claim as an asset of the bankruptcy
estate for the benefit of creditors.
Accordingly, we affirm.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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