665 B.R. 395
8th Cir. BAP2024Background
- The case arises from over ten years of litigation involving Chapter Kris Jackson, the Jackson Family Trust(s), Appellees Rachel Gossett and Jordan Beswick, and former husband Christopher Jackson.
- Appellees pursued claims against Jackson and ultimately initiated an involuntary bankruptcy proceeding when they could not collect a judgment.
- Jackson sought dismissal of the involuntary case and requested sanctions, damages, and other relief against Appellees, asserting bad faith in filing the petition.
- The bankruptcy court dismissed the involuntary petition under 11 U.S.C. § 305 (abstention) and denied Jackson’s requests for sanctions and damages without holding an evidentiary hearing.
- Jackson appealed the denial of her motion for sanctions and damages, seeking an evidentiary hearing to determine entitlement to such relief.
- The Bankruptcy Appellate Panel (BAP) remanded the case for an evidentiary hearing on Jackson’s motions, clarifying that damages under 11 U.S.C. § 303(i) may be available following dismissal under § 305, per recent Eighth Circuit authority.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Entitlement to evidentiary hearing on sanctions and damages | Jackson argued she was denied the opportunity to present evidence for sanctions and damages after involuntary petition dismissal. | Appellees argued no hearing required since dismissal under § 305 precludes § 303(i) relief. | BAP held Jackson entitled to a hearing to fully present sanctions and damages claims. |
| Authority to award damages under § 303(i) after abstention under § 305 | Relief under § 303(i) should be available even after § 305 dismissal. | Relief not available if case dismissed under § 305 rather than § 303. | BAP held recent circuit precedent allows such relief after § 305 dismissal. |
| Merits of Appellees’ bad faith in filing | Jackson asserts Appellees acted in bad faith and caused her damages. | Appellees deny bad faith, claim action proper to collect judgment. | BAP made no merits determination, remanded for evidentiary hearing. |
| Judicial notice and trust validity issues | Jackson sought appellate court to take notice of documents disproving trust validity and attorney authority. | Appellees oppose; court shouldn’t decide trust issues not ruled on below. | BAP declined, limiting review to denied sanctions/damages—not trust validity issues. |
Key Cases Cited
- In re Corn-Pro Nonstock Coop., Inc., 318 B.R. 153 (B.A.P. 8th Cir. 2004) (standard for reviewing fee/expense decisions in bankruptcy)
- Bankers Tr. Co. BT Serv. Co. v. Nordbrock, 772 F.2d 397 (8th Cir. 1985) (reviewing bankruptcy court’s discretion in awarding fees)
- Booker v. Special Sch. Dist. No. 1, 585 F.2d 347 (8th Cir. 1978) (appellate function is limited to reviewing lower court decisions)
- Marshall v. Anderson Excavating & Wrecking Co., 8 F.4th 700 (8th Cir. 2021) (scope of appellate review is limited to issues raised below and on appeal)