Leonid Shifrin v. United States Bankruptcy Court for the District of Colorado
17-12
| 10th Cir. BAP | Sep 20, 2017Background
- Leonid Shifrin filed Chapter 7 about one month after a Colorado state court entered a sanctions order finding certain entities and joint accounts to be his property and freezing accounts for CPPA violations.
- Trustee sought documents; Shifrin largely failed to produce records; Trustee and the State sued in adversary proceeding seeking denial of discharge under 11 U.S.C. § 727.
- Bankruptcy court granted summary judgment denying Shifrin’s discharge under multiple § 727 grounds on October 19, 2015; Shifrin did not timely appeal that judgment.
- A state appellate ruling later reversed part of the Sanctions Order based on improper service to Shifrin’s mother; Shifrin then moved in bankruptcy court under Civil Rule 60(b)(5) and (6) (Bankr. R. 9024) to set aside the summary-judgment denial of discharge.
- Bankruptcy court denied the 60(b) motion, explaining the denial of discharge rested on Shifrin’s own false statements, omissions, and failure to preserve records—independent of the State Court’s ownership findings.
- On appeal, the BAP affirmed, holding the bankruptcy court did not abuse its discretion in denying Rule 60 relief because it relied on facts independent of the vacated portions of the Sanctions Order and Rule 60 relief is extraordinary.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether BAP has jurisdiction to hear appeal of 60(b) denial | Shifrin sought review of bankruptcy court’s denial of 60(b) motion | Appellees argued appeal was properly before BAP (Shifrin’s election to district court was invalid/untimely) | BAP had jurisdiction; Shifrin’s attempted district-court election was invalid/untimely |
| Whether Rule 60(b)(5)/(6) relief is warranted because state-court ownership finding was vacated | Shifrin: summary judgment denying discharge relied on State Court’s now-vacated ownership findings, so judgment rests on reversed basis | Appellees: bankruptcy court specifically relied on independent evidence (schedules, affidavits, testimony) not state-court ownership finding | Denied: bankruptcy court did not abuse discretion; it based denial on independent, nonstate-court facts |
| Whether denial of discharge under § 727(a)(4)(A)/(D) was predicated on state-court order | Shifrin: § 727 grounds were tainted by Sanctions Order ownership findings | Trustee/State: § 727(a)(4) denial rested on false oaths, misstatements, and testimony in schedules and examinations | Held: denial under § 727(a)(4) supported by facts independent of Sanctions Order |
| Whether denial under §§ 727(a)(3) and (a)(5) depended on entity ownership | Shifrin: he did not own entities so could not produce their records; reversal of Sanctions Order undermines these findings | Trustee/State: § 727(a)(3) concerns debtor’s own financial records and business transactions; evidence showed failure to produce records and unexplained transfers regardless of ownership | Held: denial under §§ 727(a)(3) and (a)(5) supported by independent record (missing records, unexplained transfers); no abuse of discretion |
| Whether inconsistent bankruptcy rulings in other adversary proceeding required relief | Shifrin: another adversary produced different findings on preclusive effect of Sanctions Order | Appellees: other adversary involved different parties/issues; 60(b) Order identified independent grounds | Held: inconsistency argument fails; different parties and issues; 60(b) denial stands |
Key Cases Cited
- Van Skiver v. United States, 952 F.2d 1241 (10th Cir. 1991) (standard for abuse of discretion review)
- Moothart v. Bell, 21 F.3d 1499 (10th Cir. 1994) (definition of abuse of discretion)
- Cashner v. Freedom Stores, Inc., 98 F.3d 572 (10th Cir. 1996) (extraordinary nature of Rule 60(b) relief)
- In re Gledhill, 76 F.3d 1070 (10th Cir. 1996) (requirements for reversing discretionary Rule 60 decisions)
- Gullickson v. Brown, 108 F.3d 1290 (10th Cir. 1997) (scope of records required under § 727(a)(3))
- Mo’s Express, LLC v. Sopkin, 441 F.3d 1229 (10th Cir. 2006) (Rooker–Feldman limits against nonparties)
- Lowell Staats Mining Co. v. Philadelphia Elec. Co., 878 F.2d 1271 (10th Cir. 1989) (res judicata principles on preclusive effect of prior judgments)