Timmerman et al v Eich et al

Filing 41

MEMORANDUM OPINION AND ORDER: Granting in Part and Denying in Part 25 Motion for Summary Judgment. Signed by Judge Mark W Bennett on 09/12/11. (kfs)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
CENTRAL DIVISION

DEAN TIMMERMAN, ANN
TIMMERMAN, and LARRY EIDE,
solely in his capacity as Chapter 7
Bankruptcy Trustee,
Plaintiffs,

No. C 09-3072-MWB

RONALD F. EICH, R. PATRICK
EICH, and EICH LAW FIRM, P.C.,

MEMORANDUM OPINION AND
ORDER REGARDING
DEFENDANTS’ MOTION FOR
SUMMARY JUDGMENT

vs.

Defendants.
____________________
TABLE OF CONTENTS
I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
A. Factual Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
B. Procedural Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
II. LEGAL ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A. Standards For Summary Judgment . . . . . . . . . . . . . . . . . . . . . . . .
B. The Trustee’s Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.
Arguments of the parties . . . . . . . . . . . . . . . . . . . . . . . .
2.
Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C. Subject Matter Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.
Arguments of the parties . . . . . . . . . . . . . . . . . . . . . . . .
2.
Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
D. Estoppel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.
Arguments of the parties . . . . . . . . . . . . . . . . . . . . . . . .
2.
Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E. In Pari Delicto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.
Arguments of the parties . . . . . . . . . . . . . . . . . . . . . . . .
2.
Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12
12
15
15
16
19
19
20
22
22
24
32
32
33

F. Insufficient Evidence Of Emotional Distress . . . . . . . . . . . . . . . . . .
1.
Arguments of the parties . . . . . . . . . . . . . . . . . . . . . . . .
2.
Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
G. Breach Of Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
H. Punitive Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.
Arguments of the parties . . . . . . . . . . . . . . . . . . . . . . . .
2.
Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

37
37
38
40
40
40
41

III. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

I

n this action, the plaintiff farmers assert that their bankruptcy attorneys were
professionally negligent in their bankruptcy case and breached warranties about

their qualifications to litigate bankruptcy matters. The bankruptcy attorneys have moved
for summary judgment on various grounds, but the central one is that the farmers caused
their injuries through their own fraudulent acts. Thus, in lay terms, the farmers call the
bankruptcy attorneys stupid, and the bankruptcy attorneys call the farmers liars. Perhaps
it is fortunate that the arguments have been framed in legal argot, not schoolyard
vernacular.
I. INTRODUCTION
A. Factual Background
I will not attempt here an exhaustive dissertation on the undisputed and disputed
facts in this case. Rather, I will set forth sufficient of the facts, both undisputed and
disputed, to put in context the parties’ arguments concerning the defendants’ motion for
2

summary judgment. Unless expressly indicated otherwise, the parties agree that the facts
stated are undisputed.

1

Unless circumstances dictate otherwise, I will identify plaintiffs Dean and Ann
Timmerman separately as Dean and Ann and plaintiff Larry Eide, the Chapter 7
bankruptcy case trustee, separately as “the Trustee,” but all three plaintiffs collectively as
“the Timmermans.” I will identify defendants Ronald F. Eich, R. Patrick Eich, and the
Eich Law Firm, P.C., collectively as “the Eichs.”
Dean and Ann have been involved in farming since the early 1970s. By 2005, Dean
and Ann farmed 4,000 to 5,000 acres, most of it leased land. American National Bank
(ANB) financed their farming operation and had been their only bank for many years. In
2006, and for many year before that, United Ag Processors (UAP) supplied Dean and Ann
with everything they needed for their crop inputs, including fertilizer, chemicals, and seed.

1

I have not necessarily stated facts precisely as the parties have stated them in their
respective statements of facts or responses to each other’s statements of facts; instead, I
have occasionally recast them to eliminate disputed language, to track more precisely the
language of documents or deposition testimony, and for other editorial or organizational
reasons. Nevertheless, I believe that I have accurately indicated what facts are undisputed
and which are disputed and why.
My determination of what facts are disputed or undisputed has been complicated by
the conduct of both sides in framing statements of facts and responding to them. For
example, many of the plaintiff farmers’ statements of additional facts are that certain
persons “testified” to certain facts, and the defendant bankruptcy attorneys’ responses were
admissions that the persons so testified. The bankruptcy attorneys used the same form of
response—admissions that a person testified a certain way—to some statements of
additional facts by the farmers that were not cast in terms of what someone testified to,
apparently relying on subheadings in the Statement Of Additional Facts in the form
“TESTIMONY FROM [NAME].” Such statements and responses leave me with no idea
whether or not the facts stated in the cited testimony are disputed.
3

Dean had an agreement with UAP to pay UAP for his fertilizer, chemicals, and seed for
the 2005 crop year by January 12, 2006.
In January 2006, three days before Dean’s payment was due to UAP, the manager
of the UAP plant and one of the salesmen came to see Dean. At that time, Dean wrote a
check to UAP for more than $400,000.00. ANB refused to honor the check, however, and
returned it to UAP. The parties agree that, if Dean did not pay UAP, he would not have
had an alternate supplier available for his 2006 crop, and he also needed money from ANB
in order to pay his cash rents, which were due on March 1, 2006. Thus, in January 2006,
Dean was already suffering what he described as “very high stress” from the financial
pressures on his farming operation from UAP, ANB, and his landlords.
In mid-February of 2006, Dean received a call from Mr. Koster, his banker with
ANB. Mr. Koster told Dean that he and Ann were going to have to declare bankruptcy,
but that if they did, then ANB would advance them money for the next crop year. The
parties agree that ANB wanted Dean and Ann to file a Chapter 7 bankruptcy. At some
point, it is not clear from the parties’ statements of facts whether it was in the same
telephone call, Mr. Koster suggested that Dean talk to the bank’s lawyer. Dean did talk
to the bank’s lawyer, who referred him to an attorney in Sioux City. Dean and his son met
with that attorney and discussed what would be involved in filing a bankruptcy, but
ultimately decided not to retain that attorney, because of the distance between the
Timmerman residence and Sioux City. Instead, Dean sought a local attorney, presumably
2

meaning one in the Sac County/Carroll County area.
2

Neither the Complaint (docket no. 1) nor the parties’ statements of facts or
responses indicate the county or counties in which the Timmermans resided or pursued
farming operations. However, it appears from materials in the parties’ appendices that the
(continued...)
4

On February 21, 2006, Dean met with defendant Ron Eich, an attorney with the
Eich Law Firm in Carroll, Carroll County, Iowa, and the Eich Law Firm agreed to
represent Dean and Ann in their bankruptcy proceedings. The parties agree that Dean
never signed a fee agreement, and the Timmermans contend that the Eichs never informed
Dean or Ann of what the Eichs’ hourly rate would be. Dean brought the Eichs all of the
farm account books, bank statements, receipts, lease papers, and financial paperwork in
Dean and Ann’s possession for the years 2005 and 2006. Dean and Ann assert that they
relied on the Eichs to prepare the appropriate bankruptcy documents based on the
information that they had provided. Dean asserts that the Eichs never asked him for any
more information or about any transactions in the prior two years. He also asserts that he
and Ann just turned everything over to the Eichs. Dean and Ann eventually signed the
schedules and bankruptcy petition electronically, although Ann testified that she personally
went to the Eichs’ law office to sign the original petition and schedules, and that she was
given the impression that all of the appropriate information was in them, based on what
they had provided to the Eichs. Ann also contends that she was not given time to review
the filings before signing them, but that she did review them afterwards. Dean did not
review the filings before signing them.
On March 15, 2006, notwithstanding that ANB wanted Dean and Ann to file a
Chapter 7 (liquidation) petition, the Eichs actually filed a voluntary Chapter 12 (family
farm reorganization) petition for them in the United States Bankruptcy Court for the
Northern District of Iowa. The Eichs maintain that Ann would not consent to the filing
of a Chapter 7 petition. The Timmermans assert that, despite the requirement that
2

(...continued)
Timmermans lived in Auburn, Sac County, Iowa, north of Carroll and Carroll County,
Iowa.
5

Chapter 12 debtors go through credit counseling prior to the filing of the petition, the
Eichs did not mention that counseling to Dean or Ann until after the petition was filed.
They also assert that, despite the Eichs signing under oath that they had informed Dean and
Ann about the kinds of relief available under the various bankruptcy code chapters and
their eligibility to file under each chapter, the Eichs never did so.
The Timmermans contend, and the Eichs admit, that during the same month that the
Chapter 12 petition was filed, the Eichs told Dean and Ann to empty their bank accounts
down to a minimal ($50) balance and to deposit the funds, instead, into the Eichs’ trust
account, and Dean and Ann did deposit $9,379 into the Eichs’ trust account; that the Eichs
did not inform Dean or Ann about what the Eichs would be doing with their money; that
Dean and Ann did not authorize the Eichs to do anything with the money; that Dean and
Ann also deposited in the Eichs’ trust account $112,00 in proceeds from cashing in Dean’s
mother’s life insurance policy, also on the advice of the Eichs; and that the Eich Law Firm
took a $15,000 fee out of those deposits, but had not previously billed Dean or Ann for the
pertinent work.
On February 2, 2007, the Eichs converted Dean and Ann’s bankruptcy petition from
a Chapter 12 petition to a Chapter 7 petition, because the Eichs had been unable to get a
reorganization plan confirmed. The Timmermans contend that, although the Eichs did
discuss the possibility of a conversion of the bankruptcy from Chapter 12 to Chapter 7, the
Eichs filed the conversion pleading without authorization from the Timmermans. The
Timmermans also contend that the Eichs did not discuss with them any other options, nor
did they discuss the possible consequences of any other options.
At a meeting of creditors in the Chapter 12 proceeding on April 11, 2006, and again
in a meeting of creditors in the Chapter 7 proceeding on March 19, 2007, Dean and Ann
confirmed the accuracy of the schedules and statement of affairs in the bankruptcy filings.
6

There is now no dispute that the schedules and statement of affairs did not accurately
disclose all of the assets and transfers of assets, for example, because they did not disclose
some of the transactions or funds that had been funneled through the Eichs’ trust account.
Dean and Ann contend that they believed that the Eichs had accurately completed the
schedules based on the information that they had provided. Dean and Ann both admit that
they do not believe that the Eichs acted intentionally to harm them, but Ann believes that
the inaccuracies in the schedules were the result of a lack of organization and failure to do
some of the things that the Eichs should have done, while Dean believes that the failures
were because the Eichs did not follow through and did not look at everything that he had
given them or take the time to complete the schedules correctly. Dean asserts that he is
not responsible for inaccuracies in the schedules, because the Eichs filled out the
schedules, he gave them all of the information that he possibly could, and the Eichs did
not request any additional information.
The parties agree that, on or about May 17, 2007, the United States Trustee filed
an Adversary Complaint objecting to discharge in the bankruptcy proceeding, alleging that
the Timmermans engaged in the following misconduct: failing to disclose assets and the
transfer of assets in their statement of financial affairs and bankruptcy schedules; verifying
the accuracy of the schedules and the statement of financial affairs in both their Chapter
12 and Chapter 7 bankruptcy petitions; confirming the accuracy of the schedules and the
statement of affairs at the April 11, 2006, Section 341 meeting of creditors in their Chapter
12 bankruptcy proceeding and again at the March 19, 2007, Section 341 meeting of
creditors in the Chapter 7 bankruptcy proceeding; knowingly and fraudulently making a
false oath when they verified their schedules and their statement of financial affairs; and
withholding information and documents from the Chapter 7 trustee. On June 16, 2007,

7

the Eich Law Firm filed Dean and Ann’s answer to the United States Trustee’s Adversary
Complaint.
A few months later, on or about October 18, 2007, two new attorneys filed their
appearances in the bankruptcy proceeding on behalf of Dean and Ann, and, on or about
October 24, 2007, the Eichs filed a motion to withdraw. On October 31, 2007, shortly
after new counsel appeared, one of the new attorneys filed on Dean and Ann’s behalf a
motion to dismiss the bankruptcy proceeding, arguing that, at the outset of the case, Dean
and Ann failed to meet the eligibility requirements of Title 11, because they had not
obtained credit counseling as required by 11 U.S.C. § 109(h)(1). On December 10, 2007,
the bankruptcy court denied Dean and Ann’s motion to dismiss, after having received
objections from several creditors and the United States Trustee. On December 18, 2007,
Dean and Ann’s other new attorney filed on their behalf a notice of appeal to the
Bankruptcy Appellate Panel of the denial of their motion to dismiss.
In February of 2008, Dean and Ann, the Trustee, United States Trustee Habbo
Fokkena, and unsecured creditors UAP, Crow’s Hybrid Seed Company, Farmers
Cooperative Company, and Ag Partners, L.L.C., entered into an agreement (Settlement
Agreement). See Defendants’ Appendix at 61-68. The Settlement Agreement provided,
in pertinent part, as follows:
NOW, THEREFORE, in consideration of the above
recitals and in consideration of the mutual covenants and
agreements of the parties as contained herein, the parties agree
as follows:
1.
Trustee [Eide] will file and obtain Court
Approval of a Motion to Compromise regarding the Objection
to Exemptions and Timmermans[’] resistance thereto. Said
compromise shall provide that both Timmermans and Trustee
agree that the Timmermans shall be allowed to repurchase the
8

equity in their homestead for 90% of its appraised value as
determined by an appraiser who is mutually acceptable to the
Trustee and Timmermans. Upon receipt of aforesaid payment,
Trustee shall withdraw his Objection to Exemptions.
2.
In Adversary Proceeding, 07-09079, Dean agrees
that the Court may enter an Order denying his discharge under
11 U.S.C. § 727.
3.
In Adversary Proceeding 07-09079, the US
Trustee [Fokkena] agrees to dismiss the complaint against
Ann.
4.
UAP, Crow’s, Farmers, and Ag Partners agree
to refrain from taking any and all collection activities against
Dean to collect upon Dean’s pre-petition debt until the earlier
of the resolution of Trustee’s malpractice claim against
R. Patrick and/or Ronald F. Eich, with prompt written notice
by the Trustee to the parties hereto describing such resolution,
or 3 years from date this agreement is approved by the Court.
5.
Upon the entry of the Court’s Order approving
this agreement, Timmermans agree to dismiss the current
appeal, BAP Case No. 07-6073.
6.
The parties agree to sign and/or to cause their
attorneys to sign all documents necessary to effectuate the
intent and purposes of this Agreement.
Settlement Agreement at 2 (Defendants’ Appendix at 62).
As required in paragraph 1 of the Settlement Agreement, quoted above, on March
24, 2008, the attorney for the bankruptcy case trustee filed a Motion To Compromise, with
the Settlement Agreement attached. On April 17, 2008, the bankruptcy court entered an
order authorizing the trustee to compromise the pending matters pursuant to the terms and

9

conditions of the Settlement Agreement. Then, on May 13, 2008, the bankruptcy court
entered an Order Re: Motion For Entry Of Judgment, as follows:
Pursuant to the agreement of the parties, approved by
the court,
IT IS ORDERED that judgment shall enter that the
discharge of Dean Timmerman is denied.
IT IS FURTHER ORDERED that the complaint of
Habbo G. Fokkena, United States trustee, against Ann
Timmerman is dismissed.
Defendants’ Appendix at 70. The parties agree that, if Dean had been granted a discharge
in the bankruptcy proceeding, the unsecured creditors, including the four unsecured
creditors who were parties to the Settlement Agreement, would have received very little
(which the Timmermans clarify means $50,000 to $75,000) with respect to their unsecured
claims.
Dean contends that the stress that he had previously been under because of pressure
from UAP and ANB was exacerbated by the Eichs’ mishandling of his bankruptcy
proceeding. He contends that the additional stress caused heart problems, including a
rapid heart rate, for which he must take medication, as well as an inability to sleep. Dean
contends that the Eichs later admitted that they had never filed a Chapter 12 proceeding
before and were confused by the new bankruptcy code. Dean also contends that Ron Eich
told him several times that he wished that he had not taken the case, because he was busy
doing tax returns, and the case was complicated; told Dean that Eich believed that the
Eichs had done things wrong; and told Dean that Eich had contacted his malpractice
insurance carrier. The Timmermans also contend that they have opinions, including
testimony from one of Dean and Ann’s new bankruptcy attorneys, the Assistant United
States Trustee for the Northern District of Iowa, and an expert witness, that the Eichs’

10

conduct fell below professional standards and caused them injury and unnecessary expense
in their bankruptcy proceeding.
B. Procedural Background
On November 13, 2009, the Timmermans filed the Complaint And Jury Demand
(docket no. 1) against the Eichs commencing this action and asserting jurisdiction pursuant
to 28 U.S.C. §§ 157 and 1334. The Timmermans assert the following claims against the
Eichs: professional negligence in Count I, alleging that the Eichs breached the standard
of care in their bankruptcy proceeding in numerous respects, and breach of express and/or
implied warranty in Count II, alleging that the Eichs represented that they were qualified
to carry out the responsibilities for which they were hired when, in fact, they were not.
The Timmermans also seek punitive damages in “Count III” of their Complaint. The
Timmermans pray for the following relief: all compensatory damages incurred by the
plaintiffs due to the Eichs’ wrongful conduct, including, but not limited to, payment of
attorneys’ fees incurred unnecessarily, loss of the benefit of non-exempt assets that were
placed in the Eichs’ trust account, being left with over one million dollars in nondischargeable claims, and incurring additional expense by having to buy back their
homestead from the bankruptcy trustee, as well as damages for emotional distress and
physical health problems; punitive damages; interest; costs; and all other relief that may
be just and equitable under Iowa law. On January 15, 2010, the Eichs filed an Answer
(docket no. 12), denying the Timmermans’ claims. Pursuant to an Order Setting Trial,
Final Pretrial Conference, And Requirements For Final Pretrial Order (docket no. 16),
trial in this matter is set during the two-week period beginning October 17, 2011.
On June 8, 2011, the Eichs filed the Motion For Summary Judgment (docket no.
25) that is now before me, asserting that the Trustee is not a real party in interest and lacks
11

standing, that the court lacks subject matter jurisdiction over the Timmermans’ state-law
claims, and that the Eichs are otherwise entitled to summary judgment on the
Timmermans’ claims on the merits, primarily because their injuries were caused by their
own fraudulent acts. The Timmermans filed a Resistance (docket no. 34) on July 18,
2011, resisting almost all of the Eichs’ grounds for summary judgment, and the Eichs filed
a Reply (docket no. 36) on July 28, 2011. No party requested oral arguments on the
motion for summary judgment in the manner required by local rules.
I regret that the press of other matters, including a two-week stint as a visiting judge
in the District of the Northern Mariana Islands, prevented me from reaching this matter
sooner.
II. LEGAL ANALYSIS
A. Standards For Summary Judgment
Motions for summary judgment essentially “define disputed facts and issues and . . .
dispose of unmeritorious claims [or defenses].” Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 585 (2007) (internal quotation marks and citation omitted); see Celotex Corp. v.
Catrett, 477 U.S. 317, 323-24 (1986) (“One of the principal purposes of the summary
judgment rule is to isolate and dispose of factually unsupported claims or defenses. . . .”).
Summary judgment is particularly appropriate when only questions of law are involved.
See, e.g., Cremona v. R.S. Bacon Veneer Co., 433 F.3d 617, 620 (8th Cir. 2006). Where
questions of fact are at issue, summary judgment is only appropriate when “the pleadings,
depositions, answers to interrogatories, and admissions on file, together with affidavits,
if any, show that there is no genuine issue of material fact and that the moving party is
entitled to a judgment as a matter of law.” FED. R. CIV. P. 56(c) (emphasis added); see
Woods v. DaimlerChrysler Corp., 409 F.3d 984, 990 (8th Cir. 2005) (“Summary judgment
12

is appropriate if viewing the record in the light most favorable to the nonmoving party,
there are no genuine issues of material fact and the moving party is entitled to judgment
as a matter of law.”).
A fact is material when it “‘might affect the outcome of the suit under the governing
law.’” Johnson v. Crooks, 326 F.3d 995, 1005 (8th Cir. 2003) (quoting Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). Thus, “the substantive law will identify
which facts are material.” Anderson, 477 U.S. at 248. An issue of material fact is
genuine if it has a real basis in the record, Hartnagel v. Norman, 953 F.2d 394, 395 (8th
Cir. 1992) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 58687 (1986)), or when “‘a reasonable jury could return a verdict for the nonmoving party’
on the question,” Woods, 409 F.3d at 990 (quoting Anderson, 477 U.S. at 248); see Diesel
Machinery, Inc. v. B.R. Lee Indus., Inc., 418 F.3d 820, 832 (8th Cir. 2005) (stating
genuineness depends on “whether a reasonable jury could return a verdict for the nonmoving party based on the evidence”).
Procedurally, the moving party bears “the initial responsibility of informing the
district court of the basis for its motion and identifying those portions of the record which
show a lack of a genuine issue,” Hartnagel, 953 F.2d at 395 (citing Celotex, 477 U.S. at
323), and demonstrating that it is entitled to judgment according to law. See Celotex, 477
U.S. at 323 (“[T]he motion may, and should, be granted so long as whatever is before the
district court demonstrates that the standard for the entry of summary judgment, as set
forth in Rule 56(c), is satisfied.”). Once the moving party has successfully carried its
burden under Rule 56(c), the nonmoving party has an affirmative burden to go beyond the
pleadings and by depositions, affidavits, or otherwise, designate “specific facts showing
that there is a genuine issue for trial.”

FED. R. CIV. P. 56(e); Mosley v. City of

Northwoods, Mo., 415 F.3d 908, 910 (8th Cir. 2005) (“The nonmoving party may not
13

‘rest on mere allegations or denials, but must demonstrate on the record the existence of
specific facts which create a genuine issue for trial.’” (quoting Krenik v. County of Le
Sueur, 47 F.3d 953, 957 (8th Cir. 1995))).
As the Eighth Circuit Court of Appeals has explained,
“On a motion for summary judgment, ‘facts must be viewed
in the light most favorable to the nonmoving party only if there
is a genuine dispute as to those facts.’” Ricci v. DeStefano,
––– U.S. ––––, 129 S. Ct. 2658, 2677, 174 L. Ed. 2d 490
(2009) quoting Scott v. Harris, 550 U.S. 372, 380, 127 S. Ct.
1769, 167 L. Ed. 2d 686 (2007) (internal quotations omitted).
“Credibility determinations, the weighing of the evidence, and
the drawing of legitimate inferences from the facts are jury
functions, not those of a judge.” Reeves v. Sanderson
Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S. Ct. 2097,
147 L. Ed. 2d 105 (2000), quoting Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 91 L. Ed. 2d 202
(1986). The nonmovant “must do more than simply show that
there is some metaphysical doubt as to the material facts,” and
must come forward with “specific facts showing that there is
a genuine issue for trial.” Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 586–87, 106 S. Ct. 1348,
89 L. Ed. 2d 538 (1986). “‘Where the record taken as a
whole could not lead a rational trier of fact to find for the
nonmoving party, there is no genuine issue for trial.’” Ricci,
129 S. Ct. at 2677, quoting Matsushita, 475 U.S. at 587, 106
S. Ct. 1348.
Torgerson v. City of Rochester, 643 F.3d 1031, 1042-43 (8th Cir. 2011) (en banc).
I will apply these standards to each of the grounds raised in the Eichs’ Motion For
Summary Judgment.

14

B. The Trustee’s Standing
The Eichs’ first ground for summary judgment is that the Trustee does not have
standing to assert any claims and is not the real party in interest. The Timmermans resist
this part of the Eichs’ Motion For Summary Judgment.
1.

Arguments of the parties

The Eichs argue that a bankruptcy trustee can only bring those claims that are the
property of the estate. They argue, further, that under Iowa law, which defines interests
in property, a person has a legal interest in a cause of action when it accrues; a cause of
action accrues when the wrongful act produces injury; and, with respect to a legal
malpractice claim stemming from bankruptcy, no injury occurs until after the bankruptcy
petition has been filed. Here, the Eichs argue that the Timmermans allege that the Eichs’
negligent advice falls into several categories: negligent advice regarding what type of
bankruptcy petition to file; negligent preparation of the schedules and disclosures to the
bankruptcy court; negligent conversion of the case from a Chapter 12 to a Chapter 7
proceeding; negligent advice regarding transfers; negligent handling of the fee agreement;
and failure to disclose to the Timmermans their inexperience in the pertinent area of the
law. The Eichs argue that no negligent advice could have harmed Dean and Ann until
after the bankruptcy petition was actually filed. The Eichs argue that, because Dean and
Ann were not injured until after their bankruptcy petition was filed, their malpractice claim
did not accrue until after the bankruptcy petition was filed and, hence, the malpractice
claim is Dean and Ann’s property, not the bankruptcy estate’s property.
The Timmermans counter that the Eichs fundamentally misunderstand the difference
between a Chapter 12 (family farm reorganization) and a Chapter 7 (liquidation)
bankruptcy proceeding.

They contend that, in Chapter 12 proceeding, 11 U.S.C.

§ 1207(a)(1) determines ownership of property interests acquired by the debtor after
15

commencement of the case, but prior to closure, dismissal, or conversion to a Chapter 7
proceeding. They argue that, under that statute, property interests acquired prior to
conversion of the Chapter 12 proceeding to a Chapter 7 proceeding are property of the
bankruptcy estate. They argue that numerous cases have applied the plain language of the
statute to conclude that any property interests acquired by the debtor while a Chapter 12
proceeding is pending, and prior to conversion to a Chapter 7 proceeding, is property of
the estate. Consequently, they argue that the Trustee is the real party in interest as to
portions of their malpractice claim that accrued prior to the conversion of their bankruptcy
to a Chapter 7 proceeding. Here, they argue that they have alleged three categories of
negligent acts by the Eichs: negligent acts prior to the filing of the Chapter 12 petition;
negligent acts between the filing of the Chapter 12 proceeding and the conversion to a
Chapter 7 proceeding; and negligent acts at the time of the conversion to a Chapter 7
proceeding and thereafter. Thus, they contend that the Trustee is the real party in interest
for claims belonging to the estate, those arising prior to the conversion to a Chapter 7
proceeding, while claims arising at the time of the conversion to a Chapter 7 proceeding
and thereafter belong to the Timmermans.
The Eichs did not reply to the Timmermans’ resistance on this issue.
2.

Analysis

The parties have not identified, and I have not found, that the question of the
Trustee’s standing in this case is somehow a question of fact; rather, it appears to me to
be a question of law on which summary judgment is particularly appropriate. See, e.g.,
Cremona, 433 F.3d 617, 620.
As the Eighth Circuit Court of Appeals has explained,
The property of the estate includes “all legal or equitable
interests of the debtor in property as of the commencement of
16

the case.” 11 U.S.C. § 541(a)(1). Causes of action are
interests in property and are therefore included in the estate;
it follows that the trustee has standing under § 704(1) to assert
causes of action that belonged to the debtor at the time of filing
bankruptcy. Mixon v. Anderson (In re Ozark Rest. Equip.
Co.), 816 F.2d 1222, 1225 (8th Cir. 1987).
In re Senior Cottages of Am., L.L.C., 482 F.3d 997, 1001 (8th Cir. 2007). The Eichs are
correct that, at least in the case of a Chapter 7 bankruptcy proceeding, whether a particular
cause of action arising under state law belonged to the debtor in bankruptcy or to someone
else is determined by state law. Id. (citing Ozark Rest. Equip., 816 F.2d at 1225). The
Eichs are also correct that, “[i]n Iowa, a person has a legal interest in a cause of action
when it accrues, and that occurs when ‘an aggrieved party has a right to institute and
maintain a lawsuit.’” Lobberecht v. Chendrasekhar, 744 N.W.2d 104, 107 (Iowa 2008)
(quoting Dolezal v. Bockes, 602 N.W.2d 348, 351 (Iowa 1999)). Finally, the Eichs are
correct that the Iowa Supreme Court has held that a claim of legal malpractice arising from
allegedly bad advice about whether to file a Chapter 7 or a Chapter 11 petition did not
cause harm until the bankruptcy petition was actually filed and, consequently, belonged
to the debtors, not the bankruptcy estate. Collins v. Federal Land Bank of Omaha, 421
N.W.2d 136, 139-40 (Iowa 1988) (also holding that claims of malpractice relating to other
transactions that caused injury before the bankruptcy petition was filed belonged to the
estate).
However, as the Eichs apparently tacitly acknowledge, under Chapter 12, property
of the estate is defined by 11 U.S.C. § 1207, which provides, in pertinent part, as
follows:

17

§ 1207. Property of the estate
(a) Property of the estate includes, in addition to the property
specified in section 541 of this title—
(1) all property of the kind specified in such section that the
debtor acquires after the commencement of the case but before
the case is closed, dismissed, or converted to a case under
chapter 7 of this title, whichever occurs first. . . .
11 U.S.C. § 1207(a)(1). Thus,
There is one wrinkle in cases, like the present one, which
began as Chapter 12 proceedings but were converted to
Chapter 7. Section 1207(a) of the Bankruptcy Code, which
applies to Chapter 12 cases, expands the definition of property
of the estate to include: “all property of the kind specified in
such section [§ 541] that the debtor acquires after the
commencement of the case but before the case is closed,
dismissed, or converted to a case under chapter 7 of this
title. . . .” 11 U.S.C. § 1207(a)(1). The practical effect of
that expansion in the temporal limitation is to move the cutoff
date for the acquisition of property from the filing of the
bankruptcy case to the time it is converted under Chapter 7.
In re Bracewell, 454 F.3d 1234, 1237 n.1 (11th Cir. 2006); see also id. at 1239-40.
“Under this provision, courts held that the post-conversion estate under Chapter 7 included
the property acquired by the debtor after filing the petition under Chapter 12 but before
conversion.” In re Bell, 225 F.3d 203, 217 (2d Cir. 2000) (citing cases).
This statute clearly and plainly establishes that claims that accrued prior to the
conversion of the bankruptcy to a Chapter 7 proceeding belong to the estate and may be
asserted by the trustee. See United States v. Ron Pair Enters., 489 U.S. 235, 242 (1989)
(“The plain meaning of legislation should be conclusive, except in the ‘rare cases [in
which] the literal application of a statute will produce a result demonstrably at odds with
18

the intentions of its drafters.’” (quoting Griffin v. Oceanic Contractors, Inc., 458 U.S.
564, 571 (1982)). Because many of the malpractice claims accrued—i.e., the injury was
felt—at the time of the filing of the Chapter 12 petition and between the filing of the
Chapter 12 petition and its conversion to a Chapter 7 petition, see Lobberecht, 744
N.W.2d at 107; Collins, 421 N.W.2d at 139-40, all such malpractice claims belong to the
estate, and the Trustee has standing to assert those claims. In re Senior Cottages of Am.,
L.L.C., 482 F.3d at 1001 (the trustee has standing to assert claims that belong to the
estate). On the other hand, Dean and Ann have standing to assert malpractice claims that
accrued only at or after the conversion of the Chapter 12 bankruptcy proceeding to a
Chapter 7 proceeding, and the Trustee does not.
The Eichs are not entitled to summary judgment on any pre-conversion malpractice
claims by the Trustee on the ground that the Trustee does not have standing to assert those
claims.
C. Subject Matter Jurisdiction
The Eichs’ second ground for summary judgment follows from their first: They
contend that, because the claims asserted here are Dean and Ann’s property, not the
bankruptcy estate’s property, this court lacks subject matter jurisdiction to hear Dean and
Ann’s state law claims. The Timmermans also resist summary judgment on this ground.
Notwithstanding the failure of the Eichs’ premise that no claims belong to the estate, I will
consider further the Eichs’ challenge to the court’s subject matter jurisdiction.
1.

Arguments of the parties

The Eichs argue that 28 U.S.C. § 157 is merely a procedural statute, not a
jurisdictional one. Thus, they argue that this court must have subject matter jurisdiction
pursuant to 28 U.S.C. § 1334, or not at all. They argue that § 1334 does not confer
19

jurisdiction here, because Dean and Ann’s claims are neither core proceedings nor related
to their bankruptcy case. They argue that any recovery will belong to Dean and Ann, not
to the bankruptcy estate and, as such, creating a pot of money against which unsecured
creditors can assert their claims outside of bankruptcy does not confer jurisdiction pursuant
to § 1334.
The Timmermans argue that the fallacy of the Eichs’ second argument for summary
judgment is the same as the fallacy of their first one: Contrary to the Eichs’ assertions,
the Trustee does have standing to assert claims in this action. Thus, some of the potential
recovery will belong to the bankruptcy estate. They argue that, under such circumstances,
jurisdiction is proper under § 1334. They add that jurisdiction is proper for their related
claims under § 157(c)(1) and § 1367.
Again, the Eichs offer no reply to the Timmermans’ resistance to this ground for
summary judgment.
2.

Analysis

Again, at least in the circumstances presented here, I do not find that subject matter
jurisdiction is a question of fact, but a question of law on which summary judgment is
particularly appropriate. See, e.g., Cremona, 433 F.3d at 620.
As the Eighth Circuit Court of Appeals has explained,
Jurisdiction over bankruptcy proceedings is governed by 28
U.S.C. § 1334(a)-(b), which provides that district courts have
“original and exclusive jurisdiction of all cases under title 11”
and “original but not exclusive jurisdiction of all civil
proceedings arising under title 11, or arising in or related to
cases under title 11.” See In re Marlar, 432 F.3d 813, 814
(8th Cir. 2005). District courts may refer to bankruptcy
judges any or all cases “under title 11 and any or all
proceedings arising under title 11 or arising in or related to a
case under title 11”. 28 U.S.C. § 157(a).
20

U.S. Commodity Futures Trading Comm’n. v. NRG Energy, Inc., 457 F.3d 776, 779 (8th
Cir. 2006). Thus, § 1334 is the statute defining federal court jurisdiction as to bankruptcy
matters, while § 157 defines the “referral jurisdiction” of the bankruptcy court for matters
referred from the district court. See id. “An action is related to the bankruptcy case if ‘it
affects the amount of property available for distribution or the allocation of property
among creditors.’” In re Reeves, 65 F.3d 670, 675 (8th Cir. 1995) (quoting Matter of
Xonics, Inc., 813 F.2d 127, 131 (7th Cir. 1987)). Because the Trustee is asserting
malpractice claims that belong to the estate, those claims undoubtedly do affect the amount
of property available for distribution, so that this court has subject matter jurisdiction over
the Trustee’s claims. Id. This court also has subject matter jurisdiction over Dean and
Ann’s bankruptcy malpractice claims, directly under § 1334(b), as those claims arise in
the bankruptcy. See, e.g., Grausz v. Englander, 321 F.3d 467, 471-72 (4th Cir. 2003)
(holding that the debtors’ legal malpractice claim against their bankruptcy attorney was a
claim “arising in” Title 11 for purposes of federal jurisdiction, because the proceeding
would have no practical existence but for the bankruptcy); Simmons v. Johnson, Curney
& Fields, P.C., 205 B.R. 834, 836–41 (Bankr. W.D. Tex. 1997); Billing v. Ravin
Greenberg & Zackin, P.A., 150 B.R. 563, 565–67 (D.N.J. 1993), rev’d on other grounds,
22 F.3d 1242 (3d Cir. 1994); In re SPI Communications & Marketing, Inc., 112 B.R. 507,
510-11 (Bankr. N.D.N.Y. 1990). This court also has subject matter jurisdiction over Dean
and Ann’s breach-of-warranty claim, as well, pursuant to 28 U.S.C. § 1367.
The Eichs are not entitled to summary judgment on the Timmermans’ claims on the
basis of lack of subject matter jurisdiction.

21

D. Estoppel
The Eichs’ third ground for summary judgment is that the Timmermans are
estopped from obtaining damages relating to Dean’s failure to obtain a discharge, because
the Timmermans consented to the entry of a judgment that denied Dean’s discharge owing
to his fraudulent acts. The Timmermans deny that estoppel is applicable.
1.

Arguments of the parties

The Eichs argue that the United States Trustee objected to the discharge of Dean
and Ann, because they had committed a number of intentional fraudulent acts in violation
of 11 U.S.C. § 727. In essence, the Eichs argue that, by consenting to denial of discharge
under § 727 as to Dean, the Timmermans admitted that Dean committed intentional,
fraudulent acts as alleged by the United States Trustee. Furthermore, they argue that,
because the court approved the Settlement Agreement and the Motion To Compromise and
entered judgment denying Dean a discharge, the court conclusively determined that Dean
committed the fraudulent acts identified in the United States Trustee’s Adversary
Complaint. Thus, the Eichs argue that it was Dean’s fraudulent acts that resulted in his
inability to get a discharge, not any conduct of the Eichs.
The Eichs argue that, under these circumstances, the Timmermans are precluded
from arguing that the denial of Dean’s discharge proximately resulted from anything other
than Dean’s fraudulent acts. They also argue that Ann has no claim that she was harmed
by denial of a discharge on the different ground that she was granted a discharge. The
Eichs also argue that the Timmermans are judicially estopped to claim that Dean’s failure
to obtain a discharge was caused by the Eichs’ negligence. They argue that this is so,
because the Timmermans represented to the bankruptcy court that Dean should be denied
a discharge pursuant to § 727, and the court adopted that position and entered judgment
accordingly, estopping the Timmermans from taking any other position in this litigation.
22

The Eichs argue that any other result would allow the Timmermans and the creditors who
entered into the Settlement Agreement to abuse the judicial process to obtain more than
they would have, if the Eichs had performed as the Timmermans allege that they should
have.
The Timmermans’ theme, in response, is that, because of the Eichs’ gross
negligence, Dean was put in a situation where he was forced to work out the best deal that
he could. They argue that Dean neither admitted nor did the bankruptcy court find that
he engaged in any fraudulent acts barring his discharge. They point out that, although the
Motion To Compromise mentions § 727, it does not mention any specific subsection of that
statute, and the language of the Settlement Agreement makes clear that Dean was not
admitting anything, just agreeing to the denial of discharge. Similarly, they point out that
there is no finding at all by the bankruptcy court that Dean committed the fraudulent acts
identified in the United States Trustee’s Adversary Complaint. The court’s order simply
adopted the parties’ settlement.
Moreover, the Timmermans argue that issue preclusion does not apply here.
Specifically, they argue that the issue in the bankruptcy proceeding, whether to adopt the
settlement, is different from the issue here, whether or not Dean committed any fraudulent
acts. They also argue that the issue of Dean’s supposed fraudulent acts was not even
litigated in the bankruptcy court. Indeed, they point out that the Settlement Agreement
indicates that the parties contemplated further litigation of that issue in these proceedings.
The Timmermans also cite numerous cases refusing to find that a consent judgment
involved actual litigation of any issue or permitted issue preclusion. As to the last
elements of issue preclusion, the Timmermans argue that, even to the extent that the
bankruptcy court’s order was undeniably final, it did not finally resolve the pertinent issue,
and there is no indication that determination of whether Dean committed fraud was
23

essential to the judgment or the denial of Dean’s discharge. As to the Eichs’ reliance on
judicial estoppel, the Timmermans argue that they are not judicially estopped to assert their
claims here, because there is nothing clearly inconsistent between their positions in the
prior and present cases; no chance that either the bankruptcy court or this court would be
misled; they are not gaining any unfair advantage; and Ron Eich originally advised the
Timmermans to consent to denial of discharge.
The Eichs’ reply focuses on judicial estoppel, rather than issue preclusion. The
Eichs assert that, because the United States Trustee asserted only certain violations of
§ 727, Dean’s consent to denial of discharge must necessarily be an admission that he
committed at least one of the violations alleged. They also argue that judicial estoppel
applies, because the issues are the same in both proceedings, where the Timmermans did
not assert a reliance on counsel defense to the denial of discharge, so that only Dean’s
fraudulent conduct was at issue.
2.

Analysis

The Eighth Circuit Court of Appeals reviews a district court’s determination that
an issue is precluded by issue preclusion de novo. Ginters v. Frazier, 614 F.3d 822, 825
(8th Cir. 2010); see also Boudreau v. Wal-Mart Stores, Inc., 249 F.3d 715, 719 (8th Cir.
2001) (“A trial court’s determination as to whether the legal prerequisites for issue
preclusion have been met on the facts before it is a mixed question of law and fact, subject
to de novo review by this court.”). Where I do not find that the question of issue
preclusion here is subject to any disputed questions of fact, but turns on the legal question
of whether the prerequisites are met, it is particularly appropriate for determination on
summary judgment. See, e.g., Cremona, 433 F.3d at 620.
As the Eighth Circuit Court of Appeals has explained,

24

In the Eighth Circuit, issue preclusion has five elements:
(1) the party sought to be precluded in the second suit must
have been a party, or in privity with a party, to the original
lawsuit; (2) the issue sought to be precluded must be the same
as the issue involved in the prior action; (3) the issue sought to
be precluded must have been actually litigated in the prior
action; (4) the issue sought to be precluded must have been
determined by a valid and final judgment; and (5) the
determination in the prior action must have been essential to
the prior judgment.
Robinette v. Jones, 476 F.3d 585, 589 (8th Cir. 2007) (quoting Anderson v. Genuine Parts
Co., Inc., 128 F.3d 1267, 1273 (8th Cir. 1997)); accord Ginters, 614 F.3d at 826 (quoting
Robinette); see also Haberer v. Woodbury Cnty., 188 F.3d 957, 961-62 (8th Cir. 1999)
(identifying essentially the same issues for issue preclusion under Iowa law).
Here, there is no dispute that the party sought to be precluded in this suit, Dean, is
the same as the party in the bankruptcy lawsuit. Id. (same party requirement). There is
also no dispute that the issue of whether or not Dean committed fraudulent acts was raised
in the bankruptcy litigation by the United States Trustee’s Adversary Complaint, just as
it is raised here. Id. (same issue requirement). The Eichs’ reliance on issue preclusion
fails, however, on the remaining three requirements.
The Eighth Circuit Court of Appeals has suggested that an issue was not “actually
litigated,” for purposes of issue preclusion, unless it was addressed on the merits, either
explicitly or implicitly. See Friends of Lake View Sch. Dist. Incorporation No. 25 of
Phillips Cnty. v. Beebe, 578 F.3d 753, 759-60 (8th Cir. 2009). The fact that an issue was
raised in the prior proceeding is not enough, if the court dismisses a case without
addressing the issue on the merits.

Id.

Similarly, as the Timmermans point out,

RESTATEMENT (SECOND) OF JUDGMENTS § 27, comment e, states the following as to the
“actually litigated” requirement:
25

A judgment is not conclusive in a subsequent action as
to issues which might have been but were not litigated and
determined in the prior action. There are many reasons why
a party may choose not to raise an issue, or to contest an
assertion, in a particular action. The action may involve so
small an amount that litigation of the issue may cost more than
the value of the lawsuit. Or the forum may be an inconvenient
one in which to produce the necessary evidence or in which to
litigate at all. The interests of conserving judicial resources,
of maintaining consistency, and of avoiding oppression or
harassment of the adverse party are less compelling when the
issue on which preclusion is sought has not actually been
litigated before. And if preclusive effect were given to issues
not litigated, the result might serve to discourage compromise,
to decrease the likelihood that the issues in an action would be
narrowed by stipulation, and thus to intensify litigation.
***
An issue is not actually litigated if the defendant might
have interposed it as an affirmative defense but failed to do so;
nor is it actually litigated if it is raised by a material allegation
of a party’s pleading but is admitted (explicitly or by virtue of
a failure to deny) in a responsive pleading; nor is it actually
litigated if it is raised in an allegation by one party and is
admitted by the other before evidence on the issue is adduced
at trial; nor is it actually litigated if it is the subject of a
stipulation between the parties. A stipulation may, however,
be binding in a subsequent action between the parties if the
parties have manifested an intention to that effect.
Furthermore under the rules of evidence applicable in the
jurisdiction, an admission by a party may be treated as
conclusive or be admissible in evidence against that party in a
subsequent action.
In the case of a judgment entered by confession,
consent, or default, none of the issues is actually litigated.
Therefore, the rule of this Section does not apply with respect
to any issue in a subsequent action. The judgment may be
conclusive, however, with respect to one or more issues, if the
26

parties have entered an agreement manifesting such an
intention.
Similarly, the Eighth Circuit Court of Appeals has held that “[a] fact established in prior
litigation not by judicial resolution but by stipulation has not been ‘actually litigated’ and
thus is the proper subject of proof in subsequent proceedings.” United States v. Young,
804 F.2d 116, 118 (8th Cir. 1986).

As the court explained, “A contrary rule,

commentators reason, would discourage parties from compromising and narrowing issues
because of the possible future preclusive effect of their decisions.”

Id. (citing

RESTATEMENT § 27, cmt. e). In that case, the court held that there was no preclusive
effect, where the parties had not actually disputed the relevant points in the prior
proceedings. Id.
Moreover, the United States Supreme Court and other courts have held that a
consent judgment does not have issue-preclusive effect, citing RESTATEMENT § 27,
comment e. Arizona v. California, 530 U.S. 392, 414 (2000); see also Nichols v. Board
of Cnty. Cmm’rs of Cnt. of La Plata, Colo., 506 F.3d 962, 968-69 (10th Cir. 2007)
(holding, under Colorado law, and citing RESTATEMENT § 27, cmt. e, that a consent
judgment pursuant to a settlement agreement did not have and was not intended to have
issue-preclusive effect, because the issues were not actually litigated); Talmage v. Harris,
486 F.3d 968, 974 (7th Cir. 2007) (recognizing that, under Wisconsin law, when a case
is resolved by settlement or stipulation, courts will find that the “actually litigated” and
“valid final judgment” requirements for issue preclusion have not been satisfied); Spectrum
Health Continuing Care Group v. Anna Marie Bowling Irrevocable Trust, 410 F.3d 304,
310-14(6th Cir. 2005) (under Michigan law, an issue not actually submitted to a trier of
fact and thereafter determined, such as an issue not challenged in the prior litigation, was
not actually litigated, and has no preclusive effect, and under New York law, an
27

underlying point in a settlement agreement that was uncontested was not actually litigated
in the prior proceeding approving the settlement, and has no preclusive effect, because the
issue when the court approved the settlement was only the fairness of the settlement, not
the validity of the liens that were the underlying issue, citing Arizona v. California, 530
U.S. at 414, for the latter proposition); United States v. Botefuhr, 309 F.3d 1263, 1282-83
(10th Cir. 2002) (the parties were not precluded from litigating the value of stock by a
stipulation in prior litigation setting a fair market value for the stock, because there was
no manifest intent to be bound in subsequent litigation and the prior court never
adjudicated the value of the stock, citing, inter alia, RESTATEMENT § 27, cmt. e).

3

Nothing about the treatment of the issue of Dean’s alleged fraudulent acts in the
parties’ Settlement Agreement or the bankruptcy court’s order adopting the parties’
Settlement Agreement and denying Dean a discharge suggests anything other than
judgment by consent with no intent to give the judgment any issue-preclusive effect. See
RESTATEMENT § 27, cmt. e (judgment by consent ordinarily does not have issue-preclusive
effect in the absence of a contrary indication of intent of the parties); Arizona v.
California, 530 U.S. at 414 (relying on RESTATEMENT § 27, cmt. e); Nichols, 506 F.3d
at 968-69 (same). The parties to the Settlement Agreement simply did not dispute that
point. See Young, 804 F.2d at 118. Contrary to the Eichs’ contentions, the Settlement
Agreement contains no express or implied admission that Dean engaged in any fraudulent
acts, simply because he agreed to denial of a discharge. The intent of the parties to the
Settlement Agreement could not be clearer: They did not intend that the Settlement
Agreement or subsequent consent judgment denying Dean a discharge would have issue-

3

The effect of a stipulation or consent judgment may be different, for purposes of
claim preclusion. See, e.g., Arizona v. California, 530 U.S. at 414.
28

preclusive effect, where they clearly anticipated litigation of that issue, among others, in
a subsequent malpractice action by Dean and the Trustee against the Eichs. Absolutely
nothing in the Settlement Agreement, Motion To Compromise, or the bankruptcy court’s
consent judgment indicated that the issue of whether or not Dean had engaged in fraudulent
acts was submitted to the bankruptcy court for final determination as part of approval of
the settlement. Instead, the bankruptcy court’s language is that Dean was denied a
discharge “[p]ursuant to the agreement of the parties, approved by the court.” The order
does not even cite § 727 as the basis for the denial of discharge. Spectrum Health
Continuing Care Group, 410 F.3d at 310-14 (under Michigan law, an issue not actually
submitted to a trier of fact and thereafter determined, such as an issue not challenged in
the prior litigation, was not actually litigated, and has no preclusive effect, and under New
York law, an underlying point in a settlement agreement that was uncontested was not
actually litigated in the prior proceeding approving the settlement, and has no preclusive
effect, because the issue when the court approved the settlement was only the fairness of
the settlement, not the validity of the liens that were the underlying issue, citing Arizona
v. California, 530 U.S. at 414). The fact that the issue was raised in the prior litigation
simply is not enough. Friends of Lake View Sch. Dist. Incorporation No. 25 of Phillips
Cnty., 578 F.3d at 759-60. Under the circumstances presented here, the issue of whether
or not Dean engaged in fraudulent acts was not “actually litigated,” finally decided, or
necessary to the final judgment, and it is not now precluded from consideration in this
subsequent litigation. Robinette, 476 F.3d at 589.
The Eichs’ assertion of judicial estoppel of the issue is equally unavailing. “Judicial
estoppel is an equitable doctrine, invoked by a district court at its discretion.” Capella
Univ., Inc. v. Executive Risk Specialty Ins. Co., 617 F.3d 1040, 1051 (8th Cir. 2010)

29

(citing New Hampshire v. Maine, 532 U.S. 742, 750 (2001)). As the Eighth Circuit Court
of Appeals has explained,
The judicial estoppel doctrine exists to protect the integrity of
the judicial process. [Stallings v. Hussmann Corp., 447 F.3d
1041,] 1047 [(8th Cir. 2006)]. While the doctrine is not
subject to a finite set of elements or factors, three factors have
recurred in courts’ analyses and have been applied by the
United States Supreme Court and this court:
First, a party’s later position must be clearly
inconsistent with its earlier position. Second, courts
regularly inquire whether the party has succeeded in
persuading a court to accept that party’s earlier
position, so that judicial acceptance of an inconsistent
position in a later proceeding would create the
perception that either the first or the second court was
misled. Absent success in a prior proceeding, a party’s
later inconsistent position introduces no risk of
inconsistent court determinations, and thus poses little
threat to judicial integrity. A third consideration is
whether the party seeking to assert an inconsistent
position would derive an unfair advantage or impose an
unfair detriment on the opposing party if not estopped.
New Hampshire v. Maine, 532 U.S. at 750-51, 121 S. Ct.
1808 (internal citations and quotations omitted).
Capella Univ., Inc., 617 F.3d at 1051; United States v. Morse, 613 F.3d 787, 792 (8th
Cir. 2010). If the challenging party fails to satisfy the “basic requirement” that the
challenged party’s arguments were “clearly inconsistent,” then there is no basis for judicial
estoppel. United States v. Smith, 575 F.3d 521, 527 (8th Cir. 2009). Moreover, in
Capella University, the Eighth Circuit Court of Appeals accepted, for the sake of
argument, that the challenged party’s positions in the successive lawsuits were inconsistent,
but nonetheless held that the district court did not abuse its discretion in declining to apply
judicial estoppel, because the prior court did not grant the challenged party’s request for
30

fees and costs, so that there was no risk of inconsistent court determinations threatening
judicial integrity, if the second court considered the challenged party’s claim for fees and
costs. Capella Univ., Inc., 617 F.3d at 1051; see also Gray v. City of Valley Park, Mo.,
567 F.3d 976, 981-82 (8th Cir. 2009) (“There is no mechanical test, however, and
ultimately, because the rule is intended to prevent improper use of judicial machinery, the
discretionary determination to apply the doctrine of judicial estoppel is made on a
case-by-case basis.”).
Again, I do not find any admission by Dean that he committed fraudulent acts in his
agreement to denial of discharge as part of a Settlement Agreement, and certainly no
agreement not to litigate the issue of the Eichs’ malpractice even over assertions that his
own wrongdoing led to the denial of his discharge. Thus, I do not find any inconsistent
arguments, and the Eichs’ assertion of judicial estoppel fails on this “basic requirement.”
Smith, 575 F.3d at 527. Yet, even if I were to accept, for the sake of argument, that Dean
is somehow taking inconsistent positions concerning whether or not he committed
fraudulent acts, I would still not apply the doctrine of judicial estoppel in the circumstances
presented here. Gray, 567 F.3d at 981-82 (“[T]he discretionary determination to apply
the doctrine of judicial estoppel is made on a case-by-case basis.”). The bankruptcy court
did not determine that Dean had committed any fraudulent acts, so there is no risk of
inconsistent court determinations threatening judicial integrity, if I reach that issue in this
subsequent lawsuit. Capella Univ., Inc., 617 F.3d at 1051.
Therefore, the Eichs are not entitled to summary judgment on the Timmermans’
malpractice claim on the grounds of issue preclusion or judicial estoppel.

31

E. In Pari Delicto
As their fourth ground for summary judgment, the Eichs assert that the
Timmermans’ claims are barred by the doctrine of in pari delicto. This ground is, again,
premised, at least in part, on the Eichs’ assertion that the bankruptcy court found that Dean
violated § 727. The Timmermans assert that summary judgment for the Eichs is not
appropriate on the basis of an in pari delicto defense.
1.

Arguments of the parties

The Eichs argue that a bankruptcy court must grant a discharge, unless the debtor
has committed one or more of the violations enumerated in § 727. Thus, the Eichs
reiterate that, by consenting to the denial of discharge, Dean admitted that he committed
fraudulent acts, and had he not made such an admission, there would have been no grounds
to deny him a discharge.
Moreover, the Eichs assert that both elements of the doctrine of in pari delicto are
met here, because Dean is guilty of fraudulent conduct, and he is equally or more culpable
than they are. They argue that Dean and Ann both signed the bankruptcy petition and
schedules under penalty of perjury, thereby attesting to their accuracy. They also argue
that Dean and Ann both testified at the creditors’ meetings that the schedules were
accurate.

The Eichs assert that Dean and Ann cannot blame their attorneys for

inaccuracies, because they bore the ultimate responsibility for the accuracy of the petitions
and schedules. They also assert that they did not counsel or advise Dean or Ann to testify
falsely. The Eichs also argue that Dean and Ann cannot assert that they were misled by
their attorneys, because if that were the case, they would not have the requisite fraudulent
intent, but they admitted to Dean’s fraudulent intent by consenting to denial of Dean’s
discharge.

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In response, the Timmermans reiterate that there was no admission of wrongdoing
on Dean’s part and no finding of wrongdoing by the bankruptcy court. Moreover, they
contend that there is no basis for finding that they and the Eichs were equally at fault.
Instead, they argue that, at the very least, a reasonable jury could find that the Eichs were
more culpable than Dean or Ann, who had done their best to provide the Eichs with all
relevant information, then relied on the Eichs to use and include all of the appropriate
information. They also argue that the cases cited by the Eichs do not stand for the
proposition that attorneys who negligently fill out forms, advise their clients to sign them,
assure the clients that they are correct, and make them sign the forms in a hurry without
a chance to review them, can somehow avoid liability when the forms are not correct.
They also argue that there is no showing that they knew that the forms were incorrect when
they attested to their accuracy.
In reply, the Eichs argue that their alleged negligence in completing forms is not a
ground for denial of discharge, fraudulent acts of the debtors are, and Dean has admitted
fraudulent conduct. They argue that Dean and Ann had the opportunity to clear up any
mistakes made by their attorneys. They also argue that a debtor who signs forms without
reading them must accept the consequences of that failing.
2.

Analysis

The Eichs reassert the contention, which I have now rejected three times, that the
Settlement Agreement and resulting judgment necessarily mean that Dean admitted
fraudulent acts and the bankruptcy court found that he had engaged in fraudulent acts. The
new wrinkle to this argument here is the Eichs’ assertion that § 727 provides the exclusive
grounds to deny a debtor a discharge, so that denial of a discharge was not possible
without a finding of a § 727 violation. Courts have recognized that § 727 states the
exclusive grounds to deny a Chapter 7 debtor a discharge. In re Michael, 433 B.R. 214,
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220 (Bankr. N.D. Ohio 2010) (“[A] debtor’s discharge may only be denied if at least one
of those limitations on discharge expressed in § 727(a) is shown to exist.”); Berstein v.
Zeiss, Inc. (In re Berstein), 78 B.R. 619, 622 (S.D. Fla. 1987). Nevertheless, this
argument fares no better than its predecessors. Nothing about the exclusivity of the
grounds for denial of a discharge in § 727 prohibits denial of discharge by consent and,
as explained above, Dean did not admit, and the bankruptcy court did not find any grounds
for denial of discharge “by at least a preponderance of the evidence.” Id. at 220.
As to the Eichs’ in pari delicto defense, the Eighth Circuit Court of Appeals has
explained,
Pari delicto is Latin for ‘equal fault.’ The in pari delicto
doctrine is the principle that a plaintiff who participated in
wrongdoing may not recover damages based on the
wrongdoing. Black’s Law Dictionary 806 (8th ed.2004).
In re Senior Cottages of Am., L.L.C., 482 F.3d at 999 n.3. More specifically, the doctrine
“derives from the Latin, in pari delicto potior est conditio defendentis: ‘In case of equal
or mutual fault . . . the position of the [defending] party . . . is the better one.’” Bateman
Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299, 306 (1985) (quoting BLACK’S LAW
DICTIONARY 711 (5th ed. 1979)); accord General Car & Truck Leasing Sys., Inc. v. Lane
& Waterman, 557 N.W.2d 274, 279 (Iowa 1996) (recognizing applicability of the doctrine
of in pari delicto to an attorney malpractice claim, noting the application of the doctrine
involves a “culpability element,” which requires that the plaintiff has been guilty of illegal
or fraudulent conduct, and proof that the plaintiff was equally or more culpable than the
defendant or acted with the same or greater knowledge as to the illegality or wrongfulness
of the transaction). The Eighth Circuit Court of Appeals “has held that the defense of in
pari delicto can bar a claim by a bankruptcy trustee against a third party for pre-petition
harm to a debtor when the debtor’s agents colluded in the wrongful conduct alleged.” In
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re Senior Cottages of Am., L.L.C., 482 F.3d at 1005. It would follow that the defense
could also bar a claim by a bankruptcy debtor against a third party for pre-petition or postpetition harm to a debtor when the debtor himself or herself colluded in or engaged in the
wrongful conduct alleged.
The Eichs are correct that a debtor does bear a substantial burden to verify the
correctness of bankruptcy forms and schedules. See, e.g., In re Retz, 606 F.3d 1189,
1199 (9th Cir. 2010) (the debtor is required to attest that he has read the schedules and
statement of affairs “to ensure to the greatest extent possible that the information turned
over to the bankruptcy court is accurate”); see also In re Searles, 317 B.R. at 378 (“The
continuing nature of the duty to assure accurate schedules of assets is fundamental because
the viability of the system of voluntary bankruptcy depends upon full, candid, and
complete disclosure by debtors of their financial affairs.”). That does not mean, however,
that bankruptcy attorneys who engaged in malpractice in the preparation of the debtor’s
filings, in providing bankruptcy advice, or in litigating a debtor’s bankruptcy can
necessarily raise in pari delicto to bar the debtor’s or the trustee’s malpractice claims,
where the debtor signed or verified forms and schedules ultimately shown to be erroneous,
in the absence of proof that the debtor engaged in fraud and the attorney was merely
negligent. See, e.g., In re Gosman, 382 B.R. 826, 838 (S.D. Fla. 2007) (holding that
actual fraud of the debtor is more objectionable than negligence of the attorney, so that
dismissal of a malpractice claim on the basis of in pari delicto was appropriate). Again,
there has been no admission or adjudication of fraudulent acts by Dean or Ann. Indeed,
Dean and Ann contend that they were misled by the Eichs into believing that the
bankruptcy forms and schedules were correct and reflected all of the information that they
had provided. Cf. In re Almasri, 378 B.R. 550, 556 (Bankr. N.D. Ohio 2007) (declining
to dismiss a complaint of bankruptcy attorney malpractice based on in pari delicto, where
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the trustee alleged in the complaint that the debtor informed his counsel of the existence
of the business account, concealment of which led to revocation of the debtor’s discharge,
and that it was the debtor’s counsel who omitted the information).
Moreover, on the issue of relative fault between the Eichs, on the one hand, and
Dean and Ann, on the other, the Timmermans have, at the very least, generated genuine
issues of material fact that Dean and Ann reasonably relied on the Eichs to disclose all of
the required information by pointing to evidence that they provided all of the farm account
books, bank statements, receipts, lease papers, and financial paperwork in Dean and Ann’s
possession for the years 2005 and 2006; the Eichs required Dean and Ann to sign and file
documents in a rush without time to review them first; the Eichs were aware of the life
insurance proceeds and other funds run through their trust account, but failed to list the life
insurance proceeds; the Eichs knowingly misrepresented that Dean and Ann had obtained
credit counseling; and the Eichs provided no advice or erroneous advice, such as
suggesting that Dean and Ann transfer assets to their son. See FED. R. CIV. P. 56(e) (the
nonmoving party has an affirmative burden to go beyond the pleadings and by depositions,
affidavits, or otherwise, designate “specific facts showing that there is a genuine issue for
trial”); Mosley, 415 F.3d at 910 (“The nonmoving party may not ‘rest on mere allegations
or denials, but must demonstrate on the record the existence of specific facts which create
a genuine issue for trial.’” (quoting Krenik, 47 F.3d at 957)). A rational finder of fact
could find for the Timmermans and reject the Eichs’ in pari delicto defense. Torgerson,
643 F.3d at 1042-43.
The Eichs are not entitled to summary judgment on the basis of their in pari
delicto defense.

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F. Insufficient Evidence Of Emotional Distress
Next, the Eichs seek summary judgment on Dean and Ann’s prayers for emotional
distress damages. The Eichs contend that Dean and Ann have not suffered any physical
injury as a result of the alleged malpractice, as required to recover emotional distress
damages under Iowa law. The Timmermans concede that Ann cannot obtain emotional
distress damages, because she has no physical injury, but they argue that Dean can.
1.

Arguments of the parties

The Eichs assert that, under Iowa law, the general rule is that, in cases grounded
in negligence, emotional distress damages are not recoverable unless accompanied by
physical injury. The Eichs assert that there is no evidence at all that Ann suffered any
physical injury allegedly resulting from their malpractice. They also argue that Dean’s
assertions of emotional distress causing a rapid heart rate and palpitations, and requiring
treatment with prescriptions, is insufficient, because the sole medical evidence offered in
support of that contention attributes the stress generally to Dean’s “financial concerns,”
not to their alleged malpractice. In circumstances such as these, the Eichs argue that
expert evidence is required to demonstrate the source of the stress. They also point out
that Dean admitted that he suffered severe stress even before contacting the Eichs about
his bankruptcy. The Eichs also argue that Dean cannot avail himself of the exception to
the physical injury requirement, because a duty to exercise ordinary care to avoid causing
emotional distress does not arise from the attorney-client relationship in bankruptcy
proceedings. Finally, the Eichs assert that the Iowa Supreme Court has held that damages
for emotional distress are not recoverable for a claim of legal malpractice arising out of
a bankruptcy.
In response, the Timmermans concede that their prayer for emotional distress
damages will be limited to Dean, because Ann suffered no physical injury. As to Dean,
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the Timmermans also concede that the medical evidence does not distinguish between
stress caused by the underlying financial problems and the stress caused by the Eichs’
negligent handling of the bankruptcy proceeding. Nevertheless, they argue that it is
disingenuous to argue that Dean’s financial problems were not directly related to the Eichs’
malpractice, in that he incurred numerous additional expenses and his debts were not
discharged, because of the Eichs’ negligence. They also point to Dean’s evidence that his
emotional distress symptoms were exacerbated by the Eichs’ negligence. They assert that
such aggravation of existing emotional distress is compensable.
In reply, the Eichs contend that the Timmermans have expressly conceded that Ann
cannot obtain emotional distress damages and have implicitly conceded that Dean cannot
either, because his expert evidence is insufficient. The Eichs also contend that Dean’s
assertion that his stress was aggravated does not demonstrate that he suffered any physical
injury as a result of the alleged malpractice.
2.

Analysis

Although it is not the initial thrust of the Eichs’ argument for summary judgment
on Dean and Ann’s prayer for emotional distress damages, I find that the dispositive issue
here is that emotional distress damages simply are not available under Iowa law for
negligence of a bankruptcy attorney. As the Iowa Supreme Court has explained,
The majority view among American jurisdictions is that
emotional distress is not a reasonably foreseeable consequence
of and does not “naturally ensue” from an act of legal
malpractice. Merenda [v. Superior Court], 4 Cal. Rptr. 2d
[87,] 89, 91 [(1992)] (“precedent runs strongly against
recovery [of emotional distress damages] in cases of legal
malpractice.”); see also Smith v. Superior Court, 10 Cal. App.
4th 1033, 13 Cal. Rptr. 2d 133, 136 (1992); McClain v.
Faraone, 369 A.2d 1090, 1092, 1094 (Del. Super. Ct. 1977)
(emotional distress resulting from loss of residential property
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was not natural and probable consequence of negligent title
search); Maere v. Churchill, 116 Ill. App. 3d 939, 72 Ill. Dec.
441, 444, 452 N.E.2d 694, 697 (1983) (“Even though real
estate is unique and the attorney-client relationship is a
fiduciary one, we are unable to conclude that serious emotional
disturbance is a particularly likely result of an attorney’s
breach of contract in his examination of title to real estate.”).
Only in “special cases involving peculiarly personal subject
matters” do the majority of jurisdictions recognize that mental
anguish may be a foreseeable damage resulting from attorney
negligence. See, e.g., Oswald [v. LeGrand], 453 N.W.2d
[634,] 639 [(Iowa 1990)]; Selsnick v. Horton, 96 Nev. 944,
620 P.2d 1256, 1257 (1980).
Lawrence v. Grinde, 534 N.W.2d 414, 422 (Iowa 1995). The court then held,
Based on our precedents in this area of law and the
reasoning of other courts on the subject, we believe that
recognition of emotional distress damages as a result of the
negligence of a bankruptcy attorney in completing bankruptcy
forms would constitute a clear departure from the narrow
circumstances in which emotional distress damages have
previously been recoverable.
A bankruptcy attorney’s duty to competently manage the
bankruptcy process is not “‘so coupled with matters of mental
concern or solicitude, or with the feelings of the party to
whom the duty is owed, that a breach of that duty will
necessarily or reasonably result in mental anguish or
suffering.’” Oswald, 453 N.W.2d at 639 (quoting Taylor v.
Baptist Medical Ctr., 400 So. 2d 369, 374 (Ala. 1981)).
Moreover, the claimed emotional distress is too far removed
from the defendants’ negligent conduct to cause the imposition
of a duty and does not naturally ensue from the acts
complained of. We therefore hold that the trial court erred as
a matter of law in submitting the claim of severe emotional
distress to the jury.

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Lawrence, 534 N.W.2d at 423; and compare dePape v. Trinity Health Sys., Inc., 242 F.
Supp. 2d 585, 615-17 (N.D. Iowa 2003) (holding that emotional distress damages were
available for malpractice by an immigration attorney).
For the same reasons that the Iowa Supreme Court rejected emotional distress
damages for malpractice of a bankruptcy attorney in Lawrence, I now reject such damages
in this bankruptcy attorney malpractice case. Therefore, the Eichs are entitled to summary
judgment on Dean and Ann’s prayers for emotional distress damages.
G. Breach Of Warranty
The Eichs assert that, under Iowa law, a claim for breach of warranty sounds in
negligence and is subsumed by a professional negligence claim, citing Kemin Industries,
Inc. v. KPMG Peat Marwick, L.L.P., 578 N.W.2d 212 (Iowa 1998). The Timmermans
agree that their claim for breach of warranty is subsumed by their professional negligence
claim, in light of Kemin. Therefore, the Eichs are entitled to summary judgment on the
Timmermans’ breach-of-warranty claim.
H. Punitive Damages
The Eichs’ last argument is that they are entitled to summary judgment on the
Timmermans’ claim for punitive damages, because the Eichs did not act with malice or
engage in willful or wanton conduct. The Timmermans resist summary judgment on the
issue of punitive damages.
1.

Arguments of the parties

The Eichs argue that, even viewed in the light most favorable to the Timmermans,
the evidence demonstrates only that they were negligent in advising the Timmermans
regarding the bankruptcy. They assert that there is simply no evidence that their conduct
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was willful and wanton or that they acted with malice. Indeed, they argue that there is no
evidence that they acted to harm their clients.
The Timmermans contend that their prayer for punitive damages should be
submitted to the jury. They contend that the evidence shows at least that the Eichs acted
in reckless disregard of their rights, i.e., that the Eichs acted with “legal malice.” They
contend that it should have been obvious to the Eichs that they were jeopardizing Dean and
Ann’s rights when they took their case, with very little bankruptcy experience, at a time
when they were too busy to represent Dean and Ann adequately. They contend that a jury
question on punitive damages is even more clearly raised, when that evidence is combined
with evidence that the Eichs deliberately failed to reveal to the bankruptcy court that over
$100,000 in Dean and Ann’s funds had gone through the Eichs’ trust account at the Eichs’
direction and evidence that Ron Eich advised Dean to commit bankruptcy fraud by
transferring assets to his son.
In reply, the Eichs assert that Dean and Ann have admitted that the Eichs did not
try to hurt them or intentionally falsify any of the schedules, but simply made mistakes
They assert that the evidence does not rise to the level required to establish legal malice.
2.

Analysis

Punitive damages are only available under Iowa law, if the claimant proves, by
clear, convincing, and satisfactory evidence, that the defendant willfully and wantonly
disregarded the claimant’s rights. IOWA CODE § 668.1(1)(a); Van Sickle Constr. Co. v.
Wachovia Commercial Mortg., Inc., 783 N.W.2d 684, 689 (Iowa 2010). As the Iowa
Supreme Court has explained,
Willful and wanton conduct involves an intentional,
unreasonable act “‘“in disregard of a known or obvious risk
that was so great as to make it highly probable that harm
would follow.”’” Cawthorn v. Catholic Health Initiatives
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Corp., 743 N.W.2d 525, 529 (Iowa 2007) (quoting Kiesau v.
Bantz, 686 N.W.2d 164, 173 (Iowa 2004)). Such an act is
“‘“usually accompanied by a conscious indifference to the
consequences.”’” Id. More than negligent conduct is required
to support a punitive damage award. Id. It was Van Sickle’s
burden to prove Wachovia acted with actual or legal malice.
Id. Actual malice may be shown by personal spite, hatred, or
ill will. “‘”[L]egal malice may be shown by wrongful conduct
committed with a willful or reckless disregard of the rights of
another.”’” Id. (quoting Wolf v. Wolf, 690 N.W.2d 887, 893
(Iowa 2005)).
Van Sickle Constr. Co., 783 N.W.2d at 689-90.
Although it is a very close question, and one that I am likely to revisit based on the
evidence presented at trial, I believe that the Timmermans have pointed to evidence from
which a rational finder of fact could find that the Eichs acted with “legal malice,” in what
was otherwise only negligent handling of Dean and Ann’s bankruptcy. Torgerson, 643
F.3d at 1042-43. As the Timmermans assert, there is a smack of reckless disregard of
their rights in the Eichs’ failure to reveal to the bankruptcy court that over $100,000 in
Dean and Ann’s funds had gone through the Eichs’ trust account at the Eichs’ direction and
evidence that Ron Eich advised Dean to commit bankruptcy fraud by transferring assets
to his son. Van Sickle Constr. Co., 783 N.W.2d at 690 (defining “legal malice” as, inter
alia, “reckless disregard of the rights of another”).
Therefore, the Eichs are not entitled to summary judgment on the Timmermans’
prayer for punitive damages.
III. CONCLUSION
Upon the foregoing, the Eichs’ June 8, 2011, Motion For Summary Judgment
(docket no. 25) is granted in part and denied in part, as follows:
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1.

The motion is denied as to standing of the Trustee;

2.

The motion is denied as to lack of subject matter jurisdiction;

3.

The motion is denied as to issue preclusion and judicial estoppel;

4.

The motion is denied as to the Eich’s in pari delicto defense;

5.

The motion is granted as to Dean and Ann’s prayers for emotional distress

damages;
6.

The motion is granted as to the Timmermans’ breach of warranty claim; and

7.

The motion is denied as to Dean and Ann’s prayer for punitive damages.

IT IS SO ORDERED.
DATED this 12th day of September, 2011.

__________________________________
MARK W. BENNETT
U. S. DISTRICT COURT JUDGE
NORTHERN DISTRICT OF IOWA

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