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Son Evicted From Home Subject to Bankruptcy Sale Not Entitled to Sue Police - Alexander v. Hedback et al.

July 8, 2013

A few months ago, Vincent Howard and our Riverside County personal bankruptcy attorneys wrote about a long-running series of bankruptcy cases in which a family has tried unsuccessfully to keep their home out of the bankruptcy trustees' hands. In Alexander v. Hedback et al., Andrew Alexander sued his parents' bankruptcy trustees, two St. Paul, Minn. police officers, several U.S. marshals and the city of St. Paul. Andrew was kicked out of the family's home after a series of court rulings determined that it was the property of the bankruptcy estates of his mother, Georgina Stephens, and his father, Larry Alexander. Law enforcement then removed Andrew and his grandmother from the home and did not permit them to retrieve their things. Andrew sued for violation of constitutional rights and tort claims, but the district court dismissed and the Eighth Circuit affirmed.

The underlying bankruptcy cases date to 1998, when Larry and Stephens divorced. Larry originally owned it but deeded it to Stephens shortly before his bankruptcy filing. A court originally decided that Stephens had a homestead interest in it, but Larry's bankruptcy trustee later successfully claimed that it was fraudulently conveyed and reopened the case. That trustee then had to come to a settlement with Stephens's bankruptcy trustee, and they ultimately agreed to split the home's value. The bankruptcy court ordered the removal of Stephens and Larry as of Sept. 15, 2011 (roughly two weeks after this ruling); any remaining belongings were to be deemed abandoned. Andrew and his grandmother were thus removed by St. Paul police officers and U.S. Marshals. After the bankruptcy court rejected an appeal from Andrew for lack of standing, he sued the trustees, the police, the city and the U.S. marshals for violating his constitutional rights, and torts.

The district court dismissed the tort claims without prejudice and the constitutional claims with prejudice, and Andrew now appeals. The claim he made was a section 1983 claim, saying a person acting under color of U.S. law deprived him of his rights by searching and seizing the home and searching his person. But he did not allege sufficient facts to show that the federal defendants were acting under color of state law, the Eighth Circuit said, and he did not bring it as a Bivens claim that would have made this unnecessary. Similarly, the court said, the complaint failed to state a claim against the city defendants because he didn't state a claim for municipal liability or sue them in their individual capacities. On the tort claims against the bankruptcy trustees, the Eighth agreed that bankruptcy trustees are subject to the Barton doctrine requiring a court to grant leave to sue them in their official capacity. It rejected an argument that the doctrine does not apply as both factually and legally wrong.

All of this litigation ultimately stems from this family's attempt to save their home, with which Vincent Howard and our Anaheim consumer bankruptcy lawyers have a lot of sympathy. We frequently represent people who are considering bankruptcy as a way to save their homes. We always advise our clients to plan very carefully, however, because bankruptcy doesn't automatically save a home. The home must meet legal and financial criteria for inclusion in the bankruptcy estate, and, as in this case, actual or apparent fraud on the court may harm the case. If you're considering doing this, we urge you to talk to Vincent Howard and our San Bernardino individual bankruptcy attorneys before you file, so you can plan for it first.

If you're heading for foreclosure and you'd like to talk to an experienced bankruptcy attorney about your options, don't wait to call Howard Law, P.C. You can send us a message online or call 1-800-872-5925 today.

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