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In Re: Robert Miell, Debtor. v. Renee K. Hanrahan; Heritage Bank

December 9, 2010

IN RE: ROBERT MIELL, DEBTOR. GARY L. HOLSINGER; SHERRY HOLSINGER, PLAINTIFFS-APPELLANTS,
v.
RENEE K. HANRAHAN; HERITAGE BANK, DEFENDANTS-APPELLEES.



Appeal from the United States Bankruptcy Court for the Northern District of Iowa

The opinion of the court was delivered by: Nail, Bankruptcy Judge.

Submitted: November 8, 2010

Before KRESSEL, Chief Judge, SALADINO, and NAIL, Bankruptcy Judges.

Gary L. Holsinger and Sherry Holsinger appeal the July 9, 2010 judgment of the bankruptcy court*fn1 dismissing their complaint against Renee K. Hanrahan and Heritage Bank. We affirm.

BACKGROUND

Robert Miell filed a petition for relief under chapter 11 of the bankruptcy code. The bankruptcy court converted the case to chapter 7, and the United States Trustee appointed Hanrahan to serve as the chapter 7 trustee.

Hanrahan filed a motion to sell several parcels of real estate, free and clear of all liens, encumbrances, claims, and other interests, to Heritage Bank. The Holsingers held junior liens against two of the parcels. Hanrahan gave written notice of her motion to all creditors and other parties in interest, including the Holsingers. Debtor filed the only objections to Hanrahan's motion. The bankruptcy court overruled Debtor's objections and entered an order authorizing Hanrahan's proposed sale. No one appealed the bankruptcy court's order, and the sale was consummated.

In their adversary complaint, as amended, the Holsingers challenged the sufficiency of Hanrahan's notice of her proposed sale and sought a determination that their liens were unaffected by the sale or a declaration that their liens attached to the proceeds from the sale. Heritage Bank filed a motion to dismiss the Holsingers' complaint for failure to state a claim upon which relief could be granted. The bankruptcy court granted Heritage Bank's motion, and the Holsingers timely appealed.

STANDARD OF REVIEW

We review de novo a dismissal for failure to state a claim. McAdams v. McCord, 584 F.3d 1111, 1113 (8th Cir. 2009) (citations therein). "We may affirm the bankruptcy court's order on any basis supported by the record, even if that ground was not considered by the trial court." Mid-City Bank v. Skyline Woods Homeowners Assoc. (In re Skyline Woods Country Club, LLC), 431 B.R. 830, 836 n.16 (B.A.P. 8th Cir. 2010) (citation therein).

DISCUSSION

An adversary complaint must include "a short and plain statement of the claim showing that the [plaintiff] is entitled to relief[.]" Fed.R.Civ.P. 8(a)(2).*fn2

[A] complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.

Ashcroft v. Iqbal, ___ U.S. ___, ___, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (internal citations ...


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