Terry v. Standard Ins. Co., No. 11-2582 (8th Cir. 2012)
Annotate this CaseJoseph Terry, who received long-term disability benefits, filed a Chapter 7 bankruptcy petition. Terry later sued the bankruptcy trustee, seeking a declaration that his disability insurance provider, Standard Insurance Company, should not have reduced his benefits by the amount of certain "voidable" payments. The bankruptcy court ruled that Standard was precluded from recouping the payments. The bankruptcy appellate panel (BAP) reversed, holding that recoupment was subject to a a "balancing of the equities." On remand, the bankruptcy court found that the equities prevented Standard from recouping the payments. The Eighth Circuit Court of Appeals reversed, holding that the BAP (1) erred by introducing a balancing of the equities test into the doctrine of recoupment and by invoking these equitable principles to deny Standard a right of recoupment; and (2) abused its discretion in how it weighed the equities.
Court Description: Civil case - Bankruptcy. The Bankruptcy Appellate Panel erred by introducing a separate "balancing of the equities" test into the doctrine of recoupment and by invoking these equitable principals to deny Standard a right of recoupment after finding that the obligations at issue arose out of the same transaction; reversed and remanded for further proceedings.
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