Hernandez v. General Mills Federal Credit Union, No. 16-3111 (8th Cir. 2017)Annotate this Case
General Mills filed an adversary proceeding to determine the dischargeability of a debt in debtor's Chapter 7 bankruptcy. Applying Minnesota law to its preclusion analysis, the Eighth Circuit affirmed the bankruptcy court's rejection of debtor's claim preclusion defense. In this case, because all claims between codefendants were dismissed without prejudice by stipulation, there was no final adjudication on the merits. Furthermore, because General Mills' adversary claim arose from its rights and remedies with respect to debtor's execution of a promissory note secured by the property at issue, there was no final adjudication of that issue. The court affirmed the bankruptcy court as to issue preclusion as well. The court rejected debtor's claim of judicial estoppel where General Mills did not take inconsistent positions. The court also held that General Mills' fraud claims were not barred by the statute of limitations; rejected debtor's challenges to the bankruptcy court's evidentiary rulings; and affirmed the bankruptcy court's finding that debtor's debt was not dischargeable. Accordingly, the court affirmed the judgment.