Summary of a Recent
Judicial Development in
Bankruptcy

Eighth Circuit Holds “Farmer Status” Waivable
Affirmative Defense to Involuntary
Bankruptcy Petition

Patrick Roberts
National AgLaw Center Graduate Assistant

In In re Marlar, No. 052015, 2005 WL 3488457 (8th Cir. Dec. 22, 2005), the United States Court of Appeals for the Eighth Circuit held in a matter of apparent first impression that “farmer status” is not jurisdictional in nature but rather is an affirmative defense in an involuntary bankruptcy proceeding that must be timely raised. In 1998, involuntary chapter 7 bankruptcy proceedings were commenced against debtor John S. Marlar. See id. at *1. Nearly five years later, Marlar filed a motion to dismiss on the grounds that under Bankruptcy Code § 303(a) the bankruptcy court lacked subject matter jurisdiction because he was a farmer at the time the involuntary bankruptcy proceedings were commenced. See id. The bankruptcy court dismissed the motion on the ground that “farmer status” was an affirmative defense which should have been pleaded at the time the involuntary bankruptcy petition was filed. See id. On appeal, the Eighth Circuit held that “an individual’s status as a farmer does not go to the jurisdiction of the bankruptcy court over an involuntary bankruptcy petition, but instead is an affirmative defense that may be waived.” Id (citing In re McCloy, 296 F.3d 370, 375 (5th Cir. 2002)). In coming to that conclusion, the court agreed that farmers are excepted from having involuntary chapter 7 and 11 cases brought against them under § 303 (a). See id. at *2. However, the court found that “farmer status” was not jurisdictional as argued by Marlar, but rather an affirmative defense under § 303(h) because with respect to a petition for bankruptcy that “is not timely controverted, the court shall order relief against the debtor in an involuntary case under the chapter under which the petition was filed.” Id

The case was decided on December 22, 2005; this summary was posted Feb. 23, 2006.