Anderson v. Conine
| Decision Date | 11 February 2000 |
| Docket Number | No. 98-30965,98-30965 |
| Citation | 203 F.3d 855 |
| Parties | (5th Cir. 2000) IN THE MATTER OF: GERALD M ROBERTSON, Debtor POLLY ANDERSON, Appellant, V. JOHN CLIFTON CONINE; FLEET MORTGAGE CORPORATION; UNITED STATES INTERNAL REVENUE SERVICE; GERALD M ROBERTSON, Appellees |
| Court | U.S. Court of Appeals — Fifth Circuit |
[Copyrighted Material Omitted]
Appeal from the United States District Court for the Western District of Louisiana
Before JONES and DENNIS, Circuit Judges, and PRADO,* District Judge.
This is an appeal by the non-debtor former spouse of the debtor from the judgment by the United States District Court for the Western District of Louisiana affirming a partial summary judgment by the Bankruptcy Court. In its partial summary judgment the bankruptcy court held that the Trustee in bankruptcy could treat the former marital home as property of the bankruptcy estate, rather than as the separate property of the former spouse. The appeal by the non-debtor former spouse raises these issues: (1) whether real property received by the debtor's former spouse in a partition of former community property before the commencement of the bankruptcy case is property of the bankruptcy estate under 541(a)(2) of the Bankruptcy Code, or, alternatively, (2) whether the Trustee may avoid the partition under section 544(a)(3) as a transfer which would be voidable by a hypothetical purchaser of real property from the debtor at the time of the commencement of the case. Upon the facts established for purposes of the partial summary judgment, we decide both questions in favor of the non-debtor former spouse, reverse the judgments of the district and bankruptcy courts, and remand the case to the district court for further proceedings.
Gerald Robertson ("Debtor") and Polly Anderson ("Anderson") were married in February 1985. They acquired a family residence in Ouachita Parish, Louisiana, as their community property in 1989. Fleet Mortgage Company ("Fleet") held a mortgage on the community property home. The couple were divorced in January 1994 and the divorce judgment was filed in the Ouachita Parish, Louisiana conveyance records. They entered into a voluntary partition, with court approval, in the form of a consent judgment by the Louisiana Fourth Judicial District Court in Ouachita Parish, Louisiana in February of 1994. In the partition, Anderson acquired the former family residence as her separate property and assumed all liabilities with respect to the home, including the Fleet mortgage debt and tax liens in favor of the United States Internal Revenue Service and the State of Louisiana Department of Revenue and Taxation. The consent judgment evidencing their voluntary partition was rendered and recorded in the state district court. The partition judgment was not filed for registry in the conveyance records of Ouachita Parish.
In June 1996 Debtor filed a voluntary petition for bankruptcy under Chapter 7 of the Bankruptcy Code. John Clifton Conine ("Trustee") was named trustee of the Debtor's bankruptcy estate. In August 1997 Trustee filed a complaint to sell the former family residence as property of the estate pursuant to 11 U.S.C. 363. In October 1997 Fleet filed a motion for relief from automatic stay under its rights as the holder of the mortgage on the home. Anderson opposed the Trustee's complaint and subsequent motion for partial summary judgment. In February 1998, the bankruptcy court for Western District of Louisiana entered a partial summary judgment for Trustee, holding that the home was properly included in the bankruptcy estate of Debtor and that Trustee would be permitted to sell the property and distribute the net proceeds according to the interest of the Debtor and Anderson. Anderson timely filed an appeal in the District Court for the Western District of Louisiana, which affirmed the decision of the Bankruptcy Court in July 1998. Anderson timely appealed to this court.
We review summary judgments de novo, applying the same standards applied by the district court. See Conkling v. Turner, 18 F.3d 1285, 1295 (5th Cir.1994).
Section 541 of the Bankruptcy Code defines the property of the estate, in pertinent part, as follows:
(a)The commencement of a case under section 301, 302 or 303 of this title creates an estate. Such estate is comprised of all the following property, wherever located and by whomever held:
* * *
(2) All interests of the debtor and the debtor's spouse in community property as of the commencement of the case that is--
* * *
(B)liable for an allowable claim against the debtor, or for both an allowable claim against the debtor and an allowable claim against the debtor's spouse, to the extent that such interest is so liable.
11 U.S.C. 541(a)(2)(B). Although section 541(a)(2)(B) states that the property of the bankruptcy estate includes all interests of the debtor and the debtor's spouse in community property as of the commencement of the bankruptcy case, neither that section nor any other Bankruptcy Code provision sets forth the criteria for determining whether a particular asset is community property, or, if so, whether the debtor and the debtor's spouse have interests in such property. "The term 'community property' is not defined in the Code, but clearly is used as a term of art referring to that certain means of holding marital property in those states which have adopted a community property system." 5 COLLIER ON BANKRUPTCY 541.13[1], 541-76, n.l (15th ed. 1999) (hereinafter COLLIER) (citing Johnson v. Fisher (In re Fisher), 67 B.R. 666, 668 (Bankr. D. Colo. 1986)). Generally, Congress has left the creation and definition of property interests of a debtor's bankruptcy estate to state law. See Butner v. United States, 440 U.S. 48, 54 (1979). The Court in Butner stated:
Property interests are created and defined by state law. Unless some federal interest requires a different result, there is no reason why such interests should be analyzed differently simply because an interested party is involved in a bankruptcy proceeding. Uniform treatment of property interests by both state and federal courts within a State serves to reduce uncertainty, to discourage forum shopping, and to prevent a party from receiving 'a windfall merely by reason of the happenstance of bankruptcy'.
440 U.S. at 55 (quoting Lewis v. Manufacturers National Bank, 364 U.S. 603, 609 (1961)). This Circuit has interpreted Butner to extend deference to state law whenever Congress has the authority to regulate an area under its bankruptcy powers but has chosen not to do so. See In re Hudson Shipbuilders, Inc., 794 F.2d 1051 (5th Cir. 1986). The ultimate characterization of property as either community or separate is determined by applicable state law, and that determination establishes what interest, if any, the bankruptcy estate has in the property. See COLLIER 541.13[2] at 541-78 (citing Dumas v. Mantle (In re Mantle), 153 F.3d 1082, 1084 (9th Cir. 1998); F.D.I.C. v. Soderling (In re Soderling), 998 F.2d 730, 733 (9th Cir. 1993)).
Under Louisiana law, unless spouses provide otherwise by matrimonial agreement, the legal regime of community of acquets and gains applies to them. LA. CIV. CODE ANN. arts. 2327 - 2329 (West 1985). Principally, the community property comprises any property acquired during the existence of the legal regime through the effort, skill, or industry of either spouse. LA. CIV. CODE ANN. art. 2338 (West 1985). During the existence of the community property regime, the spouses may, without court approval, voluntarily partition the community property in whole or in part. In such a case, the things that each spouse acquires are separate property. LA. CIV. CODE ANN. art. 2336 (West 1985).
The legal regime of community property is terminated by the death or judgment or declaration of death of a spouse, declaration of nullity of the marriage, judgment of divorce or separation of property, or matrimonial agreement that terminates the community. LA. CIV. CODE ANN. art. 2365 (West 1985). After the termination of the community property regime by a cause other than death or judicial declaration of death of a spouse, articles 2369.2 - 2369.8 apply to former community property until a partition of the former community property or the death or judgment of declaration of death of a spouse. LA. CIV. CODE ANN. art. 2369.1 (West 1999); see also Katherine S. Spaht, Co-Ownership of Former Community Property: A Primer on the New Law, 56 LA.L.REV. 677 (1996).
The term "spouse" in articles 2369.1 - 2369.8 includes co-owners of former community property who continue to be married spouses and former spouses holding former community property in co-ownership until it is partitioned. LA. CIV. CODE ANN. art. 2369.1 Comment (d) (West 1999). Upon the termination of the community without a partition of the community property, each spouse owns an undivided one-half interest in former community property and its fruits and products. LA. CIV. CODE ANN. art. 2369.2 (West 1999). A spouse has a duty to preserve and to manage prudently former community property under his or her control. LA. CIV. CODE ANN. art. 2369.3 (West 1999). Spouses may partition former community property by agreement or judicially, just as may ordinary co-owners. LA. CIV. CODE ANN. art. 2369.8 Comment (b) (West 1999); see also LA CIV. CODE ANN. arts. 809; 2336 (West 1985). When spouses are unable to agree on a partition of community property or former community property, either spouse may institute a proceeding under Louisiana Revised Statutes section 9:2801 for a judicial partition. LA. CIV. CODE ANN. art. 2369.8 (West 1999).
The partition of the former community property between the former spouses has these effects: (1) the spouses cease to be co-owners of the former community property; (2) the former community assets are divided into separate portions or lots; (3) each former spouse becomes the exclusive owner of a separate...
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