Blackwell v. Lurie

• Decision Date: 11 May 2000
• Docket Number: No. 99-2511,99-2511
• Citation: Blackwell v. Lurie, 223 F.3d 764 (8th Cir. 2000)
• Parties: (8th Cir. 2000) IN RE: POPKIN & STERN, DEBTOR. ROBERT J. BLACKWELL, LIQUIDATING TRUSTEE OF THE POPKIN & STERN LIQUIDATING TRUST, APPELLEE, v. MICHAEL LURIE, RYAN LURIE, APPELLANTS, RONALD U. LURIE, DEFENDANT. Submitted:
• Court: U.S. Court of Appeals — Eighth Circuit

Page 764

223 F.3d 764 (8th Cir. 2000)

IN RE: POPKIN & STERN, DEBTOR.

ROBERT J. BLACKWELL, LIQUIDATING TRUSTEE OF THE POPKIN & STERN LIQUIDATING TRUST, APPELLEE, v. MICHAEL LURIE, RYAN LURIE, APPELLANTS, RONALD U. LURIE, DEFENDANT.

No. 99-2511

UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

Submitted: May 11, 2000

Filed: August 15, 2000

Appeal from the United States Bankruptcy Appellate Panel

Before Bowman, Floyd R. Gibson,¹ and Loken, Circuit Judges.

Bowman, Circuit Judge.

Before us is another matter arising from the bankruptcy of Popkin & Stern (P&S), a Missouri law firm in which Ronald Lurie was a general partner. Ronald's sons, Michael and Ryan Lurie, appeal the decision of the Bankruptcy Appellate Panel (BAP), affirming the decision of the Bankruptcy Court, that an interest in certain real property was fraudulently transferred to them by their father and thus could be reached by the bankruptcy trustee and sold for the benefit of P&S's creditors. Michael and Ryan contend that they received the property by the operation of a lawful disclaimer, and not through a fraudulent transfer, and that they are entitled to compensation for their loss of it. Concluding that at least one of the disclaimers executed by Ronald is facially valid and enforceable, we reverse and remand.

We apply the same standards as the Bankruptcy Appellate Panel, reviewing the Bankruptcy Court's findings of fact for clear error and its conclusions of law de novo. See Official Plan Comm. v. Expeditors Int'l (In re Gateway Pac. Corp.), 153 F.3d 915, 917 (8th Cir. 1998).

I.

At issue is a piece of real property, known as the Clayton Road property, that belonged to Edna Lurie, Ronald's mother and Michael and Ryan's grandmother. Edna died on December 26, 1991, leaving an estate consisting of the Clayton Road property and various other assets. Edna's last will and testament named Ronald as the executor and, along with his brother Robert, as a co-trustee of all trusts created under her will. Edna's will provided that upon her death, her sons Ronald and Robert were the intended beneficiaries of her estate, sharing equally. If, on the other hand, Ronald predeceased Edna, Michael and Ryan would be entitled to Ronald's share of Edna's estate.

Shortly after Edna's death, Ronald executed two disclaimers. The first disclaimer, dated January 1, 1992, and signed "Ronald U. Lurie," states "I hereby disclaim any interest I may otherwise have in The Lurie Family Trust and the Estate of Edna W. Lurie" (General Disclaimer). A second disclaimer, identically dated and signed, states more specifically, "I hereby disclaim any interest I may otherwise have in the real property owned by the Estate of Edna Lurie" (Real Property Disclaimer). It is undisputed that the only real property owned by Edna's estate was the Clayton Road property.

On January 22, 1992, Edna's will was admitted to probate and shortly thereafter the probate court appointed Ronald as personal representative of Edna's estate and authorized independent administration. At some point between Edna's death and September 1994, Ronald received jewelry from Edna's estate. In early 1994, Ronald received the proceeds from the sale of certain investments held by the Lurie Family Trust. There are competing theories about whether these funds were distributed to Ronald in contravention of the General Disclaimer (as the Bankruptcy Court concluded), or whether they merely were loaned to Ronald by Michael and Ryan (as Michael and Ryan contend).

Of particular importance here, on June 7, 1994, Ronald, in his capacity as the personal representative of Edna's estate, executed a deed of distribution allotting the Clayton Road property to Robert, Michael, and Ryan as tenants in common, with Robert receiving an undivided one-half interest and Michael and Ryan each receiving an undivided one-quarter interest. Ronald never received title to the Clayton Road property nor took possession of it.

Meanwhile, on March 26, 1992, an involuntary Chapter 7 petition for relief was filed against P&S soon thereafter, the case was converted to Chapter 11. In August 1994, the bankruptcy trustee brought a core adversary proceeding, under 28 U.S.C. 157(b)(2) (1994), seeking a declaration that Ronald's purported disclaimers were invalid and that Michael and Ryan received the Clayton Road property from their father through a fraudulent transfer in violation of Mo. Rev. Stat. 428.024 (1994), a provision of Missouri's Uniform Fraudulent Transfer Act (UFTA). The bankruptcy trustee sought to invalidate the purported transfer and to liquidate this one-half interest in the Clayton Road property.

Following a trial, the Bankruptcy Court held that the disclaimers were unenforceable, that Ronald had fraudulently transferred his one-half interest in the Clayton Road property to Michael and Ryan in contravention of Missouri's UFTA, that this transfer was void, and that Ronald would be deemed to hold a one-half interest in the Clayton Road property. Subsequently, Ronald's purported one-half interest in the Clayton Road property was sold at an execution sale. Michael and Ryan now seek to recover the value of that one-half interest in the Clayton Road property.²

II.

We begin our analysis by determining whether the disclaimers are facially valid and enforceable. ³ Under Missouri law, a disclaimer is "an irrevocable and unqualified refusal to accept a transfer." Mo. Rev. Stat. 474.490.1(2) (1994). ⁴ To be valid, a disclaimer must: (1) be in writing; (2) identify the transfer being disclaimed; (3) be signed by the disclaimant; and (4) "[n]o later than nine months after the effective date of the transfer, be received by the transferor, or the transferor's legal representative." Mo. Rev. Stat. 474.490.3. The Bankruptcy Court found that both disclaimers satisfy requirements one through three, and we see no reason to disturb this conclusion.

As to the fourth requirement, the Bankruptcy Court suggested that it may not have been met because the disclaimers were not delivered to Ronald's brother Robert within nine months of Edna's death, the effective date of the transfer. We do not see any requirement, however, that Robert receive copies of the disclaimers. Instead, we agree with the BAP that item four is satisfied because "Ronald was the personal representative of his mother's estate. He therefore was the legal representative of the transferor of the Clayton Road property and in that capacity he received both disclaimers at the moments of their execution." Blackwell v. Lurie (In re Popkin & Stern), 234 B.R. 724, 728-29 (B.A.P. 8th Cir. 1999). ⁵ Accordingly, we hold that both disclaimers are prima facie valid under Mo. Rev. Stat. 474.490.

This conclusion, however, does not end our inquiry. Even if a disclaimer is facially valid, "[a] disclaimer may not be made under this section with respect to any transfer, ⁶ or part thereof, which the disclaimant has accepted." ⁷ Mo. Rev. Stat. 474.490.5. Questions surrounding the meaning of this provision, and whether any of Ronald's actions constitute a sufficient acceptance to render his disclaimers unenforceable, have been at the heart of this litigation.

The Bankruptcy Court concluded that "[b]oth documents entitled 'Disclaimer' are a sham. . . . drafted and executed by [Ronald] in an attempt to defraud his creditors." Blackwell v. Lurie (In re Popkin & Stern), No. 92-42218-293, at 21 (Bankr. E.D. Mo. Aug. 18, 1998). The basis of this conclusion, however, is not that the disclaimers themselves were improperly executed, ⁸ but that they were unenforceable because Ronald had accepted "stocks, bonds, jewelry, furniture, and other personal property" in contravention of them. Id. We cannot agree with the BAP's characterization that "[t]he record unequivocally demonstrates that Ronald, in spite of his purported and otherwise valid disclaimers to the contrary, in fact accepted numerous transfers from his mother's estate and from the Lurie Family trust, thereby rendering both disclaimers void." Blackwell, 234 B.R. at 729 (emphasis added).

Even if we were inclined to agree that the General Disclaimer--which broadly disclaims "any interest" in the Lurie Family Trust and Edna's estate--is unenforceable because Ronald accepted certain property disclaimed under it, ⁹ we are still left with the second, narrower Real Property Disclaimer--a freestanding document--which only purports to disclaim "the real property owned by the Estate of Edna Lurie." There is no dispute that the only property covered by the Real Property Disclaimer is the property at issue here, i.e., the Clayton Road property. There also is no dispute that Ronald never took title to or possession of the Clayton Road property. See Blackwell, No. 92-42218-293, at 28 ("The only property not distributed to [Ronald] was the real property . . . ."). Accordingly, we are persuaded not only that the Real Property Disclaimer is prima facie valid, but also that it was not rendered void by Ronald's acceptance of property covered by it, because in fact he did not accept any such property.

We recognize that the Bankruptcy Court concluded that the Real Property Disclaimer "is not the controlling document," because, on several occasions when referencing his disclaimer, Ronald referred to disclaiming all of his interests under his mother's will, and not to disclaiming only his real property interests. ¹⁰ Id. at 20. We do not agree, however, that Ronald's reference to the greater indicates omission of the lesser. More importantly, none of the facts cited by the Bankruptcy Court in support of this proposition involve Ronald's acceptance of the Clayton Road property within the meaning of 474.490.5. The same is true of the evidence relied upon by the BAP for its holding voiding the Real Property Disclaimer. The inescapable fact is that Ronald never accepted any of the property covered by the Real Property Disclaimer, and thus there is no proper basis for voiding that...