In re Greer
| Decision Date | 15 October 1999 |
| Docket Number | Bankruptcy No. 98-34378. |
| Parties | In re Brian M. and Wendy L. GREER, Debtors. |
| Court | United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Northern District of Ohio |
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Howard A. Elliott, Findlay, OH, for debtors.
Louis J. Yoppolo, Toledo, OH, trustee.
This cause comes before the Court upon the Chapter 7 Trustee's Motion to have the Debtor, Wendy Greer, "Turnover" certain property that she became entitled to receive as the result of a divorce that occurred between her and the other Debtor to this action, Brian M. Greer. On April 27, 1999, a Hearing was held on the matter at which time the Chapter 7 Trustee sought leave from the Court to file a Motion for Summary Judgment, and in accordance with Bankruptcy Rule 9014, the Court granted the Trustee's request. Thereafter, on July 8, 1999, the Court received the Trustee's Summary Judgment Motion along with a Memorandum in Support thereof, and on July 29, 1999, legal counsel for Wendy Greer submitted to the Court a Response Memorandum in opposition to the Chapter 7 Trustee's Motion for Summary Judgment. The Court has now reviewed these Memorandum and the arguments and exhibits contained therein, as well as the entire record of the case. Based upon that review, and for the reasons set forth below, the Court finds that the Trustee's Motion for Summary Judgment should be Granted in part and Denied in part.
The facts of this case, and the arguments presented by the Parties, can be briefly summarized as follows: On October 5, 1998, the Debtors, Brian and Wendy Greer, who were in the midst of a divorce, filed in this Court a joint petition for relief under Chapter 7 of the United States Bankruptcy Code. In their joint bankruptcy petition, the Debtors' claimed as exempt, under O.R.C. § 2329.66(A)(10)(b), an interest in a 401(k) Plan that Brian Greer maintained at his place of employment. No objection to this exemption was ever lodged by the Chapter 7 Trustee (hereinafter "Trustee").
On November 25, 1998, as a part of the divorce proceeding that was pending between the Debtors, an Ohio State Court Magistrate rendered a "Decision" whereby it was determined that Wendy Greer would be entitled to a one-half (½) interest in the 401(k) Plan that Brian Greer maintained through his employment. In addition, the state court Magistrate also determined that Wendy Greer was entitled to a one-half (½) interest in an earned, but as of yet undistributed, COLA payment due from Brian Greer's employer. This division of the Debtors' property was subsequently adopted by the state court with jurisdiction over the Debtors' divorce through a decree entered on May 14, 1999. However, prior to the entry of this decree, the Trustee, as the result of the "Decision" rendered by the state court magistrate, filed a Motion, pursuant to 11 U.S.C. § 542, to have Wendy Greer "Turnover" any and all property that she would become entitled to receive through the Debtors' divorce.
In support of this action, the Trustee, through his Motion for Summary Judgment, puts forth the following legal arguments: First, the Trustee argues that as a result of the "Decision" rendered by the state court magistrate, Wendy Greer's bankruptcy estate acquired an interest in Brian Greer's 401(k) Plan and COLA Account pursuant to 11 U.S.C. § 541(a)(5)(B) which allows property acquired by a debtor/spouse within 180 days of the filing of the bankruptcy petition to be included as property of the bankruptcy estate if such property was received on account of "an interlocutory or final divorce decree." Second, the Trustee argues that regardless of Brian Greer's potential exemption under Ohio law in the 401(k) Plan, Wendy Greer is not entitled to claim such an exemption because upon the state court awarding Wendy Greer a one-half (½) interest in the 401(k) Plan, any exempt status that the property may have enjoyed was then lost.
Wendy Greer, through her legal counsel, however, objects to these arguments based upon the following legal grounds: First, Wendy Greer maintains that she did not acquire an interest in Brian Greer's property as a result of the "Decision" rendered by the state court Magistrate based on the fact that magistrates lack the authority, under Ohio law, to issue orders and final judgments. Instead, Wendy Greer asserts that she only acquired an interest in Brian Greer's property when the actual divorce decree was entered by the state court, but as this occurred more than 180 days after the filing of the Debtors' bankruptcy petition, her bankruptcy estate did not obtain an interest in the property pursuant to 11 U.S.C. § 541(a). Second, Wendy Greer asserts that even if her bankruptcy estate is found to have an interest in the 401(k) Plan, her interest in the Plan is exempt under Ohio law.
Section 541 of the Bankruptcy Code provides in pertinent part:
Orders to turn over property of the estate, and determinations concerning a debtor's entitlement to exemptions are core proceedings per 28 U.S.C. § 157(b). Thus, this case is a core proceeding.
The Trustee's Motion for Turnover is now before the Court upon the Trustee's Motion for Summary Judgment. The standard for a summary judgment motion is set forth in Fed.R.Civ.P. 56, which is made applicable to this proceeding by Bankruptcy Rule 7056, and provides in pertinent part: A movant will prevail on a motion for summary judgment if, "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In order to prevail, the movant must demonstrate all the elements of the cause of action. R.E. Cruise, Inc. v. Bruggeman, 508 F.2d 415, 416 (6th Cir.1975). However, upon the moving party meeting the foregoing burden, the nonmoving party may not thereafter rest on his pleadings, but must instead set forth specific facts demonstrating that, in fact, there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). In making the determination of whether the parties have met their respective burdens, the Court is directed to view all facts in the light most favorable to the party opposing the summary judgment motion. Matsushita v. Zenith Radio Corp., 475 U.S. 574, 586-88, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); see also In re Bell, 181 B.R. 311 (Bankr.N.D.Ohio 1995).
The Trustee brings his Motion for "Turnover" under § 542 of the Bankruptcy Code which holds that any property of a debtor which the trustee can use or sell (or which the debtor can exempt), and which is in the possession, custody, or control of the debtor or a third party must be turned over to the trustee unless such property is of an inconsequential value or benefit to the bankruptcy estate. In re Norris, 183 B.R. 437, 462-63 (Bankr.W.D.La.1995). In addition, and although not specifically stated in the statute, fundamental to the concept of "Turnover" under § 542(a) is that the asset to be turned over must be property of the debtor's bankruptcy estate pursuant to § 541(a). Cates-Harman v. Stage (In re Stage), 85 B.R. 880, 881 (Bankr.M.D.Fla.1988); Marlow v. Oakland Gin Company, Inc. (In re Julien Co.), 128 B.R. 987, 992-93 (Bankr.W.D.Tenn.1991).
Under § 541(a) property of the estate includes "all legal or equitable interests of the debtor in property." This definition is meant to be very broad and includes practically every conceivable interest that a debtor may have in property. See United States v. Whiting Pools, Inc., 462 U.S. 198, 203-04, 103 S.Ct. 2309, 2312-13, 76 L.Ed.2d 515 (1983); In re Labrum & Doak, LLP, 227 B.R. 391, 410 (Bankr. E.D.Pa.1998). For example, intangible interests in property are clearly included within a debtor's bankruptcy estate. Brown v. Dellinger (In re Brown), 734 F.2d 119 (2nd Cir.1984). However, in line with the "fresh start" policy of the Bankruptcy Code, property of the estate is generally limited to legal or equitable interests in property that were held by the debtor prior to, and up until the time of the filing of the bankruptcy petition. See American Bankers Ins. Co. v. Maness, 101 F.3d 358, 362 (4th Cir.1996); see also 5 Collier on Bankruptcy ¶ 541.03 at 541-9 (15th Ed.1998). This general rule, however, is subject to a few limited exceptions for certain types of after-acquired property. Specifically relevant to this case is § 541(a)(5)(B), which provides that property acquired "as a result of ... an interlocutory or final divorce decree" becomes property of a debtor's bankruptcy estate if the following two conditions are met: First, the debtor must acquire or become entitled to acquire an interest in the property within One Hundred Eighty (180) days after filing for bankruptcy relief, and second, the property must have otherwise been property of the debtor's bankruptcy estate if the debtor had held an interest in the property on the date of the filing of his original bankruptcy petition. § 541(a)(5)(B).1
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