In re Popkin & Stern
| Decision Date | 20 May 2003 |
| Docket Number | No. 02-6073 EM.,02-6073 EM. |
| Parties | In re POPKIN & STERN, Debtor. Nancy Fendell Lurie, Michael Lurie, and Ryan Lurie, Appellants, v. Robert J. Blackwell, Liquidating Trustee of the Popkin & Stern Liquidating Trust, Appellee. |
| Court | Bankruptcy Appellate Panels. U.S. Bankruptcy Appellate Panel, Eighth Circuit |
Stanley E. Goldstein, Eli Karsh, Clayton, Missouri, for appellant.
James B. Day, Serall Chezem, O'Fallon, Missouri, for appellee.
Before, KRESSEL, Chief Judge, DREHER, and FEDERMAN, Bankruptcy Judges.
On November 1, 2002, the bankruptcy court held that Nancy and Ronald Lurie jointly owned 87.4 percent of a painting entitled "Apache Renegades," and that 87.4 percent of the proceeds of the sale of that painting should be evenly divided between Nancy Lurie and the Liquidating Trustee of the Popkin & Stern Liquidating Trust.1 On November 14, 2002, the bankruptcy court denied appellants' motion to set aside and reconsider the order of November 1, 2002. Appellants now appeal from both of those orders. We affirm.
This case has a long and complex history beginning with the bankruptcy filing of the Popkin and Stern law firm. Ronald Lurie (Ronald) was a general and managing partner of Popkin & Stern at that time. In October of 1994, Robert Blackwell, the Liquidating Trustee (the Trustee) of the Popkin & Stern bankruptcy estate, obtained a deficiency judgment against Ronald in the amount of $1,121,743, plus interest from the date of judgment at the rate of 6.06 percent. This deficiency judgment was based on the difference between the value of the property of Popkin & Stern's estate and the amount needed to pay all of the allowed claims against Popkin & Stern.2 On June 17, 1994, Ronald pleaded guilty to felony perjury in connection with the bankruptcy case, and he was incarcerated.
On February 25, 1995, the bankruptcy court entered an order freezing the Luries' assets, including the painting entitled "Apache Renegades."3 The Luries purchased this painting in Missouri in 1981. The painting's Certificate of Title, dated January 26, 1981, indicates that the Nancy Fendell Lurie Trust owned a two-thirds interest in the painting and that the Peter Lurie Revocable Trust owned a one-third interest. Peter Lurie was the father of Ronald and Robert Lurie, the two beneficiaries of the Peter Lurie Trust. Nancy Lurie (Nancy) was the sole beneficiary of the Nancy Fendell Lurie Trust, which was subsequently liquidated. Those assets were distributed to Nancy.
In addition to the deficiency judgment against Ronald, in April of 1998, the Trustee obtained a judgment against Nancy to set aside certain transfers of assets, as well as an aggregate monetary judgment in the amount of $352,300.95, plus interest. That judgment permitted the Trustee to execute on Ronald and Nancy's jointly-held assets to the extent of the judgment against her.
On September 10, 1998, the Trustee filed a motion for relief from the bankruptcy court's order freezing all of the Luries' assets. On November 18, 1998, the bankruptcy court granted the Trustee's motion, and he proceeded to execute against personal property held by the Luries in Montana.
On December 21, 1999, the bankruptcy court entered an order holding that the total amount the Trustee could collect on his judgments against Ronald and Nancy was the amount of the deficiency judgment against Ronald, plus interest. Thus, the Trustee could only execute on Nancy's property up to the amount of his judgment against her — $352,300.95, plus interest — and any amount realized from Nancy's judgment must be credited against Ronald's deficiency judgment.
Sometime prior to January 13, 2000, the Luries consigned the painting "Apache Renegades" to a gallery in Arizona. On January 13, 2000, the Trustee and the sheriff of Maricopa County, Arizona, conducted an execution sale of "Apache Renegades." After deducting fees and costs, the Trustee received $203,059.00 from the sale of the painting. The funds from the sale of the painting were deposited into the Popkin & Stern liquidating trust account. Prior to the sale, the parties agreed that Robert Lurie, Ronald's brother, would receive 12.6 percent of the proceeds. The bankruptcy court entered an order allowing the Trustee to issue a check in accordance with this agreement, and the Trustee paid to Robert the sum of $25,585.00. This Court has already recognized the distribution to Robert Lurie.4 Thus, the only dispute here concerns the ownership and distribution of the remaining $177,474, plus interest.
On June 27, 2000, Nancy filed a motion in the bankruptcy court to determine the ownership of the proceeds of the painting. The bankruptcy court denied Nancy's motion, concluding that the Rooker-Feldman doctrine barred it from hearing the issue. Nancy appealed, and we reversed the bankruptcy court and remanded for further proceedings.5 The Trustee appealed, but the Eighth Circuit Court of Appeals dismissed that appeal.6 The Eighth Circuit stated that, "at a minimum, the BAP's remand order requires the bankruptcy court to make a de novo determination of Nancy Lurie's ownership interest, if any, in the painting and its proceeds."7
On July 18, 2002, on remand, the bankruptcy court dismissed as moot Nancy's motion to determine her ownership interest. The bankruptcy court found that the parties had stipulated that the judgment against Nancy had been satisfied, and that Nancy had not requested the court to distribute the proceeds to her. The court, therefore, found that the relief requested was moot in light of the satisfaction of the judgment.
On August 14, 2002, Nancy and her two sons, Michael and Ryan, filed a new motion requesting a determination of the ownership interests in the proceeds of the sale of the painting and seeking a distribution of those funds. Nancy claimed that she has fully satisfied the judgment against her, that the Trustee no longer has a claim against her, that she owned 80 percent of the painting, and that she, therefore, is entitled to receive 80 percent of the proceeds from the sale of the painting, plus interest. Michael and Ryan also asserted in this motion that they owned 7.4 percent of the painting, and that they are entitled to the remaining 7.4 percent of the proceeds, plus interest.
On November 1, 2002, the bankruptcy court entered an order in which it determined that Nancy and Ronald jointly owned 87.4 percent of the painting at the time of the execution sale, therefore, Nancy was entitled to 43.7 percent of the net proceeds, plus interest at the legal rate for judgments. The court found that Michael and Ryan had no ownership interest in the painting. Nancy, Michael, and Ryan moved the bankruptcy court to set aside or reconsider its order. The court declined to do so, and the three of them filed this appeal. Appellants claim the bankruptcy court erred when it found Nancy and Ronald jointly owned the painting. Alternatively, appellants claim that even if Nancy and Ronald jointly owned the painting, they owned it as tenants by the entirety, thus the proceeds are exempt from the claims of the Trustee.
A bankruptcy appellate panel shall not set aside findings of fact unless those findings are not supported by the evidence or unless they are based on an incorrect understanding of the law. We give due regard to the opportunity of the bankruptcy court to judge the credibility of the witnesses.8 We review the legal conclusions of the bankruptcy court de novo.9 Here we review for clear error.
There is no dispute that Robert Lurie's share of the proceeds is 12.6 percent. We, therefore, begin with the issue of who is entitled to the remaining 87.4 percent of the proceeds. The bankruptcy court analyzed conflicting facts in reaching its decision. It began with the Certificate of Title
The Certificate of Title states:
THIS CERTIFIES THAT
Two-thirds undivided interest-Nancy Fendell Lurie Trust U/W Charles Fendell One-third undivided interest-Peter Lurie Revocable Trust
. . . . .
THE WORK OF ART
The Certificate of Title also indicates that the "Apache Renegades" painting was exchanged for another painting entitled "Indian Hunter," plus $100,000.11 The evidence supports a finding that the Nancy Fendell Lurie Trust traded "Indian Hunter," plus and additional $69,000 in cash, and the Peter Lurie Family Trust contributed the sum of $31,000 toward the purchase of "Apache Renegades." Though there was some dispute about this purchase, the bankruptcy court found that the Nancy Fendell Lurie Trust owned "Indian Hunter," which was valued at $55,000. Nancy's trust traded that painting, plus an additional $50,000 cash, and the Peter Lurie Trust contributed $50,000 cash toward the purchase of "Apache Renegades." At the time of purchase, the Nancey Fendell Lurie Trust held a two-thirds interest in the painting and the Peter Lurie Trust held a one-third interest in the painting.
The Nancy Fendell Lurie Trust was later dissolved, and its assets were distributed to Nancy. As a result, Nancy asserted to the bankruptcy court that, as part of that distribution, a two-thirds interest in the painting became her property. The bankruptcy court, however, found that Nancy has testified on more than one occasion that she has always considered the art she purchased with her money during the marriage, including both "Indian Hunter" and "Apache Renegades," to be joint property. She testified that there was no "mine and his" in their marriage and that everything was "ours,"12 including the paintings. Ronald testified in the same manner on at least one occasion.13 Despite the fact that Nancy changed her testimony regarding the ownership of the painting at the last hearing, the bankruptcy court...
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...by marriage in which each spouse owns the entire property rather than a share or divisible part." Lurie v. Blackwell (In re Popkin & Stern), 292 B.R. 910, 918 (B.A.P. 8th Cir. 2003) (citing Rinehart v. Anderson, 985 S.W. 2d 363, 367 (Mo. Ct. App. 1998)), aff'd sub nom. Blackwell v. Lurie (I......