In re Stevens, Bankruptcy No. 86-03023-H3-7
| Decision Date | 31 March 1989 |
| Docket Number | Bankruptcy No. 86-03023-H3-7,Adv. No. 88-0270-H3. |
| Parties | In re James R. STEVENS, and Patricia A. Stevens, Debtors. Janet S. CASCIATO, Trustee for the Estate of James R. Stevens and Patricia A. Stevens, Plaintiff, v. James R. STEVENS, Patricia A. Stevens, R.E. Shoemate, Executor of the Estate of Lena Shoemate, Deceased, Mildred Stevens, James R. Stevens, Jr., Jason Stevens, Defendants. |
| Court | United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Southern District of Texas |
Gerson D. Bloom, Galveston, Tex., for debtors/defendants.
Gerald P. Doyle, Woodard, Hall & Primm, Houston, Tex., for trustee Janet S. Casciato.
R.E. Shoemate, Wickett, Tex., pro se.
Came on for hearing on January 6, 1989 the Motion for Summary Judgment filed by the plaintiff, Janet S. Casciato, Trustee; the Motion for Summary Judgment filed by the defendant, R.E. Shoemate; and the Cross Motion for Summary Judgment filed by defendants, James R. and Patricia Stevens, and after considering the pleadings, memoranda and evidence presented by counsel, the court enters the following findings of fact and conclusions of law along with a separate judgment. To the extent any findings of fact herein are construed to be conclusions of law, they are hereby adopted as such. To the extent any conclusions of law herein are construed to be findings of fact, they are hereby adopted as such.
On April 7, 1988 the Chapter 7 Trustee filed this adversary action to recover property of the bankruptcy estate of James R. and Patricia A. Stevens based upon a fraudulent conveyance of the Debtor's inheritance by renouncing and disclaiming his devise and/or legacy under his grandmother's will. Lena Shoemate died on November 14, 1985 appointing her son, R.E. Shoemate, the independent executor of her will. Her will provided that an undivided one-ninth interest in her estate was to go to her grandson, James R. Stevens, one of the Debtors herein. (Plaintiff's Exhibits B, F; Defendant Stevens' Exhibit D.) On November 21, 1985 the will was offered for probate and admitted on December 2, 1985. (Plaintiff's Exhibits D, E, G; Defendant Stevens' Exhibit E.) As of July 21, 1986, the fair market value of decedent's estate totaled $372,310.99 with a one-ninth undivided interest having a value of $41,367.89. (Plaintiff's Exhibit I.)
Approximately two weeks prior to his grandmother's death, James R. Stevens, Debtor and defendant herein, entered into a Stipulation for Entry of Judgment in connection with a pending state court lawsuit filed by Stewart B. Heighten. (Plaintiff's Exhibit J.) The stipulation granted a judgment to Mr. Heighten against James R. Stevens in the amount of $112,488.23 which judgment was recorded with the Clerk of Court of Young County, Texas on November 20, 1985.
On January 23, 1986, Debtor executed a disclaimer and renunciation whereby he renounced and disclaimed all rights to and interests in his individual one-ninth interest in all of the property of his grandmother's probate estate. (Plaintiff's Exhibits K, N; Defendant Stevens' Exhibit F.) In exchange for the execution of the renunciation, Stevens received no consideration. (Plaintiff's Exhibit B, Paragraph VII; Defendant Stevens' Exhibit B.) The beneficiaries of the renunciation of Stevens' inheritance are his own children. (Plaintiff's Exhibits B, Paragraph III, L; Defendant Stevens' Exhibit B.) At the time of the execution of the disclaimer, January 23, 1986, Stevens was insolvent. (Plaintiff's Exhibit B, Paragraph VIII; Defendant Stevens' Exhibit B.) James Stevens, Debtor and defendant herein, executed the disclaimer and renunciation with the actual intent to keep his inheritance away from the state court judgment creditors to which he was indebted at the time. (Plaintiff's Exhibits L, M, N.) On April 8, 1989, and within three months of the execution of the disclaimer and renunciation, James Stevens and his wife Patricia Stevens filed a voluntary Chapter 7 bankruptcy proceeding. (Plaintiff's Exhibit A; Defendant Stevens' Exhibit A.)
Federal Rule of Civil Procedure 56 provides for summary judgment which is the method for promptly disposing of actions in which there is no genuine issue as to any material fact. Material facts are those which might affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Fontenot v. Upjohn Co., 780 F.2d 1190 (5th Cir.1986). This court finds that no genuine issue of material fact exists and that the granting of a summary judgment under the facts as established by the parties and the applicable law is appropriate.
The plaintiff/Trustee's cause of action is based upon 11 U.S.C. § 548(a)(1) or alternatively, 11 U.S.C. § 548(a)(2) which specifies the requirements to be met in order for the Trustee to avoid certain fraudulant transfers. Section 548(a)(1) details three elements to be satisfied in determining whether an act or event is a fraudulent transfer: (1) whether a transfer of an interest in debtor's property occurred; (2) whether such transfer was made with actual intent to hinder, delay, or defraud any entity to which the debtor was indebted at the time; and (3) whether the transfer occurred within one year of the date of the filing of the bankruptcy petition. 11 U.S.C. § 548(a)(1). Alternatively, under Section 548(a)(2) a transfer can be avoided if a four part inquiry is satisfied. The trustee is required to show that: (1) a transfer of an interest in debtor's property occurred; (2) the transfer occurred within one year of the date of the filing of the bankruptcy petition; (3) the debtor received less than a reasonably equivalent value in exchange for such transfer; and (4) the debtor was insolvent on the date the transfer occurred or became insolvent as a result. 11 U.S.C. § 548(a)(2).
Property as invoked in the definition of "transfer" under the section of the Code proscribing fraudulent transfers is a broad, all encompassing term, which has been recognized to incorporate anything of value which but for the transfer might have been preserved for the trustee for the ultimate benefit of the bankrupt's creditors. Glosband v. Watts Detective Agency, 21 B.R. 963, 971 (D.Mass.1981). Section 541(a)(5)(A) of the Bankruptcy Code specifically defines property of the bankruptcy estate to include:
"any interest in property that would have been property of the estate if such interest had been an interest of the debtor on the date of the filing of the petition and that the debtor acquires . . . by bequest, devise, or inheritance."
Thus, the right to control, deduct or receive a testamentary distribution constitutes an interest in property. In re Peery, 40 B.R. 811, 813 n. 4 (Bankr.M.D.Tenn.1984). Whether an interest in property actually exists at a specific point in time is determined by applying the appropriate state law. In re Kjeldahl, 52 B.R. 916 (D.C. Minn.1985); In re Peery, 40 B.R. 811. There is no question that the Debtor, James R. Stevens, had an...
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