Lawrence v. Commonwealth of Kentucky Transportation Cabinet (In re Shelbyville Road Shoppes, LLC)

(6th Cir. Jan. 5, 2015)

The Sixth Circuit affirms the bankruptcy court’s order dismissing the trustee’s complaint for turnover of a good faith deposit. The debtor was the assignee of a real property purchase agreement with the cabinet, pursuant to which the debtor could purchase certain real property by a certain date. A good faith deposit had been made. The debtor filed a chapter 7 bankruptcy petition a few days before the deadline to purchase, and the trustee then sought turnover of the deposit. The court holds that the trustee does not have a right to demand turnover of the deposit because it is not part of the bankruptcy estate. The debtor did not have a present right to the deposit at the time the bankruptcy was filed. Opinion below.

2015-01-05 – lawrence v ky transportation cab

Lawless v. Newton (In re Lawless)

(6th Cir. Dec. 15, 2014)

The Sixth Circuit affirms the bankruptcy court’s order denying the chapter 7 debtor’s claimed exemption in a deferred-compensation retirement plan. The debtor claimed his deferred-compensation credits were exempt under Tennessee law. The trustee objected. While the plan fit the Tennessee statute’s general definition of exempt retirement accounts or plans, an exception to the statute applied. Because the debtor had the option to accelerate payment and take a lump sum distribution, the exemption did not apply. Thus, the deferred-compensation credits were correctly held to be property of the estate. Opinion below.

2014-12-15 – lawless v newton

Wojcik v. Gold (In re Daher)

(6th Cir. B.A.P. Dec. 4, 2014)

The Sixth Circuit B.A.P. affirms the bankruptcy court’s decision that certain insurance proceeds are property of the estate. The debtor’s property was damaged prepetition, resulting in an insurance claim being paid. The debtor was contractually obligated to turnover the proceeds to the mortgagee and did so. However, the claim check was never cashed. The mortgagee foreclosed on the property, and the debtor filed bankruptcy apparently to discharge the deficiency claim. The debtor was not aware that the claim check had not been cashed and did not schedule the check as an asset. When the debtor learned of the check, he sued in state court for a declaration that the check was solely payable to him. The bankruptcy was reopened so that the trustee could assert the estate’s interest in that action. The state court entered judgment in favor of the debtor, and the trustee then filed a complaint in the bankruptcy for turnover of the check. The court holds that the check was property of the estate, relying on the broad definition of property of the estate in 11 U.S.C. § 541. The proceeds were paid as a result of prepetition damage to the debtor’s property and thus were sufficiently rooted in the “pre-petition history” to be property of the estate. Opinion below.

2014-12-04 – wojcik v gold

Underhill v. Huntington National Bank (In re Underhill)

(6th Cir. Sep. 10, 2014)

The Sixth Circuit reverses the B.A.P.’s and the bankruptcy court’s decisions finding the debtor’s tortious interference claim against a competitor was property of the estate. The competitor’s improper acts that led to the supplier breaching its contract with the debtor began before the debtor’s bankruptcy petition was filed. However, the supplier did not breach the contract with the debtor until after the petition date. Because the actual injury to the debtor did not occur prepetition (i.e., the tortious interference claim was not established until the contract was breached), the cause of action was not property of the estate. Judge Donald dissents. Opinion below.

2014-09-10 – in re underhill

In re Atwood

(Bankr. S.D. Ind. Issued June 23, 2014)

The bankruptcy court denies the debtors’ motion to exclude turnover of the portion of their tax refund based on a child tax credit. Even though the bankruptcy petition was filed prior to December 31, 2013, the date the debtors became eligible to receive the refund, the debtors had a contingent interest in the refund on the petition date. Thus, to the extent the refund was for an overpayment of taxes, it is property of the bankruptcy estate. Opinion below.

2014-06-23 – in re atwood