Bohm v. Titus (In Re Titus)
467 B.R. 592
| Bankr. W.D. Pa. | 2012Background
- Trustee pursues fraudulent transfer action under 11 U.S.C. § 544(b)(1) against the Debtor and Mrs. Titus for deposits into an Entireties Checking Account post-2003.
- Court adopts Meinen framework: direct wage deposits into an and/or into an entireties account may be constructive fraudulent transfers unless spent on necessities or used to acquire other entireties property.
- Court rejects State Court Titus Decisions as controlling law but adopts Meinen-based approach for this case.
- Direct deposits are treated as transfers by the Debtor (indirectly through employer deposits into the Entireties Account).
- Trustees seeks recovery under § 550(a)(1) for transfers-turned-claim against both Debtor and Mrs. Titus; damages amount determined at $281,006.18.
- Exemption objections are litigated; retirement account exempt under § 522(b)(3)(C) and other exemptions addressed; one exemption (Schnader $74,412) denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper lookback period for § 544(b)(1) action | Trustee may pursue 4-year lookback (Apr 23, 2003–Apr 23, 2007). | Debtor and Titus argue a shorter/limited window; TRZ status questioned. | Trustee authorized to pursue 4-year lookback Apr 23, 2003–Apr 23, 2007. |
| Whether State Titus Decisions govern or Meinen controls | State Titus controls; deposits are limited to luxuries only. | State Titus decisions are not binding; Meinen is controlling. | Meinen framework applies; direct deposits may be constructive fraudulent transfers unless spent on necessities. |
| Are direct wage deposits into the Entireties Account transfers by the Debtor | Deposits are indirect transfers by Debtor and constitute transfers under § 5101(b). | Deposits are exempt wages; not transfers by Debtor. | Direct deposits are transfers by the Debtor (indirectly via employer). |
| Whether Mrs. Titus is an initial transferee | Mrs. Titus is an initial transferee of all direct deposits into the Entireties Account. | Recovery should depend on who spent and who benefited; not every depositor is transferee. | Mrs. Titus is an initial transferee with the Debtor; § 550(a)(1) permits recovery jointly/severally. |
| Insolvency and value received in constructive transfers | Debtor insolvent during lookback; deposits did not receive reasonably equivalent value. | Insolvency depends on disputed debts and timing; pre-lookback/other assets complicate. | Trustee proven insolvency during lookback; $281,006.18 recovered; value not reasonably equivalent. |
Key Cases Cited
- In re Meinen, 232 B.R. 827 (Bankr.W.D.Pa.1999) (supports constructive transfers when funds not spent on necessities)
- In re Arbogast, 466 B.R. 287 (Bankr.W.D.Pa.2012) (fraudulent transfer actions involving Titus & McConomy context)
- In re Estate of Holmes, 414 Pa. 403, 200 A.2d 745 (Pa. 1964) (tenants by entirety presumption; joint accounts; gift estate rule)
- Constitution Bank v. Olson, 423 Pa. Super. 134, 620 A.2d 1146 (Pa. Super. Ct. 1993) (joint account ownership presumptions; tenancies by the entirety)
- In re Broadview Lumber Co., Inc., 168 B.R. 941 (Bankr.W.D.Mo.1994) (illustrates transferee treatment of spouses in joint accounts)
- Stern v. Marshall, Supreme Court (2011) (constitutional authority of bankruptcy courts post-Stern)