Ellis v. Olson, 656 B.R. 904

Mrs. Olson filed for Chapter 7 bankruptcy in March 2021, but her husband, Mr. Olson, did not join the filing.
The Chapter 7 Trustee (Ellis) brought an adversary proceeding alleging that two quit claim deeds executed by Mrs. Olson in favor of Mr. Olson (in 2018 and 2019) were fraudulent transfers or warranted imposition of an equitable lien.
The challenged properties were: 1) the Berry Street House, purchased by Mr. Olson before marriage, later sold in 2018; and 2) the King Street House, purchased during the marriage with proceeds from the Berry Street House sale.
The quit claim deeds in question were executed by Mrs. Olson both at the time of purchase and later refinancing of the King Street House—each deed identified as releasing community interest.
The Trustee alleged community funds were used for mortgage payments and property improvements, supporting potential recovery for the estate or at least an equitable lien for reimbursement.
Mr. Olson moved for summary judgment, arguing no estate or community interest in the properties existed at the time of either quit claim deed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Character of Berry Street proceeds	Sale proceeds became community property upon sale.	Proceeds traceable to separate property; not community.	Berry Street proceeds remained separate.
Character of King Street House	Community property given proceeds and marital status.	Purchased solely with separate funds and separately financed.	King Street House was Mr. Olson’s separate.
Fraudulent transfer by quitclaim deed	Deeds fraudulently conveyed community interest.	No community/estate interest existed to be transferred.	No transfer of estate property occurred.
Equitable lien for community payment	Community funds/improvements justify equitable lien.	Any benefit was offset by Mrs. Olson’s occupancy/enjoyment.	No right to reimbursement; lien denied.

Barnhill v. Johnson, 503 U.S. 393 (defining when a transfer occurs for bankruptcy)
Butner v. United States, 440 U.S. 48 (property rights determined by state law in bankruptcy)
In re Estate of Borghi, 167 Wn.2d 480 (presumptions for separate/community property—WA law)
Guye v. Guye, 63 Wn. 340 (property keeps original character absent clear and convincing evidence)
Merkel v. Merkel, 39 Wn.2d 102 (community funds on separate property give rise to reimbursement right, not transmutation)
Miracle v. Miracle, 101 Wn.2d 137 (no reimbursement if community receives reciprocal benefit)
In re Marriage of Elam, 97 Wn.2d 811 (rule for measuring community reimbursement for improvements to separate property)