Harold Rosbottom, Jr. v. Gerald Schiff
701 F. App'x 330
| 5th Cir. | 2017Background
- Harold Rosbottom and Leslie Fox, spouses in Louisiana community property regime, executed simultaneous instruments in 1999 conveying each spouse’s undivided one-half interest in their Shreveport residence to separate QPRTs (Rosbottom Trust and Fox Trust).
- The spouses later sold the residence in 2005; sale proceeds were split equally and deposited into the respective trusts’ accounts.
- Fox filed for divorce; Rosbottom used his share of the proceeds to buy a Dallas condominium (the Vendome) and later transferred title to the Rosbottom Trust.
- Rosbottom filed for bankruptcy in 2009; irregularities led to appointment of a trustee (Schiff) and Rosbottom’s later criminal conviction for bankruptcy-related fraud.
- Trustee and Fox sued seeking a declaratory judgment that the 1999 donations were null under La. Civ. Code art. 2337 (prohibiting a spouse from alienating his undivided community interest to a third person), so the trusts never acquired a res and the Vendome condominium is part of the bankruptcy estate.
- Bankruptcy court granted summary judgment for trustee (trusts void; condo estate asset); district court reversed, characterizing the 1999 instruments as an effective partition (a single donation). Fifth Circuit reverses the district court and affirms the bankruptcy court.
Issues
| Issue | Plaintiff's Argument (Schiff) | Defendant's Argument (Rosbottom) | Held |
|---|---|---|---|
| Validity of 1999 donations under La. Civ. Code art. 2337 | The donations violated art. 2337 because each spouse attempted to alienate his/her undivided community interest to a third party (their separate trusts); thus transactions are absolutely null | The spouses effectively made a single, mutual donation/partition; both consented and manifested intent to convey, so the transfers were valid | Transfers were void as absolute nullities under art. 2337; trusts never obtained title |
| Status of Vendome condominium (estate asset vs. trust property) | Because the trusts never acquired the Shreveport property or its proceeds, the Vendome condo was purchased with community assets and is part of Rosbottom’s bankruptcy estate | The condo was purchased with trust funds (proceeds held by valid trusts) and therefore was not estate property | Condo is part of the bankruptcy estate because the underlying transfers were null and proceeds remained community property |
Key Cases Cited
- Sikes v. Crager (In re Crager), 691 F.3d 671 (5th Cir. 2012) (standard of review for district court reviewing bankruptcy court)
- Grothues v. IRS (In re Grothues), 226 F.3d 334 (5th Cir. 2000) (summary judgment review in bankruptcy appeals)
- Smith v. Reg'l Transit Auth., 827 F.3d 412 (5th Cir. 2016) (construing evidence in favor of nonmovant on summary judgment)
- Fargerson v. Fargerson, 593 So.2d 454 (La. Ct. App. 1992) (partitions may be effected by agreement styled as donation where intent to partition is shown)
- Hare v. Hodgins, 586 So.2d 118 (La. 1991) (partitioning community property by agreement or judicial action)