In re: Stephen J. Anderson and Melanie Anderson, 572 B.R. 743

Debtors Stephen and Melanie Anderson, licensed Idaho real estate agents, filed chapter 7 on September 9, 2015.
On the petition date, Debtors had 13 real-estate transactions with binding contracts signed but closings occurring postpetition; commissions were paid postpetition to Bastille Enterprises, Inc., a corporation Debtors formed after filing.
Under their broker agreement with Keller Williams, commissions were paid to Keller, which remitted Debtors’ share to Bastille; Idaho law requires commissions be paid to licensed individuals.
Chapter 7 Trustee sought turnover under 11 U.S.C. § 542(a) of $52,485.92 in associate commissions that Debtors received postpetition.
The bankruptcy court found the commissions were estate property under § 541(a)(1) because Debtors performed all acts necessary to earn them prepetition, and Debtors failed to show postpetition services to justify apportionment under § 541(a)(6).
The BAP affirmed, holding contingent prepetition interests in commissions are estate property per Ninth Circuit precedent; Debtors’ postpetition corporate arrangement did not alter the result.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether commissions that were contractually earned prepetition but paid postpetition are property of the bankruptcy estate and subject to turnover under § 542(a)	Debtors: under Idaho law commission not earned until closing (postpetition), and payments to Bastille were postpetition earnings excluded by § 541(a)(6)	Trustee: Debtors had a contingent prepetition interest because necessary acts were done prepetition, so payments are estate property under § 541(a)(1)	Affirmed: contingent commissions rooted in prepetition acts are estate property; Debtors offered no evidence of postpetition services to exclude or apportion under § 541(a)(6)

Jess v. Carey (In re Jess), 169 F.3d 1204 (9th Cir. 1999) (contingent fees attributable to prepetition work are property of the estate)
Segal v. Rochelle, 382 U.S. 375 (U.S. 1966) (property sufficiently rooted in the prebankruptcy past is estate property)
Neuton v. Danning (In re Neuton), 922 F.2d 1379 (9th Cir. 1990) (contingent trust interests vested by postpetition event were estate property)
Ryerson v. Rau (In re Ryerson), 739 F.2d 1423 (9th Cir. 1984) (payments under prepetition contract deemed estate property)
In re Tully, 202 B.R. 481 (9th Cir. BAP 1996) (commissions earned prepetition but paid postpetition are estate property when debtor fulfilled prepetition obligations)
Butner v. United States, 440 U.S. 48 (U.S. 1979) (state law defines property interests)