491 B.R. 898
8th Cir. BAP2013Background
- Debtor Laura Mehlhaff filed Chapter 7 on June 19, 2012; former spouse obligated to pay $200/month alimony until child turns 18 (December 2014).
- Alimony was scheduled as a on Schedule B (asset) and Schedule I (income); no exemption claimed.
- Trustee moved for turnover of alimony award; Debtor opposed; motion treated as summary judgment under Rule 12(d) with supplemental materials.
- Bankruptcy Court relied on In re Steen and granted summary judgment that alimony is property of the bankruptcy estate under 11 U.S.C. § 541(a)(1).
- Debtor argues alimony should be excluded under § 541(a)(5)(B) and Kelly v. Jeter; panel affirms estate inclusion; right vested pre-petition; SD exemption regime applies as South Dakota opted out of federal exemptions.
- Court notes alimony can be attachable property under SD law (attorney’s lien issue in Jasper v. Smith) and that Congress exempts future alimony separately, but existing pre-petition alimony is property of the estate; child support is not at issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether prepetition alimony is property of the estate under § 541(a)(1). | Mehlhaff argues not under Kelly v. Jeter and § 541(a)(5)(B). | Trustee contends alimony is an interest in property under state law and falls within § 541(a)(1). | Yes; alimony is property of the estate under § 541(a)(1). |
| Whether § 541(a)(5)(B) excludes alimony from the estate. | Mehlhaff relies on § 541(a)(5)(B) and Kelly v. Jeter to exclude alimony. | Trustee argues § 541(a)(5)(B) does not control here; the prepetition right falls under § 541(a)(1). | No; § 541(a)(5)(B) is not applicable to exclude prepetition alimony from the estate; the right exists as property under § 541(a)(1). |
| Whether the right vested pre-petition and thus became estate property. | Mehlhaff asserts rights post-petition, not applicable. | Trustee benefitted from debtor’s prepetition judgment; trustee steps into debtor’s shoes. | Yes; right vested pre-petition and became estate property. |
| What law governs exemptions and how SD exemption regime applies. | South Dakota exemptions apply due to SD opt-out. | Exemption limits governability; SD law controls exemptions. | SD exemptions apply per state law; alimony revenue remains property subject to exemptions. |
Key Cases Cited
- Butner v. United States, 440 U.S. 48 (U.S. Supreme Court 1979) (state-law rules determine nature of property interests; federal bankruptcy law governs extent)
- In re Cent. Arkansas Broad. Co., 68 F.3d 213 (8th Cir. 1995) (broad scope of § 541(a)(1) includes property, tangible and intangible, and causes of action)
- Jasper v. Smith, 540 N.W.2d 403 (S.D. 1993) (attorney’s lien may attach to alimony; public policy not controlling)
- Evans v. Robbins, 897 F.2d 966 (8th Cir. 1990) (property of estate includes contingent interests and future payments)
- In re Wise, 346 F.3d 1239 (10th Cir. 2003) (maintenance may be personal statutory right under certain state law; not always estate asset)
- Kelly v. Jeter (In re Jeter), 257 B.R. 907 (8th Cir. BAP 2001) (alimony not property of the estate under § 541(a)(5)(B) as to Nebraska law; disputes resolved under state law)