Sikirica v. Wettach (In re Wettach)
489 B.R. 496
| Bankr. W.D. Pa. | 2013Background
- Titus-related adversary proceeding involving former Titus & McConomy partners and Trizec; Wettach family defendant filed bankruptcy with substantial pre-petition earnings allegedly transferred to entireties accounts.
- Trizec had obtained a state court judgment against Debtor Thomas Wettach and others; ongoing disputes over fraudulent transfers to shield assets from Trizec.
- Debtor claimed assets as exemptions under Pennsylvania law and § 8214 exemptions; Trustee challenged exemptions and pursued PfUFTA claims.
- Wettach FTA asserts transfers of post-2000 C&G compensation into en-tie/ies accounts, and other deposits (inheritance) into those accounts, were fraudulent.
- Trial conducted November 30, 2011; court reviewed pleadings, post-trial briefs, transcript and exhibits to decide; no new trial held.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether deposits of debtor’s compensation into en-tie-ies accounts constitute fraudulent transfers under PaUFTA. | Trustee argues deposits were transfers without reasonably equivalent value and while insolvent. | Defendants contend deposits may be non-recoverable if used for necessities; may not violate PaUFTA. | Yes, to the extent deposits were not used for necessities and debtor was insolvent; amounts traceable to lookback period recoverable. |
| What is the correct lookback period and insolvency link under PaUFTA for this case? | Trustee relies on lookback from debtor’s bankruptcy filing date. | Defendants argue four-year lookback from petition date; dispute about timing. | Four-year lookback counted from bankruptcy filing date; transfers within October 14, 2001–October 14, 2005 are actionable. |
| Which transfers from the PNC en-tie-ies account and other accounts are non-necessities recoverable? | Trustee identifies multiple categories (investments, travel/entertainment, autos, housing, contributions, allowance) as recoverable. | Defs. contest some categories as necessaries; limited evidence on business necessity. | Trustee proved recoverable amounts totaling $380,253.87 from PNC account; various adjustments made for necessities. |
| Are C&G plan contributions and guardian life policy increases exempt or property of the estate under 541(c)(2) and §8124? | Trustee seeks to recover contributions/gains as potentially fraudulent transfers; exemption questioned. | Defendants rely on exemptions for retirement funds and anti-alienation provisions. | Guardian Life increase not recoverable; C&G plan contributions not exempt; unresolved 541(c)(2) issue pending further argument on whether plan is a trust and enforceable spendthrift provision. |
Key Cases Cited
- In re Meinen, 232 B.R. 827 (Bankr. W.D. Pa. 1999) (deposits of earnings into entireties may be fraudulent transfers unless used for necessities)
- In re Arbogast, 466 B.R. 287 (Bankr. W.D. Pa. 2012) (foundations for Titus-like fraudulent transfer analysis; joint liability against spouses)
- In re Titus, 467 B.R. 592 (Bankr. W.D. Pa. 2012) (fraudulent transfer framework in Titus chain; bankruptcy context analyzed by Markovitz/this court)
- Cohen v. Sikirica, 487 B.R. 615 (W.D. Pa. 2013) (discussion of burden and proof in similar Titus cases; treatment of deposits and necessities)
- In re Roberts, 81 B.R. 354 (Bankr. W.D. Pa. 1987) (ERISA/anti-alienation exemptions; treatment of retirement funds in bankruptcy)