Walsh v. Bosack (In Re Bosack)
454 B.R. 625
| Bankr. W.D. Pa. | 2011Background
- Debtor William J. Bosack filed Chapter 7; Trustee Walsh objected to exemption of Debtor's residual commissions from Glacial Energy earned post-petition.
- Glacial Energy Agent Agreement (Feb. 20, 2010) provides monthly residual commissions based on Debtor's customers' electric usage and continued so long as customers stay with Glacial.
- 17 pre-petition customer contracts generated residuals; January 2011 contract also generated commission; agreement characterizes relationship as independent contractor.
- Debtor earned residuals as an independent contractor; he also held a separate Glacial salaried position in mid-2010 and later full-time employment with First Choice; commissions were not disclosed in initial schedules.
- Debtor amended Schedules in Jan. 2011 to disclose residuals and exempt them; Trustee contends residuals are estate property, some post-petition services are required, and some funds were concealed or not disclosed.
- Court adopts apportionment approach for mixed pre- and post-petition commissions, finding 93% pre-petition, 7% post-petition for the 17 Contract Residual Commissions; 93% estate property, 7% post-petition income.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do Residual Commissions constitute estate property? | Walsh argues commissions earned pre-petition but paid post-petition are estate property. | Bosack contends residuals arise from post-petition services and are exempt under § 541(a)(6). | Partially estate property: 93% estate, 7% post-petition income. |
| How to apportion pre- and post-petition components for mixed commissions? | Walsh asserts all 17 Contract Residuals are estate property because tied to pre-petition work. | Bosack argues Wu/Golde approach should apply, allowing apportionment between pre- and post-petition components. | Adopts Wu/Golde method; 93% pre-petition, 7% post-petition for the 17 Contract Residual Commissions. |
| Can the estate-property portion be exempt under Pennsylvania § 8127? | Walsh contends 93% estate property cannot be exempt; § 8127 applies to wages held by employer, not independent contractor. | Bosack maintains possible exemption under § 8127 as wages/commissions. | No exemption for the estate-property portion; § 8127 inapplicable to independent contractors. |
| Did Debtor conceal or fail to disclose estate property to defeat exemption? | Walsh contends Debtor intentionally concealed and/or failed to disclose 17 Contract Residual Commissions. | Bosack claims concealment was honest mistake. | Clear finding of intentional concealment/undisclosed property; bars exemption and strengthens estate claims. |
Key Cases Cited
- In re Golde, 253 B.R. 843 (Bankr.N.D. Ohio 2000) (pre/post-petition components require allocation under 541(a)(6))
- In re Wu, 173 B.R. 411 (9th Cir. BAP 1994) (if postpetition services are necessary, apportion post/preevest payments)
- In re Malloy, 2 B.R. 674 (Bankr.M.D. Fla. 1980) (apportionment schemes used for mixed pre/post-petition earnings)
- In re Nicholson, 435 B.R. 622 (9th Cir. BAP 2010) (bad faith concealment standard in exemption proceedings applies by preponderance)
- Rolland, 317 B.R. 402 (Bankr.C.D. Cal. 2004) (bad faith concealment standard in exemption proceedings)