392 F.3d 782 | 5th Cir. | 2004
Agreeing with other circuits, we hold that a crop disaster payment from the federal government to a farmer, who was the debtor in a closed bankruptcy case, should not be treated as property of his bankruptcy estate. We reverse the judgment of the district court.
BACKGROUND
The relevant facts are not in dispute. Appellant Edward Burgess, a farmer, filed a bankruptcy petition under Chapter 7 of the Bankruptcy Code on August 2, 2002. A bankruptcy trustee was appointed. Burgess received a discharge on December 5, 2002. Legislation known as the Agricultural Assistance Act of 2003 became law on or about February 20, 2003. This legislation provided for crop disaster payments to farmers for crop losses in 2001 or 2002. The earliest date on which farmers could apply for disaster payments under this legislation was June 21, 2003. The record is unclear as to when Burgess actually applied for a disaster payment under the program, but there is no dispute that his application would have been submitted after his bankruptcy discharge.
On August 15, 2003, after the case had been administratively closed and after Burgess had received his discharge, the trustee received a check from the Farm Service Agency of the Department of Agriculture in the amount of $24,829. This check was a crop disaster payment for Burgess under the above-described legislation, for a failed 2001 crop.
The bankruptcy proceeding was reopened to resolve what to do with this check. Burgess filed a “Motion for Turnover” requesting that the check be given to him. The trustee contended that the funds were property of the bankruptcy estate and therefore should go to the creditors. The bankruptcy court issued a decision agreeing with the trustee. Burgess appealed this decision to the district court, and the district court affirmed the bankruptcy court.
DISCUSSION
“The commencement of a [bankruptcy] case ... creates an estate.” 11 U.S.C. § 541(a). The bankruptcy estate includes
the following property, wherever located and by whomever held: (1) ... all legal or equitable interests of the debtor in property as of the commencement of the case [and] ... (6) Proceeds, product, offspring, rents, or profits of or from property of the estate, except such as are earnings from services performed by an individual debtor after the commencement of the case.
Id. The bankruptcy court and the district court held that the disaster relief payment was property of the estate.
A number of bankruptcy courts have considered whether crop disaster or similar payments are property of the estate. These courts have concluded that these government payments for crop losses occurring before the debtor filed for bankruptcy are property of the estate under § 541 because they constitute proceeds of property of the estate under § 541(a)(6) or because the payments themselves fall within the ambit of a legal or equitable interest under § 541(a)(1).
For example, in In re Ring,
In In re Lemos,
Another bankruptcy court decision, In re Boyett,
Arguably, Ring and Boyett are distinguishable from the pending case in that the acts authorizing the disaster relief payments became law before the debtors filed for bankruptcy.
Regardless, these bankruptcy decisions read the scope of property of the estate under § 541 expansively. We have similarly recognized that “[t]he scope of property rights and interests included in a bankruptcy estate is very broad: The conditional, future, speculative, or equitable nature of an interest does not prevent it from being property of the bankruptcy estate.”
In light of the broad reading the Supreme Court and this court have given to § 541, the bankruptcy court decisions cited above offer one plausible analysis of the issue presented. Nevertheless, we find more persuasive the decisions of two circuit courts supporting Burgess’s position that the crop disaster payment is not property of the estate.
In In re Vote,
Vote found persuasive the Ninth Circuit’s decision in In re Schmitz.
We essentially agree with analysis offered in Vote and Schmitz. In the pending case, the legislation providing for the crop disaster payment in issue did not exist at the time Burgess filed for bankruptcy. Indeed, Burgess had already received his bankruptcy discharge by the time the 2003 Act became law. As with the debtor in Vote, Burgess had at the time he filed for bankruptcy a “mere hope” that future legislation would provide relief for his crop loss. Burgess had no legal or equitable right to such relief at the commencement of his bankruptcy case. Although, as the Lemos court noted, “Con
Nor do we believe that the crop disaster payment can properly be characterized as “proceeds” of property of the estate under § 541(a)(6). Section 541(a)(6), by its terms, provides that property of the estate includes “proceeds ... of ... property of the estate,” so reading § 541(a)(6) together with § 541(a)(1), the “proceeds” under § 541(a)(6) must still derive from “property of the estate,” defined by § 541(a)(1) as a legal or equitable interest of the debtor in property as of the commencement of the case. Again, Burgess had no legal or equitable interest in property at the commencement of the estate which could mature into the crop disaster payment. Stated another way, § 541(a)(6) and its reference to proceeds cannot retroactively create a property interest that did not exist at the commencement of the case. If the contingent interest in a crop disaster payment is not property of the estate, the payment itself cannot qualify as proceeds of property of the estate under § 541(a)(6).
Judgment Reversed; case Remanded.
. 169 B.R. 73 (Bankr.M.D.Ga.), aff’d, 160 B.R. 692 (M.D.Ga.1993).
. 243 B.R. 96 (Bankr.D.Idaho 1999).
. Id. at 99. We note that a later bankruptcy court decision has concluded that Lemos is no longer good law, in light of the Schmitz decision discussed below. In re Stallings, 290 B.R. 777, 781 (Bankr.D.Idaho 2003).
. 250 B.R. 817 (Bankr.S.D.Ga.2000).
. Id. at 822.
. See Ring, 169 B.R. at 74; Boyett, 250 B.R. at 818.
. In re Kemp, 52 F.3d 546, 550 (5th Cir.1995) (citing In re Haber Oil Co., 12 F.3d 426, 435 (5th Cir.1994); La. World Exposition v. Fed. Ins. Co., 858 F.2d 233, 245 (5th Cir.1988); Ga. Pac. Corp. v. Sigma Serv. Corp., 712 F.2d 962, 967-68 (5th Cir.1983)).
. United States v. Whiting Pools, Inc., 462 U.S. 198, 204-05 & n. 9, 103 S.Ct. 2309, 76 L.Ed.2d 515 (1983) (internal quotation marks omitted).
. 382 U.S. 375, 86 S.Ct. 511, 15 L.Ed.2d 428 (1966).
. Id. at 380, 86 S.Ct. 511.
. 276 F.3d 1024 (8th Cir.2002).
. Id. at 1026.
. Id.
. Id. at 1027.
. 270 F.3d 1254 (9th Cir.2001).
. Id. at 1258 (quoting In re Vote, 261 B.R. 439, 444 (8th Cir.BAP 2001)).