Radiance Capital v. CrowRadiance Capital v. Crow
David von Gunten, von Gunten Law LLC, Denver, Colorado, for Appellant.
Stephen R. Winship, Winship & Winship, P.C., Casper, Wyoming, for Appellee Thomas Leslie Crow.
Brent R. Cohen, Lewis Roca Rothgerber Christie LLP, Denver, Colorado, for Appellee Carol-Ann Crow.
Before TYMKOVICH, Chief Judge, BRISCOE, and BACHARACH, Circuit Judges.
This case arises from a bankruptcy filing by Thomas Crow, who owned substantial property and investment accounts in Wyoming. His bankruptcy petition sought an exemption for approximately $2 million contained in a Fidelity account, which he claimed was jointly held with his wife (who did not file for bankruptcy) and therefore was shielded from creditors under Wyoming law. The Trustee and a creditor, Radiance Capital Receivables Nineteen, L.L.C., objected to the claimed exemption. After an evidentiary hearing, the bankruptcy court upheld the exemption, and a Bankruptcy Appellate Panel (BAP) affirmed.
On appeal, Radiance challenges the BAP‘s affirmance. Crow first argues we lack jurisdiction over this appeal because the BAP‘s affirmance of the bankruptcy court‘s ruling on the claimed exemption was not “final” within the meaning of
On the merits, we affirm. Applying Wyoming law, we conclude the Crows jointly held the Fidelity account with a right of survivorship—known as a “tenancy by the entirety” at common law—and was therefore exempt from the bankrupt estate. We further conclude the tenancy by the entirety was not severed by the Crows’ subsequent conduct.
Radiance also challenges the BAP‘s affirmance of the bankruptcy court‘s ruling that an adversary proceeding is required to determine the amount of joint debt held by the Crows before any portion of the Fidelity account must be turned over to the Trustee. We hold Radiance lacks standing to challenge that portion of the BAP‘s ruling and therefore dismiss that aspect of its appeal.
I. Background
A. Facts
Thomas and Carol Crow resided in a home in Jackson, Wyoming. That property was sold in 2015 for approximately $10 million, resulting in $5.2 million in net proceeds. Of that amount, $1.5 million was applied to a new home in Jackson. The remaining approximately $3.7 million was placed in a Fidelity account.
The Fidelity account was opened in April 2015. The application to open the account was signed by the Crows, but their son-in-law, Jeff Marvin, handled the paperwork. Marvin testified he went to great lengths in his discussions with Fidelity representatives to ensure that any funds placed in the account would be held as a tenancy by the entirety. Consistent with that testimony, the application to open the account contains a handwritten note that labels the account a tenancy by the entirety. The note was apparently made by a Fidelity representative. Once the account was opened, subsequent monthly investment reports show the account is titled in the name of “Thomas L Crow and Carol A Crow – Tenants by the Entirety.”
B. Bankruptcy Court Proceedings
Thomas Crow made his fortune as the founder of Cobra Golf. Unfortunately, he trusted his finances to an advisor who was later convicted of fraud. As a result, Crow‘s net worth was substantially depleted, leaving him with significant debt, including a judgment obtained by Radiance against Crow in the amount of $2.8 million. When Radiance sought to garnish the Fidelity account, Crow filed for bankruptcy protection under Chapter 7 of the Bankruptcy Code.
Crow claimed that the proceeds of the Fidelity account were exempt because it was held as a tenancy by the entirety with his wife Carol. The Trustee filed objections to that claimed exemption, as did Radiance.
The bankruptcy court held an evidentiary hearing on the claimed exemption, after which it entered an order holding that the Fidelity account was in fact held as a tenancy by the entirety and exempt under
The Trustee then moved to have $1.8 million of the Fidelity account transferred to the Trustee based on the existence of joint debt owed by the Crows. Radiance joined in that motion. The bankruptcy court denied the motion without prejudice, holding that the determination of the amount of joint debt had to be decided in an adversary proceeding.
Radiance and the Trustee appealed the exemption order and the transfer order to the Bankruptcy Appellate Panel. After the appeal to the BAP had been perfected, the parties stipulated to allow a portion of Carol Crow‘s share in the Fidelity account to be transferred to her in order to pay for Thomas Crow‘s move into an assisted living facility. Pursuant to that stipulation, Carol Crow was entitled to use all but $1.8 million in the Fidelity account to pay those expenses.
The BAP affirmed both the exemption order and the transfer order, concluding the bankruptcy court did not err in determining the account was held by the Crows as tenants by the entirety. The panel also held that the tenancy by the entirety status of the account was not severed by subsequent transactions.
Radiance timely filed a notice of appeal. The Crows then filed a motion to dismiss the appeal, which was transferred to this panel for decision.
II. Analysis
We first address the Crows’ motion to dismiss for lack of appellate jurisdiction,
A. Appellate Jurisdiction
Section 158(d) of Title 28 of the United States Code governs appeals from bankruptcy decisions issued by the bankruptcy court, district court, or the bankruptcy appellate panel. The court of appeals “shall have jurisdiction of appeals from all final decisions, judgments, orders, and decrees entered” by the district court or the BAP.
The BAP did not certify Radiance‘s appeal under
Issues of finality and appealability are different in bankruptcy cases. Bullard v. Blue Hills Bank, 135 S. Ct. 1686, 1692 (2015). “A bankruptcy case involves ‘an aggregation of individual controversies,’ many of which would exist as stand-alone lawsuits but for the bankrupt status of the debtor.” Id. (quoting 1 Collier on Bankruptcy ¶ 5.08[1][b], at 5–42 (16th ed. 2014)). Thus, “Congress has long provided that orders in bankruptcy cases may be immediately appealed if they finally dispose of discrete disputes within the larger case.” Howard Delivery Serv. v. Zurich Am. Ins. Co., 547 U.S. 651, 657 n.3 (2006). Some courts have described this approach as “the flexible finality rule,” which developed “because, if ‘traditional’ rules of finality applied in bankruptcy, no appeals would be heard in any bankruptcy matter until a final order issued as to the entire bankruptcy case.” Eddleman v. U.S. Dep‘t of Labor, 923 F.2d 782, 786 n.7 (10th Cir. 1991).
In the Tenth Circuit, “[g]rant or denial of a claimed exemption is a final appealable order from a bankruptcy proceeding.” In re Brayshaw, 912 F.2d 1255, 1256 (10th Cir. 1990). In this case, the bankruptcy court allowed Thomas Crow a tenancy-by-the-entirety exemption as to the Fidelity account, and the BAP affirmed subject to a determination of the amount of joint debt. This legal determination constituted a “[g]rant . . . of a claimed exemption” under Brayshaw, and therefore may be immediately appealed.2 The Crows fail to acknowledge Brayshaw, and nothing in their argument suggests it is no longer good law.
The Crows’ motion to dismiss is denied, and we will proceed to the merits of Radiance‘s appeal.
B. Exemptions for Tenancy by the Entirety
Radiance argues the bankruptcy court erred in determining the Fidelity account is exempt. It contends tenancy by the entirety is disfavored under Wyoming law,
Section 522 of the Bankruptcy Reform Act of 1978 authorizes a debtor in bankruptcy to exempt certain property from the bankrupt estate. In particular,
Because there is no federal law of property, whether an exemption exists under
1. Creation of a Tenancy by the Entirety
A tenancy by the entirety is a common-law estate unique to married couples, with a right of survivorship where the surviving spouse retains the entire interest rather than acquiring the decedent‘s interest. Tenancy by the Entirety, Black‘s Law Dictionary (11th ed. 2019). Wyoming law recognizes tenancy by the entirety in personal property. Id. at 485 (“It appears that Wyoming is among the minority of states which recognize tenancy by the entirety in personal property.“); Wambeke v. Hopkin, 372 P.2d 470, 475–76 (Wyo. 1962);
In Wambeke the Wyoming Supreme Court laid out two alternative ways to prove the creation of a tenancy by the entirety in personal property:
- Each of the four unities of interest, time, title, and possession must be present, with the added unity of person for a tenancy by the entirety; or
- In the absence of one or more of the first four unities, it must be evident from the language of the instrument itself that the parties thereto intended to create a right of survivorship.
372 P.2d at 476. The parties agree that the required unities of interest are lacking with respect to the Fidelity account, so the only way the Crows can establish a tenancy by the entirety is by the second alternative described in Wambeke.
Whether a particular document constitutes an “instrument” within the meaning of Wambeke is a matter on which the parties strongly disagree. Radiance argues for a narrow definition, and its position is effectively that an investment account like the one at issue here can never be held as a tenancy by the entirety. Radiance contends an “instrument” within the meaning of Wambeke was narrowly defined by the bankruptcy court in Anselmi: “As used by the Wambeke court, ‘instrument’ might include bills, bonds, conveyance, leases, mortgages, contract,
We disagree with Radiance‘s position, which would unduly narrow tenancies by the entirety in Wyoming. The relevant passage of Anselmi reads:
[A] careful reading of Wambeke indicates that, in this context, [“instrument“] refers to those writings which give formal expression to a legal act or agreement for the purpose of creating, securing, modifying, or terminating a right. As used by the Wambeke court, “instrument” might include bills, bonds, conveyance, leases, mortgages, contract, promissory notes, deeds, and other similar writing whereby “chattel is embodied in a document.”
52 B.R. at 492 (emphasis added). The first sentence provides an apt definition, and is consistent with Wyoming cases that inquire whether the “creating instrument” evidences a clear intention to create a tenancy by the entirety. See, e.g., Choman v. Epperly, 592 P.2d 714, 718 (Wyo. 1979) (citing cases). On the other hand, the second sentence on which Radiance relies is only an example—it indicates the definition of instrument “might include” a document in which the chattel is embodied, not that it is limited to such a document. Similarly,
The Wyoming Supreme Court recently confirmed that
Here, the application to open the Fidelity account is a “creating instrument,” and it gave formal expression to an agreement between Fidelity and the Crows to create rights. The application contains a handwritten note expressly labeling the account as a tenancy by the entirety. We therefore find it is “evident from the language of the instrument itself that the parties thereto intended to create a right of survivorship.” Wambeke, 372 P.2d at 476.
Radiance further argues, however, that the application itself contains language allowing either spouse to dispose of the assets of the account without the consent or approval of the other. Citing Anselmi, Radiance argues this provision is inconsistent
2. Severance of a Tenancy by the Entirety
Even if a tenancy by the entirety had been created, Radiance argues it was “severed” by certain actions taken after the Fidelity account was opened. First, it argues that withdrawals from the account by Annabelle Marvin and Jeff Marvin severed the tenancy. Second, Radiance argues that when the Crows entered a stipulation to allow Carol Crow access to a part of the Fidelity account to pay for her husband‘s nursing care expenses, the tenancy was severed. We hold the tenancy by the entirety was not severed.
Radiance characterizes the Marvins as treating the Fidelity account as a sort of slush fund, withdrawing proceeds on a whim for their own personal benefit. Even accepting this characterization as true, Radiance cites only a single bankruptcy case from Florida in support of their argument that the Marvins’ withdrawals severed the tenancy. In that case, the court stated that if any of the five unities are destroyed, “there is no entireties estate.” In re Pierre, 468 B.R. 419, 426 (Bankr. M.D. Fla. 2012). As discussed above, however, the parties all agree that the required unities are lacking, so it is not clear why Pierre is relevant. In addition, in making the withdrawals, Annabelle Marvin was exercising her power of attorney on behalf of both her parents. The Crows, as the owners of the Fidelity Account, had the right to determine its subsequent disposition, and they did so by granting Annabelle Marvin power of attorney and ratifying each subsequent transfer.
Radiance also argues the stipulation in the bankruptcy court to allow Carol Crow to access a portion of the Fidelity funds severed the tenancy. As the BAP noted in this case, however, a debtor‘s right to an exemption is determined on the petition date. White v. Stump, 266 U.S. 310, 313 (1924). And the language of
C. The Transfer Order
After the bankruptcy court found the Fidelity account to be exempt as a tenancy by the entirety, the Trustee moved to have a portion of the Fidelity account transferred to the Trustee based on the existence of joint debt owed by the Crows. The bankruptcy court denied the motion without prejudice. In that order, the bankruptcy court held the determination of the amount of joint debt had to be decided in an adversary proceeding. Radiance argues the bankruptcy court erred in so holding.
The Crows contend Radiance has no standing to challenge the transfer order, and we agree. The Crows argue Radiance is not a “person aggrieved” by the order, and therefore has no standing to challenge it. To qualify as a “person aggrieved,”
III. Conclusion
For the foregoing reasons, we affirm the BAP‘s holding that the Fidelity account is exempt under
BRISCOE, Circuit Judge, concurring.
I agree that we should affirm the Bankruptcy Appellate Panel‘s (BAP‘s) holding on the merits. I also agree that we should deny the Crows’ motion to dismiss for lack of jurisdiction. I disagree, however, with the rationale proposed in support of our having appellate jurisdiction to review the BAP‘s rulings. Specifically, I disagree that the BAP‘s decision “granting” an exemption was immediately appealable. As I read the BAP‘s ruling, it did not “grant” an exemption; rather, it left the exemption contingent on the outcome of an adversary proceeding.1 Thus, Radiance‘s appeal of the BAP‘s decision was interlocutory. Now that the adversary proceeding has concluded as to the exemption issue, however, Radiance‘s appeal has ripened, and we may exercise jurisdiction.
Under
Here, the BAP correctly found that the bankruptcy court‘s exemption order was an interlocutory order. Aplt. App. at 1290. The bankruptcy court ruled that the Fidelity account was held by the Crows as tenants by the entirety. Id. at 130. The bankruptcy court did not, however, determine the extent of the exemption. Rather, the bankruptcy court ruled that Mrs. Crow was entitled to at least one half of the
The BAP‘s decision did not change the interlocutory nature of the bankruptcy court‘s exemption order. Like the bankruptcy court, the BAP held that the exemption was “dependent upon the joint debt of the Crows,” and the amount of joint debt would be resolved in an adversary proceeding. BAP Op. at 41. Thus, this case initially fell under our general rule that the BAP‘s decision is interlocutory when it affirms an interlocutory order by the bankruptcy court. See Tri-Valley Distributing, 533 F.3d at 1214–15.
In re Brayshaw, 912 F.2d 1255, 1256 (10th Cir. 1990), does not resolve the issue before us. In that case, we held that “[g]grant or denial of a claimed exemption is a final appealable order from a bankruptcy proceeding.” Id. Yet, as described above, the BAP‘s ruling was not that clear cut. The BAP did not “grant” or “deny” any exemption—it merely made a legal determination that the exemption could apply to anywhere between half and all of the Fidelity account. Thus, the BAP‘s ruling left the parties’ rights and obligations far from “fixed.” Bullard, 135 S. Ct. at 1692. The BAP‘s ruling regarding the exemption only got the parties part way toward resolution of their competing claims for the Fidelity account—it affirmed the bankruptcy court‘s conclusion that the Fidelity account was established and maintained by the Crows as tenants in the entirety, but whether any part of the account would escape exemption remained to be seen.
Although the BAP‘s decision was not final, the bankruptcy court‘s subsequent grant of summary judgment in the adversary proceeding cured Radiance‘s otherwise premature notice of appeal.3 An otherwise ineffective interlocutory appeal may be cured if “subsequent to the filing of the premature notice of appeal, the [bankruptcy court] either finally disposes of the remainder of the case or follows the Rule 54(b) procedure for entry of final judgment on the particular matters theretofore appealed.” In re Durability, 893 F.2d 264, 266 (10th Cir. 1990) (citing Lewis v. B.F. Goodrich Co., 850 F.2d 641, 645 (10th Cir. 1988)). In its summary judgment order, the bankruptcy court determined that “[n]o interest in the Fidelity Account remains in the bankruptcy estate.” Aple. Not. Suppl. Authority, Att. 1 (Order Granting Summ. J.) at 6. Thus, the remainder of the case left by the BAP‘s decision—i.e.,
Crow points out that the bankruptcy court denied summary judgment on Carol Crow‘s counterclaim and has not entered final judgment in the adversary proceeding. See Errata to Oral Argument. Further, the bankruptcy court has not entered a Rule 54(b) order in the adversary proceeding. Yet, Carol Crow‘s counterclaim was not part of the BAP‘s decision; thus, her counterclaim is not relevant to whether we have jurisdiction over Radiance‘s appeal of the BAP‘s decision. Further, a Rule 54(b) certification is only one way to cure an appeal of an interlocutory order. Because the bankruptcy court‘s summary judgment order “finally dispose[d] of the remainder” of the BAP‘s consideration of the exemption issue, jurisdiction over the exemption issue is proper under the first alternative recognized in Durability.
The finality rules are indeed “different in bankruptcy.” Bullard, 135 S. Ct. at 1692. Yet, they are not so flexible as to permit review while the parties’ dispute is simultaneously litigated in an adversary proceeding. Radiance‘s appeal of the exemption issue only ripened when the adversary proceeding concluded as to that issue.