IN RE: BRACE, JR.

Case Type:
Consumer
Case Status:
Dismissed
Citation:
No. 17-60032 (9th Circuit, Nov 08,2018) Published
Tag(s):
Ruling:
9th Cir. certified question for California Supreme Court regarding conflicting presumptions in real property ownership related to community property and title in deed. Community property presumption in California law conflicted with presumption in favor of deed. Bankruptcy court (D. Haw.) ruled that community presumption rendered title in real property community property after chapter 7 trustee avoided transfers, notwithstanding that tile had previously been held as "joint tenants." BAP affirmed. Ninth Circuit concluded that resolution required certification to California Supreme Court.
Procedural context:
Bankruptcy court (D. Haw.) granted judgment for chapter 7 trustee plaintiff. Debtor and non-debtor spouse appealed to BAP for 9th Circuit. BAP affirmed and appellants appealed to 9th Circuit.
Facts:
Appellants, husband and wife, acquired their "Residence" in 1977, and also acquired a rental property ("Rental") and a vacant parcel ("Parcel"), taking title as "husband and wife as joint tenants." In 2004, husband formed "Crescent Trust," designating wife as sole beneficiary and himself as trustee. Husband did not record trust documents. Husband then transferred his interest in Residence and Rental the real properties to the Crescent Trust for no consideration while he was defending against a civil suit in state court. Two weeks later, a default judgment entered against him. Husband then filed chapter 7. Trustee sued appellants to avoid transfers and claim real properties on behalf of bankruptcy estate. Following trial, the bankruptcy court ruled in favor of the trustee and held that the real property was property of the bankruptcy estate in their entireties. Bankruptcy court rejected appellants argument that they had orally transmuted the property from community property to separate property. Appellants moved for reconsideration, arguing that only husband's half interest in real property should be part of bankruptcy estate.
Judge(s):
Callahan, Nguyen, Ezra

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