In re Thomas Crow

Tenth Circuit majority believes that the grant or denial of an exemption is sufficient to make the order final, even if the bankruptcy court hasn’t ruled on the extent or amount of the exemption.

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Case Status:
19-8082 (10th Circuit, Feb 12,2021) Published
Affirming the BAP, the circuit court concluded that a retirement account (RA) was held as a tenancy by the entirety by the Debtor (DR) and his wife and thus properly exempt per Wyoming law, status not forfeited by later conduct, and denied creditor’s standing to contest bankruptcy court’s ruling on need for an adversary proceeding to quantify joint debt pre-turnover. Two judges affirmed the court’s jurisdiction to review the BAP’s decision “granting” the exemption, deeming it final, despite its then unsettled value. A third viewed it as interlocutory, now ripe only due to the AP’s end.
Procedural context:
When two entities—(1) Radiance Capital Receivables Nineteen, L.L.C. (Radiance), which held a judgment of $2.8 million against Thomas L. Crow, the DR, the winner of the 1961 Australian amateur golf championship; and (2) the United States Trustee (TR) responsible for the administration of the estate created by the DR’s filing of a petition for relief under Chapter 7 of the Bankruptcy Code (Code)—challenged DR’s claim of an exemption for the RA due to his wife’s interest in it as a tenant by the entirety, the U.S. Bankruptcy Court for the District of Wyoming (BC) held an evidentiary hearing. It ultimately concluded that the exemption was proper under § 522(b)(2)(B) of the Code and found no reason to accord dispositive weight to the post-creation actions of the DR and his spouse, Carol A. Crow (CC and, together with DR, Crows). Meanwhile, it put off on any decision as to the value of the joint debt and thus the amount of the exemption until the determination of the amount of joint debt. This final aspect of the BC’s ruling prompted two more motions and yet another ruling. Naturally, the TR began by moving to have $1.8 million of the RA transferred to the estate based on the existence of joint debt owed by the Crows; Radiance joined in that motion. Without prejudice, the BC denied this joint request, holding that the determination of the amount of joint debt could only be adjudicated in the course of an adversary proceeding. Radiance and the Trustee appealed the exemption order and the transfer order to the BAP. After the appeal’s perfection, the parties stipulated to allow a portion of CC’s share in the RA to be transferred to her in order to pay for the DR’s move into an assisted living facility. The BAP affirmed both the exemption order and the transfer order and further held that the tenancy by the entirety status of the account was not severed by subsequent transactions. Radiance, but not the UST, appealed, to which the Crows responded with a motion to dismiss, to the U.S. Court of Appeals for the Tenth Circuit (Circuit). With this appeal still standing, the DR died. In response, the BC granted summary judgment, the deceased husband's bankrupt estate now holding no interest in the entireties account. his event explained the nature of the split amongst the panel: while two judges regarded the BAP's decision that the exemption was valid as sufficient to make it final and thus appealable based on their reading of prior circuit precedent (In re Brayshaw, 912 F.2d 1255 (10th Cir. 1990)), a third (Hon. Briscoe) did not and hence only formally concurred. As the Kansan explained, the BAP's decision had actually "left the exemption contingent on the outcome of an adversary proceeding," meaning that the appeal, when filed, had concerned an interlocutory order of the BC, which, based on the circuit's "general rule," meant the BAP's order was interlocutory too. In her view, Brayshaw did not directly address this issue and was therefore inapposite. Regardless of this dispute, for this jurist, it was the end of the AP, which the DR's death had prompted, that had rendered the appeal ripe by the time that the panel considered the issue.
It all took place in Jackson Wyoming, where the Crows had long resided. In 2015, the couple sold their home for approximately $10 million. Of the net proceeds, they used $1.5 million to purchase a new home and placed the remaining $3.7 million in the RA maintained by Fidelity Investments. By then, the DR had already started showing signs of dementia. Officially opened in April 2015, the RA’s status mattered greatly to the Crows and their family. Unsurprisingly, the application to open the RA was signed by both. Moreover, according to Jeff Marvin (JF), the Crows’ son-in-law, who handled the paperwork, he persistently and repeatedly explained in his discussions with Fidelity representatives that any funds placed in the account should be held as a tenancy by the entirety so as to provide each spouse with a right of survivorship. Supporting this contention, the application contained a note labeling the RA a tenancy by the entirety, seemingly handwritten by a Fidelity representative. More evidence of such intent came via the form of subsequent investment reports, all of which referred to the account’s title as “Thomas L Crow and Carol A Crow – Tenants by the Entirety.” In May 2015, things changed. In that spring month, the Crows executed a Fidelity Durable Power of Attorney granting their daughter Annabelle Marvin, JM’s wife, broad powers to conduct transactions within the RA. Thereafter, the Marvins authorized all transactions and withdrawals from the RA pursuant to this power of attorney. And the Marvins made abundant use of this authority: transfers to them from the RA amounted to $532,000 in 2015 and $357,820 in 2016. Ostensibly, these transfers were intended to pay off an earlier loan made by the Marvins to the Crows through various intermediaries. An unexpected development thrust the RA’s design and working into non-familial scrutiny: though the DR had made a fortune as the founder of Cobra Golf (CG), he had trusted his funds to an advisor eventually convicted of fraud. (CG is a sports equipment manufacturing company based in Carlsbad, California, focused on golf equipment, producing a wide range of golf clubs; the DR had founded it in 1973.) As a result, the Crows’ net worth plummeted, and their debt exploded. Among those obligations was included a judgment obtained by Radiance. When Radiance sought to garnish the RA, the DR turned to Chapter 7 for relief, albeit CC never did. In the schedules accompanying his petition, the DR claimed that the proceeds of the RA were exempt. As reason, he adduced one fact: he jointly held the whole thing as a tenancy by the entirety with CC under Wyoming law. The UST objected to this claim. Radiance offered up its own protest, though it later joined the UST’s effort.
Timothy M. Tymkovich; Mary B. Briscoe; and Robert E. Bacharach

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