Lovald v. Falzerano (In re Falzerano)

8th Cir. Court of Appeals [Case No. 11-2938 (July 23, 2012)]
AFFIRMING the BAP order denying the turnover action of the Chapter 7 Trustee on the grounds that unjust enrichment claims exceeds the scope of 11 U.S.C. Section 542(a).
Procedural context:
At the bankruptcy court, the Chapter 7 Trustee sued the debtors on the basis of unjust enrichment due to the use of assets of the estate. The bankruptcy court concluded that the defendants (debtors) were not unjustly enriched. The Chapter 7 Trustee appealed to the BAP, which affirmed on alternative grounds. That case was again appealed by the Chapter 7 Trustee to the Court of Appeals.
The debtor and his non-filing spouse arranged for the purchase of 500 tons of hay May 2001. In Decemeber 2001, the non-filing spouse died. In 2007, after not paying the creditor the balanced owed, creditor sued in state court. Prior to the judgment against the debtor, debtor filed for relief under Chapter 7. In 2009, the chapter 7 trustee filed a complaint under 11 USC Section 542 against the debtor and non-filing decedent spouse to recover rent for the pasture and hay provided to the probate estate's cattle. The chapter 7 trustee asserted that the defendants, the debtor and non-filing decedent spouse, were liable to the bankruptcy estate under an unjust enrichment theory.
Loken, Colloton, and Shepherd.

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