Sikirica v. Wettach (In re Wettach)
- Sikirica v. Wettach (In re Wettach), No. 14-3140, slip op. (3d Cir. Jan. 20, 2016)
- The district court's (W.D. Pa.) affirmance of the bankruptcy court's (Bankr. W.D. Pa.) decision is affirmed. According to the appellate review, the bankruptcy court correctly imposed on the Chapter 7 Trustee the burden of persuasion to show as constructively fraudulent under the Pennsylvania Uniform Fraudulent Transfer Act, pre-petition transfer of wages paid to the debtor, deposited by the payer directly into an account held by the entireties of the debtor and his spouse, particularly for lack of reasonably equivalent value, by a preponderance of the evidence. The lower court next correctly imposed a burden of production on the debtor, effectively creating a rebuttable presumption that the transfer lacked the exchange of any reasonably equivalent value. It required him to show "at least some useful evidence to demonstrate how" the funds were spent, viz., whether they were used to pay for reasonable and necessary household expenses. The Third Circuit determined that the bankruptcy court's evidentiary findings, particularly regarding the amounts recoverable by the Trustee, were free from clear error. The review also affirmed the holding that the deposit of wages into an entireties account is a transfer under the PUFTA. Finally, the court rejected Appellants' other arguments as undeveloped in briefing.
- Procedural context:
- Appeal from the United States District Court for the Western District of Pennsylvania, which affirmed the United States Bankruptcy Court for the Western District of Pennsylvania, finding for the Chapter 7 Trustee for recovery of fraudulent transfers.
- Trustee challenged as fraudulent transfers pre-petition transfer of wages paid to the debtor, deposited by the payer directly into an account held by the entireties of the debtor and his spouse, particularly for a lack of reasonably equivalent value. Debtor challenged the bankruptcy court's allocation of evidentiary burdens, the validity of its evidentiary findings, and the legal conclusion that such a deposit is the transfer of an asset under the Pennsylvania Uniform Fraudulent Transfer Act (PUFTA).
- Benton, Sentelle, and Gilman, JJ. (The Honorable Duane Benton, Circuit Judge of the Eighth Circuit Court of Appeals, the Honorable David Bryan Sentelle, Senior Circuit Judge of the District of Columbia Court of Appeals, and the Honorable Ronald Lee Gilman, Senior Circuit Judge of the Sixth Circuit Court of Appeals, sitting by designation.)
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