Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca3-24-01202/USCOURTS-ca3-24-01202-0/pdf.json

Parties Involved:
Christine Biros
Appellee
Biros Irrevocable Life Insurance Trust
Appellee
Shanni Snyder
Appellant
U Lock Inc
Appellee

Document Text:

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

______________

No. 24-1202

______________

In re: U LOCK INC.,

 Debtor

SHANNI SNYDER,

as assignee of Robert Slone, Chapter 7 Trustee for U Lock Inc.,

Appellant

v.

CHRISTINE BIROS and the BIROS IRREVOCABLE LIFE INSURANCE TRUST

______________

On Appeal from the United States District Court

for the Western District of Pennsylvania

(D.C. No. 2-23-cv-01410)

U.S. District Judge: Honorable Arthur J. Schwab

______________

Submitted Under Third Circuit L.A.R. 34.1(a)

December 6, 2024

______________

Before: SHWARTZ, MATEY, and McKEE, Circuit Judges.

(Filed: January 9, 2025)

______________

OPINION

______________

 This disposition is not an opinion of the full court and pursuant to I.O.P. 5.7 does 

not constitute binding precedent.

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2

SHWARTZ, Circuit Judge.

Shanni Snyder appeals from the District Court’s order affirming the Bankruptcy 

Court’s dismissal of her adversary action alleging that U Lock transferred property to 

Christine Biros and that such transfer was an avoidable preference or fraudulent transfer. 

Because Biros always held equitable title to the property, the property was not a part of 

the estate and hence could not be transferred from it. As a result, we will affirm the order 

dismissing the adversary action.

I

1

A

A group of individuals—including Biros, her brother, and relatives of Snyder—

formed U Lock Inc. to purchase a commercial property for development. Biros lent U 

Lock $325,000 to purchase the property2and U Lock closed on the property. U Lock 

never repaid Biros for the loan.

Two years later, Biros filed a complaint against U Lock and the property’s prior 

owners in Pennsylvania state court, asserting that she was the property’s equitable owner

because U Lock never repaid her and requesting an order compelling the prior owners to 

convey legal title to her. After trial, the court (1) found that the initial deeds naming U 

Lock as the grantee were void ab initio because U Lock was not a properly formed

1 We accept as true the facts stated in the adversary complaint and may also

consider “public records, including judicial proceedings.” In re Energy Future Holdings 

Corp., 990 F.3d 728, 737 (3d Cir. 2021) (quoting S. Cross Overseas Agencies, Inc. v. 

Wah Kwong Shipping Grp. Ltd., 181 F.3d 410, 426 (3d Cir. 1999)).

2 U Lock had no other assets at the time. 

Case: 24-1202 Document: 36 Page: 2 Date Filed: 01/09/2025
3

corporation at the time of sale; (2) imposed a constructive trust on the property and 

recognized Biros as its equitable owner because she had fully funded the purchase and U 

Lock did not repay her; and (3) directed U Lock to convey legal title to Biros. The state 

appellate court affirmed, finding “no error in the trial court’s imposition of a constructive 

trust on the [p]roperty and its direction that ownership thereof be transferred to [Biros].” 

Biros v. U Lock Inc., 255 A.3d 489, 496 (Pa. Super. Ct. 2021). The state supreme court 

denied U Lock’s petition for leave to appeal. The next day, Biros recorded the relevant

deeds to the property in her name. 

Months later, purported creditor Snyder placed U Lock into involuntary Chapter 7 

bankruptcy. Chapter 7 Involuntary Petition, In re U Lock Inc., No. 22-20823 (Bankr. 

W.D. Pa. Apr. 27, 2022), ECF No. 1. Snyder later purchased from the U Lock estate 

virtually all causes of action it held as of the date of its bankruptcy.

B

Snyder filed an adversary complaint against Biros,3alleging that the transfer of 

property from U Lock to Biros constituted an avoidable preference4 or fraudulent 

3 Based on her ownership of the estate’s causes of action, Snyder brings the 

present action as the estate’s assignee. Order Confirming Sale, In re U Lock Inc., No. 22-

20823 (Bankr. W.D. Pa. Dec. 20, 2022), ECF No. 254. 

4

“The Bankruptcy Code’s avoidable preference provision, 11 U.S.C. § 547(b), 

allows a bankruptcy trustee to recover certain transfers a debtor made prior to filing a 

petition in bankruptcy.” In re First Jersey Sec., Inc., 180 F.3d 504, 509 (3d Cir. 1999).

Case: 24-1202 Document: 36 Page: 3 Date Filed: 01/09/2025
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transfer,

5

and Biros moved to dismiss under Federal Rule of Bankruptcy Procedure 

7012(b) and Federal Rule of Civil Procedure 12(b)(6). 

The Bankruptcy Court granted Biros’s motion, reasoning that (1) Snyder’s claims 

required her to show a “transfer of an interest of the debtor in property”; and (2) Snyder 

could not make this showing because, under Pennsylvania law, the “debtor is deemed to 

have never owned the equitable interests [] in the first place,” and therefore the 

imposition of a constructive trust is not a “transfer of an interest of the debtor.” Snyder v. 

Biros (In re U Lock Inc.), 652 B.R. 456, 466, 468 (Bankr. W.D. Pa. 2023) (internal 

citations and quotation marks omitted) (emphasis omitted).

The District Court affirmed, holding that “the equitable interest in the [property] 

resided with Biros [since] the original date of transfer” to U Lock from the prior owners,

and that therefore, “there was no conveyance from U Lock to Biros.” Snyder v. Biros (In 

re U Lock Inc.), No. 23-1410, 2024 WL 69628 at *5 (W.D. Pa. Jan. 5, 2024).

Snyder appeals. 

II6

5

“[11 U.S.C. §] 548(a)(1) allows a trustee to avoid any transfer of the debtor's 

interest in property made within [two years] before the filing of a bankruptcy petition if 

the transfer was the result of actual or constructive fraud.” In re Fruehauf Trailer Corp., 

444 F.3d 203, 210 (3d Cir. 2006).

6 The Bankruptcy Court had jurisdiction under 28 U.S.C. §§ 157 and 1334, the 

District Court had appellate jurisdiction under 28 U.S.C. §§ 158 and 1334, and we have

jurisdiction under 28 U.S.C. §§ 158(d) and 1291. We exercise plenary review of the

Bankruptcy Court’s order dismissing the complaint, see In re Hertz Corp., 120 F.4th 

1181, 1191 (3d Cir. 2024), and must determine whether the complaint contains 

“sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its 

face[,]” In re Energy Future Holdings, 990 F.3d at 736-37 (quoting Ashcroft v. Iqbal, 556 

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5

To prevail on her claims, Snyder must demonstrate that there was a transfer of a 

property interest from U Lock to Biros. See 11 U.S.C. §§ 547(b) (providing “the trustee 

may . . . avoid any transfer of an interest of the debtor in property” meeting § 547’s

definition of a preference), 544(b) (providing “the trustee may avoid any transfer of an 

interest of the debtor in property . . . that is voidable under applicable law”), 548(a)(1) 

(providing “[t]he trustee may avoid any transfer . . . of an interest of the debtor in 

property” meeting § 548’s definition of a fraudulent transfer). Because “state law 

generally determines what interest, if any, a debtor has in property,” In re O’Dowd, 233 

F.3d 197, 202 (3d Cir. 2000), we examine U Lock’s interest in the property under 

Pennsylvania law to determine whether a transfer took place.7 

Under Pennsylvania law, a constructive trust is “a relationship with respect to 

property[,] subjecting the person [holding title] to an equitable duty to convey [title] to 

another on the ground that his acquisition or retention of the property is wrongful and that 

he would be unjustly enriched if he were permitted to retain the property.” Kern v. Kern, 

892 A.2d 1, 8 (Pa. Super. Ct. 2005) (internal quotation marks and citation omitted). The 

beneficiary of a constructive trust is deemed to have held equitable title from the date the 

original owner conveyed the property, and the trustee8(1) is deemed to “have never 

U.S. 662, 678 (2009)); id. at 736 n.1 (explaining that under Bankruptcy Rule of 

Procedure 7012, motions to dismiss adversary complaints are evaluated under the 

standard set forth in Federal Rule of Civil Procedure 12(b)(6)).

7 We may not sit in appellate review of the state court’s decision to impose a 

constructive trust. Merritts v. Richards, 62 F.4th 764, 774 (3d Cir. 2023) (“The RookerFeldman doctrine prevents [district and circuit] courts from . . . engag[ing] in appellate 

review of state-court orders.”).

8 The trustee in this case is the legal title holder.

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6

owned the equitable interest in [the] property in the first place,” In re Pitchford, 410 B.R. 

416, 420 (Bankr. W.D. Pa. 2009); and therefore (2) has “no right whatsoever to the 

property,” Kern, 892 A.2d at 8. “[A]lthough a constructive trust may not be judicially 

decreed until many years subsequent to the transaction giving rise to the trust, the 

accepted theory is that the constructive trust is in existence at the inception of the 

transaction.” Grubbs v. Dembec, 418 A.2d 447, 451 n.1 (Pa. Super. Ct. 1980) (citations 

omitted); see also City of Farrell v. Sharon Steel Corp., 41 F.3d 92, 97 (3d Cir. 1994) 

(recognizing that, under Pennsylvania law, a constructive trust arises at the time of the 

relevant transaction).

Here, Biros loaned U Lock the funds to buy the property from the prior owners. U 

Lock never repaid her for her loan and had no assets with which to do so. As a result, the 

state court (1) imposed a constructive trust on the property as of the date it was sold and 

recognized Biros as the beneficiary and equitable title holder to compensate her for the 

loss of her funds and (2) recognized U Lock, as the trustee, as holding only legal title. 

Because a constructive trust exists at the time a prior owner sells a property to a

debtor, bankruptcy courts applying Pennsylvania law have determined that a judicial 

declaration of a constructive trust does not constitute a transfer of property of the estate. 

See, e.g., In re Aultman, 223 B.R. 481, 485-86 (Bankr. W.D. Pa. 1998) (explaining that, 

under Pennsylvania law, imposition of a constructive trust is not a transfer of an interest 

from the debtor in the property); In re Pitchford, 410 B.R. at 422-23 (same). The debtor, 

as trustee, never had any equitable interest in the property to transfer, In re Pitchford, 410 

B.R. at 423, and any transfer of bare legal title for such property is not a transfer of

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7

property of the estate, see In re Net Pay Sols., Inc., 822 F.3d 144, 155 (3d Cir. 2016)

(“[T]he Code’s definition of property of the estate [] includes ‘all legal or equitable 

interests of the debtor in property as of the commencement of the case’ but excludes 

property in which the debtor holds only legal title and not an equitable interest.” (internal 

quotation marks and citation omitted); United States v. Whiting Pools, Inc., 462 U.S. 198, 

204 n.8 (1983) (concluding that “Congress intended to exclude from the estate property 

of others in which the debtor had some minor interest such as [] bare legal title”).

9 Thus, 

neither the state court’s declaration that Biros was the property’s equitable owner, nor the

subsequent transfer of legal title to her, constituted a transfer of property of the estate to 

Biros, and therefore, Snyder’s avoidable preference and fraudulent transfer claims fail.10

III

For the foregoing reasons, we will affirm.

9 The trial court ordered “the present conveyance of the . . . [p]roperty to Plaintiff 

Christine Biros.” A405. Although Snyder argues that this language indicates that the 

court directed a transfer of estate property, we understand the phrase “present 

conveyance” to refer to the conveyance of legal title only, which all parties agree U Lock 

held at the time the state trial court issued its opinion. 

10 Snyder’s reply brief also alludes to the “strong-arm powers of the Trustee as 

creditor” under 11 U.S.C. § 544(a), Reply Br. at 5, but she did not raise it in her opening 

brief so the argument is forfeited. Kalu v. Spaulding, 113 F.4th 311, 344 n.21 (3d Cir. 

2024).

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