### Th e Honorable Michael J. Melloy, Chief Judge, United State s 1 

### Distri ct Court for the District of Northern Iowa, sitting b y designation. 

# United States Court of Appeals FOR THE EIGHTH CIRCUIT

___________ No. 96-1838

___________ In re: Stanley Bargfrede; * Pamela Bargfrede, * * Debtors. * *

------------------------- * * Michael S. Dietz, Trustee of * the Bankruptcy Estate of * Appeal from the United States Stanley and Pamela Bargfrede, * District Court for the * District of Minnesota. Appellant, * * v. * * St. Edward's Catholic Church; * Diocese of Dubuque, * * Appellees. *

___________ Submitted: February 14, 1997 Filed: June 27, 1997

___________ Before HANSEN and MORRIS SHEPPARD ARNOLD, Circuit Judges, and MELLOY, District Judge.

1

___________ PER CURIAM.
Bankruptcy Trustee Michael Dietz (Trustee) appeals the

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distri ct court's affirmance of the bankruptcy court's entry of summar y judg ment in favor of St. Edward's Catholic Church and the Diocese o f Dubuque (Church) in h is proceeding to recover three pre-filing transfers. We reverse in part and remand.

In 1989, Pamela Bargfrede pleaded guilty to felony theft after sh e embezzled over $200,000 from the Church at which she was employed as a bookkeeper. The Chur ch was awarded a civil judgment, which was satisfied by agreement after th e three separate payments which are at issue in this mat ter were received by the Church. The first payment, made in 1991 , represented the proce eds from the sale of the Bargfredes’ homestead. The second payment, also made in 1991, represented the proceeds from an auctio n sale of their personal property and household items. The third payment wa s made by Pamela's husband, Stanley Bargfrede, in July 1992, and represented a lump sum withdrawal from his pension and profit sharing accounts.

On April 19, 1993, less than one year after the last payment, th e Bargf redes filed a Chapter 7 bankruptcy petition. As relevant to thi s appeal, the Trustee c ommenced an adversary proceeding to recover the 1992 transfer of Stanley's pension funds as fraudulent under 11 U.S.C. § 548(a)(2)(A),(B)(i); alternatively, the Trustee claimed the transfer was preferential because the Church was an insider pursuant to 11 U.S.C. § 547

. The trustee also sought to recover Stanley's one -half interest in the 1991 transfers of the proceeds from the sales of the homestead and personalty as fraudulent under Iowa law pursuant to 11 U.S.C. § 544(b). The bankruptcy court granted the Church summary judgment with r espect to all th ree transfers, finding the release of a possible burden on th e
ma rital relationship and the preservation of the family relationshi p constituted reasonably equivalent value and

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consideration to Stanley. The bankruptcy court alternatively conclude d that the homestead proceeds were exempt. The bankruptcy court als o reject ed the Trustee's claim that the pension funds transfer wa s preferential. The district court affirmed.

We revie w de novo a grant of summary judgment, determining whethe r the record , when viewed in the light most favorable to the non-movin g party, shows that there is no genuine issue as to any material fact an d that the moving party is entitled to judgment as a matter of law. See Fed

. R. Civ. P. 56(c); In re Young , 82 F.3d 1407, 1413 (8th Cir. 1996).

As to th e transfer of Stanley's pension funds, the provision unde r whi ch the Trustee is proceeding allows him to void the transfer a s fraudulent if Stanley did not receive reasonably equivalent value for the transfer and if he was insolvent at the time of, or made insolvent by, the transfer. See 11 U.S.C. § 548(a)(2)(A), (B)(i). We conclude the bankruptcy court erred in holding that Stanle y received reasonably equivalent value for the transfer of his pension funds

. The transfer directly benefitted Stanley's wife, not him, by discharging her debt to the Church. See In re Jolly's, Inc. , 188 B.R. 832, 842 (Bankr

. D. Minn. 1995) (transfers made solely for benefit of third party do no t furnish reasonably equivalent value); Biggs v. United States Nat'l Bank , 11 B.R. 524, 527 (D. Neb. 1980) (same). To the extent Stanley receive d indir ect, non-economic benefits in the form of a release of a possibl e burden on the marital relationship and the preservation of the famil y relationship, we find these sufficiently analogous to other intangible , psychological benefit s to conclude that they do not constitute reasonably equivalen t value. See In re Young , 152 B.R. 939, 948 (D. Minn. 1993 ) (moral obligations not reasonably

### Iowa's Uniform Fraudulent Transfer Act does no t apply to this 2 

### matte r, as the Act, which was effective January 1, 1995, is no t retroactive. See Iowa Code Ann. §§ 684.1-684.12 (West Supp. 1996).

-4- equivalent value), rev'd on other grounds , 82 F.3d 1407 (8th Cir. 1996);
see also In re Treadwell , 699 F.2d 1050, 1051 (11th Cir. 1983) (love and affection not reasonably equivalent value); Zahra Spiritual Trust v. Unite d Stat es , 910 F.2d 240, 249 (5th Cir. 1990) (spiritual fulfillment no t reasonably equivalent value).

The transfers of Stanley's one-half interest in the homestead an d per sonalty proceeds are not voidable under section 548(a), as they wer e made more than a year before the Chapter 7 filing. See 11 U.S.C. § 548(a)

. However, the Trustee may still void these transfers if they are voidable under Iowa law. See 11 U.S.C. § 544(b); Iowa Code Ann. § 614.1(4) (West Supp. 1996) (five year statute of limitations). Under Iowa law applicable at the time this action was filed, the Trustee may set aside t he transfers 2 in questio n if they were fraudulent; the transfers are presumed to b e fraudu lent if Stanley did not receive consideration, unless the Churc h proves that Stanley r emained solvent after the transfers. See Regal Ins. Co. v. Summit Guar. Corp. , 324 N.W.2d 697, 703 (Iowa 1982). The bankruptcy court concluded that the release of a possible burden
on the marital relationship and the preservation of the family relationshi p also c onstituted consideration for the transfers of the homestead an d personalty sale proce eds. As the Supreme Court of Iowa has not addressed this precise issue, we must attempt to predict what that Court would decid e if faced with the iss ue, considering "relevant state precedent, analogous dec isions, considered dicta, . . . and any other reliable data". Se e Ventura v. Titan Sports, Inc. , 65 F.3d 725, 729 (8th Cir. 1995), cert.

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denied , 116 S. Ct. 1268 (1996). We believe that the Supreme Court of Iowa would conc lude that the benefits Stanley received to his marital an d family relationships do not constitute consideration. Cf. First Nat'l Ban k

v. Frescoln Farms, Ltd. , 430 N.W.2d 432, 435 (Iowa 1988) (transfer of stoc k "in consideration of love and affection" is not consideration for purposes of Iowa fraudulent transfer law).

Because the bankruptcy court erroneously concluded that Stanle y received reasonably equivalent value and consideration for the dispute d transfers, it did not consider whether the Trustee also showed that Stanle y
was insolvent at the time of, or rendered insolvent because of, the pensio n funds transfer, see In re Hemphill , 18 B.R. 38, 48 (Bankr. S.D. Iowa 1982) (burden on party seeking to void transfer to pro ve elements of § 548), nor
or whether the Church proved that Stanley remained solvent after th e transfers of the homestead and personalty proceeds, see Regal Ins. Co. , 32 4 N.W.2d at 703 (burden on transferee to prove tra nsferor remained solvent). Thus, we remand for the bankruptcy court to consider those issues.

As to th e homestead proceeds, we also disagree with the bankruptc y court's alternative conclusion that such proceed s were exempt; we disagree because the Bargfredes did not invest the procee ds in a new home; instead, they intended to, and did, use the proceeds to satisfy Pamela's debt to th e Church. See Iowa Code Ann. § 561.20 (West 1992) (new home acquired with proceeds from old home exempt to value of old); Millsap v. Faulkes , 2 0 N.W.2d 40 (Iowa 1945) (proceeds of homestead exempt only for purpose o f reinvesting in new home). As to the proceeds from the sale of th e Bargfr edes' personalty, the bankruptcy court stated that the record wa s insufficient to determine whether the personalty items, and

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thus the proceeds therefrom, were exempt. On remand, should the bankruptc y court conclude the tr ansfer of the personalty proceeds was fraudulent, it may need to further consider whether any of the personalty was exempt.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.