UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 09-2344

PEGGY S. LEVIN, Trustee,

Plaintiff - Appellant,

v.

WACHOVIA BANK; DAVID STROEHMANN, SR.; SAM WOLCOTT,

Defendants - Appellees.

Appeal from the United States District Court for the Eastern 

District of North Carolina, at Raleigh. Terrence W. Boyle, 

District Judge. (4:09-cv-00087-BO)

Argued: March 23, 2011 Decided: June 28, 2011

Before MOTZ and WYNN, Circuit Judges, and Ronald Lee GILMAN, 

Senior Circuit Judge of the United States Court of Appeals for 

the Sixth Circuit, sitting by designation.

Affirmed by unpublished opinion. Judge Wynn wrote the opinion,

in which Judge Motz and Senior Judge Gilman concurred.

ARGUED: William Peak Janvier, EVERETT, GASKINS, HANCOCK & 

STEVENS, Raleigh, North Carolina, for Appellant. Michael J. 

Parrish, WARD & SMITH, PA, New Bern, North Carolina, for 

Appellees. ON BRIEF: James M. Hash, EVERETT, GASKINS, HANCOCK & 

STEVENS, Raleigh, North Carolina, for Appellant. Paul A. 

Fanning, WARD & SMITH, PA, Greenville, North Carolina, for 

Appellees.
2

Unpublished opinions are not binding precedent in this circuit.
3

WYNN, Circuit Judge:

This case requires us to determine whether a debtor’s 

remainder interests in the corpus of two spendthrift trusts are 

property of his bankruptcy estate. The bankruptcy court ruled 

that they were; on appeal, the district court ruled that they 

were not. For the reasons explained below, we believe the 

district court is correct that the debtor’s remainder interests 

are not part of his bankruptcy estate, and consequently we 

affirm the judgment of the district court.

I.

By a trust instrument dated November 23, 1976, Gertrude S. 

Stroehmann created a trust (the “1976 trust”) for the benefit of 

her two children and their issue. The corpus of the 1976 trust 

was first divided into two equal shares: one for the benefit of 

Harold Stroehmann, Jr. (“Harold, Jr.”) and his issue, and one 

for the benefit of David Stroehmann, Sr. (“David, Sr.”), and his 

issue. The David, Sr. share was further divided into separate 

shares for the benefit of his two children, J. Kathryn 

Stroehmann and David Stroehmann, Jr. (“David, Jr.”), the debtor

in this case.

Wachovia Bank, N.A. is the sole trustee of the 1976 trust. 

The 1976 trust grants the trustee the power to distribute income 

and principal in its “sole and absolute discretion.” The only 
4

mandatory distribution occurs at the trust’s termination, when 

the remaining principal and retained income are to be paid to 

the named beneficiaries. The instrument provides that the trust 

shall continue until the death of the last to die of Harold, Jr. 

and David, Sr.. Harold, Jr. has already died. 

The 1976 trust contains a spendthrift provision. Article 

XII states that “[t]he interest of any beneficiary in the corpus 

or income of any trust shall not be subject to assignment, 

alienation, pledge, attachment, or claims of creditors and shall 

not otherwise be voluntarily or involuntarily alienated or 

encumbered by such beneficiary.” The value of the debtor’s 

share of the corpus of the 1976 trust was valued at $684,285.77 

as of January 6, 2009.

A second trust (the “Will trust”) was created by the terms 

of the Last Will and Testament of Gertrude S. Stroehmann, which 

was executed on November 18, 1987. A residuary clause in the 

Will directed that the residue of the estate be divided into two 

equal shares to be held in trust. One of these shares was 

divided further between David, Sr., and his children. David, 

Jr., the debtor in this case, is one of the children of David, 

Sr., and therefore a beneficiary of the Will Trust.

Defendants David, Sr., Samuel Wolcott, and Wachovia Bank, 

N.A., are the trustees of the Will Trust. The Will trust 

mandates that the trustee make distributions of all the net 
5

income of a grandchild’s share in at least quarterly 

installments. It further states that a trustee has absolute 

discretion to invade the principal for the medical expenses, 

support, and education of the beneficiaries. 

The Will trust also contains a spendthrift provision. The 

“Protective Provision” of the Will Trust states:

I direct that all legacies and all shares and 

interests in my estate and any property appointed 

under this will, whether principal or income, while in 

the hands of my personal representatives, trustees or 

the guardians of property, shall not be subject to 

attachment, execution, or sequestration for any tort, 

debt, contract, obligation or liability of any legatee 

or beneficiary and shall not be subject to pledge, 

assignment, conveyance or anticipation.

The trustees of the Will trust are directed to pay out, in full, 

a grandchild’s remaining share when that grandchild reaches the 

age of forty-five years old. If a grandchild dies before 

reaching that age, the grandchild’s remaining interest passes to 

other beneficiaries named in the Will trust. 

A codicil to the Will, dated March 10, 1988, modifies this 

last provision, making the grandchild’s interest pass to the 

grandchild’s estate. The codicil further provides that “[n]o 

principal or income of any grandchild’s trust may be used for 

any person other than the grandchild for whom held . . . .” 

David, Jr. was born on March 2, 1965 and reached the age of 
6

forty-five on March 2, 2010.1

David, Jr., filed a Chapter 7 petition for bankruptcy on 

June 12, 2007. Plaintiff Peggy S. Levin, the Chapter 7 Trustee 

appointed to David, Jr.’s case, filed an adversary proceeding on 

March 14, 2008. Plaintiff asked the bankruptcy court to order 

Defendants to turn over all amounts distributed to the debtor 

under “the Stroehmann Trust” since the filing of the petition, 

including the principal of the trust, and all future income 

generated by the trust.

 The debtor’s interest in the 

principal of the Will trust had a value of $299,581.31 as of 

January 6, 2009.

2

The bankruptcy court conducted a hearing on July 10, 2008. 

In a subsequent order, the bankruptcy court reasoned that the 

1976 trust gives the debtor separate interests in the trust: (1) 

an interest in the income from the trust during the life of the 

trust, (2) an interest in the principal during the life of the 

trust, and (3) a future interest in the principal that must be 

paid to the debtor upon the termination of the trust. Later in 

the order, the bankruptcy court recognized the latter two 

 Defendants filed a motion to dismiss

the complaint on June 18, 2008. 

 1 The Will trust therefore terminated, at least with regard 

to the debtor’s share, during the pendency of this appeal.

2 The initial complaint does not distinguish between the two 

trusts, but names all three Defendants as trustees.
7

interests as two aspects of the same thing; the debtor’s right 

to receive principal is divided into: (1) the present right to 

receive disbursements of principal at the discretion of the 

trustees, and (2) the future right to receive mandatory 

distribution of principal upon termination of the trust.

Ultimately, the bankruptcy court granted Defendants’ motion 

to dismiss as to the debtor’s right to receive income and 

principal distributions during the life of the trust.3

During the course of the proceedings, Plaintiff learned 

that the debtor was the beneficiary of another trust, the Will 

trust (discussed above). With leave of the bankruptcy court, 

Plaintiff filed an amended complaint on February 2, 2009,

requesting an order that Defendants turn over all amounts paid 

since the filing of the petition under the 1976 trust and the 

 The 

bankruptcy court denied, however, the motion to dismiss “as to 

the debtor’s future remainder interest in the trust principal,” 

finding that such an interest “is a separate property interest 

of the debtor that is property of the bankruptcy estate.” 

Defendants filed a motion for summary judgment on January 9, 

2009. Plaintiff filed a motion for summary judgment on January 

12, 2009.

 3 Both the bankruptcy court and the district court found 

these interests protected by a valid spendthrift provision. 

Plaintiff does not challenge this ruling on appeal.
8

Will trust, all future amounts to be paid under either trust, 

and declaring that the debtor’s interest in both trusts is 

property of the bankruptcy estate. Defendants filed answers to 

the amended complaint and filed another motion for summary 

judgment.

In an order entered on March 30, 2009, the bankruptcy court

referred to its previous order regarding only the 1976 trust and 

recognized that “[t]his is the same issue previously determined 

in this case, only with relation to a different trust 

agreement.” Consistent with its previous order, the bankruptcy 

court granted Plaintiff summary judgment insofar as “the 

debtor’s remainder interests in both trusts are property . . . 

that belong[s] to the bankruptcy estate.” The bankruptcy court 

granted Defendants summary judgment “to the extent that the 

income and principal distributions during the life of the trusts 

are not property of the bankruptcy estate.”

Defendants appealed to the district court. The district 

court reversed the bankruptcy court, concluding that the 

debtor’s “future remainder interest in the principal of the 

Trusts is protected by a valid spendthrift provision.” Wachovia 

Bank, N.A. v. Levin, 419 B.R. 297, 303 (E.D.N.C. 2009). 

Plaintiff appealed to this Court. 
9

II.

Initially we address a question of justiciability raised by 

Defendants. Defendants argue that this appeal should be 

dismissed as moot since provisions in both trusts permit 

distribution of the entire principal prior to termination.

This Court has recognized that “when, pending appeal, an 

event occurs, without the fault of the defendant, that makes it 

impossible for the court to grant effective relief to the 

plaintiff, should the plaintiff prevail on the merits, the 

appeal should be dismissed and the court should not proceed to 

judgment.” Cent. States, Se. and Sw. Areas Pension Fund v. 

Cent. Transp., Inc., 841 F.2d 92, 95-96 (4th Cir. 1988). “The 

mootness doctrine is a limit on our jurisdiction that originates 

in Article III’s case or controversy language.” Townes v. 

Jarvis, 577 F.3d 543, 554 (4th Cir. 2009) (quotation marks and 

brackets omitted), cert. denied, 130 S. Ct. 1883 (2010). A

claim is not moot, however, as long as the parties have a 

concrete interest in the outcome of the litigation. In re Balt.

Emergency Servs. II, Corp., 432 F.3d 557, 560 n.* (4th Cir. 

2005).

In the present case, Defendants argue that provisions of 

the trusts permit the trustees to disburse the entire principal 

prior to the termination of the trusts. It follows, according 

to Defendants, that a judgment for Plaintiff “would not lead to 
10

the recovery of any value for the benefit of [the debtor’s] 

creditors.” Brief of Appellees at 7-8. Defendants conclude 

from this that the harm allegedly suffered by Plaintiff cannot 

be redressed by a favorable decision.

Defendants do not, however, assert that as trustees they 

have distributed the entire principal of the trusts. Indeed, 

noticeably lacking from Defendants’ argument is any suggestion

that they have actually exercised their discretion under the 

trust provisions that they claim prevent Plaintiff from 

obtaining redress. Insofar as Plaintiff seeks to compel the 

transfer of the debtor’s presently held remainder interests in 

both trusts, the case is not rendered moot by the mere 

possibility that they may later have no value. See In re Smith, 

71 F.2d 378, 380 (9th Cir. 1934) (subsequent payment of trust 

principal did not render appeal moot where question raised was 

whether debtor’s remainder interest was transferable in 

bankruptcy).

Plaintiff observes in reply that the Will trust has already 

terminated, and the debtor’s remainder interest in that trust is 

now identifiable. We do not believe this circumstance has any 

bearing on the alleged mootness of this appeal. Insofar as the 

parties continue to dispute the debtor’s entitlement to his 

remainder interests, the parties have a concrete interest in the 

outcome of the litigation. It follows that the case is not 
11

moot. See In re Balt. Emergency Servs. II, Corp., 432 F.3d at

560 n.*.

III.

We turn now to the merits of Plaintiff’s appeal. “We 

review the judgment of a district court sitting in review of a 

bankruptcy court de novo, applying the same standards of review 

that were applied in the district court.” In re Merry-Go-Round 

Enters., Inc., 400 F.3d 219, 224 (4th Cir. 2005). Thus, we 

review the bankruptcy court’s factual findings for clear error, 

and we review questions of law, including summary judgment, de 

novo. Id.; see also In re French, 499 F.3d 345, 351 (4th Cir. 

2007).

A.

The bankruptcy estate includes “all legal or equitable 

interests of the debtor in property as of the commencement of 

the case,” with some exceptions. 11 U.S.C. § 541(a)(1). One 

such exception provides that “[a] restriction on the transfer of 

a beneficial interest of the debtor in a trust that is 

enforceable under applicable nonbankruptcy law is enforceable in 

a case under this title.” 11 U.S.C. § 541(c)(2). The 

bankruptcy court and the district court agreed that this 

provision excludes from the property of the bankruptcy estate 
12

interests in trust that are protected under a spendthrift clause 

that is enforceable under applicable state law. See Patterson 

v. Shumate, 504 U.S. 753, 758 (1992) (“The natural reading of 

the provision entitles a debtor to exclude from property of the 

estate any interest in a plan or trust that contains a transfer 

restriction enforceable under any relevant nonbankruptcy law.”).

The parties do not dispute that the 1976 trust and the Will 

trust are subject to Pennsylvania state law. Pennsylvania law 

recognizes that “[a] spendthrift provision is valid only if it 

restrains both voluntary and involuntary transfer of a 

beneficiary’s interest.” 20 Pa. Cons. Stat. Ann. § 7742(a)

(West 2006). Subject to certain exceptions not alleged to apply

here, “a creditor or assignee of the beneficiary of a 

spendthrift trust may not reach the interest or a distribution 

by the trustee before its receipt by the beneficiary.” Id. at § 

7742(c). Both the bankruptcy court and the district court found 

that both trusts here contained spendthrift provisions that are 

valid under state law.

Pennsylvania courts “construe[] spendthrift provisions 

broadly.” In re Blanchard, 201 B.R. 108, 125 (Bankr. E.D. Pa. 

1996). “No principle in the law of wills and trusts is more 

firmly and clearly established than that the intention of the 

testator or settlor must prevail.” Clark v. Clark, 411 Pa. 251, 

255, 191 A.2d 417, 419-20 (1963). “The law rests its protection 
13

of what is known as a spendthrift trust fundamentally on the 

principle of cujus est dare, ejus est disponere. [He who has a 

right to give, has the right to dispose of the gift.] It allows 

the donor to condition his bounty as suits himself so long as he 

violates no law in so doing.” In re Morgan’s Estate, 223 Pa. 

228, 230, 72 A. 498, 499 (1909).

B.

In this case, Plaintiff argues that the bankruptcy court 

correctly ruled that the debtor’s remainder interests in both 

trusts are property of the bankruptcy estate. Plaintiff 

concedes that the debtor’s interests in income and principal 

during the life of the trusts are protected by the spendthrift 

provisions and therefore not part of the bankruptcy estate. 

Plaintiff contends, however, that the debtor’s remainder 

interests in the corpus of the trusts are not similarly 

protected.

Plaintiff relies on Ginsburg v. Hilsdorf, 30 Pa. D. & C.2d 

384 (1962). In Ginsburg, the Court of Common Pleas of 

Pennsylvania considered whether the defendants’ interests in 

three trusts might be attached in light of the spendthrift 

provisions the trusts contained. Id. at 390. The defendants in 

Ginsburg were the vested remaindermen of the trusts’ corpus, but 
14

were not beneficiaries entitled to any of the income. Id. at 

395-96. The spendthrift provision stated:

No sum payable by my Trustees under the provisions of 

the foregoing trust shall be pledged, assigned, 

transferred or sold, or in any manner whatsoever 

anticipated, charged or encumbered by the 

beneficiaries thereunder, or any of them, or be in any 

manner liable in the hands of my Trustees for the 

debts, contracts and engagements of the beneficiaries 

thereunder, or any of them.

Id. at 394-395. The court found it clear from this provision 

that the settlors intended to protect only the income 

beneficiary. “If they intended the spendthrift provision to 

protect the vested remainderman they could have said so. . . . 

In failing to include the remainder interests in the spendthrift 

provisions, the testators have left the door open to the present 

attachment proceedings.” Id.

The 

at 395.

Ginsburg court distinguished other, more expansive, 

spendthrift provisions such as that which appeared in Riverside 

Trust Co. v. Twitchell, 342 Pa. 558, 20 A.2d 768 (1941). The 

defendant in Riverside was the income beneficiary of a trust 

established by her aunt. Id.

that there shall be no power of anticipation or of 

pledge or assignment either of the income or of the 

principal of the Trust Fund, or of any interest 

therein whatsoever; and the Trustee, its successors 

and assigns, shall hold and administer the Trust and 

pay over the income received by it as aforesaid, and 

the principal sum upon the termination of the Trust, 

as herein provided, free from any debts, liabilities, 

at 560, 20 A.2d at 769. The 

spendthrift provision there stated 
15

obligations or other engagements whatsoever of the 

Grantor, or of any persons who, by the terms hereof, 

may be or become beneficiaries hereunder.

Id. at 560-61, 20 A.2d at 769-70. The Riverside court held that 

the spendthrift provision was meant to protect both income and 

principal.4 Id.

The 

at 561-62, 20 A.2d at 770. 

Ginsburg court also distinguished the spendthrift 

provision that appeared in Harder v. Follansbee, 102 Pitts. L. 

J. 231 (Pa. C.P. 1954).5

 The trust instrument in Harder directed 

the trustee to pay the income to the settlor’s widow for life, 

and thereafter to the defendant, who also held a remainder 

interest in the corpus. Id. at 231. The trust contained a 

spendthrift provision that stated, “neither the principal nor 

income of this trust fund shall in any manner be liable to the 

control or answerable for the debts, contracts or engagements of 

the beneficiaries hereunder or liable to any charge, 

encumbrance, assignment, conveyance or anticipation by them.” 

Id. at 232. The Harder court held that the provision protected 

the defendant’s interest in both income and principal.6

 

 4 The provision in Riverside, the Ginsburg court said, is “a 

far cry from the one in the case at bar.” Ginsburg, 30 Pa. D. &

C.2d at 394.

Id.

5 This case is not available on Westlaw or Lexis but may be 

obtained through public resources in the State of Pennsylvania.

6 The Ginsburg court stated simply that such a provision as 

appeared in Harder did not appear in the instant case. 

Ginsburg, 30 Pa. D. & C.2d at 393.
16

Plaintiff notes that the spendthrift provisions here did 

not explicitly cover the trust principal upon termination of the 

trusts, as did the provision in Riverside. Plaintiff asserts 

that the language of the trusts here, particularly that of the 

Will trust, is similar to the language of the trusts construed 

in Ginsburg

The spendthrift provision of the 1976 trust protects “[t]he 

interest of any beneficiary in the corpus or income of any 

trust” and the spendthrift provision of the Will Trust protects 

“all shares and interests in my estate and any property 

appointed under this will, whether principal or income.” Thus, 

unlike the spendthrift provision in 

. Plaintiff concludes that the debtor’s remainder 

interests in the trusts are therefore not subject to the 

protection of the spendthrift provision.

Ginsburg, the provisions 

here explicitly mention both the income and the corpus/principal 

of the trusts. They are therefore more analogous to the 

spendthrift provisions distinguished by Ginsburg

Indeed, 

than the 

provisions at issue in that case. 

Harder is directly on point. Like the debtor in 

this case, the defendant in Harder held both an interest in the 

income and a remainder interest in the principal of the trust. 

Harder, 102 Pitts. L. J. at 231. The court held that the 

spendthrift provision obviously applied to income but also to 
17

the defendant’s remainder interest in the principal. Id. at 

232. The same reasoning applies here.

C.

Plaintiff next argues that this Court should join those

courts that have held a debtor’s remainder interest in a 

spendthrift trust upon termination of the trust is part of the 

bankruptcy estate. See In re Britton, 300 B.R. 155 (Bankr. D. 

Conn. 2003); In re Crandall, 173 B.R. 836 (Bankr. D. Conn. 

1994); Matter of Strasma, 26 B.R. 449 (Bankr. W.D. Wis. 1983). 

Plaintiff insists that if the debtor holds an interest in the 

corpus of a spendthrift trust upon its termination, “then those 

funds cannot, by the plain language of the trust, be subject to 

the spendthrift clause which necessarily must terminate with the 

trust.” Brief of Appellant at 18. Plaintiff recognizes that 

the district court relied on Pennsylvania bankruptcy cases

contrary to her position, but argues that the courts that 

decided those cases “failed to consider that they were expanding 

the scope of spendthrift protection beyond that provided for by 

state law.” Brief of Appellant at 22.

The district court explained that the apparent split of 

authority does not support the bankruptcy court’s conclusion 

that the principal here is unprotected because Pennsylvania law 

alone controls this case. As the district court recognized, 
18

Pennsylvania law protects remainder interests in the corpus of a 

trust if the spendthrift provision of the trust instrument so 

provides. See Clark, 411 Pa. at 256, 191 A.2d at 420 (holding 

that attempted conveyance of remainder interest in a trust was 

invalid because the spendthrift provision prohibited beneficiary

from making any binding commitment of principal or income during 

the life of the trust); In re Blanchard, 201 B.R. at 126 

(applying Pennsylvania law to provide spendthrift protection to 

debtor’s remainder interest in the corpus of a trust and to 

exclude the debtor’s interest in the corpus from the bankruptcy 

estate); In re Katz, 220 B.R. 556, 565 (Bankr. E.D. Pa. 1998)

(holding that when the debtor’s entire interest in a trust was 

protected by a valid spendthrift provision, the debtor could not 

assign his interest in either the principal or the income before 

they were distributed); cf. In re Will of Rintz, 2007 Phila. Ct. 

Com. Pl. LEXIS 254 (June 19, 2007) (approving the distribution 

of certain income and principal directly to the trust

beneficiary, despite the claims of his Chapter 7 bankruptcy 

trustee, because they were protected by a valid spendthrift 

provision).

The issue is thus not whether we should choose to follow 

one line of cases or another. Rather, we are compelled to 

follow applicable nonbankruptcy law. 11 U.S.C. § 541(c)(2). In 

this case, that means we apply Pennsylvania law. Under 
19

Pennsylvania law, “the intention of the testator or settlor must 

prevail.” Clark, 411 Pa. at 255, 191 A.2d at 419-20. For the 

reasons explained above, we believe that by explicitly invoking

the trusts’ principal, the settlor here intended the spendthrift 

provisions to apply to the debtor’s remainder interests therein. 

The spendthrift provisions here represent “[a] restriction 

on the transfer of a beneficial interest of the debtor in a 

trust that is enforceable under applicable nonbankruptcy law.” 

11 U.S.C. § 541(c)(2). The debtor’s remainder interests in the 

trusts’ principal are therefore not included in his bankruptcy 

estate. Id. The determination of the district court is 

consequently

AFFIRMED.