Court Opinion

ID: 6986111
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:11:08.909381+00
Date Added: 2024-06-11T16:09:26.722019
License: Public Domain

REINHARDT, Circuit Judge,
concurring in part and dissenting in part:
I agree with the majority’s holding that the bankruptcy court did not err in finding that the conveyance of the Glendora real property was avoidable as a § 547 preference transfer. However, I cannot agree with the majority’s conclusion that the new bankruptcy judge did not exceed the scope of the BAP’s mandate when he determined anew the nature of the properties involved. The record makes clear that the nature of the properties in which Ms. Roosevelt *1041transferred her interests had already been finally resolved, and that the jurisdiction of the bankruptcy court was limited by the BAP’s mandate to determining the value of her community interest. The bankruptcy court and the BAP had previously held that Ms. Roosevelt possessed a community interest in her former husband’s medical practice and legal education. Nevertheless, the new bankruptcy judge determined not the value, but the nature of her interest in the relevant property. Accordingly, in my opinion, we are required to reverse and remand with directions to the bankruptcy court that it carry out the previous mandate — that it determine the actual value of the property transferred by Ms. Roosevelt. Thus, I agree with the decision to vacate the judgment regarding the medical practice but would hold that on remand the bankruptcy court should determine the amount of Ms. Roosevelt’s interest in the practice. I also dissent from the majority’s affirmance of the part of the judgment holding that Ms. Roosevelt had no interest in the funds expended for Dr. Roosevelt’s legal education and denying her, on that account, an offset for her share of such payments.
At the first trial, there was no dispute that Ms. Roosevelt had a community interest in both the medical practice and the legal education. The 1993 Joint Pretrial Order contains a stipulation by all parties that:
All parties agree that as between Debtor and Judy Roosevelt in a domestic dissolution context her community interest in Debtor’s medical practice, including T. Steven Roosevelt, MD, PHD, Inc., legal education and legal practice do have value for a division of community property purposes, but are valueless from the perspective of a levying creditor. The primary issue is whether the existence of that domestic relations value prevents the Trustee from avoiding the transfers totally or partially.
(emphasis added). The BAP then determined that the community interest, rather than the amount available to creditors for levying, was the proper basis for valuation under § 548. In re Roosevelt, 176 B.R. 200, 208. The BAP noted that its ruling left unresolved “the actual value of the property transferred to Steven by Judy,” id., and remanded “to determine the value exchanged between the parties and the limit of the trustee’s recovery from Judy, if any, pursuant to Britt v. Damson.” In re Roosevelt, 176 B.R. 200, 208.
On remand, the new bankruptcy judge did not issue a pre-trial order, but adopted the 1993 Joint Pre-Trial Order along with the opinion issued by the BAP, and the findings from the first trial that were not reversed on appeal. Thus, he properly adopted the stipulation that Ms. Roosevelt’s community interests in Dr. Roosevelt’s medical practice and legal education “do have value” for community property purposes and he was bound by the BAP opinion that the community interest value was the proper basis for valuation purposes. It is clear from this, if nothing else, that the issue whether Ms. Roosevelt had a community interest in her former husband’s medical practice and legal education had been resolved, and was not before the bankruptcy judge on remand. The only remaining issue with respect to the medical practice and legal education was the value of the community property involved. That was what the bankruptcy judge was supposed to determine — and that is what he erroneously declined to do.
It is readily apparent from the above that the new bankruptcy judge exceeded his jurisdiction by concluding that the medical practice was at all times the separate property of Mr. Roosevelt, and that, in the absence of evidence that the legal education was paid for with community funds, the legal education was also separate property. The newly assigned judge should, instead, have calculated the value of Ms. Roosevelt’s community interest in both properties and made whatever offset may be appropriate on that basis.