Court Opinion

ID: 9692025
Source: CourtListenerOpinion
Date Created: 2023-08-25 15:36:56.76456+00
Date Added: 2024-06-11T18:19:29.677543
License: Public Domain

ASHLAND, Bankruptcy Judge,
concurring:
I concur in the majority’s result but for a different reason. The majority concludes that In re Unicom Computer Corp., 13 F.3d 321 (9th Cir.1994), compels us to find that the funds held by Golden Triangle were not property of the estate. In Unicom the court imposed a constructive trust on funds mistakenly in the possession of the debtor. Initially the court placed the burden on the creditor to establish state court grounds for imposition of a constructive trust. Once established, the court switched the burden to the debtor to prove that it would be inequitable to impose a constructive trust in the context of the bankruptcy.
When a debtor holds complete control over funds, such that the funds are deposited in the debtor’s general operating account or otherwise subject to attachment by executing lien creditors, the funds are presumed to be .property of the estate. See, In re Bullion Reserve of North America, 836 F.2d 1214, 1217 (9th Cir.1988), cert. denied, Bozek v. Danning, 486 U.S. 1056, 108 S.Ct. 2824, 100 L.Ed.2d 925 (1988). A creditor has the burden to prove that funds in the debtor’s possession should be held in trust for that creditor’s benefit. See, In re American International Airways, Inc., 44 B.R. 143, 146 (Bankr.E.D.Pa.1984). After the burden has been satisfied, then the debtor has the opportunity to establish that imposition of the constructive trust is inequitable in the bankruptcy context. Unicom, 13 F.3d at 325.
In this case, I am not convinced that Golden Mortgage satisfied its burden to show that a constructive trust was warranted under California law. A cashiers check was issued in the name of Robert Braun with no indication of his capacity in Golden Triangle. Upon cashing the check, the monies were not held in a separate account but deposited in a general account -with other unrelated monies and approximately $20,000 was drawn from the account after deposit of the funds. The record is devoid of any writing indicating the terms of the transfer to Camino or the portion of the funds to be paid to Golden Triangle as a servicing fee. Until after the bankruptcy was filed, there was no indication by the actions of Golden Triangle or Golden Mortgage that a trust situation was intended.
For the same reasons, the transaction herein raises the question of whether imposition of a constructive trust in the bankruptcy context is inequitable. A further question is raised as to whether the funds were actually transferred by Golden Mortgage to Golden Triangle and what, if any, portion of those funds are traceable.
The majority’s holding, in conjunction with Unicom, provides an avenue for abuse by conspiring debtors and creditors to contend, after the filing of a bankruptcy, that a trust situation was contemplated when the funds were transferred and in this way to prefer certain creditors over others. I believe that if it were Golden Mortgage’s intent to give monies to Golden Triangle in trust for Cami-no, it could have protected itself in several ways, including setting up an escrow account in which to deposit the funds or creating an express trust.
The transaction herein raises many questions which should preclude summary adjudication. As a result I agree with the reversal and remand of the case, but for a different reason than expressed in the majority opinion.