Court Opinion

ID: 33246
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:02:48+00
Date Added: 2024-06-11T12:04:08.158854
License: Public Domain

United States Court of Appeals
                                                                            Fifth Circuit
                                                                         F I L E D
                                                                        November 3, 2003
                  IN THE UNITED STATES COURT OF APPEALS
                                                                     Charles R. Fulbruge III
                            FOR THE FIFTH CIRCUIT                            Clerk

                                   No. 02-31256

      In The Matter Of: LOUIS J. PROVENZA;
      NORTHSHORE NEUROLOGICAL SURGERY
      ASSOCIATION, A Professional Medical Corporation,

                                                   Debtors.

      ------------------

      LOUANNE FRIEND,

                                                   Appellee,

                                      versus

      LOUIS J. PROVENZA,

                                                   Appellant.

                  Appeals from the United States District Court for
                         the Eastern District of Louisiana
                            (USDC No. 02-CV-3045-F)
          _______________________________________________________

Before REAVLEY, HIGGINBOTHAM and BENAVIDES, Circuit Judges.

PER CURIAM:*

      *
       Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion
should not be published and is not precedent except under the limited circumstances
       Appellee’s motions to dismiss for lack of standing and appellate jurisdiction are

denied.

       The district court’s judgment is affirmed for the following reasons.

       The disputed land is not community property. For the purposes of bankruptcy,

property of the estate is defined in 11 U.S.C. § 541 and state law governs the

characterization of property as community or separate. In re Robertson, 203 F.3d 855,

859 (5th Cir. 2000). Article 3535 of the Louisiana Civil Code provides that “[r]eal rights

in immovables situated in another state are governed by the law that would be applied by

the courts of that state.” Thus, the district court held that Florida and Mississippi

provide the relevant law. We took this appeal to address the question of whether Article

3525 preempts Article 3535 as maintained by the bankruptcy court.

       Article 3525 reads:

       Upon the termination of the community between spouses, either of
       whom is domiciled in this state, their rights and obligations with
       regard to immovables situated in another state acquired during
       marriage by either spouse while domiciled in this state, which would
       be community property if situated in this state, shall be determined
       in accordance with the law of this state . . . .

See LA. CIV. CODE ANN. art. 3525 (emphasis added). The bankruptcy court interpreted

this law to govern all foreign immovables that were acquired by either spouse separately

or by both spouses together. Conversely, the district court found that this article only

covers property acquired by a spouse singly.

set forth in 5TH CIR. R. 47.5.4.

                                              2
       We agree with the district court. The ordinary meaning of “either” is that it

denotes one of two possible options. It is not commonly understood as including the

selection of both possible options. Aside from the plain meaning, the rest of the

Louisiana Civil Code suggests that the drafters clearly understood there to be a difference

between the term “either” and “both” with either being exclusive of both. For example,

in article 142, the code states “ . . . [t]he court may order either or both of the parents to

provide an interim allowance or final support for a child. . . .” See LA. CIV. CODE ANN.

art. 142 (emphasis added). Furthermore, there are instances in the code of using the term

“both” without also using “either” which suggests the drafters could have used the term

“both” in article 3525 but chose not to.1

       This interpretation is further supported by Article 3525's Revision comments

which state:

               (c) . . . [w]hen the spouses are domiciled in this state at the termination
               of the community, Louisiana has every legitimate interest, and is
               constitutionally empowered, to apply its own law of classification and
               distribution so as to prevent cheating by one Louisiana spouse who uses
               community funds to buy immovable property in his own name in another
               state . . . .
               (e) The acquiring spouse’s own half. By essentially treating the foreign
               immovable as if it were community property, this Article adequately
               protects the non-owner spouse. To give that spouse more under the
               substantive successions law of the foreign spouse would be giving that
               spouse much more than is contemplated by the law of either state.

       1
        See LA. CIV. CODE ANN. art. 2347 (“The concurrence of both spouses is
required for the alienation, encumbrance or lease of community immovables. . . .”)
(emphasis added).

                                               3
See LA. CIV. CODE ANN. art. 3525, cmts. (c),(e). These comments make clear that the

interest that Louisiana is interested in protecting is that of the spouse who is cheated by

the other spouse buying property in one name but using community funds to finance the

sale. As Louisiana has not clearly expressed a concern about cheating when both spouses

purchase foreign immovables, there is no reason to supplant the laws of a foreign state

relative to the immovable in that state. Provenza argues that the interest established by

the Louisiana legislature is to prevent Friend from escaping “with the equity of the

property and with no responsibility to the community creditors, when in fact, community

funds were used during the existence of the marriage while both parties were domiciled in

Louisiana to acquire properties outside the State of Louisiana.” This ignores the

legislature’s description in art. 3525 which concerns protection of the non-owning spouse

rather than the duty owed to community creditors. It also ignores the preference

established by art. 3535 to allow the state where the property is located to govern the

determination of the property. Louisiana wishes to respect the interest of a state in

governing its own property. While Louisiana might have some interest here, it recognizes

that the interests of the state where the property is located are greater.

       Provenza’s argument that Article 2340 creates a presumption of community

property in this instance is misplaced. It is a well established canon of construction that a

specific provision controls over one of more general application. Landmark Land Co. v.

Office of Thrift Supervision, 948 F.2d 910, 912 (5th Cir. 1971). Article 3535 speaks

                                               4
more clearly to the current situation than Article 2340's general presumption of

community property.

       Similarly, Provenza’s reliance on the preference identified in the RESTATEMENT

(SECOND) OF CONFLICTS OF LAW is misplaced. While the RESTATEMENT establishes “ a

preference to have a single law govern the assignment of a debtor’s interests rather than

have as many laws as there are states in which the debtor has property,” again the specific

governs the general. Louisiana has a specific law that directs the court to look at the laws

of another state in this instance.

       Provenza urges that Florida holds that any property jointly held by spouses when

one files for bankruptcy means that the tenancy assets are subject to bankruptcy

proceedings. He cites In re Geoghegan, 101 B.R. 329, 300 (Bankr. M.D. Fla. 1989) and

In re McRae, 282 B.R. 704, 709 (Bankr. N.D. Fla. 2002) to support this proposition. In

re Geoghegan holds that property held in tenancy by the entirety is property of the

bankruptcy estate when one of the spouses files for bankruptcy. In re McRae holds that if

there is joint debt of a married couple when one spouse files for bankruptcy, then the

tenancy assets are subject to bankruptcy. As the marriage’s dissolution occurred prior to

the filing for bankruptcy, it is clear that Florida does not consider the land to be

community property. In re McRae and In re Geoghegan simply do not speak to the

situation presented in this case.

       Provenza further argues that Friend is not entitled to the distribution of the

                                              5
Mississippi property under 11 U.S.C. § 363(j) because her half ownership did not vest

under a partition. He cites In re Hendrick in favor of this proposition. 45 B.R. 976 (M.D.

La. 1985). Again, however, the cited case rests on the proposition that there is

community property to be disposed of. The Hendrick court stated

        § 363(h) does not apply to property of the estate; it applies to
       property jointly owned by the bankruptcy estate and by a third
       party. . . . Since the estate owns the interest of both the debtor and
       the non-debtor spouse, there is no other entity to be concerned with
       § 363(h).

Id. at 987-88. Yet here, the contested property is not community property nor property of

the estate under 11 U.S.C. § 541(a)(2). Section 89-1-7 of the Mississippi Code

authorizes spouses to hold land as either tenants in common, joint tenants, or tenants by

the entirety. As the warranty deed clearly states that Provenza and Friend held title as

“joint tenants with full rights of survivorship as tenants in common,” the property ought

not be characterized as community property under Mississippi law. Thus, the limitation

on § 363(h) does not apply in this instance.

       AFFIRMED.

                                               6