United States Bankruptcy Appellate Panel of the Eighth Circuit
In re: Laura Elizabeth Mehlhaff, also known as Laura N. Mehlhaff, also known as Laura Noble Mehlhaff Debtor
Forrest C. Allred Trustee - Appellee Laura Elizabeth Mehlhaff, Debtor - Appellant
Submitted: May 15, 2013
Appeal from United States Bankruptcy Court for the District of South Dakota – Pierre
Before FEDERMAN, Chief Judge, SCHERMER and SHODEEN, Bankruptcy Judges.
FEDERMAN, Chief Judge
Debtor Laura Elizabeth Mehlhaff appeals from the Bankruptcy Court's Order finding that her prepetition claim against her former spouse for alimony is property of her bankruptcy estate, and ordering her to turn that claim over to the Trustee. For the reasons that follow, we AFFIRM.
At the time the Debtor filed her Chapter 7 bankruptcy petition on June 19, 2012, the Debtor's former spouse was obligated under a prepetition divorce decree to pay her alimony in the amount of $200 per month until their minor child turns eighteen years old. According to the Debtor, the minor child will turn eighteen in December 2014. The Debtor properly included the alimony award on her schedules as both an asset on Schedule B and income on Schedule I, and did not claim any portion of the alimony exempt. The Chapter 7 Trustee filed a motion for turnover of the alimony award, which the Debtor opposed. The Trustee then filed a Motion for Judgment on the Pleadings, to which the Debtor also responded. Because the pleadings included several documents as attachments, the Court treated the Motion as a motion for summary judgment and allowed the parties to present any additional materials pertinent to a motion for summary judgment pursuant to Federal Rule of Civil Procedure 12(d). As authorized by the Court, the Trustee filed a supplement to respond to the Debtor's arguments. No one asserts that the Bankruptcy Court committed procedural error in treating the Motion as one for summary judgment.
Relying on its recent decision in In re Steen,  the Bankruptcy Court held that the Debtor's alimony award was property of her bankruptcy estate pursuant to 11 U.S.C. § 541(a)(1), granted summary judgment in favor of the Trustee, and ordered the Debtor to turn her alimony award over to the Trustee. The Debtor appeals.
STANDARD OF REVIEW
Rule 56(a) provides that "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Here, there is no dispute as to the material facts; rather, the Debtor asserts that the Bankruptcy Court erred in its application of the law to the facts. Our review is, therefore, de novo.
The bankruptcy estate includes "all legal or equitable interests of the debtor in property as of the commencement of the case, " wherever located and by whomever held. The nature and extent of a debtor's interest in property are determined by state law. However, once the nature and extent of the debtor's interest is determined under state law, federal bankruptcy law dictates to what extent that interest is property of the estate.
Although § 541(a)(1) is broad and is intended to include property of all descriptions,  certain types of property are expressly excluded from the bankruptcy estate under § 541. Such excluded property includes powers that the debtor may exercise solely for the benefit of another, interests as a lessee under certain types of leases, and some types of accounts for retirement or education purposes. In addition, as the Bankruptcy Court pointed out, property that is subject to a restriction on transfer that is enforceable under "applicable nonbankruptcy law, " such as spendthrift trusts and social security benefits, are also expressly excluded from the bankruptcy estate.
As the party asserting that the alimony award is property of the estate subject to turnover, the Trustee bears the burden of proving that it is. If the Trustee is able to make a prima facie case, the burden shifts to the Debtor to show that the asset is excluded from the estate, although the final burden rests with the proponent. Finally, if property is determined to be property of the estate, § 522(b) of the Bankruptcy Code permits a debtor to withdraw some of it by a claim of exemption, as determined by state law or § 522(d). ...