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In Re David Folsom

August 8, 2011


Bankruptcy No. 09-08919-B7 Adversary No. 10-90142-B7

The opinion of the court was delivered by: M. James LorenzUnited States District Court Judge


Debtor David Folsom and Pamela Brodwolf-Folsom*fn1 appeal the decision of the Bankruptcy Court granting the Chapter 7 Trustee's motion for summary judgment. The appeal has been fully briefed. For the reasons set forth below, the decision of the Bankruptcy Court is affirmed.

Factual Background

Debtor and Pamela Brodwolf-Folsom entered into a premarital contract on October 26, 1990, concerning, inter alia, community property.

Community Property: The parties do not intend to establish joint checking and joint savings accounts. In the event that any joint accounts are established, the funds deposited in said accounts shall be the community property of the parties. Any property, real or personal, acquired after marriage and held by the parties jointly, shall be the community property of the parties. Any assets acquired from the funds in the parties joint accounts will be community property. (Premarital Contract, ¶6, RA*fn2 , Exh. 1, A)

In 2006, Debtor and Pamela Brodwolf-Folsom opened a joint checking account, i.e., the account was held in both names, at Bank of America. Moneys were deposited into the joint account and those funds were wired out of the account to Great American Title Co. in order to purchase eight condominiums in Missouri. Title to the condominiums was conveyed to "Pamela Brodwolf-Folsom, as a married woman." There are no liens or encumbrances on the condominiums.

In the answer to the complaint filed in the Bankruptcy Court, Brodwolf-Folsom states that she owned other real property, specifically her Fuerte Drive property, that was her separate property under the premarital contract. She borrowed money using her separate property as security for repayment and used the separate property loan proceeds to purchase the Missouri condominiums. As a result, Debtor and Brodwolf-Folsom contend that no community property or funds were used to purchase the Missouri condominiums, David has no community property interest in the condominiums, and the condominiums are not property of the bankruptcy estate.

The Bankruptcy Court disagreed finding that based on the language of their Premarital Contract, the joint account appellants opened was community property and thus the condominiums purchased with the funds from the account were the property of the bankruptcy estate.

Standard of Review

When considering an appeal from the bankruptcy court, a district court applies the same standard of review that a circuit court would use in reviewing a decision of a district court. See Ford v. Baroff (In re Baroff ), 105 F.3d 439, 441 (9th Cir. 1997). On appeal, a district court must review a bankruptcy court's findings of fact under the clearly erroneous standard and its conclusions of law de novo. FED. R. BANKR. P. 8013; see also Sigma Micro Corp. v. (In re, 504 F.3d 775, 783 (9th Cir. 2007). The test for clear error is not whether the appellate court would make the same findings, but whether the reviewing court, based on all of the evidence, has a definite and firm conviction that a mistake has been made. Anderson v. City of Bessemer City, 470 U.S. 564, 573 (1985). A reviewing court may not overturn a decision, even if it would have weighed the evidence in a different manner, so long as the trial court's view of the evidence is plausible in light of the entire record. Id. at 573-74, 105 S. Ct. 1504. In applying the clearly erroneous standard, the appellate court views the evidence in the light most favorable to the party who prevailed below. Lozier v. Auto Owners Ins. Co., 951 F.2d 251, 253 (9th Cir. 1991).

A grant of summary judgment is reviewed de novo. United States v. City of Tacoma, 332 F.3d 574, 578 (9th Cir. 2003). Under the Federal Rules of Civil Procedure, a court shall grant summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323. The burden then shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." FED. CIV. P. 56(e). The nonmoving party must identify factual disputes that "might affect the outcome of the suit under governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

Issue on Appeal

Did the Bankruptcy Court err in finding as a matter of law that a joint account the Debtor and his wife was community property under a premarital contract and therefore, the funds from that account that were used to purchase condominiums were the property of David Folsom's bankruptcy estate ...

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