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In Re Thomas Allen Means and Laura Leesha Means v. David Y. Farmer

May 3, 2012

IN RE THOMAS ALLEN MEANS AND LAURA LEESHA MEANS DEBTORS, THOMAS ALLEN MEANS AND LAURA LEESHA MEANS APPELLANTS,
v.
DAVID Y. FARMER, CHAPTER 7 TRUSTEE, AND KRISTIE BOND APPELLEES.



OPINION ON APPEAL FROM BANKRUPTCY COURT Bankruptcy Case No. 9:09-bk-12268-RR Adversary Case No. ND09-1271-RR

The opinion of the court was delivered by: Hon.otis D. Wright, II United States District Judge

O JS-6

Appellants-Debtors Thomas and Laura Means bring this appeal challenging the bankruptcy court's November 5, 2010 Order approving the settlement between Kristie Bond and David Farmer, the Chapter 7 Trustee. Having carefully considered the papers filed in support of and in opposition to this appeal, the Court deems the matter appropriate for decision without oral argument. See Fed. R. Civ. P. 78; L.R. 7-15.

I.BACKGROUND

The settlement at issue governs the Trustee's adversary complaint against Kristie Bond, sister to Laura Means. The adversary complaint alleged that Laura fraudulently conveyed property to her father, Francis Priest, to shelter it from the bankruptcy estate. Upon motion, the bankruptcy court entered summary judgment in favor of the Trustee. Bond appealed. Subsequently, Bond and the Trustee reached a settlement. Appellants filed this appeal challenging the bankruptcy court's order approving the settlement, arguing that: (1) the bankruptcy court did not perform a proper evaluation of the settlement; (2) the Trustee provided insufficient notice of the motion seeking approval of the settlement; and (3) Appellants were deprived of their due process rights because they were not a named defendant in the adversary action.

A.The property

In 2003, Priest executed a will, bequeathing his house on Old Rose Drive in Las Vegas, Nevada to his daughter Laura. (Appellee's Br. 2.) In February 2006, he transferred the house to himself and Laura as joint tenants. (Id.) Then, because of Laura's looming financial troubles, she transferred her interest in the house back to Priest in 2008, making him the sole owner. (Id. at 2--3.)

On June 10, 2009, Laura and her husband filed a joint Chapter 7 bankruptcy petition and David Farmer was appointed as trustee to their bankruptcy estate. (Id. at 1.) After Laura and her husband filed bankruptcy, Priest executed a new will disinheriting Laura and bequeathing all of his property, including the house, to his other daughter, Kristie Bond. (Id. at 5.)

B.The fraudulent transfer adversary complaint

In 2009, the Trustee filed an adversary complaint against Priest, alleging the 2008 transfer of Laura's interest in the house to Priest was a fraudulent conveyance under Bankruptcy Code section 548. (Id. at 3.) Specifically, the complaint alleged the conveyance was fraudulent because Laura was insolvent at the time of the transfer and received no consideration for the transfer. (Id.)

Priest died on December 6, 2009. (Id.) As a result of Priest's death and the 2009 will, the house transferred to Bond by operation of law. (Id.) The Trustee then amended the complaint to name Bond as the defendant. (Id.)

After discovery in the adversary case, Bond and the Trustee each filed a motion for summary judgment. (Id.) The bankruptcy court granted summary judgment in favor of the Trustee. (Id. at 5.) Bond appealed the summary judgment order. (Id.)

C.The Nevada probate action

After Priest's death, Laura filed a petition, presently pending in Nevada state court (Case No. P-10-067454-E), challenging his 2009 will. (Id. at 5; Appellants' Opening Br. 8.) Priest died 179 days after Laura filed for bankruptcy. (Appellee's Br. 5.) The law provides that the bankruptcy estate includes all property the debtor stands to receive under a will within 180 days of filing the bankruptcy petition.

11 U.S.C. ยง 541(a)(5). Therefore, if the 2009 will were invalidated, and Laura were to receive property under the 2003 will, such property would be property of ...


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