In re: CHARLES EDWARDS, JR. and KATHY WICKWARE, Debtors.
GREG A. AKERS, Chapter 7 Trustee, Appellee. CHARLES EDWARDS, JR. and KATHY WICKWARE, Appellants
ORDER AFFIRMING ORDER OF THE BANKRUPTCY COURT
JEFFREY T. MILLER, District Judge.
Appellants Charles Edwards, Jr. and Kathy Wickware appeal an order of the Bankruptcy Court requiring them to turn over certain assets to the bankruptcy estate. The Chapter 7 Trustee, Greg Akers ("Trustee") opposes the appeal. Pursuant to Local Rule 7.1(d)(1), the court finds the matters presented appropriate for resolution without oral argument. For the reasons set forth below, the court affirms the order of the Bankruptcy Court.
On September 4, 2012, Bankruptcy Court Judge Laura S. Taylor ordered that Appellants turn over to the bankruptcy estate a pro-rata portion of the bonus received from Ms. Wickware's employer. (ER 9). Appellants contend that the bonus is not property of the bankruptcy estate.
On October 31, 2011, Appellants filed their voluntary Chapter 7 bankruptcy petition. About two months later, Ms. Wickware's employer, San Diego Gas & Electric ("SDGE"), paid her a year-end bonus in the amount of $14, 549.40. Plaintiff was employed by SDGE throughout 2011. (ER 78).
When Debtors refused the Trustee's request to turn over a pro rata portion of the bonus to the estate, the Trustee moved to compel the Debtors to turn over the property to the estate. The Bankruptcy Court found that the portion of the bonus attributable to Ms. Wickware's pre-filing employment belonged to the estate. The Bankruptcy Court awarded 10/12 of the bonus to the estate, or the amount of $12, 124.50.
Standard of Review
In bankruptcy appeals, legal conclusions by the bankruptcy court are reviewed de novo, factual questions are reviewed for clear error, and mixed questions of law and fact are reviewed de novo. See In re Chang , 163 F.3d 1138, 1140 (9th Cir. 1998); In re Pace , 67 F.3d 187, 191 (9th Cir. 1995). "This court must accept the bankruptcy court's findings of fact unless upon review we are left with the definite and firm conviction that a mistake has been committed." In Re: Straightline Ins., Inc., 525 F.3d 870, 876 (9th Cir. 2008).
Property of the Estate
Property of a bankruptcy estate is broadly defined as consisting of "all legal or equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. §541(a). The main purpose of this definition is to "bring anything of value that the debtors have into the estate." Lyon v. Eiseman , 372 B.R. 321, 330-31 (6th Cir. BAP 2007). Property of the estate includes contingent interests in future payments. In re Mehlhaff, 491 B.R. 898, 903 (8th Cir. BAP 2013). Federal law determines what property is included in the estate, while state law controls whether the debtor has a legal or equitable interest in the property at the time the bankruptcy case is filed. In re Westfall , 599 F.3d 498, 502 (6th Cir. 2010).
In the main, Appellants argue that the payment made by SDGE to Plaintiff pursuant to the Incentive Compensation Plan ("ICP") constitutes a mere expectancy of payment as of the bankruptcy commencement date, and not a contingent interest. Trustee, on the other hand, argues that the bonus is sufficiently tied to Ms. Wickware's pre-filing employment activities to ...