Sanchez-Villalba v. Herkert
Filing
12
OPINION AND ORDER. Signed by Judge Robin S. Rosenbaum on 2/11/2013. (lbc)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 12-23199-CIV-ROSENBAUM
In re:
VIVIAN SANCHEZ-VILLALBA,
Appellant-Debtor,
v.
NANCY N. HERKERT,
Appellee-Trustee.
_____________________________/
OPINION AND ORDER
This is an appeal by Appellant-Debtor Vivian Sanchez-Villalba (“Appellant-Debtor”) of the
Order Sustaining Trustee’s Objection to Confirmation (“Underlying Order”) [D.E. 1 at 2-6; BKC
D.E. 147] entered on February 24, 2012 and Order Denying Motion for Rehearing of the Underlying
Order (“Order Denying Rehearing”) [D.E. 1 at 6-9; BKC D.E. 159], entered on March 31, 2012, in
the United States Bankruptcy Court for the Southern District of Florida (“Bankruptcy Court”). The
Court has carefully considered the briefs and all supporting and opposing filings and is otherwise
fully advised in the premises. For the reasons set forth below, the Bankruptcy Court’s decisions are
affirmed.
I. Background
The factual background, as summarized by the bankruptcy court below, is not in dispute:
The Debtor filed a Chapter 7 bankruptcy petition on July 7, 2010.
The case was converted to a Chapter 13 case on December 8, 2010.
Schedule “A” filed by the Debtor indicates title to five different
parcels of property are in the Debtor’s name.
*****
The issue presented by the Chapter 13 Trustee’s objection is with
reference to the properties located at Sarto Avenue [430 Sarto
Avenue, Miami, FL 33134 (“Sarto Avenue”)] and Biltmore Way [600
Biltmore Way, Unit 505, Miami, FL 33134 (“Biltmore Way”)]. The
Title to both of these properties are in the name of the Debtor, the
Debtor’s father, the Debtor’s mother and the Debtor’s sister.
Debtor’s father lives at 430 Sarto Avenue and the property is his
homestead; the Debtor’s sister lives at 600 Biltmore Way, and this
property is her homestead.
The Debtor testified that her father put the Debtor on the title to his
property for purposes of estate planning. In case the father died, the
Debtor would not have to go through a probate proceeding to obtain
the property. The Debtor also testified that she has never made any
payments on the mortgage nor has she ever lived at the property. The
property is owned free and clear of liens. The Debtor also testified
that the father’s act of placing her name on the title was not intended
as a gift.
Debtor’s father’s testimony confirmed that he has made all payments
on the property, that the Debtor has never lived there and that it was
not intended to be a gift to the Debtor. He testified that the Debtor
was put on the title to avoid probate proceedings in the event he
passed away.
The father also testified that he put the Debtor on the title to the
Debtor’s sister’s property for the same reason — in case he died, the
Debtor would not have to go through a probate proceeding to obtain
the property. The father testified that the Debtor has never made any
payments on the mortgage and never lived there; and, he confirmed
that titling the name of the property in the Debtor’s name too was not
intended to be a gift. The property is owned free and clear of liens.
The Trustee argues the Debtor owns 1/4 of these properties and
therefore the value of 1/4 of the properties should be included in the
Debtor’s estate.
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The Debtor wishes to carve out the real properties from property of
the estate. The Debtor argues that, pursuant to 11 U.S.C. § 541(d),
the 1/4 interest held by the Debtor in the aforementioned properties
is not property of the estate because the Debtor holds only bare legal
title and the properties are, therefore, not subject to administration by
the Trustee.
D.E. 1 at 2-4 (reported as In re Sanchez-Villalba, No. 10-29242-BKC-AJC, 2012 WL 627746
(Bankr. S. D. Fla. Feb 24, 2012).1 After Appellee-Trustee filed his objection to confirmation, the
Bankruptcy Court sustained the objection. Id. The court held that, although the Debtor argued that
she held the properties in a resulting trust, the Debtor did not establish the elements necessary to
prove a resulting trust. D.E. 1 at 4.
The court decided that “the Warranty Deeds on the Subject Properties granted a fee simple
estate to the Debtor, the Debtor’s sister, the Debtor’s mother and the Debtor’s father. Id. No other
recorded documents were admitted into evidence to prove the properties were held by the parties in
trust.” D.E. 1 at 4. Additionally,
. . . while the Debtor has established that the properties were paid for
by the Debtor’s father, and the Debtor has not paid for any insurance
or maintenance on the properties, and although the testimony
establishes that the Debtor never exercised control over the
properties, the Court finds the Debtor has failed to prove the titling of
the properties did not confer ownership upon [sic] her and that the
ownership of the properties was not taken into consideration by
creditors with regard to extending credit to this Debtor or
otherwise forbearing collection of debt.
1
Unless otherwise noted, the facts are derived from various documents filed in this
docket and the underlying bankruptcy docket. These facts, which appear to be undisputed, are
provided for background purposes only and do not constitute findings of fact by the Court. For
purposes of clarity, documents filed in this docket, 12-23199-RSR, will be cited as “D.E. ___”
and documents filed in the underlying bankruptcy docket, 10-29242-BKC-AJC, will be cited as
“BKC D.E. __.”
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*****
There is no subsequently recorded transaction or declaration
indicating that the Debtor holds only bare legal title subject to a
resulting trust for the benefit of others.
D.E. 1 at 5-6 (emphasis added).
In the Order Denying Rehearing [D.E. 1 at 6-9], the Bankruptcy Court clarified that its
previous ruling was not based solely upon the fact that no documentation existed to indicate a trust
relationship. Rather,
[t]he Debtor cannot reconcile Florida’s recording statute with the
facts of this case. . . . A resulting trust is typically created as an
exception to the rule of estoppel when the true owner of property was
not to blame for the misleading record, and did not have knowledge
that title is recorded in another’s name. However, that is not what
occurred in this case. In this case, the Debtor’s father placed the
subject real property in the name of his daughter, the Debtor, without
considering all the consequences of doing so.
Id. Appellant-Debtor appeals the Underlying Order and the Order Denying Rehearing. D.E. 7 at 5.
The issue on appeal is whether the Bankruptcy Court abused its discretion and erred in failing to
conclude that the Subject Properties were held as bare legal title by Appellant-Debtor and therefore
should be excluded from property of the bankruptcy estate. D.E. 7 at 5.
II. Jurisdiction
Federal courts are courts of limited jurisdiction. Federated Mut. Ins. Co. v. McKinnon
Motors, LLC, 329 F.3d 805, 807 (11th Cir. 2003). With regard to appeals from bankruptcy courts,
district courts enjoy jurisdiction over only three types of orders: 1) final orders, as described in 28
U.S.C. § 158(a)(1); (2) interlocutory appeals issued under 11 U.S.C. § 1121(d), as described in 28
U.S.C. § 158(a)(2); and, (3) with leave of the court, other interlocutory orders, as described in 28
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U.S.C. § 158(a)(3) and Fed. R. Bankr. Pro. 8001(b). Tobkin v. Calderin, No. 12-22692-MC, 2012
WL 3609867, at *1 (S.D. Fla. Aug. 22, 2012). As this Court has explained, district courts have
jurisdiction to hear appeals “from final judgments, orders, and decrees.” Id. at *1-2; 28 U.S.C. §
158(a)(1).
Here, Appellant-Debtor properly seeks review under 28 U.S.C. § 158(a)(1). D.E. 1 at 1.
Appellant-Debtor timely filed this appeal, and the parties do not dispute jurisdiction. This Court has
agrees that it enjoys jurisdiction.
III. Legal Standards
In reviewing bankruptcy-court judgments, a district court functions as an appellate court. In
re JLJ Inc., 988 F.2d 1112, 1116 (11th Cir. 1993). Factual findings by the bankruptcy court are
reviewed under the limited and deferential clearly erroneous standard. In re Club Associates, 951
F.2d 1223, 1228 (11th Cir. 1992) (citing In re Sublett, 895 F.2d 1381, 1384 (11th Cir. 1990)); In
re Goerg, 930 F.2d 1563 1566 (11th Cir. 1991); see Fed. R. Bankr. Pro. 7052, 8013; Fed. R. Bankr.
Pro. 8013 (“[f]indings of fact, whether based on oral or documentary evidence, shall not be set aside
unless clearly erroneous”). District courts may not make independent factual findings on appeal.
In re JLJ Inc., 988 F.2d at 1116. If the bankruptcy court is silent or ambiguous as to an outcome
determinative of a factual question, the case must be remanded to the bankruptcy court for the
necessary factual findings. Id. (citing In re Cornelison, 901 F.2d 1073, 1075 (11th Cir. 1990); In re
Sublett, 895 F.2d 1381, 1384 (11th Cir. 1990)).
In contrast, the legal conclusions by the Bankruptcy Court are reviewed de novo. In re Club
Assoc., 951 F.2d at 1228-29 (citations omitted). Thus, this Court reviews the Bankruptcy Court’s
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factual findings in this case for clear error and its legal conclusions de novo. In re Globe Manuf.
Corp., 567 F.3d 1291, 1296 (11th Cir. 2009); In re Club, 951 F.2d at 1228-29.
IV. Discussion
“Chapter 13 of the bankruptcy code provides bankruptcy protection to ‘individuals with
regular income’ whose debts fall within statutory limits.” Hamilton v. Lanning, __ U.S.__, 130 S.
Ct. 2464, 2468 (2010) (citing 11 U.S.C. §§ 101(3), 109(e)). “Unlike debtors who file under Chapter
7 and must liquidate their nonexempt assets in order to pay creditors, Chapter 13 debtors are
permitted to keep their property, but they must agree to a court-approved plan under which they pay
creditors out of their future income.” Id. at 2467-68 (citations omitted). A debtor must propose a
Chapter 13 plan that would pay the debtor’s unsecured claims “not less than the amount” that a
Chapter 7 Trustee would pay to unsecured claims. 11 U.S.C. § 1325(a)(4). Here, during the
Bankruptcy proceedings, the Chapter 13 trustee, Appellee-Trustee, objected to confirmation with
reference to the properties located at Sarto Avenue and Biltmore Way (the “Properties”). D.E. 1 at
1.
More specifically, Appellant-Debtor contends that she holds only “bare legal title” in the
Properties and that the Properties are subject to a resulting trust, and therefore, pursuant to 11 U.S.C.
§ 541(d), the value of her interest in the Properties should not be included in Appellant-Debtor’s
estate. D.E. 7 at 2. Appellee-Trustee, on the other hand, takes the position that the Bankruptcy
Court did not abuse its discretion in confirming Appellee-Trustee’s objection to confirmation and
that Appellant-Debtor failed to meet her burden of proof that a resulting trust was created such that
Appellant-Debtor held only “bare legal title.” D.E. 8 at 6. Further, Appellee-Trustee argues, in the
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alternative, that even if a resulting trust had been created, Appellee-Trustee may nonetheless avoid
a secret resulting trust under the11 U.S.C. § 544(a)(3). D.E. 8 at 6, 8.
Section 541 of the Bankruptcy Code defines the bankruptcy estate as including all legal or
equitable interests of the debtor in property at the commencement of the case. 11 U.S.C. § 541.
Section 541(d), however, qualifies the definition of bankruptcy-estate property, providing,
Property in which the debtor holds, as of the commencement of the
case, only legal title and not an equitable interest, such as a mortgage
secured by real property, or an interest in such a mortgage, sold by the
debtor but as to which the debtor retains legal title to service or
supervise the servicing of such mortgage or interest, becomes
property of the estate under subsection (a)(1) or (2) of this section
only to the extent of the debtor’s legal title to such property, but not
to the extent of any equitable interest in such property that the debtor
does not hold.
11 U.S.C. § 541(d). Thus, the plain language of § 541(d) excludes from the bankruptcy estate a
equitable interest in a property where the debtor holds only legal title but no equitable interest to that
property. In re Campuzano, No. 11-22929-CIV-MARRA, 2012 U.S. Dist. LEXIS 64270, *5 (S.D.
Fla. May 8, 2012). It is under this provision that Appellant-Debtor claims exclusion of the
Properties, asserting that she holds only bare legal title and that the properties are subject to a
resulting trust.
To evaluate Appellant-Debtor’s contention, the Court considers Florida law, which
determines the nature and extent of a debtor’s interest in property. See Burtner v. United States, 440
U.S. 48 (1979). In Florida, real property is presumed to be held as it is titled unless the debtor is able
to rebut the strong presumption in favor of a recorded deed. Reasoner v. Fisikelli, 153 So. 98, 105
(Fla. 1934); see also In re Schiavone, 209 B.R. 751, 756 (Bankr. S.D. Fla. 1997). And where any
real estate has been conveyed, such a conveyance “shall be construed to vest the fee simple title or
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other whole estate or interest which the grantor had power to dispose of at the time.” Fla. Stat. §
689.10.
Significantly, under the Florida Recording Statute, Fla. Stat. § 695.01, bona fide purchasers
prevail over unrecorded equitable interests.2 In re Loewen Group Int’l, 292 B.R. 522, 527 (Bankr.
D. Del. 2003) (finding that “a bona fide purchaser of real property under Florida law may avoid an
unrecorded interest”); Dubai Islamic Bank v. Attorneys’ Title Ins. Fund, 778 So. 2d 413 (Fla. 3d
DCA 2001) (holding that the beneficiary of a constructive trust holds an unrecorded interest that is
inferior to the interest of a bona fide purchaser).
A resulting trust is an equitable status that can automatically arise by operation of law.
Wadlington v. Edwards, 92 So. 2d 629, 631 (Fla. 1957). More specifically, a resulting trust occurs
where the facts demonstrate an intention that one party hold legal title to the property for the benefit
of another or for some other purpose, but the parties fail to execute documents establishing the trust.
See Tribue v. Hough, 2006 WL 212017, *3 (N.D. Fla. 2006); In re Goldstein, 135 B.R. 703, 705
(Bankr. S.D. Fla. 1992). A resulting trust “may be created by deed or may rest entirely in parol, or
may be partly in writing and partly in parol.” Id. (quoting Bay Biscayne Co. v. Baile, 75 So. 860
2
Section 675.01 of the Florida Statutes titled, Conveyances to be Recorded, states,
(1) No conveyance, transfer, or mortgage of real property, or of any
interest therein, nor any lease for a term of 1 year or longer, shall be
good and effectual in law or equity against creditors or subsequent
purchasers for a valuable consideration and without notice, unless the
same be recorded according to law; nor shall any such instrument
made or executed by virtue of any power of attorney be good or
effectual in law or in equity against creditors or subsequent
purchasers for a valuable consideration and without notice unless the
power of attorney be recorded before the accruing of the right of such
creditor or subsequent purchaser.
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(1917)) (internal quotation marks omitted). But where, as here, a party seeks to establish a resulting
trust by parol evidence only, that party shoulders that burden “to remove every reasonable doubt as
to [the resulting trust’s] existence by clear, strong, and unequivocal evidence.” United States v.
Kaplan, 277 F.2d 405, 409 (5th Cir. 1960) (quoting Fox v. Kimball, 109 So. 465 (Fla. 1926); Semple
v. Semple, 105 So. 134 (Fla. 1925); Johnston v. Sherehouse, 54 So. 892 (Fla. 1911)) (internal
quotation marks omitted).
Here, the Bankruptcy Court made a factual finding that Appellant-Debtor did not hold bare
legal title to the Properties. D.E. 1 at 8. In support, the Court reasoned, “The debtor herein has
failed to provide any documentation of any element of the trust and has otherwise failed to establish
a resulting trust through parol evidence.” D.E. 1 at 5. The Court based its determination on a
number of factors: (1) Appellant-Debtor did not present evidence that the titling of the Properties
did not confer ownership upon her; (2) Appellant-Debtor did not present evidence that the ownership
of the Properties was not taken into consideration by subsequent creditors with regard to extending
credit to Appellant-Debtor or otherwise forbearing collection of debt; (3) no documentation of any
kind existed to indicate a trust relationship; and (4) Appellant-Debtor and her father could have
recorded any equitable interests in the Properties, but because they did not, under the Florida
Recording Statute, under the Florida Recording Statute, a bona fide purchaser would prevail over
an unrecorded equitable interest asserted by Appellant-Debtor. D.E. 1 at 5-6.
In addition, when Appellant-Debtor challenged the Bankruptcy Court’s ruling and moved for
rehearing, the Bankruptcy Court expressly clarified that it “underst[ood] Debtor’s argument and did
not neglect to consider [whether a resulting trust had been created]; the Court simply did not find
that, under the circumstances presented, a resulting trust was created.” D.E. 1 at 8. Moreover, the
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Bankruptcy Court added, “[T]he Court did not find that the appropriate circumstances existed in this
case to find that a resulting trust was established . . . .” Id.
As noted previously, the Court reviews findings of fact for clear error. In re Globe Manuf.
Corp., 567 F.3d at 1296. While the Court understands Appellant-Debtor to argue that the
Bankruptcy Court did not make a factual finding but instead effectively concluded as a matter of law
that a resulting trust could never occur in the absence of documentary evidence, the record does not
support Appellant-Debtor’s position.
Although some of the factors that Judge Cristol identified refer to documentation, others do
not. For example, Appellant-Debtor could have testified that she did not cause the ownership of the
Properties to be taken into consideration by subsequent creditors with regard to extending credit to
Appellant-Debtor or otherwise forbearing collection of debt, but she did not. Judge Cristol found
the lack of such evidence to be important in his factual determination regarding whether, in the
absence of documentation, a resulting trust had been created. He was in the best position to evaluate
all of the evidence of record — including the evidence that Appellant-Debtor chose not to adduce.
Although Appellant-Debtor presented testimony from her father that she was added to the title to the
Properties for estate-planning purposes and that her father made all payments on the property,
whether such testimony was clear, strong, and unequivocal evidence that a resulting trust was created
— particularly in light of the lack of evidence that Appellant-Debtor did not cause the ownership of
the Properties to be taken into consideration by subsequent creditors with respect to extending credit
to Appellant-Debtor or otherwise forbearing collection of debt — was a factual determination for
the Bankruptcy Court. See D.E. 1 at 2-9. Nothing in the record on appeal suggests that the
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Bankruptcy Court’s findings were clear error. Therefore, the Bankruptcy Court’s decisions must be
affirmed.
Nor, as Appellant-Debtor asserts, does any other Florida law presumption alter the analysis.
While Appellant-Debtor notes that once a person proves that he paid the purchase price for a piece
of property, a presumption arises that it was the parties’ intention that the individual holding legal
title was to hold the property in trust for the payor, D.E. 7 at 5 (citing Smith v. Smith, 196 So. 2d 409
(Fla. 1940) and Frank v. Eeles, 13 So. 3d 216 (Fla. 1943)), that presumption has no practical effect
here.
As Florida courts have held, “If the transferee can show that the payor is under a legal or
moral obligation to provide for the transferee, that the transferee is ‘the natural object of the payor's
bounty,’ or that the payor stands in a position of in loco parentis to the transferee, then a rebuttable
presumption of gift is raised and the burden again shifts.” Maliski v. Maliski, 664 So. 2d 341, 343
(Fla. 5th DCA 1995) (citations omitted) (holding that the trial court properly held that the testimony
presented in that case did not support a conclusion that a resulting trust was created because,
although intent to create a resulting trust was presumed once the beneficiary proved that he paid for
the property, the related party did not prove that the transfer was not a gift). Under Florida law, the
transfer of real property to an immediate family member creates a strong presumption that a gift
transfer occurred, and such a presumption can be overcome only by evidence “so clear, strong and
unequivocal as to remove every reasonable doubt as to the existence of the gift.” D’Uva v. D’Uva,
74 So. 2d 889, 891 (Fla. 1954) (holding that the presumption that the father’s transfer of land to his
son and daughter-in-law was a gift was not overcome by clear and unequivocal evidence).
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In the pending matter, the Properties were transferred from Appellant-Debtor’s father to
Appellant-Debtor. As a result, a strong presumption arises under Florida law that, even if the father
paid the purchase price, the transfer was a gift. See D.E. 1; see also D’Uva, 74 So. 2d at 890. The
Warranty Deeds in this case granted a one-fourth fee simple estate in the Properties to AppellantDebtor, and no other recorded documents were admitted into evidence. D.E. 1 at 4. Moreover,
Judge Cristol heard the witnesses and assessed their demeanor. Evaluating the credibility of
witnesses falls within the trial court’s exclusive purview. See In re Marill Alarm Systems, Inc., 81
B.R. 119, 124 n.10 (S.D. Fla. 1987) (citing In re Chalik, 748 F.2d 616, 619 (11th Cir. 1984)). In
short, this Court finds no clear error in Judge Cristol’s conclusions that Appellant-Debtor’s interest
in the Properties is not limited to a bare legal interest only and that no resulting trust arises in this
case. As a result, the Properties may not be excluded under 11 U.S.C. § 541(d) from the property
of the estate, and Appellant-Debtor’s one-fourth interest in each of the Properties is property of the
bankruptcy estate.3
V. Conclusion
For the foregoing reasons, the Bankruptcy Court’s conclusions in the Underlying Order and
3
Because this Court has concluded that a resulting trust was not created and the Properties
are property of the estate, the Court need not decide whether Appellee-Trustee may avoid a
resulting trust under 11 U.S.C. § 544(a)(3). Nevertheless, under the Eleventh Circuit’s
construction of Section 544(a)(3), Appellee-Trustee may have been able to avoid a resulting trust
using her strong-arm powers, anyway. See In re General Coffee Corp., 828 F.2d 699, 706 n.9
(11th Cir. 1987); see also In re Corzo, 406 B.R. 154, 158 (Bankr. S.D. Fla. 2008).
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Order Denying Rehearing are hereby AFFIRMED. The Clerk of Court shall CLOSE this case.
DONE and ORDERED at Fort Lauderdale, Florida, this 11th day of February 2013.
________________________________
ROBIN S. ROSENBAUM
UNITED STATES DISTRICT JUDGE
copies:
Counsel of Record
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