In re Bronikowski

569 B.R. 48, 77 Collier Bankr. Cas. 2d 1550, 2017 Bankr. LEXIS 1684
CourtUnited States Bankruptcy Court, W.D. North Carolina
DecidedJune 16, 2017
DocketCase No. 16-50719
StatusPublished
Cited by2 cases

This text of 569 B.R. 48 (In re Bronikowski) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Bronikowski, 569 B.R. 48, 77 Collier Bankr. Cas. 2d 1550, 2017 Bankr. LEXIS 1684 (N.C. 2017).

Opinion

ORDER OVERRULING TRUSTEE’S OBJECTION TO EXEMPTIONS

Laura T. Beyer, United States Bankruptcy Judge

THIS MATTER is before the court on the Trustee’s Objection to Exemptions (“Objection”) filed by the Chapter 7 Trustee on January 17, 2017. The court held a hearing on the Motion on February 10, 2017 and announced its ruling at a hearing on March 10, 2017. Representatives of the Trustee and the Debtors appeared at both hearings. The Objection presents two issues to the court: (1) whether the female Debtor’s anticipated bonus from her employer for the 2016 calendar year constitutes property of her bankruptcy estate; and (2) whether the female Debtor can exempt the anticipated bonus from her estate pursuant to North Carolina General Statute § 1-362. For the reasons that follow, the court concludes that the anticipated bonus is not property of the female Debtor’s estate, does not reach the second issue, and overrules the Objection.

The facts relevant to the Objection are not in dispute. The Debtors commenced this case by'filing a Chapter 7 voluntary petition on November 11, 2016. The Debtors’ original Schedule A/B includes the female Debtor’s anticipated bonus with a value of $9500 and the following description:

Potential bonus from employer. Female debtor’s employer may, at their sole discretion (per contract), award a bonus in February of 2017. At the time of filing employer confirmed no award has been determined, and any award if given, will be contingent on overall company performance as well as employee performance, together with being in the sole discretion of the employer. Such performance has not been evaluated, to date. Debtor takes the stance this is an uncertain potential future award, but is listing here in the interest of full disclosure. The remaining 1601(a)(2) exemption has been applied in good faith.

The Debtors’ Schedule C includes an exemption in $9470.65 of the anticipated bonus pursuant to North Carolina General Statute § lC-1601(a)(2). At the Debtors’ § 341 meeting of creditors, the female Debtor testified that she received a bonus of $30,000 in 2016 (for the 2015 calendar year). The Debtors filed a No Protest Motion to Amend Exemptions (“Motion”) on January 16, 2017 and amended the Motion on January 19, 2017. The Motion notes that the Trustee took an “unexpected, alternate position” about the anticipated bonus at the § 341 meeting and says the anticipated bonus is “wholly exempt under [50]*50North Carolina law” (without any further detail or support) if it constitutes property of the female Debtor’s bankruptcy estate.

On January 30, 2017, the Debtors filed an amended Schedule A/B listing the value of the anticipated bonus as unknown. The amended Schedule A/B describes the anticipated bonus as “Potential Bonus From Female Debtor’s Employer — NOT PART OF BANKRUPTCY ESTATE Per KLEIN-SWANSON, 488 B.R. 628 (8th Cir., BAP 2013), disclosure made to avoid costly litigation which would hinder debtors’ fresh start. See attachment.” In the attachment to their amended Schedule A/B, the Debtors argue that the anticipated bonus is not an asset of the female Debtor’s estate and repeatedly refer to the bonus as “entirely discretionary.”

The Debtors also filed a Response to Trustee’s Objection to Exemptions (“Response”) on January 30. The Response elaborates on the Debtors’ argument about the status of the anticipated bonus, clarifies that the Debtors will seek to exempt the anticipated bonus pursuant to North Carolina General Statute § 1-362 if it is deemed property of the estate, and includes a copy of the 2016 General Plan Provisions (“GPP”) governing the female Debtor’s employer’s bonus program as an attachment. According to the GPP, the employer uses the bonus program to “pay for performance — company, line of business and individual performance.” ¶ 2(a). The GPP gives the employer “full and final discretionary authority to interpret and administer the Plan as well as determine the amount, if any, and payment of all incentive bonuses, awards and other compensation pursuant to the Plan.” ¶ 10. The GPP allows the employer to amend, modify, discontinue, or terminate the bonus program at any time, says there is no contract with the employees in relation to bonuses, and provides that participation in the plan in a prior year does not mandate eligibility for a future year. ¶ 14. The GPP states that an employee who no longer works for the employer at the time that the bonuses are awarded “will no longer be eligible to receive any award under the Plan, unless otherwise required by applicable law”; however, former employees who cease to work for the employer for certain reasons (such as death, disability, and retirement) “may remain eligible for consideration for a full or partial award/payment under the Plan, as determined in the sole discretion” of the employer. ¶ 2, The GPP requires employees eligible for awards to comply with all company policies and procedures and allows the employer to revoke an employee’s eligibility to receive an award if the employee does not adhere to all performance and compliance obligations. ¶ 9.

The Trustee filed a Memorandum of Law in Support of Trustee’s Objection to Exemptions (“Trustee’s Brief’) explaining her position on this matter on February 3, 2017. The Trustee’s Brief argues that the GPP does not require the female Debtor to be employed when her employer issues a bonus, that her job performance does not have to be satisfactory for her to be eligible for a bonus, that the GPP is ambiguous about whether the employer has the discretion to not issue a bonus, and that “the only contingency that must be fulfilled in order for Mrs. Bronikowski to receive the Bonus is her employers’ [sic] decision to pay it.” Trustee’s Brief at 7-9. According to the Trustee, the court should apportion the anticipated bonus based on the amounts earned pre- and post-petition' with the pre-petition portion treated as property of the female Debtor’s estate. Id. at 9.

As of the February 10 hearing, the female Debtor had not yet received the anticipated bonus, and the court does not [51]*51know if she subsequently received a bonus or the amount of any bonus that she may have received. At the February 10 hearing, in response to a question from the court, the attorney for the Trustee admitted that he could not estimate a value for the female Debtor’s alleged interest in the anticipated bonus as of her petition daté and that her alleged interest was not marketable. Neither party nor the court found any applicable law relevant to the female Debtor’s entitlement to the anticipated bonus prior to its payment.

The court must look to federal and state law to determine whether the female Debtor’s anticipated bonus is property of her bankruptcy estate. A debtor’s filing of a bankruptcy petition commences a case and creates an estate. 11 U.S.C. §§ 301(a), 541(a). With certain statutory exceptions not relevant to this matter, a bankruptcy estate includes “all legal or equitable interests of the debtor in property as of the commencement of the case.” § 541. Congress intended the scope of a debtor’s estate to be “all embracing,” Vogel v. Palmer (In re Palmer), 57 B.R. 332, 333 (Bankr. W.D. Va. 1986) (citing In re Ryan, 15 B.R. 514 (Bankr. D. Md. 1981)); see S. Rep. No. 95-989, at 82 (1978), as reprinted in 1978 U.S.C.C.A.N. 5787, 5868; H.R. Rep. No. 95-595, at 367 (1977), as reprinted in 1978 U.S.C.C.A.N.

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Cite This Page — Counsel Stack

Bluebook (online)
569 B.R. 48, 77 Collier Bankr. Cas. 2d 1550, 2017 Bankr. LEXIS 1684, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-bronikowski-ncwb-2017.