Kirby v. Elggren (In Re Carmel of St. Joseph of Santa Ynez)

237 B.R. 155, 99 Daily Journal DAR 8483, 99 Cal. Daily Op. Serv. 6643, 1999 Bankr. LEXIS 961, 1999 WL 614721
CourtUnited States Bankruptcy Appellate Panel for the Ninth Circuit
DecidedJuly 30, 1999
DocketBAP No. CC-98-1801-MeBWe. Bankruptcy No. ND-97-13322-RR. Adversary No. ND-98-01063-RR
StatusPublished

This text of 237 B.R. 155 (Kirby v. Elggren (In Re Carmel of St. Joseph of Santa Ynez)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Appellate Panel for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kirby v. Elggren (In Re Carmel of St. Joseph of Santa Ynez), 237 B.R. 155, 99 Daily Journal DAR 8483, 99 Cal. Daily Op. Serv. 6643, 1999 Bankr. LEXIS 961, 1999 WL 614721 (bap9 1999).

Opinion

OPINION

MEYERS, Bankruptcy Judge.

I

An entity brought an action to impose a constructive trust, or in the alternative a resulting trust, on a parcel of real property that the Chapter 7 trustee asserted was estate property. The court granted the trustee’s motion for summary judgment.

We AFFIRM.

*157 ii

FACTS

Sister Jean Marie Kirby (“Sister Jean Marie”) is a member of the Roman Catholic religious order of nuns known as the Discalced Nuns of the Order of Our Blessed Lady of Mount Carmel (“Carmel-ites”). She was one of the founding sisters of the Carmel of St. Joseph of Long Beach, which was established in 1949. This Carmel subsequently became the Carmel of St. Joseph of Santa Ynez (“Debtor”). Sister Jean Marie was involved with the governance of the Debtor, at least to a sufficient degree that she had knowledge of many of the relevant financial dealings of the Debtor.

Her brother, Joseph Kirby (“Kirby”), is the trustee of several family trusts, including the Kirby Family Trust (“Kirby Family Trust”). Kirby wished to arrange a gift to the Debtor that would allow the Debtor to purchase real property on which a new monastery could be built. Stock in a family owned business, held by the trusts, was liquidated to' raise the funds. In 1986, Kirby directed the transfer of the funds to the Debtor.

In 1988, the Debtor purchased two parcels of real property, using the funds from the Kirby Family Trust. The parcels are generally referred to as Parcels A and B (“Property”). The Debtor commenced construction of a new monastery sometime thereafter. The cost of construction was not paid with any of the funds from Kirby.

On June 27, 1997, the Debtor filed for relief under Chapter 7 of the Bankruptcy Code. F. Wayne Elggren was appointed Chapter 7 trustee (“Trustee”).

On March 20, 1998, Kirby, in his representative capacity as trustee of the Kirby Family Trust, filed a complaint for the imposition of a constructive trust on the Property, and return of the Property to the Kirby Family Trust. Kirby alleged that the Kirby Family Trust donated the Property in 1988 for the designated purpose of providing a location for a new monastery for the members of the Carmel of St. Joseph. He asserted that the condition had not been satisfied and the Property had to be returned.

On April 20, 1998, Kirby, again as trustee of the Kirby Family Trust, and now also as trustee of the Laura V. Kirby Trust, the Patrick F. Kirby Trust and the Helen Ob-erle Trust, filed a first amended complaint seeking both imposition of a constructive trust and the declaration of a resulting trust. The factual allegations remained the same.

The Trustee filed a motion for summary judgment on April 22, 1998. The court conducted a hearing on the motion on June 16, 1998, and dismissed the complaint with leave to amend on the ground that title to the Property was not presently in the name of the estate. Instead, it had been transferred prior to the bankruptcy filing to the Discalced Carmelites of St. Louis, Mo., Inc. (“Carmel of St. Louis”), but the Trustee represented that he was near a settlement on a fraudulent transfer action, and expected to have title to the Property transferred to the estate in short order. The settlement with the Carmel of St. Louis was approved by the court and title to the Property was transferred to the Debtor.

Kirby filed a second amended complaint (“Second Amended Complaint”) on June 30, 1998, naming the Debtor, the Trustee and the Carmel of St. Louis as defendants. Kirby now admitted that the Kirby Family Trust had transferred money, and not the Property, to the Debtor in 1986, “for the specific purpose of providing for the purchase of real property to serve as the location for a new monastery for the Car-mel.”

In support of this allegation, he attached a letter he wrote to the Bishop of Los Angeles dated December 27, 1986, in which he stated that “[i]n February 1986, as trustee to said will, I gave the Carmel of St. Joseph the consent to use the money in the trust for the specific purpose of *158 purchasing property at Orange in which they were interested.” (emphasis added). He maintained that under the Canon Law for the Roman Catholic Church, there was an implied promise that the Property had to be returned if not used for the designated purpose. He also claimed that beginning in October or November of 1997, proceedings were commenced to dissolve the Carmel of St. Joseph, which render impossible the intended use of the Property-

The Trustee filed a second motion for summary judgment (“Motion”) on July 30, 1998. Kirby opposed the Motion on the grounds it was not supported by any evidence and it was contrary to existing law. The court entered its order granting the Motion on November 3,1998.

III

STANDARD OF REVIEW

The Panel reviews the granting of summary judgment de novo. In re Yarbrow, 150 B.R. 233, 236 (9th Cir. BAP 1993).

IV

DISCUSSION

On its face, this appears to be a complicated case involving difficult legal issues. However, a closer examination reveals that the case turns on two very basic facts. One, Kirby gave money to the Debtor for the purchase of some unidentified parcel of real property. He did not gift over the Property itself, although he so alleged in his original complaint. In the Second Amended Complaint, he corrected this and admitted that he transferred money to the Debtor. And in his declaration in opposition to the Motion, Kirby stated that he “authorized the release of the proceeds of the sale [of stock] to the [Debtor]” and that “[a]t all times, it was [his] intention, consistent with the intentions of my parents, to provide this money to the Carmel for the designated purpose of providing a new place for residence of the Carmel of St. Joseph....”

Two, Kirby is seeking to have a constructive or resulting trust imposed on the Property as his relief. He is not asking for the imposition of an equitable lien on the Property or on future proceeds when the Property is inevitably sold. He is not seeking a return of the gift that he made. At oral argument, counsel for Kirby made it abundantly clear that by this action Kirby is not seeking monetary damages. Kirby wants the Property. In other words, Kirby is attempting to take title to an asset the Trustee asserts is potentially worth several million dollars, the liquidation of which may pay all creditors in full, as compensation for the gift of $841,-035.28.

These facts are undisputed. 2 Once the case is summed up in this fashion it becomes obvious that the equitable relief Kirby seeks is unavailable to him and would actually bring about an inequitable result relative to the other creditors of the estate.

Kirby asserted that either a constructive trust or a resulting trust should be imposed. As to the constructive trust, Kirby relies primarily on Martin v. Kehl, 145 Cal.App.3d 228, 238, 241,193 Cal.Rptr. 312 (1983). This reliance is misplaced.

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Related

Torrez v. Torrez (In Re Torrez)
63 B.R. 751 (Ninth Circuit, 1986)
Siegel v. Boston (In Re Sale Guaranty Corp.)
220 B.R. 660 (Ninth Circuit, 1998)
Martin v. Kehl
145 Cal. App. 3d 228 (California Court of Appeal, 1983)

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Bluebook (online)
237 B.R. 155, 99 Daily Journal DAR 8483, 99 Cal. Daily Op. Serv. 6643, 1999 Bankr. LEXIS 961, 1999 WL 614721, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kirby-v-elggren-in-re-carmel-of-st-joseph-of-santa-ynez-bap9-1999.