Date of Decision:
May 25, 2011
Whether the chapter 7 trustee, citing 11 U.S.C. § 542(a) and Fed.R.Bankr.P. 7001(1), could recover from defendants, under an unjust enrichment theory, expenses associated with the care of certain cattle?
The Bankruptcy Court concluded the trustee was unable to show all the elements of unjust enrichment, in particular that it would be inequitable to allow the defendants to retain the benefit of hay and pasture provided to cattle the defendants may subsequently inherit where the debtor, while he lived, was entitled, under a family settlement agreement, to receive the net profits from the subject cattle, after deducting necessary expenses such as the hay and pasture. There was no agreement or understanding the defendants would pay the debtor separately for his expenses in caring for the cattle. Thus, the defendants received no benefit from the hay and pasture, while the debtor was compensated for these expenses when he received the cattle sale proceeds to apply against the expenses.
Full Bankruptcy Court Decision:
In Lovald v. Falzerano (In re Falzerano), 454 B.R. 81 (B.A.P. 8th Cir. 2011), the appellate panel affirmed, but concluded the trustee could not advance an unjust enrichment theory under § 542(a) to recover the cattle care expenses because § 542(a) is limited to the turnover of property or its proceeds from entities in possession at the time of demand. The Court of Appeals affirmed the appellate panel. Lovald v. Falzerano (In re Falzerano), 686 F.3d 885 (8th Cir. 2012).
Full Bankruptcy Appellate Panel/District Court Appeal Opinion:
Full Eighth Circuit Court of Appeals Opinion: