Anderson v. Conine

UNITED STATES COURT OF APPEALS
For the Fifth Circuit

No. 98-30965

IN THE MATTER OF: GERALD M ROBERTSON, Debtor
----------------------------------------------

POLLY ANDERSON,

Appellant,

VERSUS

JOHN CLIFTON CONINE; FLEET MORTGAGE CORPORATION; UNITED STATES
INTERNAL REVENUE SERVICE; GERALD M ROBERTSON,

Appellees.

Appeal from the United States District Court
for the Western District of Louisiana

February 11, 2000
Before JONES and DENNIS, Circuit Judges, and PRADO,* District
Judge.

DENNIS, Circuit Judge:

This is an appeal by the non-debtor former spouse of the

debtor from the judgment by the United States District Court for

*
District Judge of the Western District of Texas, sitting by
designation.
the Western District of Louisiana affirming a partial summary

judgment by the Bankruptcy Court. In its partial summary judgment

the bankruptcy court held that the Trustee in bankruptcy could

treat the former marital home as property of the bankruptcy estate,

rather than as the separate property of the former spouse. The

appeal by the non-debtor former spouse raises these issues: (1)

whether real property received by the debtor’s former spouse in a

partition of former community property before the commencement of

the bankruptcy case is property of the bankruptcy estate under §

541(a)(2) of the Bankruptcy Code, or, alternatively, (2) whether

the Trustee may avoid the partition under section 544(a)(3) as a

transfer which would be voidable by a hypothetical purchaser of

real property from the debtor at the time of the commencement of

the case. Upon the facts established for purposes of the partial

summary judgment, we decide both questions in favor of the non-

debtor former spouse, reverse the judgments of the district and

bankruptcy courts, and remand the case to the district court for

further proceedings.

I.

Gerald Robertson (“Debtor”) and Polly Anderson (“Anderson”)

were married in February 1985. They acquired a family residence in

Ouachita Parish, Louisiana, as their community property in 1989.

Fleet Mortgage Company (“Fleet”) held a mortgage on the community

property home. The couple were divorced in January 1994 and the

2
divorce judgment was filed in the Ouachita Parish, Louisiana

conveyance records. They entered into a voluntary partition, with

court approval, in the form of a consent judgment by the Louisiana

Fourth Judicial District Court in Ouachita Parish, Louisiana in

February of 1994. In the partition, Anderson acquired the former

family residence as her separate property and assumed all

liabilities with respect to the home, including the Fleet mortgage

debt and tax liens in favor of the United States Internal Revenue

Service and the State of Louisiana Department of Revenue and

Taxation. The consent judgment evidencing their voluntary

partition was rendered and recorded in the state district court.

The partition judgment was not filed for registry in the conveyance

records of Ouachita Parish.

In June 1996 Debtor filed a voluntary petition for bankruptcy

under Chapter 7 of the Bankruptcy Code. John Clifton Conine

(“Trustee”) was named trustee of the Debtor’s bankruptcy estate.

In August 1997 Trustee filed a complaint to sell the former family

residence as property of the estate pursuant to 11 U.S.C. § 363.

In October 1997 Fleet filed a motion for relief from automatic stay

under its rights as the holder of the mortgage on the home.

Anderson opposed the Trustee’s complaint and subsequent motion for

partial summary judgment. In February 1998, the bankruptcy court

for Western District of Louisiana entered a partial summary

judgment for Trustee, holding that the home was properly included

in the bankruptcy estate of Debtor and that Trustee would be

3
permitted to sell the property and distribute the net proceeds

according to the interest of the Debtor and Anderson. Anderson

timely filed an appeal in the District Court for the Western

District of Louisiana, which affirmed the decision of the

Bankruptcy Court in July 1998. Anderson timely appealed to this

court.

II.

We review summary judgments de novo, applying the same

standards applied by the district court. See Conkling v. Turner,

18 F.3d 1285, 1295 (5th Cir.1994).

A.

Section 541 of the Bankruptcy Code defines the property of the

estate, in pertinent part, as follows:

(a) The commencement of a case under section 301, 302
or 303 of this title creates an estate. Such
estate is comprised of all the following property,
wherever located and by whomever held:

* * *

(2) All interests of the debtor and the
debtor’s spouse in community property as
of the commencement of the case that is –

* * *

(B) liable for an allowable claim
against the debtor, or for both an
allowable claim against the debtor
and an allowable claim against the
debtor’s spouse, to the extent that
such interest is so liable.

4
11 U.S.C. § 541(a)(2)(B). Although section 541(a)(2)(B) states

that the property of the bankruptcy estate includes all interests

of the debtor and the debtor’s spouse in community property as of

the commencement of the bankruptcy case, neither that section nor

any other Bankruptcy Code provision sets forth the criteria for

determining whether a particular asset is community property, or,

if so, whether the debtor and the debtor’s spouse have interests in

such property. “The term ‘community property’ is not defined in

the Code, but clearly is used as a term of art referring to that

certain means of holding marital property in those states which

have adopted a community property system.” 5 COLLIER ON BANKRUPTCY ¶

541.13[1], 541-76, n.l (15th ed. 1999) (hereinafter COLLIER) (citing

Johnson v. Fisher (In re Fisher), 67 B.R. 666, 668 (Bankr. D. Colo.

1986)). Generally, Congress has left the creation and definition

of property interests of a debtor’s bankruptcy estate to state law.

See Butner v. United States, 440 U.S. 48, 54 (1979). The Court in

Butner stated:

Property interests are created and defined by state law.
Unless some federal interest requires a different result,
there is no reason why such interests should be analyzed
differently simply because an interested party is
involved in a bankruptcy proceeding. Uniform treatment
of property interests by both state and federal courts
within a State serves to reduce uncertainty, to
discourage forum shopping, and to prevent a party from
receiving ‘a windfall merely by reason of the
happenstance of bankruptcy’.

440 U.S. at 55 (quoting Lewis v. Manufacturers National Bank, 364

U.S. 603, 609 (1961)). This Circuit has interpreted Butner to

5
extend deference to state law whenever Congress has the authority

to regulate an area under its bankruptcy powers but has chosen not

to do so. See In re Hudson Shipbuilders, Inc., 794 F.2d 1051 (5th

Cir. 1986). The ultimate characterization of property as either

community or separate is determined by applicable state law, and

that determination establishes what interest, if any, the

bankruptcy estate has in the property. See COLLIER ¶ 541.13[2] at

541-78 (citing Dumas v. Mantle (In re Mantle), 153 F.3d 1082, 1084

(9th Cir. 1998); F.D.I.C. v. Soderling (In re Soderling), 998 F.2d

730, 733 (9th Cir. 1993)).

Under Louisiana law, unless spouses provide otherwise by

matrimonial agreement, the legal regime of community of acquets and

gains applies to them. LA. CIV. CODE ANN. arts. 2327 - 2329 (West

1985). Principally, the community property comprises any property

acquired during the existence of the legal regime through the

effort, skill, or industry of either spouse. LA. CIV. CODE ANN. art.

2338 (West 1985). During the existence of the community property

regime, the spouses may, without court approval, voluntarily

partition the community property in whole or in part. In such a

case, the things that each spouse acquires are separate property.

LA. CIV. CODE ANN. art. 2336 (West 1985).

The legal regime of community property is terminated by the

death or judgment or declaration of death of a spouse, declaration

of nullity of the marriage, judgment of divorce or separation of

6
property, or matrimonial agreement that terminates the community.

LA. CIV. CODE ANN. art. 2365 (West 1985). After the termination of

the community property regime by a cause other than death or

judicial declaration of death of a spouse, articles 2369.2 – 2369.8

apply to former community property until a partition of the former

community property or the death or judgment of declaration of death

of a spouse. LA. CIV. CODE ANN. art. 2369.1 (West 1999); see also

Katherine S. Spaht, Co-Ownership of Former Community Property: A

Primer on the New Law, 56 LA.L.REV. 677 (1996).

The term “spouse” in articles 2369.1 – 2369.8 includes co-

owners of former community property who continue to be married

spouses and former spouses holding former community property in co-

ownership until it is partitioned. LA. CIV. CODE ANN. art. 2369.1

Comment (d) (West 1999). Upon the termination of the community

without a partition of the community property, each spouse owns an

undivided one-half interest in former community property and its

fruits and products. LA. CIV. CODE ANN. art. 2369.2 (West 1999). A

spouse has a duty to preserve and to manage prudently former

community property under his or her control. LA. CIV. CODE ANN. art.

2369.3 (West 1999). Spouses may partition former community

property by agreement or judicially, just as may ordinary co-

owners. LA. CIV. CODE ANN. art. 2369.8 Comment (b) (West 1999); see

also LA CIV. CODE ANN. arts. 809; 2336 (West 1985). When spouses are

unable to agree on a partition of community property or former

7
community property, either spouse may institute a proceeding under

Louisiana Revised Statutes section 9:2801 for a judicial partition.

LA. CIV. CODE ANN. art. 2369.8 (West 1999).

The partition of the former community property between the

former spouses has these effects: (1) the spouses cease to be co-

owners of the former community property; (2) the former community

assets are divided into separate portions or lots; (3) each former

spouse becomes the exclusive owner of a separate portion or lot of

the divided assets; and (4) the assets of which each former spouse

acquires sole ownership is reclassified by law as the separate,

exclusive property of that former spouse. See LA. CIV. CODE ANN.

arts. 1382, 2335, 2336, 2341, 2369.1 (West 1999); LA.R.S. § 9:2801;

MARCEL PLANIOL, 1 TRAITE ELEMENTAIRE DE DROIT CIVIL § 2498 (La. State Law

Institute trans., 12th Ed. 1939); MARCEL PLANIOL, 3 TRAITE ELEMENTAIRE DE

DROIT CIVIL §§ 1332-1336, 2367-2410 (La. State Law Institute trans.,

11th Ed. 1938); AUBRY AND RAU, 4 DROIT CIVIL FRANCAIS § 625 (Carlos E.

Lazarus trans., 6th Ed. 1953); see generally KATHERINE S. SPAHT & W.

LEE HARGRAVE, 16 LOUISIANA CIVIL LAW TREATISE: MATRIMONIAL REGIMES §§

7.1–7.31 (2nd Ed. 1997)(hereinafter SPAHT AND HARGRAVE).

Prior to the commencement of the present bankruptcy case, the

community property regime was terminated, the former community

property was partitioned, Anderson received the former family home

from the partition as her separate property, and that asset ceased

to be either community or former community property. A final

8
judgment of divorce was entered in January 1994, dissolving the

community but not partitioning the former community property. The

judgment of divorce was recorded in the Ouachita Parish, Louisiana

conveyance records in January 1994. In February 1994, a consent

judgment was recited into the record of the court partitioning the

former community property between Debtor and Anderson. Under

Louisiana law, a consent judgment agreed upon by the mutual consent

of the parties and approved by the court is a valid and enforceable

judgment. La. Civ. Code Ann. art. 3071, 3078; see Adams v. Adams,

529 So.2d 877 (La.App. 4th Cir. 1988) (citing Felder v. Georgia

Pacific Corp., 405 So.2d 521 (La. 1981)); In re Stouder, 164 B.R.

59, 63 (E.D.La. 1994) (“[t]he consent judgment partitioned the

proceeds of the sale of the former community residence . . . [i]t

is binding between the parties and enforceable as a partition of .

. . the community property.”). The consent judgment recited into

the record of the court therefore acted to partition the former

community property between Anderson and Debtor, thus ending the

former spouses co-ownership of the former community property,

removing it from the former community property regime and causing

the partitioned property to become the separate property of the

spouses. See Crais v. Crais, 737 So.2d 785 (La.App. 4th Cir. 1999);

see generally 59A Am.Jur.2d Partition § 143 (1987). Thus, under

the plain meaning of section 541(a)(2), Anderson’s partitioned,

9
separate property could not be included in Debtor’s bankrupt estate

as it was not community property at the commencement of the case.

The Trustee does not seriously dispute the conclusion that the

partition vested the Debtor’s former spouse with total separate

ownership of her home prior to the petition date. He argues,

however, that under Civil Code article 2357 Anderson’s separate

property home remains subject to debts which she incurred jointly

with her former spouse during the community property regime, and

that section 541(a)(2)(B) has the effect of making all property

liable for such debts part of the bankruptcy estate. Article 2357,

in pertinent part, provides that “[a]n obligation incurred by a

spouse before or during the community property regime may be

satisfied after termination of the regime from the property of the

former community and from the separate property of the spouse who

incurred the obligation.” Thus, a creditor’s right under state law

to have such an obligation satisfied from her separate property

under Article 2357 is not affected by the partition. See also

La.R.S. § 9:2801(c). It does not follow, however, that separate

property of the non-debtor spouse passes to the bankruptcy estate

under section 541(a)(2) simply because it is subject to a pre-

termination community creditor’s claim under state law.

According to the relevant court decisions we have found,

“community property” as used to define property of the estate in

section 541(a)(2) includes community property and former community

10
property that has not been partitioned as of the petition date but

does not include former community property which has been divided

and reclassified as separate property by state law before that

date. Courts addressing the issue have held that community

property which has not been legally divided as of the commencement

of the bankruptcy case passes to the debtor’s estate.1 See In re

Mantle, 153 F.3d at 1085 (9th Cir. 1998) (citing Keller v. Keller

(In re Keller), 185 B.R. 796 (B.A.P. 9th Cir.1995)); McCoy v. Bank

of America (In re McCoy), 111 B.R. 276 (B.A.P. 9th Cir. 1983);

Miller v. Walpin (In re Miller), 167 B.R. 202 (Bankr. C.D.Cal.

1994); In re Hendrick, 45 B.R. 976, 983-984 (Bankr. M.D.La.1985).

It necessarily follows that community property which has been

finally partitioned and reclassified as separate property of the

Debtor’s former spouse before the petition date does not become

part of the estate. See Paderewski v. Barrett (In re Paderewski),

564 F.2d 1353 (9th Cir. 1977); In re Keller, 185 B.R. at 800; In re

Stouder, 164 B.R. 59, 64 (E.D.La.1994); COLLIER, ¶ 541.13[4] at 541-

82 (“In instances where the community property has not been divided

1
One bankruptcy court has held that property of a former spouse,
may not be included in the debtor spouse’s bankrupt estate even if
it is undivided as of the date of the petition. See In re LaNess,
159 B.R. 916 (Bankr. C.D.Cal. 1993). This decision has been
criticized. See In re Miller, 167 B.R. at 208. We need not
concern ourselves with the merits or demerits of LaNess, however,
because we have concluded that partition of former community
property before the bankruptcy petition date prevents inclusion
within the bankrupt estate of the separate property received by
partition by the non-debtor spouse or former spouse.

11
in a dissolution case as of the petition date, the community

property of the spouses passes to the debtor’s estate, and

creditors of the debtor’s former spouse participate in the

distribution as holders of ‘community claims.’ However, if the

property has been divided by a final order of the divorce court,

the bankruptcy estate is bound by the terms of that order, subject

to any rights which creditors may retain [under Bankruptcy Code §

548 (Fraudulent Transfers and Obligations)]).”(footnotes citing

foregoing authorities omitted.); see also Alan Pedlar, Community

Property and the Bankruptcy Reform Act of 1978, 11 ST. MARY’S L.J.

349, 358 (1979)(“[I]n a state where spouses equally or jointly

manage and control their community property, the only property of

either spouse that does not pass to the bankruptcy estate of an

individual spouse is the separate property of the non-debtor spouse

and the community property subject to sole management and control

of the nondebtor spouse, to the extent that such property is not

liable for an allowable claim against the debtor.”)(footnote

omitted); see H.R. REP. NO. 95-595, at 175–176 (1977) (“The bill

determines what is property of the estate by a simple reference to

what interests in property the debtor has at the commencement of

the case . . . [u]nder the bill, all of the community property of

the debtor, with some minor limitations, and all of the separate

property of the debtor will become property of the estate available

for distribution. Community creditors of both the bankrupt spouse

12
and the nonbankrupt spouse will be permitted to share in the

community property, according to specified marshalling rules set

out in the statute.”)(footnotes omitted); Alan Pedlar, The

Implications of the New Community Property Laws for Creditors’

Remedies and Bankruptcy, 63 CAL.L.REV. 1610, 1661 (1976)

(hereinafter PEDLAR).

We agree with the prevailing view that former community

property which has been partitioned and classified as separate

property of the debtor’s former spouse under state law prior to the

commencement of the case does not pass into the bankruptcy estate.

Under section 541(a)(2) only “interests of the debtor and the

debtor’s spouse in community property as of the commencement of the

case” may become part of the estate. Anderson’s property interest

in her separate property home was created and defined by state law

prior to the commencement of this bankruptcy case. Unless the

characterization of the property by state law conflicts with the

Bankruptcy Code, “there is no reason why such interests should be

analyzed differently simply because an interested party is involved

in a bankruptcy proceeding.” Butner, 440 U.S. at 55. We see no

such conflict between the plain meaning of section 541(a)(2) of the

Bankruptcy Code and the classification of Anderson’s home as her

separate property under state law prior to the commencement of the

Debtor’s bankruptcy case.

13
 The Trustee argues, as the Bankruptcy Court reasoned, that

section 101(7) and section 726 of the Bankruptcy Code change the

plain meaning of section 541(a)(2)(B) so that, when read together,

they include the separate property of the non-debtor former spouse

in the debtor’s bankruptcy estate if the non-debtor’s separate

property is liable for a “community claim.” Their reasoning is

contrary to the Bankruptcy Code, however, because section 101(7)

and section 726 derive their meaning by reference to section

541(a)(2), not the other way around. Section 101(7) defines

“community claim” as a debt incurred during the community property

regime which vests in the creditor a right to have that debt

satisfied from community assets, regardless of whether there is

community property in the estate as of the commencement of the

bankruptcy case.2 The outer limits of community property of the

estate marked by section 541(a)(2) are thus not altered by section

101(7), which merely defines “community claim” as one for which

2
Section 101(7) provides: “In this title–-[] ‘community claim’
means claim that arose before the commencement of the case
concerning the debtor for which property of the kind specified in
section 541(a)(2) of this title is liable, whether or not there is
any such property at the time of the commencement of the case[.]”
This definition “is keyed to the liability of the debtor’s property
for a claim against either the debtor or the debtor’s spouse. If
the debtor’s property is liable for a claim against either, that
claim is a community claim.” H.R. REP. NO. 95-595 (1977); S. REP.
NO. 95-989 (1978). The definition of “community claim” was amended
by the Senate “in order to indicate that a community claim exists
whether or not there is community property in the estate as of the
commencement of the case.” 124 CONG. REC. H11090 (daily ed. Sept.
28, 1978); 124 CONG. REC. S17406 (daily ed. Oct. 6, 1978) (remarks
of Rep. Edwards and Sen. DeConcini).

14
community property (“of the kind specified in section 541(a)(2)”)

is liable and does not expressly or impliedly provide that a non-

debtor former spouse’s separate property shall be included in the

estate or made liable for a community claim in the bankruptcy

case.3

Section 726(c) governs distributions in cases in which there

is both community property (“property of the kind specified in

section 541(a)(2) of this title”) and non-community property in the

estate. In essence, section 726(c) creates a “sub-estate” that

calls for the segregation of community property in the estate from

other property of the estate and for the order of distribution of

the two kinds of property in payment of claims: First,

administrative expenses are paid equitably from both kinds of

3
Nor can subsection (B) expand the reach of section 541(a)(2)
beyond that property which is community property at the
commencement of the case. Subsection (B) modifies section
541(a)(2), which by its plain terms is limited solely to community
property; to then find that subsection (B) expands section
541(a)(2)’s reach beyond community property would be to render the
limiting modifier of “community property” in section 541(a)(2)
meaningless. See United States v. Shaw, 979 F.2d 41, 44 (5th Cir.
1992). Further, the legislative history of the precursor of
subsection (B) indicates that it was solely intended to address the
unique situation whereby state statute community property is under
the sole management and control of the non-debtor spouse, yet is
still subject to community claims. See PEDLAR at 1663 n. 296 (“The
final clause, which passes ‘other community property of the debtor
and his spouse to the extent it is liable for any allowable claim
. . .’ was inserted to acquire the wife’s one-half interest in the
community property which was liable for her torts under New Mexico
law . . . However, this language is retained . . . to deal with the
business interest of the non-bankrupt spouse in California and the
community property under the sole management and control of the
non-bankrupt in Texas.”) (internal citations omitted) (emphasis
added).

15
property; Second, community claims against the debtor or the

debtor’s spouse are paid from community property, except such as is

liable solely for the debts of the debtor; Third, community claims

against the debtor, to the extent not paid under the above

provision, are paid from community property that is solely liable

for the debts of the debtor; Fourth, to the extent that all claims

against the debtor including community claims against the debtor

are not paid under the above provisions, such claims shall be paid

from property of the estate other than community property of the

estate; Fifth, if any community claims against the debtor or the

debtor’s spouse remain unpaid, they are paid from whatever property

remains in the estate. See 11 U.S.C. § 726(c); H.R. REP. NO. 95-

595, at 383-384 (1977); S. REP. NO. 95-989, at 97-98 (1978). The

marshalling rules of § 726(c) apply only to property of the estate

as defined under section 541 and thus the sub-estate mechanism

merely defines a hierarchy of distributions from the estate -- it

has no implication as to whether property is to be included in the

bankrupt estate under section 541. Id.

Because the separate property home of Anderson, the non-debtor

former spouse, was not included or owned in indivision with the

property of the Debtor’s bankruptcy estate, the Trustee lacked

authority to sell her home as “property of the estate” under

section 363(b)(1), as property of the estate in which there is an

interest of “an entity other than the estate” under section 363(f),

16
or as “the interest of any co-owner in property in which the debtor

had, at the time of the commencement of the case, an undivided

interest as a tenant in common, joint tenant, or tenant by the

entirety” under section 363(h). See COLLIER ¶ 363.08[2].

B.

Alternatively, the Trustee argues that, as trustee of the

Debtor’s bankruptcy estate, he has, under the “strong-arm”

provisions of section 544 of the Bankruptcy Code, the rights and

powers of a bona fide purchaser of real property from the debtor to

avoid any transfer of the property of the Debtor, including the

transfer by partition to Anderson of the family homestead as her

separate property. Section 544, in pertinent part, provides:

(a) The trustee shall have, as of the commencement of the
case, and without regard to any knowledge of the trustee
or of any creditor, the rights and powers of, or may
avoid any transfer of property of the debtor or any
obligation incurred by the debtor that is voidable by -

* * *

(3) a bona fide purchaser of real property, other than
fixtures, from the debtor, against whom applicable law
permits such transfer to be perfected, that obtains the
status of a bona fide purchaser and has perfected such
transfer at the time of the commencement of the case,
whether or not such purchaser exists.

11 U.S.C. § 544(a)(3).

Under section 544(a)(3) the trustee has the right and power,

as of the date of the commencement of the case, to avoid any lien

or transfer avoidable by a hypothetical bona fide purchaser of real

17
property of the debtor as of the date of the commencement of the

case. These rights and powers are conferred on the trustee by

federal law. See COLLIER ¶ 544.02 at 544-5 (citing Commercial

Credit Co., Inc. v. Davidson, 112 F.2d 54 (5th Cir. 1940)). The

extent of the trustee’s rights as a bona fide purchaser of real

property, however, is measured by the substantive law of the state

governing the property in question. See Gaudet v. Babin (In the

Matter of Zedda), 103 F.3d 1195 (5th Cir. 1997); COLLIER ¶ 544.02 at

544-5; 3 NORTON ON BANKRUPTCY ¶ 54.3 at 54-9, n. 22 (citing In re

Clifford, 566 F.2d 1023, 1025 (5th Cir. 1978); McKay v. Trusco

Finance Co., 198 F.2d 431 (5th Cir. 1952)) (hereinafter NORTON). The

statutory language, “without regard to any knowledge of the trustee

or of any creditor” refers to actual knowledge and does not affect

state laws relating to constructive notice. COLLIER ¶ 544.02 at

544-7; NORTON ¶ 54.5 at 54-17 – 54-18. The phrase has been

construed by the courts not to affect actions which, under

applicable nonbankruptcy law, serve to give competing claimants

constructive notice of the claim. When an otherwise bona fide

purchaser of real estate would be subject to a claim because of

constructive notice under state law, the trustee cannot avoid the

claim. See NORTON ¶ 54.5 at 54.18, n.67 (citing authorities); COLLIER

¶ 544.03 at 544-7. A hypothetical bona fide purchaser under

section 544(a)(3) is a purchaser who under state law could have

conducted a title search, paid value for the property and perfected

18
his interest as a legal title holder as of the date of the

commencement of the case. See COLLIER ¶ 544.08 at 544-15 (citing In

re Bridge, 18 F.3d 195 (3rd Cir. 1994)). The trustee, just as a

hypothetical purchaser, is amenable to state recording statutes and

other nonbankruptcy laws which would prevent him from properly

perfecting transfer from the debtor at the time of the commencement

of the case. See COLLIER ¶ 544.08 at 544-15 - 544-16; NORTON ¶ 54:5

at 54-17 — 54-18, nn. 63 - 64 (citing Watkins v. Watkins, 922 F.2d

1513 (10th Cir. 1991); In re Gulino, 779 F.2d 546, 551 (9th Cir.

1985)). Thus, although section 544 provides that a trustee’s

actual knowledge is not relevant, a trustee is still bound by the

state law regarding recordation and constructive notice, as well as

other state law limitations upon bona fide third party purchaser

status. See, e.g., In re Hamilton, 125 F.3d 292 (5th Cir. 1997);

see also NORTON ¶ 54.5 at 54.18, n.67 (citing authorities); COLLIER

¶ 544.03 at 544-7.

Until 1980, the Louisiana Civil Code designated the husband as

the “head and master” or sole manager of the community property.

See SPAHT AND HARGRAVE § 5.1 at 223-234 (citing LA. CIV. CODE ANN. arts.

2404 (1870); 2373 (1825); 66 (1808)). “Doubts about the

constitutionality of this discrimination against the wife were a

primary motivation for the 1980 revision of the community property

laws and the adoption of the current regime which gives the spouses

equal management powers.” SPAHT AND HARGRAVE § 5.1 at 224; see LA.

19
CIV. CODE ANN. art. 2346 (1980). As an important exception to the

basic principle of equal management, however, Civil Code article

2347 (1980) provides that “[t]he concurrence of both spouses is

required for the alienation, encumbrance, or lease of community

immovables....” The purpose of Article 2347 is to “protect one

spouse against solo transactions that have the potential of

depleting the community–-normally transfer or encumbrance of

immovables.” SPAHT AND HARGRAVE § 5.10 at 253. Consequently, because

of Article 2347, a third person who attempts to buy real property,

that the conveyance records indicate is community immovable

property, from one of the spouses without the concurrence of the

other cannot by the solo transfer obtain bona fide purchaser status

or good title to that property. See SPAHT AND HARGRAVE § 5.10 at

253—257 (citing Louisiana court decisions).

New Civil Code articles were enacted in 1995 to govern the

management of undivided former community property after the inter

vivos termination of the community property regime. See 1995 La.

Acts No. 433 (amending Civil Code article 2369.1 and adding Civil

Code articles 2369.2—2369.8). As amended, Article 2369.1 provides

that, after the termination of the community regime by a cause

other than a spouse’s death or the judicial declaration of a

spouse’s death, Articles 2369.2 — 2369.8 apply to former community

property until a partition of the former community property or the

death or judgment of declaration of death of a spouse. Article

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2369.4, which prohibits a spouse’s solo transfer of former

community property, provides: “A spouse may not alienate, encumber,

or lease former community property or his undivided interest in

that property without the concurrence of the other spouse, except

as provided in the following articles.4 In the absence of such

concurrence, the alienation, encumbrance, or lease is a relative

nullity.” Article 2369.4 was deemed necessary because “during the

existence of the community regime while it may be assumed that a

spouse will exercise his management powers in such a way as to

promote the mutual purposes of the community regime, no such

assumption exists after termination of the community regime.” LA.

CIVIL CODE ANN. art. 2369.4, Comment (a) (West 1999). Article 2369.4

governs “former community property that is co-owned by spouses or

former spouses on or after January 1, 1996, regardless of when the

community regime of the spouses or former spouses terminated.”

1995 La. Acts No. 433, § 3.

On the facts of the present case, a hypothetical buyer of the

real property in question from the Debtor as of the commencement of

this bankruptcy case could not have achieved bona fide purchaser

status. It is undisputed that: in 1989, when the Debtor and

Anderson acquired the real property in their names by a deed

recorded in the conveyance records of Ouachita Parish, Louisiana,

a community property regime had been established by their marriage,

4
None of the Civil Code Articles following Article 2369.4 is
applicable to the present case.

21
so that the property became their community property; on January

26, 1994, the Debtor and Anderson were divorced by a judgment of

the Fourth Judicial District Court for Ouachita Parish, Louisiana,

which was recorded in the conveyance records of Ouachita Parish on

January 27, 1994; and on June 17, 1996, the Debtor filed a

voluntary petition for relief under Chapter 7 of the Bankruptcy

Code that commenced the present bankruptcy case.

The community regime of the Debtor and Anderson was terminated

by their judgment of divorce as of the date of filing of the

petition in that action on May 21, 1993. LA. CIV. CODE ANN. arts.

102, 103, 159 (effective Jan. 1, 1991). The divorce judgment was

recorded in the conveyance records of Ouachita Parish on January

27, 1994 and thus became effective against third persons with

respect to former community immovables in that parish from the date

and time of its registry. LA. CIV. CODE ANN. art. 1839 (effective

Jan. 1, 1984); LA.R.S. § 9:2721.5 Consequently, a solo transfer by

the debtor to a hypothetical buyer, of the real property in

question, on the June 17, 1996 bankruptcy petition date, would be

a relative nullity, would not transfer valid title to such a buyer,

and would not enable that buyer to obtain bona fide purchaser

status. Thus, the Trustee is not authorized by section 544(a)(3)

5
See generally W. Lee Hargrave, Public Records & Property Rights,
56 LA.L.REV. 535 (1996); William V. Redmann, The Louisiana Law of
Recordation: Some Principles and Some Problems, 39 TUL.L.REV. 491
(1965).

22
to exercise the rights and powers of a bona fide purchaser with

respect to the real property in question.

We have interpreted and applied the principles of the

pertinent Louisiana Civil Code articles, other state laws, and

state court decisions as we think the Supreme Court of Louisiana

would. In particular, the Supreme Court of Louisiana’s decision in

Camel v. Waller, 526 So.2d 1086 (La. 1988), although decided in a

factual context that arose prior to the 1980 revision of the Civil

Code provisions on matrimonial regimes and the 1996 amendments

concerning co-ownership of former community property, provides

substantial guidance as to how that court would apply the currently

applicable state law. In that case, third party purchasers of

community immovables from a husband, who had been judicially

separated from his wife by an unrecorded judgment, prevailed over

the wife’s claim for enforcement of her community rights in the

property. The court held that because the separation judgment had

not been recorded prior to the third party purchasers’ acquisition

of the property, the husband had not lost his right as head and

master of the community to make a solo transfer of the community

property. In a virtually unanimous opinion, the court noted:

Elizabeth Camel[, the wife,]could have alerted third
party purchasers to the newly acquired right of joint
control attending her undivided co-ownership interest by
recording her judgment of separation....She did not do
so. Consequently, ‘the judgment affecting immovables”,
that is, a judgment changing the husband’s right to
convey alone, to a right of joint control, is not
‘binding on’ and does not ‘affect third persons’.

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 La.Rev.Stat.Ann. § 9:2721 (West 1965). In this context
Elizabeth Camel’s ‘claim’, the right to enjoy joint
control of property owned in indivision which is ‘outside
the public records’‘shall [not] be binding on or affect
third persons’, La.R.S. § 9:2721, and indeed, it is
‘utterly null and void, except between the parties....’
La.Rev.Stat. Ann. § 9:2756 (West Supp. 1988).

Id. at 1093 (citations in original).

Considering that: (1) the present case is amenable to the 1980

revision of the Civil Code provisions on matrimonial regimes,

which replaced the husband’s head and master authority with a

general principle of equal management and a requirement of the

concurrence of both spouses for the alienation of community

immovables;6 (2) the Camel court carefully noted that the 1980

revision was not applicable to the 1977 and 1978 transfers at issue

in Camel; (3) the present case is governed by the new 1996 rules

requiring spousal concurrence for the alienation of any interest in

undivided former community property; and (4) the present case is

factually distinguishable from Camel in that the Debtor-Anderson

divorce judgment was recorded in the conveyance records in January

1994 and therefore was effective as a bar to the Debtor’s

hypothetical attempt to transfer the real property in question to

6
See generally W. Lee Hargrave, Public Records and Property
Rights, 56 LA.L.REV. 535, 550 (Spring 1996) (“under current law,
facts similar to Camel v. Waller will result in annulment of the
transfer upon the request of the non-consenting spouse.”); L.C.
Friedmann, Camel v. Waller: A Conflict Between the Laws of
Community Property and the Public Records Doctrine, 63 TUL.L.REV.
193, 198 (1988) (“Because the head and master rule has been
eliminated from Louisiana law, the application of the Camel
analysis will be limited in the future.”).

24
a third person purchaser on the June 17, 1996 date of the

bankruptcy petition, we believe that the Louisiana Supreme Court

would resolve the conflict here, as we have, in favor of the non-

debtor former spouse and against the hypothetical third party

purchaser.

III.

For the reasons assigned, we conclude that (1) the real

property in question became Anderson’s separate property home

through the partition of the former community property home before

the commencement of the bankruptcy case and therefore is not

property of the Debtor’s bankruptcy estate defined by section

541(a)(2); and (2) the trustee is not entitled to obtain the status

of a bona fide purchaser with respect to the real property in

question under section 544(a)(3). Accordingly, the judgment of the

district court is REVERSED, and the case is REMANDED to the

district court, which is instructed to REVERSE the bankruptcy

court’s judgment and REMAND the case to the bankruptcy court for

further proceedings consistent with this opinion.

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