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In re Clement

United States Bankruptcy Appellate Panel of the Eighth Circuit

August 8, 2019

In re: Tracy John Clement, doing business as Clement Farms, Debtor.
v.
CUSB Bank, formerly known as CUS Bank Defendant - Appellant Phillip L. Kunkel, as Chapter 11 Trustee Plaintiff - Appellee,

          Submitted: June 28, 2019 Filed: August 8, 2019

          Appeal from United States Bankruptcy Court for the District of Minnesota - St. Paul

          Before SCHERMER, SHODEEN and DOW, Bankruptcy Judges.

          SHODEEN, BANKRUPTCY JUDGE

         CUSB Bank appeals the Bankruptcy Court's[1] entry of summary judgment in favor of Phillip Kunkel, Trustee. For the reasons that follow, we affirm.

         STANDARD OF REVIEW

         We review a bankruptcy court's grant of summary judgment de novo. Mwesigwa v. DAP, Inc., 637 F.3d 884, 887 (8th Cir. 2011) (citing Anderson v. Durham D & M, L.L.C., 606 F.3d 513, 518 (8th Cir. 2010)). We will affirm if "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). "We may affirm on any basis supported by the record." Seaver v. New Buffalo Auto Sales, LLC (In re Hecker), 459 B.R. 6, 10-11 (B.A.P. 8th Cir. 2011); Schoelch v. Mitchell, 625 F.3d 1041, 1046 (8th Cir. 2010) (citing Moyle v. Anderson, 571 F.3d 814, 817 (8th Cir. 2009)). Here we review de novo whether the bankruptcy court's conclusions interpreting the relevant statutes and applying them to the undisputed facts is correct. Fisette v. Keller (In re Fisette), 455 B.R. 177, 180 (B.A.P. 8th Cir. 2011); Checkett v. Sutton (In re Sutton), 365 B.R. 900, 904 (B.A.P. 8th Cir. 2007).

         BACKGROUND FACTS

         While he was married, Tracy Clement purchased real estate with his father. Each of them acquired a one-half interest as tenants in common in two parcels that are identified as the "Miller Property" and the "Nolt Property" (Real Estate). Tracy's wife Nancy never held title in these properties.

         Tracy and Nancy Clement[2] divorced in 2012. Under Minnesota law all real or personal property whether title is held individually or jointly is considered marital property. Minn. Stat. Ann. § 518.003. The state court divided Tracy and Nancy's assets and marital interests in their divorce. The Real Estate was awarded to Tracy. By statute Minnesota authorizes the use of a Summary Real Estate

         Disposition Judgment (Judgment) to convey and transfer real estate that is the subject of a property settlement in a dissolution proceeding. Minn Stat. Ann. § 518.191. A Judgment awarding Nancy's marital interest in the Real Estate to Tracy was issued by the state court and was filed of record in the respective counties where the Real Estate is situated on June 11, 2012.

         Later, on July 2, 2012 Nancy executed a trustee's quit claim deed for the Real Estate from her revocable trust to Tracy's revocable trust. Following these conveyances, CUSB Bank entered a mortgage with the Tracy J. Clement Revocable Trust on the Real Estate. The Mortgage was properly recorded.

         Tracy filed a voluntary chapter 11 bankruptcy petition in 2016. Kunkel filed an adversary proceeding to avoid the Bank's mortgage as unenforceable pursuant to 11 USC §544(a)(3). He filed a motion for summary judgment arguing that Tracy owns the Real Estate and the Bank holds a mortgage with Tracy's trust, an entity that has never been in title. The bankruptcy court concluded that the Judgment served to convey whatever interest Nancy may have held in the Real Estate to Tracy and granted summary judgment in favor of Kunkel avoiding the Bank's mortgage and preserving it for the estate's benefit under 11 U.S.C. §551. ...


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