United States District Court, D. Colorado
In re GREGORY CHERNUSHIN, Debtor.
GREGORY CHERNUSHIN, ANDREA CHERNUSHIN, THE JUDY T. COX REVOCABLE TRUST, and THE ALLEN E. COX REVOCABLE TRUST, Defendants. ROBERTSON B. COHEN, as Chapter 7 Trustee, Plaintiff,
ORDER AFFIRMING BANKRUPTCY COURT'S
BROOKE JACKSON, UNITED STATES DISTRICT JUDGE.
matter is before the Court on Robertson B. Cohen's
(“the Trustee”) appeal from the judgment of the
Bankruptcy Court, which determined that property owned by
now-deceased Gregory Chernushin (“the Debtor”) is
not part of the Debtor's bankruptcy estate but instead is
owned by Defendant Andrea Chernushin free of the interest of
others. This Court exercises jurisdiction over the appeal
pursuant to 28 U.S.C. §§ 1334(a) and 158(a)(1). The
Court has reviewed the record and the parties' briefs.
For the reasons set forth below, the Bankruptcy Court's
judgment is AFFIRMED.
following facts are undisputed. On August 17, 2015 the Debtor
filed a voluntary Chapter 13 bankruptcy petition. ECF No. 7-1
at 54. His wife, Mrs. Andrea Chernushin, neither joined his
petition nor filed her own. At the time of his bankruptcy
filing, the Debtor owned a vacation property located in
Crested Butte, Colorado (“the Property”). The
Debtor and Mrs. Chernushin owned the Property in joint
tenancy with the right of survivorship. Pursuant to 11 U.S.C.
§ 541, the Debtor's interest in the Property became
part of his bankruptcy estate when he filed for bankruptcy.
October 2, 2015 the Court converted the Debtor's case to
one under Chapter 7 of the Bankruptcy Code and the Trustee
was appointed. On either June 8 or June 9, 2016 the Debtor
died, but his death did not affect the progression of the
bankruptcy case pursuant to Fed.R.Bankr.P. 1016. Days later,
on June 15, 2016, the Trustee filed an adversary proceeding
against the Debtor, Mrs. Chernushin, and two secured
creditors in an effort to sell the Property. Mrs. Chernushin
filed an answer in which she asserted that the Debtor's
interest in the Property was terminated by operation of law
on the day that he died, and therefore the Property was no
longer part of the bankruptcy estate. Both parties filed
motions for summary judgment on the issue. ECF No. 7-1 at 54.
In an April 3, 2017 order, the United States Bankruptcy Court
for the District of Colorado granted Mrs. Chernushin's
motion for summary judgment and determined that:
the Debtor's interest in the Property remained in joint
tenancy, with its accompanying right of survivorship, until
the time of his death. At the time of his death, the
Debtor's interest in the Property terminated. The
Defendant [Mrs. Chernushin] now owns the Property free of any
interest of the Debtor. The Property is not property of the
Debtor's bankruptcy estate, and the Trustee is not
entitled to sell it.
Id. The Bankruptcy Court thus entered judgment for
Mrs. Chernushin and dismissed the adversary proceeding.
Id. On May 3, 2017 the Trustee filed an appeal of
the Bankruptcy Court's decision. The issues have been
fully briefed and are ripe for this Court's review.
Standard of Review.
Court reviews the Bankruptcy Court's legal determinations
de novo. See In re Baldwin, 593 F.3d 1155, 1159
(10th Cir. 2010). The Court also reviews de novo mixed
questions of law and fact that primarily involve legal
issues. See In re Wes Dor Inc., 996 F.2d 237 (10th
Cir. 1993). The Bankruptcy Court's factual findings are
reviewed for clear error. See In re Johnson, 477
B.R. 156, 168 (10th Cir. BAP 2012). If a “lower
court's factual findings are premised on improper legal
standards or on proper ones improperly applied, they are not
entitled to the protection of the clearly erroneous standard,
but are subject to de novo review.” Id.
the Trustee's appeal is premised on his argument that the
Bankruptcy Court improperly applied the law, I will review
the Bankruptcy Court's decision de novo. See In re
Baldwin, 593 F.3d at 1159.
Trustee makes three arguments on appeal, but they boil down
to one basic assertion: the Bankruptcy Court ignored federal
law when it ruled that the Property was removed from the
bankruptcy estate upon the death of the Debtor. ECF No.
The Bankruptcy Court made its determination based upon
Colorado joint tenancy law, as codified in C.R.S. §
38-31-101. ECF No. 7-1. The Trustee alleges that the
Bankruptcy Court “ignored the Supremacy Clause of the
United States and 11 U.S.C. § 541” and other
provisions of the Bankruptcy Code in making this decision,
and the Trustee argues that had the Bankruptcy Court properly
applied federal law it would have ruled in the Trustee's
favor. Id. After reviewing the briefs and relevant
law, I AFFIRM the Bankruptcy Court's grant of summary
judgment and determination that the Property is no longer
part of the bankruptcy estate. My reasoning is explained
Debtor and Mrs. Chernushin owned the Property as joint
tenants. “[J]oint tenancy is a form of ownership in
which each joint tenant possesses the entire estate, rather
than a fractional share.” Taylor v.
Canterbury, 92 P.3d 961, 964 (Colo. 2004). When a joint
tenant dies, his or her interest in the property is
terminated, and the surviving joint tenant's interest in
the property continues free of the deceased joint
tenant's interest. C.R.S. § 38-31-101(6)(c). Jointly
held property remains in a joint tenancy unless that joint
tenancy is severed. Taylor, 92 P.3d at 964. The
filing of the bankruptcy petition did not sever the joint
tenancy, C.R.S. § 38-31-101(5)(b) and here neither party
makes any other argument that severance
occurred. Therefore, the parties concur that ...