Mr. Smith is a client who is involved in a bitter divorce in Family Court in Dallas, Texas. Mr. Smith and his soon to be ex-wife had agreed to split community property equally, but here is now an argument over what is considered to be community property. Mrs. Smith had accumulated a substantial amount of jewelry, which she purchased with community money, or was given to her by her spouse over the 20 years of the marriage. She is refusing to split the value of the jewelry because she insists that it is her separate property. Her attorney has requested the court to order that the jewelry in question be deemed to be Mrs. Smith's separate property and that Mr. Smith is not entitled to half of the value. Mrs. Smith's attorney has filed a brief with the court, citing cases that he believes supports the position of Mrs. Smith.

Your supervising attorney has asked that you check the citations for the court opinions included in the brief filed by Mrs. Smith's attorney. Please read the opinions on Westlaw and determine the following:

2004 WL 2314524

Only the Westlaw citation is currently available.

United States District Court,

E.D. Louisiana.

In re: Moseley Oliver SOULE Debtor

No. Civ.A. 04-0914.

Oct. 13, 2004.

Attorneys and Law Firms

Clayton Joseph Swank, III, Clayton J. Swank, III, and Associates, APLC, Madisonville, LA, for Appellant.

Fernand L. Laudumiey, IV, Gordon, Arata, Mccollam, Duplantis & Eagan LLP, New Orleans, LA, for Appellee.

ORDER AND REASONS

PORTEOUS, J.

*1 The Court, after considering the appeal from the Unites States Bankruptcy Court for the Eastern District of Louisiana, the record, the brief of the appellee, and the applicable law, hereby AFFIRMS the judgment of the United States Bankruptcy Court.

Standard of Review

In reviewing a decision of the Bankruptcy Court, the District Court applies a "clearly erroneous" standard of review to findings of facts, and a de novo standard of review to questions of law. See 28 U.S.C. 158(c); Bankruptcy Rule 8013; and In re T-H New Orleans Ltd. Partnership, 116 F.3d 790 (5th Cir.1997). In addition, when reviewing a Bankruptcy Court's determination regarding a disclosure statement, the District Court applies an "abuse of discretion" standard of review. In re Texas Extrustion Corp., 844 F.2d 1142 (5th Cir.1988).

Background

On August 23, 2003, Moseley Oliver Soule ("Debtor") filed the present case under Chapter 7 of the United States Bankruptcy Code. At the time of the filing of the bankruptcy and at all other material times hereto the Debtor and his wife were living in a community property regime in Louisiana. During the marriage, Mr. Soule made presents of jewelry to his wife. The total appraised value of such jewelry is in excess of $20,000. It is undisputed that the jewelry was purchased with community funds.

Between June 24, 1998, and June 22, 2001, the Debtor and his wife submitted four personal financial statements to obtain loans from various financial institutions. In the June 24, 2001, statement to Whitney National Bank, all assets of the Debtor and his wife are listed as being community property except $5000 in cash which is listed as the separate property of his wife. In a financial statement given to the Whitney National Bank dated October 4, 1999, all assets of the Debtor and his wife are listed as being community property and no separate property of any kind is listed. Jewelry is included as "personal property" having a value of $50,000.00. In a financial statement given to the Whitney National Bank dated June 22, 2001, all of the assets are listed as being community property and jewelry is specifically listed as an item of personal property having a value of $20,000.00. No separate property of any kind is listed on this financial statement. The Debtor ultimately defaulted on the loans.

The Bankruptcy Court concluded that the jewelry was community property and the doctrine of judicial estoppel applied to Mr. Soule and his wife.

Law and Argument

In a bankruptcy appeal, findings of fact are not set aside unless they are found to be clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the witnesses. Bankruptcy Rule 8013. In this case, the issue for the court to consider is whether the Bankruptcy Court erred in concluding that jewelry irrevocably became community property when it was listed as such on two financial statements given to the Whitney National Bank. Further, this court must consider whether the Bankruptcy Court erred in applying the doctrine of judicial estoppel to the facts of this case.

*2 The Debtor contends that the jewelry at issue in this matter is the separate property of Mrs. Soule, as the gifts of jewelry from her him were valid gratuitous donations of community movables. The Debtor further argues that the court below was in error in finding that the financial statements listing the jewelry as community property constituted a donation of separate property made to the community, relying on La. Civ.Code Art. 2343.1 which provides:

The transfer by a spouse to the other spouse of a thing forming part of his separate property with the stipulation that it shall be part of the community, transforms the thing into community property. As to both movables and immovables, a transfer by onerous title must be made in writing and a transfer by gratuitous title must be made by authentic act.

This argument fails, however, as the Bankruptcy Court found, and this Court agrees, that the deliberate placement of the jewelry on the list of community assets on their financial statement constitutes sufficient indication of intent to transfer the [jewelry] back into the community. Relying on Graffeo v. Graffeo, 576 So.2d 586 (La.App. 4 Cir.1991), this Court finds that the transfer of the jewelry to the community was an onerous transfer, as Mr. and Mrs. Soule obtained the advantage of the receipt of substantial bank loans based upon the representations in the financial statements. Therefore, because there was a stipulation that the jewelry is part of the community and a writing, this Court agrees with the finding of the bankruptcy court that the jewelry at issue is community property

The Bankruptcy Court made a determination that all elements of estoppel are present in this case and therefore, the Debtor is judicially estopped from denying that the jewelry is community property. Under the doctrine of "quasi estoppel," a party who accepts the benefit of a transaction may not subsequently take an inconsistent position to avoid the corresponding obligations or effects. Exchange Trust Drainage Co. v. Drainage Dist., 278 U.S. 421, 425, 49 S.Ct. 181, 73 L.Ed. 436 (1929).

The Debtor concedes that two of the financial statements (the 10/4/99 and the 6/22/01 statement) referenced the jewelry as being community property. Likewise, he concedes that it was inaccurate to list the jewelry as community property on the financial statements.

However, the Debtor contends that it is not reasonable to conclude that categorizing the jewelry as community property on the financial statement was calculated to deceive the Whitney National Bank into making a loan to the Soules', as the combined net worth was not misstated even though the jewelry should have been listed as Mrs. Soules' separate property.

This Court, however, does not find that the Bankruptcy Court erred in its finding. Davidson v. Davison, 947 F.2d 1294, 1297 (5^th Cir.1991), a 1991 Fifth Circuit Court of Appeals case, stands for the proposition that a party cannot accept the benefits of a transaction or statute and then subsequently take an inconsistent position to avoid the corresponding obligations or effects. Therefore, because the Debtor represented in several financial statements that the jewelry was community property, regardless of the fact that these were extra judicial representations, he is estopped from now claiming that the jewelry was separate property beyond the reach of his creditors.

*3 IT IS ORDERED that the judgment of the United States Bankruptcy Court for the Eastern District of Louisiana be AFFIRMED.

a. Whether the opinions are on point, and why or why not

b. Whether opinions are primary mandatory, primary persuasive, or non-authorities for a court in Dallas, Texas, and why or why not

c. Whether the opinions support Mrs. Smith's contention, and why or why not