Narrative Opinion Summary
In this bankruptcy case, Darnelle Boisrond filed for Chapter 7 bankruptcy, and the trustee, Robert L. Geltzer, sought to recover charitable contributions made to the Universal Church from 1997 to 1999. The bankruptcy court initially sided with the Church, ruling that only a 1997 donation exceeding the 15% income threshold was avoidable under 11 U.S.C. § 548(a)(2). On appeal, the district court reversed, interpreting the RLCDPA's 15% safe-harbor provision to apply to aggregate annual contributions, thus permitting more contributions to be avoided. It also upheld the trustee's insolvency claim. The appellate court affirmed the district court's interpretation of the RLCDPA but vacated the insolvency finding due to insufficient expert testimony review, remanding for further analysis. The court also held that avoiding the contributions did not infringe upon First Amendment rights, as the statute is religion-neutral. While the Church waived certain defenses by not raising them timely, it was permitted to argue the consistency of charitable giving on remand. The district court's decisions were partially affirmed and partially vacated, requiring additional proceedings to resolve insolvency and defense issues.
Legal Issues Addressed
Application of RLCDPA's 15% Safe-Harbor Provisionsubscribe to see similar legal issues
Application: The court determined that the 15% safe-harbor provision under the RLCDPA should be applied to aggregate annual contributions rather than individual transfers.
Reasoning: The appellate court affirmed that the RLCDPA focuses on total annual contributions to evaluate the 15% limit, noting that Boisrond's donations exceeded this threshold, allowing the trustee to avoid the transfers.
First Amendment and Avoidance of Charitable Contributionssubscribe to see similar legal issues
Application: The court ruled that avoiding charitable contributions did not violate First Amendment rights, as the bankruptcy code provisions are generally applicable and religion-neutral.
Reasoning: Regarding the Church's argument that allowing the trustee to avoid contributions to it violates First Amendment rights, this claim lacks merit.
Insolvency Determination in Bankruptcy Proceedingssubscribe to see similar legal issues
Application: The court vacated the finding of insolvency due to inadequate evaluation of expert testimony, requiring further review on remand.
Reasoning: Both lower courts did not properly evaluate the expert testimony, leading to the vacating of the summary judgment on insolvency and a remand for further evaluation.
Waiver of Defenses in Bankruptcy Appealssubscribe to see similar legal issues
Application: The court held that defenses not timely raised are considered abandoned, but allowed the Church to assert a defense concerning consistency of charitable giving on remand.
Reasoning: The district court denied the motion to reconsider, stating the Church abandoned these claims. The Church argued it could not raise these defenses until the aggregate approach was adopted.