Todd Frealy v. Rick Reynolds

ORDER CERTIFYING A QUESTION TO THE CALIFORNIA SUPREME COURT

ORDER

This appeal requires us to determine the extent to which a bankruptcy estate may reach a beneficiary’s interest in a spendthrift trust under the California Probate Code. The beneficiary claims that California Probate Code section 15306.5 caps the bankruptcy estate’s access at 25 percent of his trust interest, which consists entirely of payments from principal. The bankruptcy trustee, on the other hand, seeks to reach more than 25 percent of the beneficiary’s interest under Probate Code sections 15301(b) and 15307, which it reads as not subject to the section 15306.5 cap.

We find no controlling precedent in the decisions of the California Supreme Court or Courts of Appeal. See Cal. R. Ct. 8.548(a)(2) (permitting certification where there is “no controlling precedent” from the state court); Sullivan v. Oracle Corp., 557 F.3d 979, 983 (9th Cir.2009) (order) (looking to decisions of California appellate courts). Nor has our court considered the interplay between section 15306.5 and other Probate Code sections governing creditors’ access to spendthrift trusts. We held in Neuton v. Danning (In re Neuton), 922 F.2d…