In Re Samir B. Tleel Lupana Tleel, Debtors Joseph N. Chbat v. Samir B. Tleel Lupana Tleel Robert A. Fischer, Trustee

The bankruptcy court granted summary judgment on behalf of Robert N. Fischer (the “Trustee”), trustee of the estate of Samir B. Tleel and Lupana Tleel (“debtors”). The Bankruptcy Appellate Panel (“BAP”) affirmed, 79 B.R. 883 (1987). Both courts ruled that, because of. the Trustee’s “strong arm” powers under 11 U.S.C. § 544 (a)(3), as a matter of law Joseph N. Chbat (“Chbat”) can demonstrate no interest in a certain parcel of real property (the “Property”) which would remove the Property from the debtors’ estate. Chbat contends that he is entitled to a constructive trust on the proceeds of the sale of the Property and that the “strong arm” provision of 11 U.S.C. § 544 (a)(3) does not “override” 11 U.S.C. § 541 (d). We review the bankruptcy court’s conclusions of law de novo. In re Probasco, 839 F.2d 1352 , 1353-54 (9th Cir.1988).

BACKGROUND

Debtors, Chbat, and two other parties acquired the Property in August of 1978. A month later, debtors bought out the interests of the co-owners and sold the Property to a third party (the “Purchaser”) by entering into a land sale contract. Under the contract, debtors retained legal title to the Property and the Purchaser was required to make…