Dumas

INTRODUCTION

Dorothy and John Mantle were married in June of 1985. John filed a petition for dissolution of marriage in October of 1990, and a petition for bankruptcy in July of 1993, before the marriage was dissolved. After John filed for divorce, but before he filed for bankruptcy, the couple sold their community property house. The bankruptcy court determined that the proceeds from the sale of the house were community property and property of the bankruptcy estate pursuant to 11 U.S.C. § 541 (a)(2).

The Bankruptcy Appellate Panel (“BAP”) reversed and remanded, holding that since Dorothy was entitled to reimbursement for her separate property contribution to the downpayment on the community property house under Cal. Fam.Code § 2640, 2 it was not proper to characterize the entire proceeds from the sale of the house as community property. According to the BAP, the community property which was property of the bankruptcy estate pursuant to § 541(a)(2) included the proceeds from the sale of the community property house, minus the amount owed Dorothy as reimbursement of her separate property.

The trustee of the bankruptcy estate now appeals. The sole issue on appeal is whether…