Sliney v. Battley (In re Schmitz) - 270 F.3d 1254 (9th Cir. 2001)

Rule:

An expectancy does not rise to the level of a "legal or equitable interest" in property such that it might be considered property of the estate under 11 U.S.C.S. § 541(a)(1).

Facts:

Debtor fisherman filed for bankruptcy a year-and-a-half before the Secretary of Commerce promulgated regulations creating post-filing fishing quota rights based on the fisherman's pre-filing catch history. The bankruptcy judge ruled that in light of the ongoing federal activity to implement a sablefish management plan and the advanced stage in bringing that to fruition at the time the fisherman filed his bankruptcy petition - even though the plan had not yet been adopted - Individual Fishing Quotas (IFQs) and Quota Shares (QSs) were tied to the fisherman's prepetition qualifying rights from the 1988-1990 fishing seasons. The bankruptcy court accordingly granted partial summary judgment for the trustee, holding that the QS/IFQs were property of the bankruptcy estate and it revoked the fisherman's discharge.

Issue:

Were the QS/IFQs the property of the bankruptcy estate? 

Answer:

No.

Conclusion:

On appeal, the court held that the quota rights were not property of the bankruptcy estate because the regulations did not exist at the time the debtor filed his petition; and although the quota rights were calculated on the basis of the debtor's pre-filing fishing history, they governed his post-filing right to fish. Accordingly, the decision of the bankruptcy appellate panel was reversed, and the case was remanded.