The Chapter 7 Trustee, John S. Lovald, appealed the bankruptcy court’s entry of a judgment in favor of the Defendants on his complaint seeking turnover under Section 542 of the Bankruptcy Code of money allegedly owed to the bankruptcy estate.
On November 12, 2009, the Trustee filed a complaint under Section 542 against the Defendants to recover rent for the pasture and the value of the hay provided to the probate estate’s cattle. The Trustee argued in his complaint that the Defendants were liable to the bankruptcy estate under an unjust enrichment theory. After conducting a trial on the matter, the bankruptcy court entered judgment in favor of the Defendants. The bankruptcy court held, inter alia, that the Defendants were not unjustly enriched because the Debtor was appropriately compensated for pasturing and feeding the estate’s cattle because the family settlement agreement under which the parties were operating provided that the Debtor was entitled only to the “net” profits from the estate’s cattle, which would necessarily reflect the cost of feeding and maintaining the cattle.
The Bankruptcy Appellate Panel found no clear error in the bankruptcy court’s determination that the Defendants were not unjustly enriched, and therefore not indebted to the bankruptcy estate, and affirmed on the more fundamental ground that the relief sought by the Trustee was beyond the scope of Section 542.
Affirmed.
