Sharp v. Dery case brief

Sharp v. Dery
253 B.R. 204 (E.D. Mich. 2000)

Facts: Debtor filed a Chapter 7 petition on Dec 21, 1998. On Feb.22, 1999, he received a bonus check from his employer for $11,331.63.

Issues: Was the post-petition bonus the property of estate? Did Debtor have an enforceable right to receive the bonus check when he filed his petition?

Procedural History: The bankruptcy court held that it was the property of estate, because the employer had no discretion as to the amount and timing of any bonus, since the bonus was based on a percentage of the employer’s salary. This court thought that though the employer had no discretion on amount and timing, it could decide not to give any bonus.

Holding: No, the Debtor had no enforceable right to the bonus when he filed a petition. The employer, as of the date the debtor filed for bankruptcy, could have decided not to pay any bonus at all under the terms of the bonus plan itself.

How to argue the future bonus is the property of estate? It is for the service rendered. But the courts may think the debtor has not been vested these benefits.

Principle: When post-petition income is dependent upon the continued services of the debtor subsequent to the petition, the amounts do not constitute property o the estate.


---

Interested in learning how to get the top grades in your law school classes? Want to learn how to study smarter than your competition? Interested in transferring to a high ranked school?