JAMES J. GIBSON & DR. LORI G. GIBSON v. WACHOVIA BANK

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
MOTION AND, IF FILED, DETERMINED
IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT
JAMES J. GIBSON and LORI G. )
GIBSON, )
)
Appellants, )
)
v. ) Case No. 2D16-5632
)
WELLS FARGO BANK, N.A., as )
successor by merger to Wachovia Bank, )
)
Appellee. )
)
Opinion filed July 13, 2018.
Appeal from the Circuit Court for
Hillsborough County; Robert A. Foster, Jr.,
Judge.
Jennifer E. Jones of McIntyre Thanasides
Bringgold Elliott Grimaldi & Guito, P.A.,
Tampa; and Shyamie Dixit and Robert L.
Vessel of the Dixit Law Firm, P.A., Tampa,
for Appellant Lori Gibson.
Amy J. Winarksy of Marcadis Singer, P.A.,
Tampa, for Appellant James J. Gibson.
Ryan W. Owen of Adams and Reese, LLP,
Sarasota, for Appellee.
LaROSE, Chief Judge.
Dr. Lori and James Gibson appeal the final summary judgment entered in
favor of judgment creditor, Wells Fargo Bank, N.A, in proceedings supplementary. We
have jurisdiction. See Fla. R. App. P. 9.030(b)(1)(A). We must determine whether,
under Florida law, a creditor may satisfy a debt incurred by one spouse by garnishing a
federal tax refund issued in both spouses' names and deposited in their joint checking
account. Florida law compels us to conclude that the joint tax refund is tenancy by the
entirety (TBE) property not subject to garnishment. Thus, we reverse.
Background
In December 2009, Wachovia Bank sued Mr. Gibson for breach of a
promissory note that he, alone, executed in March 2008. The parties stipulated to the
entry of a final judgment in favor of Wachovia for over one million dollars.
Following entry of final judgment, the Gibsons filed amended joint federal
tax returns for tax years 2003 through 2006, seeking retroactive reduction in their tax
burden. See American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5, at
§ 1211, 123 Stat. 115 (2009) (amending section 172(b)(1)(H) of the Internal Revenue
Code to extend the carryback period to up to five years for 2008 net operating losses
incurred by an eligible small business). Based upon these returns, the Internal
Revenue Service issued two tax refund checks; one in June 2011 and the other in April
2014. Each check was payable to both Mr. Gibson and his wife, Dr. Gibson. The
refund checks totaled over two million dollars. The Gibsons deposited both checks into
their joint account at SunTrust Bank. The parties agree that the Gibsons held the
SunTrust account as TBE property.
In October 2014, Wells Fargo Bank, as successor by merger to Wachovia,
moved to garnish the SunTrust account. Wells Fargo sought proceedings
supplementary under section 56.29, Florida Statutes (2014), and moved to implead Dr.
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Gibson as a party. Wells Fargo alleged that it could execute on the federal tax refunds
in the account to satisfy Mr. Gibson's outstanding judgment.
The trial court granted Wells Fargo's motions for proceedings
supplementary and impleader. Thereafter, Wells Fargo moved for summary judgment.
The Gibsons opposed the motion and filed their own summary judgment motion,
arguing that they held the joint federal tax refunds as TBE. They also maintained that
the refunds related to tax years prior to execution of the 2008 promissory note.
The trial court granted Wells Fargo's motion and denied the Gibsons'
motion. The trial court found that the refunds "were attributable solely to [Mr. Gibson]'s
economic activities." Further, the trial court was persuaded by Wells Fargo's argument
that, because the IRS has the ability to apportion tax refunds to each individual spouse,
issuance of the joint tax refund checks did not establish TBE property. The trial court
entered a final summary judgment providing that Wells Fargo could recover from Dr.
and Mr. Gibson "jointly and severally and as tenants by the entireties, the sum of
$1,310,491.78" from the SunTrust Account.
Analysis
On appeal, the Gibsons argue that the joint tax refunds, issued in both of
their names and deposited in their joint bank account, are TBE property. Therefore,
Wells Fargo, a creditor to only Mr. Gibson, cannot reach those funds to satisfy his
individual debt. Although they acknowledge that the IRS has statutory authority to
attach TBE property in certain circumstances, the Gibsons contend that third-party
creditors, such as Wells Fargo, lack such authority. The trial court, in their view, erred
in ruling for Wells Fargo.
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A movant is entitled to summary judgment "if the pleadings,
depositions, answers to interrogatories, admissions,
affidavits, and other materials as would be admissible in
evidence on file show that there is no genuine issue as to
any material fact and that the moving party is entitled to a
judgment as a matter of law."
Estate of Githens ex rel. Seaman v. Bon Secours-Maria Manor Nursing Care Ctr., Inc.,
928 So. 2d 1272, 1274 (Fla. 2d DCA 2006) (quoting Fla. R. Civ. P. 1.510(c)). The
parties agree that there are no material facts in dispute. Thus, we review the trial
court's entry of summary judgment as a pure question of law. Our review is de novo.
See Shaw v. Tampa Elec. Co., 949 So. 2d 1066, 1069 (Fla. 2d DCA 2007) ("The
general 'standard of review governing a trial court's ruling on a motion for summary
judgment posing a pure question of law is de novo.' " (quoting Major League Baseball v.
Morsani, 790 So. 2d 1071, 1074 (Fla. 2001))).
Finding its origins in paternalistic ideas of property ownership, see First
Nat'l Bank of Leesburg v. Hector Supply Co., 254 So. 2d 777, 779 (Fla. 1971) ("The
historic basis for the [TBE] was the assumed incapacity of married women to hold
property individually."), TBE's theoretical underpinnings suit a contemporary ethos.
Indeed, "the distinctive feature of a tenancy by the entireties, that husband and wife hold
property as an indivisible unit, renders this form of ownership equally well-suited to the
concept of modern-day marriage as a partnership between equals." See Beal Bank,
SSB v. Almand & Assocs., 780 So. 2d 45, 52 n.7 (Fla. 2001).
In Beal Bank, the Florida Supreme Court answered the following
rephrased certified question in the affirmative:
In an action by the creditor of one spouse seeking to garnish
a joint bank account titled in the name of both spouses, if the
unities required to establish ownership as a tenancy by the
entireties exist, should a presumption arise that shifts the
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burden to the creditor to prove that the subject account was
not held as a tenancy by the entireties?
Id. at 48. In so doing, the court eliminated any lingering distinctions between real
property and personal property held jointly by wife and husband. See Cacciatore v.
Fisherman's Wharf Realty Ltd. P'ship, 821 So. 2d 1251, 1253 (Fla. 4th DCA 2002)
("[Beal Bank] indicated that the time had come to eliminate that disparity and to accord
to personal property in general (not just bank accounts) the same presumption of
tenancy by the entireties when jointly owned by husband and wife as that accorded real
property jointly owned by husband and wife."). And, the court adopted a presumption
"shifting the burden to the creditor to prove by a preponderance of evidence that a
tenancy by the entireties was not created." Beal Bank, 780 So. 2d at 58-59 (footnote
omitted). Significantly, Beal Bank affirmed that "property held by husband and wife as
tenants by the entireties belongs to neither spouse individually, but each spouse is
seized of the whole." Id. at 53.
The court spoke broadly, finding strong policy considerations supporting a
tenancy-by-the-entireties presumption when "a married couple jointly owns personal
property." Id. at 57; see also In re Daniels, 309 B.R. 54, 59 (Bankr. M.D. Fla. 2004)
("[W]hile the court in Beal Bank explicitly addressed an issue involving only marital bank
accounts, the court also discussed in detail ownership issues surrounding marital
personal property in general and expressly concluded that strong policy reasons exist
for extending the tenancy by the entireties presumption to jointly owned marital personal
property, not just to financial accounts.").
Beal Bank noted that TBE property enjoys six unities:
(1) unity of possession (joint ownership and control);
(2) unity of interest (the interests in the account must be
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identical); (3) unity of title (the interests must have originated
in the same instrument); (4) unity of time (the interests must
have commenced simultaneously); (5) survivorship; and
(6) unity of marriage (the parties must be married at the time
the property became titled in their joint names).
780 So. 2d at 52 (footnote omitted). The unity of marriage is the unique quality of TBE
property. Id. ("Because of the sixth characteristic—unity of marriage—a tenancy by the
entireties is a form of ownership unique to married couples."); In re Franzese, 383 B.R.
197, 201 (Bankr. M.D. Fla. 2008) ("Tenancy by the entireties, as defined by applicable
Florida law, is a unique form of property ownership only married couples may enjoy.").
State law creates and defines property interests. Butner v. United States,
440 U.S. 48, 55 (1979). Federal tax law, on the other hand, "creates no property rights
but merely attaches consequences, federally defined, to rights created under state law."
United States v. Nat'l Bank of Commerce, 472 U.S. 713, 722 (1985) (quoting United
States v. Bess, 357 U.S. 51, 55 (1958)). Under Florida law, special protections
assigned to TBE property which are not afforded to other forms of property ownership
underscore the distinctiveness of TBE property. For example, and particularly relevant
for us, "[f]unds owned by a husband and wife as tenants by the entireties are 'beyond
the reach of a creditor of either one of the tenants. Such funds are immune from
garnishment except where the debt was incurred by both spouses.' " Branch Banking &
Tr. Co. v. Ark Dev./Oceanview, LLC, 150 So. 3d 817, 821 (Fla. 4th DCA 2014) (quoting
Antuna v. Dawson, 459 So. 2d 1114, 1116-17 (Fla. 4th DCA 1984)).
[I]f property is held as a joint tenancy with right of
survivorship, a creditor of one of the joint tenants may attach
the joint tenant's portion of the property to recover that
joint tenant's individual debt. However, when property is
held as a tenancy by the entireties, only the creditors of both
the husband and wife, jointly, may attach the tenancy by
the entireties property; the property is not divisible on behalf
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of one spouse alone, and therefore it cannot be reached to
satisfy the obligation of only one spouse.
Beal Bank, 780 So. 2d at 53 (emphasis added) (citation omitted); accord In re
Benzaquen, 555 B.R. 63, 66 (Bankr. S.D. Fla. 2016) ("[P]roperty held as TBE can only
be attached by joint creditors of both a husband and wife." (citing Beal Bank, 780 So. 2d
at 45)).
The Gibsons filed their tax returns jointly as husband and wife. They
argue that "once the check was issued, both Dr. Gibson and her husband [possessed
the six unities of TBE property]." We agree. It is important, however, to focus on the
antecedent act of filing joint returns. We assess, initially, whether TBE status can attach
to the anticipated receipt of a tax refund.
The field of bankruptcy law provides the key. "While a debtor may not
obtain a refund until the tax year closes, the predicates for receiving the refund may
occur prior to filing the bankruptcy petition." In re Uttermohlen, 506 B.R. 142, 148
(Bankr. M.D. Fla. 2012) (citing In re Witko, 374 F.3d 1040, 1043 (11th Cir. 2004)).
"Thus, a debtor possesses 'an existing interest [in the refund] at the time of filing even
though his enjoyment of that interest was postponed.' " Id. (alteration in original)
(quoting In re Witko, 374 F.3d at 1043). Naturally, therefore, by filing jointly, the
Gibsons had an expectation of a refund that satisfied the requisite unities of TBE
property. See id. ("The Court finds that the Uttermohlens had an interest in the
prospective refund at the time of filing and the law presumes that they intended to
possess that interest as TBE. They evinced that intent by filing a joint tax refund
making them jointly and severally responsible for any tax liability, and received a refund
check in both their names."). And once the checks were issued, because either party
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could have deposited them, the unity of survivorship was satisfied. Cf. § 735.302(1)(a),
Fla. Stat. (2014) (providing for the disposition of a federal income tax refund by a
surviving spouse).
We are not persuaded by Wells Fargo's efforts to draw the line between
the issuance of the refund checks, in the first instance, and their subsequent deposits in
the Gibsons' joint account. This temporal legerdemain is insufficient to undermine our
determination that the refunds were TBE property. When TBE property is established,
its subsequent transfer to another asset does not terminate the unities of title or
possession. See Passalino v. Protective Grp. Sec., Inc., 886 So. 2d 295, 297 (Fla. 4th
DCA 2004) ("Transferring the proceeds of the sale of entireties property to a trustee for
the benefit of the husband and wife does not terminate the unities of title or possession,
where the parties clearly intended their property to be held as a tenancy by the
entireties by exercising beneficial ownership of the property and controlling the
property's disposition."). The Gibsons possessed an interest in their prospective
refunds as TBE property at the time they filed their amended joint returns. That interest
continued intact following issuance of the checks and their deposits into their joint back
account.1
Wells Fargo argued to the trial court that the tax code's treatment of
refunds, and the IRS's statutory authority to impose tax liens, control any determination
of whether the tax refunds are TBE property. See 26 U.S.C.§§ 6321 ("If any person
liable to pay any tax neglects or refuses to pay the same after demand, the amount
1As underscored by Florida law, "[a]ny deposit or account made in the
name of two persons who are husband and wife shall be considered a tenancy by the
entirety unless otherwise specified in writing." § 655.79(1), Fla. Stat. (2014). Our
record is devoid of a writing specifying otherwise.
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(including any interest, additional amount, addition to tax, or assessable penalty,
together with any costs that may accrue in addition thereto) shall be a lien in favor of the
United States upon all property and rights to property, whether real or personal,
belonging to such person."), 6402(a) (2012) ("In the case of any overpayment, the
Secretary . . . may credit the amount of such overpayment, including any interest
allowed thereon, against any liability in respect of an internal revenue tax on the part of
the person who made the overpayment and shall . . . refund any balance to such
person."). Wells Fargo claimed that because the IRS may apportion tax refunds to each
spouse, the joint tax refund checks issued to the Gibsons were not TBE property.
The argument is unavailing. Whatever rules apply to the IRS do not
necessarily apply to a creditor such as Wells Fargo. "[W]e are, of course, not bound by
the [Middle District]'s decisions on questions of Florida law." Liberty Am. Ins. Co. v.
Kennedy, 890 So. 2d 539, 541 (Fla. 2d DCA 2005) (citing Int'l Ass'n of Bridgeworkers v.
Blount Int'l, Ltd., 519 So. 2d 1009, 1012 (Fla. 2d DCA 1987), for the "holding that state
courts, in construing and interpreting state law, are not bound by the decisions of
federal courts"). However, we find Judge Covington's cogent analysis in Uttermohlen,
which presents a similar factual scenario as that presented in our case, compelling.
Uttermohlen filed for bankruptcy protection. Uttermohlen, 506 B.R. at 144.
He later amended his petition to claim a tax refund of over $10,000, issued to him and
his wife jointly, as exempt property. Id. The bankruptcy trustee unsuccessfully objected
to the exemption. Id. The district court affirmed the bankruptcy court's order on appeal.
Id.; see also 28 U.S.C. § 158(a)(1) (2006) (conferring appellate jurisdiction upon district
courts of a bankruptcy court's "final judgments, orders, and decrees").
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Judge Covington began her analysis by noting that, under Beal Bank,
policy considerations favored the presumption that personal property owned jointly by a
married couple is TBE property. Uttermohlen, 506 B.R. at 146. She then discussed In
re Sinnreich, 391 F.3d 1295 (11th Cir. 2004), and United States v. Craft, 535 U.S. 274
(2002), in a manner that undermines Wells Fargo's position:
[In Sinnreich], a creditor sought to reach assets
owned by the debtor and his non-filing spouse as TBE,
applying the rationale of United States v. Craft, 535 U.S.
274, 122 S. Ct. 1414, 152 L. Ed. 2d 437 (2002). In Craft, the
Supreme Court held that because each spouse had certain
individual rights in TBE property that fell within the meaning
of property defined by the Internal Revenue Code, the IRS
may attach a lien to TBE property. Id. at 282. In Sinnreich,
the Eleventh Circuit declined to extend the holding in Craft to
other creditors, finding that the IRS had 'unique powers' to
attach a lien to TBE property. 391 F.3d at 1297. Otherwise,
the TBE protection afforded by the Bankruptcy Code would
be rendered superfluous. Id. at 1298.
Uttermohlen, 506 B.R. at 147; see also Sinnreich, 391 F.3d at 1298 ("Simply stated, the
Craft Court announced the rule that the IRS's federal statutory powers to tax and attach
liens to property trumped any state property rights afforded to a taxpayer who holds
property by the entireties with her spouse. The Craft Court gave no indication that its
holding could be extended beyond a tax collection context . . . . "). Judge Covington
then observed that other courts, too, had found that federal law "create[d] a narrow
exception allowing only the IRS to defeat the unity of interest that is presumed to exist
under Beal Bank." Uttermohlen, 506 B.R. at 147 (quoting In re Newcomb, 483 B.R.
554, 558 (Bankr. M.D. Fla. 2012) (unpublished memorandum opinion)). Other creditors
enjoy no such special status.
Some Florida bankruptcy court decisions are not in accord with
Uttermohlen. See, e.g., In re Morine, 391 B.R. 480, 482 (Bankr. M.D. Fla. 2008)
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("Because the refund is attributable solely to the Debtor's income and not to his non-
debtor spouse, the interest in the refund check only belongs to the Debtor."); In re Kant,
21 Fla. L. Weekly Fed. B59 (Bankr. M.D. Fla. Apr. 12, 2006) ("[A] husband and wife may
not have the unity of interest in a tax refund that is necessary for a tenancy by the
entireties."); accord In re Ascuntar, 487 B.R. 319, 322-23 (Bankr. S.D. Fla. 2013)
(reasoning that the debtor could not establish TBE ownership of the refund because
there was no unity of interest and concluding that, unless the tax refund is received
prepetition and deposited into a TBE account, the expected future income existing on
the filing of the individual's bankruptcy petition is not owned as TBE with his or her
spouse); In re Rice, 442 B.R. 140, 143-44 (Bankr. M.D. Fla. 2010). Contra In re Smith,
26 Fla. L. Weekly Fed. B111 (Bankr. M.D. Fla. Feb. 18, 2016) (finding Ascuntar's
"holding inconsistent with the fact that there is a presumption in favor of ownership of a
joint tax refund as TBE when owned by a married couple, as well as, the decision . . . in
In re Sinnreich, 391 F.3d 1295 (11th Cir. 2004)" and "[i]nstead, . . . adopt[ing] the
reasoning and holding . . . of In re Newcomb, 483 B.R. 554, 558 (Bankr. M.D. Fla. 2012)
. . . find[ing] the refund is presumably held as TBE by the Debtors and the Trustee has
failed to rebut this presumption").
As explained in Newcomb, however, the reasoning behind Morine and
Kant and their progeny is questionable:
If creditors other than the IRS were permitted to rely
on the IRS's authority to allocate a portion of a joint tax
refund to individual spouses as the basis for rebutting the
tenancy by the entirety presumption, then a debtor could
never establish a tenancy by the entirety in a joint tax refund.
Whether a debtor contributed all (as in Kant and Morine),
none, or a portion of the overpayment, the joint tax refund
would always be subject to attack by any creditor of just one
of the spouses, with the allocation based on 26 U.S.C. §
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6402(a). Such a result runs contrary to the limitations
imposed by Sinnreich and to the presumption of entirety
property afforded by Beal Bank.
Newcomb, 483 B.R. at 558.
We agree. Under Florida law, the Gibsons were entitled to a rebuttable
presumption that the tax refunds were TBE property. See Beal Bank, 780 So. 2d at 57
(recognizing that "strong[] policy considerations favor allowing [a] presumption in favor
of a tenancy by the entireties when a married couple jointly owns personal property").
They demonstrated their intent to receive the refunds as TBE property by filing
amended joint tax returns and receiving joint refund checks. Whether the refunds were
related to Mr. Gibson's economic activity, alone, is irrelevant. See Newcomb, 483 B.R.
at 558. They then deposited the checks into their joint bank account. In our view, their
actions created the rebuttable presumption. See § 655.79(1), Fla. Stat. (2014); see also
Beal Bank, 780 So. 2d at 58 ("[W]e hold that as between the debtor and a third-party
creditor (other than the financial institution into which the deposits have been made), if
the signature card of the account does not expressly disclaim the tenancy by the
entireties form of ownership, a presumption arises that a bank account titled in the
names of both spouses is held as a tenancy by the entireties as long as the account is
established by husband and wife in accordance with the unities of possession, interest,
title, and time and with right of survivorship."). Wells Fargo failed to rebut the
presumption.
Wells Fargo urges us to hew to the decision in Hundley v. Marsh, 944
N.E.2d 127 (Mass. 2011). Wells Fargo's reliance on that case is misplaced. In
Hundley, the United States Court of Appeals for the First Circuit certified to the Supreme
Judicial Court of Massachusetts the question of how an income tax refund was to be
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apportioned between a debtor in bankruptcy and his nondebtor wife with whom he had
filed a joint tax return. Id. at 129. "Hundley dealt with the appropriate formula under
state law for allocating the ownership of an income tax refund between spouses when
the applicable state statute was silent on the issue." In re Provencal, 09-42728-MSH,
2011 WL 2470614, at *1 (Bankr. D. Mass. June 21, 2011).
Beal Bank is not silent, as was the status of Massachusetts law in
Hundley. Thus, Wells Fargo's reliance upon Hundley underscores the trial court's error.
Despite the TBE presumption established in Beal Bank, the trial court mistakenly
allowed Wells Fargo, a creditor to only Mr. Gibson, to seek execution on TBE assets by
claiming an authority reserved exclusively to the IRS. See Sinnreich, 391 F.3d at 1298.
Hundley's analysis began with the observation that "[a]s a matter of Federal law, the
right to a refund resulting from loss-carryback of prepetition losses constitutes property
of the estate. Accordingly, any interest that the husband in this case may have in the
joint refund is properly in the trustee's possession." 944 N.E.2d at 130 (citations
omitted). Wells Fargo is not the IRS and lacks the IRS's special authority under the
Internal Revenue Code. To allow otherwise would be to countenance the evisceration
of the protections afforded TBE property discussed in Uttermohlen. Thus, Hundley is
inapposite.
Conclusion
We reverse the trial court's entry of summary judgment in favor of Wells
Fargo and remand for further proceedings consistent with this opinion.
Reversed and remanded.
SILBERMAN and SALARIO, JJ., Concur.
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