## Facts

- Cochise College Park, Inc., an Arizona land developer, sold subdivision lots nationwide primarily through installment land-sale contracts with small down payments and multi-year monthly payments.
- Sale documentation typically included a land-sale contract, promissory note, warranty deed, and sometimes a mortgage; Cochise generally promised to deliver a warranty deed upon full payment and to build improvements such as streets and utilities.
- In 1972, Cochise entered bankruptcy; Wallace Perry was appointed trustee.
- Perry obtained a bankruptcy court order, without notice to a class of lot purchasers, authorizing him to collect purchasers’ monthly installment payments and use them to pay bankruptcy estate administrative expenses, including trustee fees.
- Perry demanded continued payments from purchasers and threatened foreclosure for nonpayment.
- Purchasers (the Baldrian class) asserted that their payments were not unencumbered estate property and that Perry’s collection and use of the funds constituted fraud, negligence, and conversion warranting personal liability.
- The bankruptcy court granted summary judgment for Perry, concluding the payments were estate property and that Perry incurred no personal liability; the district court affirmed.

## Issues

1. Whether summary judgment was proper on the question whether purchasers’ installment payments were property of the bankruptcy estate, rather than subject to purchasers’ equitable interests or trust-based claims.
2. Whether the bankruptcy court applied correct legal standards in evaluating the trustee’s potential personal liability for fraud, negligence, or conversion arising from collecting and applying the purchasers’ payments.
3. Whether unresolved factual and mixed law-fact questions about the transactions and the trustee’s conduct precluded summary judgment.

## Decision

- The Ninth Circuit reversed the district court’s affirmance of summary judgment for the trustee and remanded.
- The court held that the lower courts may have reached improper conclusions about ownership of the installment payments given the transaction structure and purchasers’ possible equitable interests.
- The court held that incorrect legal standards were applied to assess the trustee’s alleged misconduct and potential personal liability.
- The court concluded that summary judgment was improper because material factual and legal questions remained regarding the nature of the purchasers’ interests and the trustee’s handling and use of collected funds.

## Legal Principles

- Determining “property of the estate” may require close examination of the full transactional structure and purchasers’ legal and equitable interests, not merely the nominal characterization of contracts and notes as debtor assets.
- Equitable doctrines (including constructive trust or related trust theories) may limit an estate’s claim to funds collected from purchasers under installment land-sale arrangements, depending on the facts and applicable state-law interests.
- A bankruptcy trustee’s reliance on a court order may provide protection, but it does not automatically bar personal liability where the trustee acts outside the order’s scope, breaches fiduciary duties, or procures the order through misrepresentation.
- Summary judgment is inappropriate where ownership of funds and trustee-liability theories turn on unresolved factual questions and mixed questions of law and fact.

## Conclusion

The Ninth Circuit required renewed proceedings because the purchasers’ installment payments could not be treated as categorically unencumbered estate property on the existing record, and because the bankruptcy court used flawed standards to assess whether the trustee could face personal liability for his collection and use of those payments despite a court order.


Hall v. Perry (In re Cochise Coll. Park, Inc.), 703 F.2d 1339 (9th Cir. 1983)