In White v. Mazella-White, 60 A.D.2d 1047 (2d Dep’t 2009), the wife filed for bankruptcy during the course of a matrimonial action and the bankruptcy trustee appointed by the U.S. Bankruptcy Court appeared in the divorce action in the wife’s place, arguing that he possessed any interest the wife might have to equitable distribution of marital property. The bankruptcy trustee then entered into a stipulation of settlement with the husband settling the wife’s equitable interest in the marital residence for $85,000.Â
The Appellate Division determined that the Supreme Court wrongly denied the wife from being heard on the question of equitable distribution of the marital residence and wrongly permitted the trustee to enter into the stipulation on behalf of the wife. Though the order of the U.S. Bankruptcy Court appointed the trustee in bankruptcy and authorized him to appear in the parties’ matrimonial action on behalf of the bankruptcy estate, at that point in the litigation, a judgment had not yet been obtained in the matrimonial action. As a result, the Court determined that any interest that the wife may have had in marital property had not yet vested in the bankruptcy estate and the trustee had no power to relinquish the wife’s equitable distribution rights.
