                            UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT


                            No. 09-2344


PEGGY S. LEVIN, Trustee,

                Plaintiff - Appellant,

           v.

WACHOVIA BANK; DAVID STROEHMANN, SR.; SAM WOLCOTT,

                Defendants - Appellees.



Appeal from the United States District Court for the Eastern
District of North Carolina, at Raleigh.   Terrence W. Boyle,
District Judge. (4:09-cv-00087-BO)


Argued:   March 23, 2011                  Decided:   June 28, 2011


Before MOTZ and WYNN, Circuit Judges, and Ronald Lee GILMAN,
Senior Circuit Judge of the United States Court of Appeals for
the Sixth Circuit, sitting by designation.


Affirmed by unpublished opinion. Judge Wynn wrote the opinion,
in which Judge Motz and Senior Judge Gilman concurred.


ARGUED: William Peak Janvier, EVERETT, GASKINS, HANCOCK &
STEVENS, Raleigh, North Carolina, for Appellant.     Michael J.
Parrish, WARD & SMITH, PA, New Bern, North Carolina, for
Appellees. ON BRIEF: James M. Hash, EVERETT, GASKINS, HANCOCK &
STEVENS, Raleigh, North Carolina, for Appellant.        Paul A.
Fanning, WARD & SMITH, PA, Greenville, North Carolina, for
Appellees.
Unpublished opinions are not binding precedent in this circuit.




                                2
WYNN, Circuit Judge:

       This    case      requires     us    to    determine   whether    a    debtor’s

remainder interests in the corpus of two spendthrift trusts are

property of his bankruptcy estate.                   The bankruptcy court ruled

that they were; on appeal, the district court ruled that they

were   not.        For     the    reasons   explained     below,    we   believe   the

district court is correct that the debtor’s remainder interests

are    not    part    of    his    bankruptcy      estate,    and   consequently    we

affirm the judgment of the district court.



                                             I.

       By a trust instrument dated November 23, 1976, Gertrude S.

Stroehmann created a trust (the “1976 trust”) for the benefit of

her two children and their issue.                  The corpus of the 1976 trust

was first divided into two equal shares: one for the benefit of

Harold Stroehmann, Jr. (“Harold, Jr.”) and his issue, and one

for the benefit of David Stroehmann, Sr. (“David, Sr.”), and his

issue.       The David, Sr. share was further divided into separate

shares       for   the     benefit     of    his    two   children,      J.    Kathryn

Stroehmann and David Stroehmann, Jr. (“David, Jr.”), the debtor

in this case.

       Wachovia Bank, N.A. is the sole trustee of the 1976 trust.

The 1976 trust grants the trustee the power to distribute income

and principal in its “sole and absolute discretion.”                          The only

                                             3
mandatory distribution occurs at the trust’s termination, when

the remaining principal and retained income are to be paid to

the named beneficiaries.            The instrument provides that the trust

shall continue until the death of the last to die of Harold, Jr.

and David, Sr..       Harold, Jr. has already died.

        The 1976 trust contains a spendthrift provision.                           Article

XII states that “[t]he interest of any beneficiary in the corpus

or    income   of    any    trust   shall       not   be    subject    to    assignment,

alienation, pledge, attachment, or claims of creditors and shall

not    otherwise     be     voluntarily         or    involuntarily        alienated    or

encumbered     by    such    beneficiary.”            The   value     of    the   debtor’s

share of the corpus of the 1976 trust was valued at $684,285.77

as of January 6, 2009.

       A second trust (the “Will trust”) was created by the terms

of the Last Will and Testament of Gertrude S. Stroehmann, which

was executed on November 18, 1987.                      A residuary clause in the

Will directed that the residue of the estate be divided into two

equal shares to be held in trust.                        One of these shares was

divided further between David, Sr., and his children.                               David,

Jr., the debtor in this case, is one of the children of David,

Sr., and therefore a beneficiary of the Will Trust.

       Defendants David, Sr., Samuel Wolcott, and Wachovia Bank,

N.A.,    are   the    trustees      of   the     Will      Trust.     The    Will    trust

mandates   that      the    trustee      make    distributions        of    all   the   net

                                            4
income     of   a        grandchild’s       share      in     at     least      quarterly

installments.       It    further    states     that     a    trustee     has   absolute

discretion to invade the principal for the medical expenses,

support, and education of the beneficiaries.

      The Will trust also contains a spendthrift provision.                          The

“Protective Provision” of the Will Trust states:

      I direct that all legacies and all shares and
      interests in my estate and any property appointed
      under this will, whether principal or income, while in
      the hands of my personal representatives, trustees or
      the guardians of property, shall not be subject to
      attachment, execution, or sequestration for any tort,
      debt, contract, obligation or liability of any legatee
      or beneficiary and shall not be subject to pledge,
      assignment, conveyance or anticipation.

The trustees of the Will trust are directed to pay out, in full,

a grandchild’s remaining share when that grandchild reaches the

age   of   forty-five       years    old.       If   a      grandchild     dies   before

reaching that age, the grandchild’s remaining interest passes to

other beneficiaries named in the Will trust.

      A codicil to the Will, dated March 10, 1988, modifies this

last provision, making the grandchild’s interest pass to the

grandchild’s estate.              The codicil further provides that “[n]o

principal or income of any grandchild’s trust may be used for

any   person    other      than    the   grandchild         for    whom   held . . . .”

David, Jr. was born on March 2, 1965 and reached the age of




                                            5
forty-five on March 2, 2010. 1           The debtor’s interest in the

principal of the Will trust had a value of $299,581.31 as of

January 6, 2009.

      David, Jr., filed a Chapter 7 petition for bankruptcy on

June 12, 2007.       Plaintiff Peggy S. Levin, the Chapter 7 Trustee

appointed to David, Jr.’s case, filed an adversary proceeding on

March 14, 2008.       Plaintiff asked the bankruptcy court to order

Defendants to turn over all amounts distributed to the debtor

under “the Stroehmann Trust” since the filing of the petition,

including the    principal    of   the   trust,   and   all   future   income

generated by the trust. 2      Defendants filed a motion to dismiss

the complaint on June 18, 2008.

      The bankruptcy court conducted a hearing on July 10, 2008.

In a subsequent order, the bankruptcy court reasoned that the

1976 trust gives the debtor separate interests in the trust: (1)

an interest in the income from the trust during the life of the

trust, (2) an interest in the principal during the life of the

trust, and (3) a future interest in the principal that must be

paid to the debtor upon the termination of the trust.              Later in

the   order,   the    bankruptcy   court   recognized     the   latter   two

      1
       The Will trust therefore terminated, at least with regard
to the debtor’s share, during the pendency of this appeal.
      2
       The initial complaint does not distinguish between the two
trusts, but names all three Defendants as trustees.



                                     6
interests as two aspects of the same thing; the debtor’s right

to receive principal is divided into: (1) the present right to

receive     disbursements          of    principal         at    the       discretion       of   the

trustees,      and     (2)    the       future        right       to       receive     mandatory

distribution of principal upon termination of the trust.

      Ultimately, the bankruptcy court granted Defendants’ motion

to   dismiss    as     to    the    debtor’s         right       to    receive        income     and

principal     distributions         during          the    life       of    the   trust. 3       The

bankruptcy court denied, however, the motion to dismiss “as to

the debtor’s future remainder interest in the trust principal,”

finding that such an interest “is a separate property interest

of   the    debtor     that    is       property          of    the    bankruptcy       estate.”

Defendants filed a motion for summary judgment on January 9,

2009.      Plaintiff filed a motion for summary judgment on January

12, 2009.

      During    the     course      of    the       proceedings,            Plaintiff       learned

that the debtor was the beneficiary of another trust, the Will

trust (discussed above).                 With leave of the bankruptcy court,

Plaintiff      filed    an    amended       complaint             on       February    2,    2009,

requesting an order that Defendants turn over all amounts paid

since the filing of the petition under the 1976 trust and the

      3
       Both the bankruptcy court and the district court found
these interests protected by a valid spendthrift provision.
Plaintiff does not challenge this ruling on appeal.



                                                7
Will trust, all future amounts to be paid under either trust,

and   declaring       that    the    debtor’s       interest       in    both    trusts     is

property of the bankruptcy estate.                    Defendants filed answers to

the   amended    complaint          and    filed     another      motion     for    summary

judgment.

      In an order entered on March 30, 2009, the bankruptcy court

referred to its previous order regarding only the 1976 trust and

recognized that “[t]his is the same issue previously determined

in    this    case,     only        with    relation        to    a     different       trust

agreement.”      Consistent with its previous order, the bankruptcy

court     granted      Plaintiff          summary     judgment         insofar     as     “the

debtor’s remainder interests in both trusts are property . . .

that belong[s] to the bankruptcy estate.”                         The bankruptcy court

granted      Defendants      summary       judgment    “to       the    extent     that    the

income and principal distributions during the life of the trusts

are not property of the bankruptcy estate.”

      Defendants appealed to the district court.                            The district

court     reversed      the    bankruptcy           court,       concluding      that      the

debtor’s      “future    remainder         interest    in    the       principal     of    the

Trusts is protected by a valid spendthrift provision.”                              Wachovia

Bank,     N.A.   v.     Levin,       419    B.R.     297,    303        (E.D.N.C.       2009).

Plaintiff appealed to this Court.




                                              8
                                              II.

      Initially we address a question of justiciability raised by

Defendants.          Defendants         argue       that    this      appeal    should     be

dismissed      as    moot     since      provisions         in     both    trusts   permit

distribution of the entire principal prior to termination.

      This Court has recognized that “when, pending appeal, an

event occurs, without the fault of the defendant, that makes it

impossible     for     the    court      to     grant      effective      relief    to    the

plaintiff,     should       the    plaintiff        prevail      on      the   merits,    the

appeal should be dismissed and the court should not proceed to

judgment.”          Cent. States, Se. and Sw. Areas Pension Fund v.

Cent. Transp., Inc., 841 F.2d 92, 95-96 (4th Cir. 1988).                                 “The

mootness doctrine is a limit on our jurisdiction that originates

in   Article    III’s       case   or    controversy         language.”          Townes    v.

Jarvis, 577 F.3d 543, 554 (4th Cir. 2009) (quotation marks and

brackets omitted), cert. denied, 130 S. Ct. 1883 (2010).                                    A

claim    is   not    moot,    however,        as    long    as     the    parties   have    a

concrete interest in the outcome of the litigation.                            In re Balt.

Emergency Servs. II, Corp., 432 F.3d 557, 560 n.* (4th Cir.

2005).

      In the present case, Defendants argue that provisions of

the trusts permit the trustees to disburse the entire principal

prior to the termination of the trusts.                          It follows, according

to Defendants, that a judgment for Plaintiff “would not lead to

                                               9
the recovery of any value for the benefit of [the debtor’s]

creditors.”        Brief of Appellees at 7-8.             Defendants conclude

from this that the harm allegedly suffered by Plaintiff cannot

be redressed by a favorable decision.

        Defendants do not, however, assert that as trustees they

have distributed the entire principal of the trusts.                        Indeed,

noticeably lacking from Defendants’ argument is any suggestion

that they have actually exercised their discretion under the

trust     provisions      that    they     claim     prevent    Plaintiff        from

obtaining redress.            Insofar as Plaintiff seeks to compel the

transfer of the debtor’s presently held remainder interests in

both     trusts,   the    case    is     not   rendered      moot    by   the    mere

possibility that they may later have no value.                  See In re Smith,

71 F.2d 378, 380 (9th Cir. 1934) (subsequent payment of trust

principal did not render appeal moot where question raised was

whether     debtor’s      remainder       interest     was     transferable        in

bankruptcy).

        Plaintiff observes in reply that the Will trust has already

terminated, and the debtor’s remainder interest in that trust is

now identifiable.         We do not believe this circumstance has any

bearing on the alleged mootness of this appeal.                     Insofar as the

parties    continue      to   dispute    the   debtor’s   entitlement       to    his

remainder interests, the parties have a concrete interest in the

outcome of the litigation.               It follows that the case is not

                                          10
moot.      See In re Balt. Emergency Servs. II, Corp., 432 F.3d at

560 n.*.



                                          III.

      We    turn    now   to    the    merits       of   Plaintiff’s        appeal.         “We

review the judgment of a district court sitting in review of a

bankruptcy court de novo, applying the same standards of review

that were applied in the district court.”                       In re Merry-Go-Round

Enters., Inc., 400 F.3d 219, 224 (4th Cir. 2005).                                  Thus, we

review the bankruptcy court’s factual findings for clear error,

and we review questions of law, including summary judgment, de

novo.      Id.; see also In re French, 499 F.3d 345, 351 (4th Cir.

2007).



                                           A.

      The    bankruptcy        estate    includes        “all    legal       or    equitable

interests of the debtor in property as of the commencement of

the case,” with some exceptions.                    11 U.S.C. § 541(a)(1).                  One

such exception provides that “[a] restriction on the transfer of

a   beneficial      interest      of     the    debtor      in       a    trust     that     is

enforceable under applicable nonbankruptcy law is enforceable in

a   case    under    this      title.”         11    U.S.C.      §       541(c)(2).         The

bankruptcy     court      and    the     district        court       agreed       that     this

provision excludes from the property of the bankruptcy estate

                                           11
interests in trust that are protected under a spendthrift clause

that is enforceable under applicable state law.                  See Patterson

v. Shumate, 504 U.S. 753, 758 (1992) (“The natural reading of

the provision entitles a debtor to exclude from property of the

estate any interest in a plan or trust that contains a transfer

restriction enforceable under any relevant nonbankruptcy law.”).

     The parties do not dispute that the 1976 trust and the Will

trust are subject to Pennsylvania state law.                   Pennsylvania law

recognizes that “[a] spendthrift provision is valid only if it

restrains      both   voluntary    and       involuntary       transfer     of   a

beneficiary’s     interest.”      20   Pa.    Cons.    Stat.   Ann.   §    7742(a)

(West 2006).      Subject to certain exceptions not alleged to apply

here,    “a    creditor   or    assignee      of   the     beneficiary      of   a

spendthrift trust may not reach the interest or a distribution

by the trustee before its receipt by the beneficiary.”                    Id. at §

7742(c).      Both the bankruptcy court and the district court found

that both trusts here contained spendthrift provisions that are

valid under state law.

     Pennsylvania      courts     “construe[]         spendthrift     provisions

broadly.”      In re Blanchard, 201 B.R. 108, 125 (Bankr. E.D. Pa.

1996).     “No principle in the law of wills and trusts is more

firmly and clearly established than that the intention of the

testator or settlor must prevail.”            Clark v. Clark, 411 Pa. 251,

255, 191 A.2d 417, 419-20 (1963).            “The law rests its protection

                                       12
of what is known as a spendthrift trust fundamentally on the

principle of cujus est dare, ejus est disponere. [He who has a

right to give, has the right to dispose of the gift.]                                       It allows

the donor to condition his bounty as suits himself so long as he

violates no law in so doing.”                        In re Morgan’s Estate, 223 Pa.

228, 230, 72 A. 498, 499 (1909).



                                                  B.

      In this case, Plaintiff argues that the bankruptcy court

correctly ruled that the debtor’s remainder interests in both

trusts     are        property        of    the    bankruptcy             estate.           Plaintiff

concedes that the debtor’s interests in income and principal

during the life of the trusts are protected by the spendthrift

provisions       and     therefore          not   part        of    the       bankruptcy       estate.

Plaintiff        contends,        however,           that          the    debtor’s          remainder

interests        in    the     corpus        of    the        trusts          are    not     similarly

protected.

      Plaintiff relies on Ginsburg v. Hilsdorf, 30 Pa. D. & C.2d

384     (1962).          In    Ginsburg,          the     Court          of     Common      Pleas   of

Pennsylvania          considered           whether      the    defendants’            interests     in

three    trusts        might     be    attached         in     light      of        the    spendthrift

provisions the trusts contained.                       Id. at 390.              The defendants in

Ginsburg were the vested remaindermen of the trusts’ corpus, but



                                                  13
were not beneficiaries entitled to any of the income.                    Id. at

395-96.      The spendthrift provision stated:

       No sum payable by my Trustees under the provisions of
       the foregoing trust shall be pledged, assigned,
       transferred or sold, or in any manner whatsoever
       anticipated,    charged    or   encumbered   by    the
       beneficiaries thereunder, or any of them, or be in any
       manner liable in the hands of my Trustees for the
       debts, contracts and engagements of the beneficiaries
       thereunder, or any of them.

Id. at 394-395.          The court found it clear from this provision

that    the     settlors    intended    to      protect   only     the   income

beneficiary.       “If they intended the spendthrift provision to

protect the vested remainderman they could have said so. . . .

In failing to include the remainder interests in the spendthrift

provisions, the testators have left the door open to the present

attachment proceedings.”          Id. at 395.

       The    Ginsburg    court   distinguished    other,   more    expansive,

spendthrift provisions such as that which appeared in Riverside

Trust Co. v. Twitchell, 342 Pa. 558, 20 A.2d 768 (1941).                    The

defendant in Riverside was the income beneficiary of a trust

established by her aunt.            Id. at 560, 20 A.2d at 769.             The

spendthrift provision there stated

       that there shall be no power of anticipation or of
       pledge or assignment either of the income or of the
       principal of the Trust Fund, or of any interest
       therein whatsoever; and the Trustee, its successors
       and assigns, shall hold and administer the Trust and
       pay over the income received by it as aforesaid, and
       the principal sum upon the termination of the Trust,
       as herein provided, free from any debts, liabilities,

                                       14
      obligations or other engagements whatsoever of the
      Grantor, or of any persons who, by the terms hereof,
      may be or become beneficiaries hereunder.

Id. at 560-61, 20 A.2d at 769-70.                   The Riverside court held that

the spendthrift provision was meant to protect both income and

principal. 4    Id. at 561-62, 20 A.2d at 770.

      The     Ginsburg    court    also        distinguished       the    spendthrift

provision that appeared in Harder v. Follansbee, 102 Pitts. L.

J. 231 (Pa. C.P. 1954). 5         The trust instrument in Harder directed

the trustee to pay the income to the settlor’s widow for life,

and   thereafter    to    the   defendant,           who   also   held    a    remainder

interest in the corpus.            Id. at 231.             The trust contained a

spendthrift provision that stated, “neither the principal nor

income of this trust fund shall in any manner be liable to the

control or answerable for the debts, contracts or engagements of

the       beneficiaries    hereunder           or     liable      to     any        charge,

encumbrance,     assignment,      conveyance          or   anticipation        by   them.”

Id. at 232.      The Harder court held that the provision protected

the defendant’s interest in both income and principal. 6                        Id.

      4
       The provision in Riverside, the Ginsburg court said, is “a
far cry from the one in the case at bar.” Ginsburg, 30 Pa. D. &
C.2d at 394.
      5
       This case is not available on Westlaw or Lexis but may be
obtained through public resources in the State of Pennsylvania.
      6
       The Ginsburg court stated simply that such a provision as
appeared in Harder did not appear in the instant case.
Ginsburg, 30 Pa. D. & C.2d at 393.


                                          15
       Plaintiff notes that the spendthrift provisions here did

not explicitly cover the trust principal upon termination of the

trusts, as did the provision in Riverside.                               Plaintiff asserts

that the language of the trusts here, particularly that of the

Will trust, is similar to the language of the trusts construed

in Ginsburg.            Plaintiff concludes that the debtor’s remainder

interests        in    the     trusts      are       therefore     not     subject    to    the

protection of the spendthrift provision.

       The spendthrift provision of the 1976 trust protects “[t]he

interest    of        any    beneficiary        in    the   corpus    or    income    of    any

trust” and the spendthrift provision of the Will Trust protects

“all     shares       and      interests        in    my    estate    and    any     property

appointed under this will, whether principal or income.”                                  Thus,

unlike     the    spendthrift         provision        in   Ginsburg,       the    provisions

here explicitly mention both the income and the corpus/principal

of   the    trusts.            They   are       therefore     more       analogous    to    the

spendthrift           provisions       distinguished          by     Ginsburg      than     the

provisions at issue in that case.

       Indeed, Harder is directly on point.                          Like the debtor in

this case, the defendant in Harder held both an interest in the

income and a remainder interest in the principal of the trust.

Harder,    102        Pitts.    L.    J.   at    231.       The    court    held     that   the

spendthrift provision obviously applied to income but also to



                                                 16
the defendant’s remainder interest in the principal.                              Id. at

232.    The same reasoning applies here.



                                           C.

        Plaintiff next argues that this Court should join those

courts     that    have       held   a   debtor’s    remainder      interest       in   a

spendthrift trust upon termination of the trust is part of the

bankruptcy estate.             See In re Britton, 300 B.R. 155 (Bankr. D.

Conn.    2003);    In     re   Crandall,      173   B.R.   836    (Bankr.    D.    Conn.

1994); Matter of Strasma, 26 B.R. 449 (Bankr. W.D. Wis. 1983).

Plaintiff insists that if the debtor holds an interest in the

corpus of a spendthrift trust upon its termination, “then those

funds cannot, by the plain language of the trust, be subject to

the spendthrift clause which necessarily must terminate with the

trust.”     Brief of Appellant at 18.                Plaintiff recognizes that

the     district    court       relied   on     Pennsylvania      bankruptcy       cases

contrary    to     her    position,      but    argues     that   the   courts      that

decided those cases “failed to consider that they were expanding

the scope of spendthrift protection beyond that provided for by

state law.”       Brief of Appellant at 22.

        The district court explained that the apparent split of

authority    does       not    support   the    bankruptcy       court’s    conclusion

that the principal here is unprotected because Pennsylvania law

alone controls this case.                As the district court recognized,

                                           17
Pennsylvania law protects remainder interests in the corpus of a

trust if the spendthrift provision of the trust instrument so

provides.        See Clark, 411 Pa. at 256, 191 A.2d at 420 (holding

that attempted conveyance of remainder interest in a trust was

invalid because the spendthrift provision prohibited beneficiary

from making any binding commitment of principal or income during

the    life   of    the   trust);       In    re     Blanchard,     201     B.R.      at   126

(applying Pennsylvania law to provide spendthrift protection to

debtor’s remainder interest in the corpus of a trust and to

exclude the debtor’s interest in the corpus from the bankruptcy

estate); In re Katz, 220 B.R. 556, 565 (Bankr. E.D. Pa. 1998)

(holding that when the debtor’s entire interest in a trust was

protected by a valid spendthrift provision, the debtor could not

assign his interest in either the principal or the income before

they were distributed); cf. In re Will of Rintz, 2007 Phila. Ct.

Com. Pl. LEXIS 254 (June 19, 2007) (approving the distribution

of     certain     income        and    principal        directly      to       the    trust

beneficiary,       despite       the   claims      of    his    Chapter     7    bankruptcy

trustee,      because     they    were      protected      by   a   valid       spendthrift

provision).

       The issue is thus not whether we should choose to follow

one line of cases or another.                      Rather, we are compelled to

follow applicable nonbankruptcy law.                    11 U.S.C. § 541(c)(2).              In

this    case,      that   means        we    apply      Pennsylvania      law.         Under

                                             18
Pennsylvania law, “the intention of the testator or settlor must

prevail.”   Clark, 411 Pa. at 255, 191 A.2d at 419-20.         For the

reasons explained above, we believe that by explicitly invoking

the trusts’ principal, the settlor here intended the spendthrift

provisions to apply to the debtor’s remainder interests therein.

     The spendthrift provisions here represent “[a] restriction

on the transfer of a beneficial interest of the debtor in a

trust that is enforceable under applicable nonbankruptcy law.”

11 U.S.C. § 541(c)(2).    The debtor’s remainder interests in the

trusts’ principal are therefore not included in his bankruptcy

estate.     Id.   The   determination   of   the   district   court   is

consequently

                                                              AFFIRMED.




                                 19
