Auyeung v. Christensen (In re Auyeung)

Summarized by David Hercher , U.S. Bankruptcy Court, District of Oregon
10 years 8 months ago

Citation:

In re Auyeung, BAP No. EC-14-1382-JuKuPa (9th Cir. B.A.P. June 9, 2015).

Tag(s):

Ruling:

Judicial estoppel barred chapter 13 debtors from avoiding a judicial lien on their homestead. In a prior chapter 13 case, they failed to comply with a confirmed plan requiring them to sell the homestead and pay the judgment lien. Not-for-publication memorandum.

Procedural context:

In debtors’ first chapter 13 case, they partially avoided the creditors’ judgment lien on the homestead, leaving $140,000 unavoided, and obtained confirmation of a plan requiring that they sell the homestead by a deadline and pay the unavoided portion of the lien. Debtors failed to comply with the plan, and their first case was converted to chapter 7. After obtaining a discharge, they filed a second chapter 13 case, in which they sought to avoid all but $7,000 of the judgment lien. The bankruptcy court denied the avoidance motion, and the BAP affirmed, with one judge dissenting.

Facts:

Judicial estopped bars litigants from making incompatible statements in two different cases (as well as in one case). The three tests for application of judicial estoppel are satisfied. First, debtors took an inconsistent position in their second case by seeking to avoid all but $7,000 of the judgment lien after having promised in their plan in the first case to sell the homestead and pay $140,000. Second, debtors’ earlier position was adopted by the court when it confirmed the first plan. Third, debtors would obtain an unfair advantage by being permitted to pursue avoidance of all but $7,000 of the lien in the second case after having misrepresented that they would sell the homestead and pay $140,000 in the first case. Law v. Siegel, 134 S.Ct. 1188 (2014), did not govern application of judicial estoppel to this case, even though doing so tangentially related to debtors’ exemption. Dissenting, Judge Kurtz suggested that the majority’s result was inconsistent with Law v. Siegel, and he stated that the bankruptcy court should have dismissed the second chapter 13 case after finding that it was filed in bad faith, thus avoiding the need to address the application of judicial estoppel to the lien.

Judge(s):

Meredith A. Jury, Frank L. Kurtz, and Jim D. Pappas, Bankruptcy Judges.

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