Banner Bank v. Johns (In re Johns)

Citation:
9th Cir. BAP Case No. ID-14-1049-KiDJu [Not for Publication]
Tag(s):
Ruling:
The 9th Circuit Bankruptcy Appellate Panel (“BAP”) in an order entered on June 23, 2014 determined that this matter was suitable for disposition without oral argument. The BAP ruled that based on the stipulated facts; there is no “danger” that the dwelling on the second parcel of real property will be claimed by others as a homestead. The parcels of real property are contiguous and the applicable state law exemption asserted does not require what types of buildings are permitted on the homestead. Therefore, the bankruptcy court’s order overruling the Bank’s objection was affirmed.
Procedural context:
Banner Bank (“Bank”) appealed the bankruptcy court’s order overruling the Bank’s objection to Douglas and Janina Johns (“Debtors”) asserted homestead exemption in three separately described, but contiguous, parcels of real property.
Facts:
The Debtors originally filed a Chapter 13 bankruptcy, and approximately one year later converted to Chapter 7. The Debtors asserted all three parcels of real property as the Debtors’ homestead. Parcel I consists of .67 acres, which contains the Debtors’ residence, Parcel II contains approximately one acre with a house that the Debtors rent to a friend as well as a garden and barn the Debtors use to shelter one of their horses, and Parcel III contains 23.81 acres. Parcel III contains a larger barn the Debtors use to house their remaining horses and there is livestock. Bank holds a consensual deed of trust securing a 2008 home equity loan that encumbers Parcel I; and, two default judgments against the Debtors related to separate commercial debt. The Bank contends that Parcel II cannot be included in the Debtors’ asserted homestead exemption because it has a separate dwelling house that is rented. Therefore, if Parcel II cannot be included within the Debtors’ asserted homestead, then Parcel III is not contiguous and also cannot be included within the Debtors’ homestead exemption.
Judge(s):
Hon. Kirscher, Dunn, and Jury

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