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In re Lisa Gay Mellem

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Clabaugh v. Grant (In re Grant)

Clabough v. Grant. (In re Grant), Case No. 16-6062 (10th Cir. September 20, 2016). Unpublished
Bankruptcy courts do not have authority to use their equitable powers to disallow exemptions or amendments to exemptions due to bad faith or misconduct; any equitable powers can only be exercised within the confines of the Bankruptcy Code and the court may not refuse to honor the exemption under § 522 absent a valid statutory basis for doing so.
Procedural context:
The Bankruptcy Court for the Western District of Oklahoma avoided Clabaugh’s judgment lien because it impaired debtor’s homestead exemption. The 10th Circuit BAP affirmed as did the 10th Circuit. The bankruptcy court’s legal conclusions were reviewed de novo and its factual findings reviewed for clear error.
Clabaugh inherited from her father a valuable coin collection and heirlooms worth as much as $2.0 million and placed them in a safety deposit box. The bank lost the ownership records for the box and in attempting to locate the owner, used information in the box to contact Grant. Grant falsely told the bank that he was the personal representative of Clabaugh’s father’s estate and the bank released the box’s contents to him which he says he sold for $488.00. Clabaugh sued and obtained a judgment for conversion in the amount of $1.25 million which she recorded in the real property records. Grant filed chapter 7. Clabaugh sued to have the debt declared non-dischargeable and objected to his homestead exemption which objection she withdrew. Grant filed a motion to avoid her lien as impairing his homestead exemption.
Matheson, McKay, O’Brien

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