Case Type:
Case Status:
22-1219 (9th Circuit, Jun 01,2023) Not Published
Affirming the U.S. Bankruptcy Court for the Northern District of California (BC), the U.S. Bankruptcy Appellate Panel of the Ninth Circuit (BAP) discerned no error in its avoidance of the judicial lien held by Airport Business Center (ABC), pursuant to § 522(f), as impairing the exemption claimed by chapter 7 debtors Emad Aziz Masoud Alfahel and Lina Nadim Fahel (DRs) on their residence and including purportedly "usurious interest in its computation" of the total amount of liens under § 522(f) despite the DRs' voluntary withdrawal of two prior motions.
Procedural context:
In the fall of 2016, having already received a discharge and witnessed their case's closing, the DRs filed a motion to reopen the case to file motions under § 522(f) to avoid the judicial liens. In February 2017, the DRs filed motions to avoid each of the four judicial liens as impairing the exemption on their residence; ABC objected; the DRs withdrew their motion; and the BC again closed their case. In May 2018, aided by new counsel, the DRs again sought to reopen the case so as to avoid the same judicial liens; the BC reopened the case subject to the DRs' filing of an avoidance motion within 90 days; about a month later, the DRs filed their motion; ABC again objected; after a lengthy delay during which the parties purportedly negotiated, the DRs withdrew their avoidance motion; and the BC closed the case for the second time. In April 2021, the DRs again moved to reopen their case and avoid the remaining liens, including ABC's. The CB again allowed them to do so, but gave them only thirty days to file the requisite avoidance motion, a deadline the DRs met. ABC challenged the motion, arguing not just that the DRs' failure to respond to written requests for admission in January 2021 meant they should now be deemed to have admitted the requests but also that they should be barred by the “two-dismissal rule” Federal Rule of Civil Procedure 41(a)(1)(B) from filing a third motion to avoid. The BC ultimately rejected ABC's every argument, and ABC timely appealed.
The DRs filed their chapter 7 petition in May 2016. They scheduled their home, which they valued at $630,000, and they claimed an exemption of $3,354 under the wildcard provision of California Code of Civil Procedure § 703.140(b)(5). The DRs listed three deeds of trust encumbering their residence, and scheduled four judicial liens arising from judgments in favor of, among others, ABC. After the DRs received their discharge, the BC closed their no-asset case in August 2016.
Scott H. Gan; Julia W. Brand; and Robert J. Faris

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