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Litton Loan Servicing, L.P. v. Dennis Schubert

Summarizing by Amir Shachmurove


Case Type:
Case Status:
BAP No. EC-21-1158-BSL (9th Circuit, Dec 22,2021) Published
The debtor's claim to a homestead exemption in a property leased to a third party as of the petition date was denied because the debtor failed to meet his burden of proof that his absence from the property was temporary.
Procedural context:
Appeal from an order of the bankruptcy court sustaining an objection to a claimed automatic homestead exemption under California law. The bankruptcy court determined that the debtor's absence from the property was not temporary, and therefore he did not meet the continuous residency requirement for a homestead under the California Code of Civil Procedure.
The debtor owned a home referred to as the Wild Rogue Property and lived there from 2011 to 2018. While the debtor and his family were living there, several creditors obtained judgments and recorded abstracts that attached to the Wild Rogue Property. In 2018, the debtor and his family moved to a larger rented home, referred to as the Cimarron Property,, to accommodate his in-laws. Upon moving out of the Wild Rogue Property, the debtor rented it out in one-year leases. Prior to the petition date the in-laws moved out of the Cimarron Property, and the tenant at the Wild Rogue Property defaulted on the lease. One month after the debtor filed his bankruptcy petition, the tenant was evicted. The debtor asserted a homestead exemption in the Wild Rogue Property and then moved there postpetition after the tenant was evicted. Creditors objected to the exemption because (1) the debtor did not live at the property on the petition date, and (2) his prepetition renting out the property showed that the debtor's absence was not temporary. The bankruptcy court held that the creditors' met their initial burden to shift the burden of proof to the debtor to prove entitlement to the exemption. The court held the debtor did not meet his burden of proof, because the debtor did not live at the Wild Rogue Property for more than two years, he left no belongings at the Wild Rogue Property, his mailing address was the Cimarron Property, there was no evidence that the debtor attempted to return to the Wild Rogue Property after the in-laws left the Cimarron Property, and the rentals of the Wild Rogue Property demonstrated no immediate desire for the debtor to return. The BAP agreed the bankruptcy court correctly applied the law and the factual findings were supported by the evidence.

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