IN RE: JOHNIE LEE NANCE, DEBTOR

Summarized by Bradley Pearce , Pearce Law PLLC
4 months 1 week ago

Case Type:

Consumer

Case Status:

Reversed and Remanded

Citation:

No. 24-2745 (9th Circuit, Oct 14,2025) Published

Tag(s):

Ruling:

Claim preclusion does not bar a debtor from amending their schedule of exemptions (which is allowed under Fed. R. Bankr. P. 1009(a)) when the amendments assert different grounds for exempting property. The trustee's objection previously adjudicated by the bankruptcy court involved a different "claim"—the alleged right to exempt property from the bankruptcy estate—than a debtor's attempt to exempt the same property under other law. In addition, the bankruptcy court properly allowed a debtor's attempt to exempt property even though the debtor asserted a different basis for the exemption.

Procedural context:

Following the bankruptcy court's order denying the Chapter 7 trustee's objection to certain exemptions claimed by the debtor, the trustee appealed to the district court. The district court reversed the bankruptcy court, holding that the debtor was barred from trying to claim certain property as exempt under the principles of claim preclusion and that the bankruptcy court could not exempt property under 11 U.S.C. § 522(b)(5) when the debtor claimed the property was exempt under 11 U.S.C. § 522(b)(3). The debtor appealed to the Court of Appeals.

Facts:

The debtor, Johnnie Lee Nance, filed a Chapter 7 bankruptcy petition. Nance claimed federal and state exemptions, including a homestead exemption for real property located in Arizona and a wildcard exemption for a recreational vehicle. The trustee objected, and the bankruptcy court sustained the objection. Nance amended his schedule of exemptions, this time claiming that the property was exempt under Washington law. Again, the trustee objected, but Nance did not oppose the objections. The bankruptcy court thus sustained the objections. Nance again amended his schedule of exemptions, asserting that the Arizona real property and the RV were exempt under 11 U.S.C. § 522(d)(1), the default exemption found in the Bankruptcy Code. The trustee again objected. At a hearing on the trustee's objections, the bankruptcy court explained that Nance could exempt the property under 11 U.S.C. § 522 due to the "hanging paragraph" of 11 U.S.C. § 522(b)(3), The bankruptcy court further granted Nance's exemption on the RV under section 522(b)(5), even though Nance had scheduled the RV as exempt under section 522(b)(3) (the federal homestead exemption).

Judge(s):

Marsha S. Berzon and Mark J. Bennett, Circuit Judges, and Joan H. Lefkow, District Judge, sitting by designation

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