- Case Type:
- Case Status:
- 20-60006 (9th Circuit, Jun 10,2021) Published
- The U.S. Court of Appeals for the Ninth Circuit (Panel) affirmed the Bankruptcy Appellate Panel’s affirmance of rejection of a debtor’s attempt, after her chapter 13 case’s conversion to a chapter 7, to exempt two assets by the bankruptcy court (BC). Specifically, per the Panel, (1) bankruptcy courts may deny exemptions just because they had been denied before per the judicially created doctrines of issue and claim preclusion where a debtor is not statutory entitled to that exemption despite Law v. Siegel, and (2) the BC had properly relied on issue preclusion to justify disallowance here.
- Procedural context:
- Lenore Albert, the debtor (DR), began with a chapter 13 petition filed in the BC, the United States Bankruptcy Court for the Central District of California. From the very beginning of this case, the DR sought to exempt from her estate counterclaims she had filed in state court against Ford Motor Credit Company (FMCC), as well as accounts receivable from former clients. Unfortunately for her, the BC sustained the objections of the Chapter 13 trustee and FMCC on the grounds that the counterclaims and accounts receivable failed to satisfy California’s exemption laws. In the days thereafter, the DR did not timely appeal those rulings. Soon thereafter, the BC converted the DR’s chapter 13 proceeding to a chapter 7 one. It simultaneously appointed a new trustee, Jeffrey Golden (TR). When the TR moved to settle the DR’s counterclaims, the DR amended her exemptions. She again listed her counterclaims and accounts receivable as exempt and valued at $500,000 each, invoking the same purported bases for these recycled exemptions. The DR, however, thereupon made a change: now, she claimed for herself $1.93 million of her counterclaims’ purported $500,000 value. From that point, thing got complicated, and the roots of this appeal were planted. Naturally, the TR objected to the DR’s latest attempt to invoke section 522. As he pointed out, the new exemptions were identical to those the BC had previously rejected; consequently, the doctrines of issue and claim preclusion barred their relitigation. As an alternative, the TR also urged the BC to reject the DR’s amended exemptions on their merits. Only after this rejoinder did the DR try to appeal to the Bankruptcy Appellate Panel for the Ninth Circuit (BAP) the orders sustaining the original objections. She argued that those orders were not final, given that the bankruptcy judge had commented at the hearing that its denial would be without prejudice. Disagreeing, the BAP dismissed this appeal as untimely. Once more, the TR failed to appeal. Meanwhile, the DR allowed the deadline to timely oppose the TR’s objections to her amended schedule to pass without comment. Instead, on the night before a hearing on the matter, she submitted a 419-page document incorporating portions of her previous filings. The BC both declined to consider these dilatorily tendered materials and denied her amended exemptions, deeming them precluded by dint of their earlier rejection. The DR unsuccessfully appealed that decision to the BAP. She then timely appealed. The Panel issued its decision without any oral argument
- In her view, the DR’s claims arose out of a failed retail installment sales transaction between her and Friendly Ford (Friendly), a Nevada automobile dealer, who subsequently assigned the retail installment sales contract to FMCC. According to the DR, though she made over $20,000.00 in car payments neither Friendly nor FMCC, properly submitted the vehicle title documents to the California Department of Motor Vehicles necessary to register the vehicle in California, as Friendly well knew she needed to do. FMCC proved no more willing to help. Based on these purported failing, the DR stated causes of action for intentional infliction of emotional distress and under the Rees-Levering Automobile Sales Finance Act related to the sale of the vehicle against FMCC. The DR bankruptcy by filing a voluntary chapter 13 petition on February 20, 2018. In her original Schedule C, she relied on two California statutes to support her exemptions of receivables and litigation claims. Section 704.140(b) of the Code of Civil Procedure of California (CCP) provides an exemption for matters relating to personal injuries, and, with inapposite exceptions, exempts “damages or a settlement arising out of personal injury ... to the extent necessary for the support of the judgment debtor and the spouse and dependents of the judgment debtor.” More generally, CCP § 704.210 states: “Property that is not subject to enforcement of a money judgment is exempt without making a claim.” From these exemptions, as shown above, sprung a tortuous tale.
- Consuelo M. Callahan; Richard C. Tallman; and Kenneth K. Lee
In re Zachary Allen ; Tiara Donegan
Summarizing by Lars Fuller
3267 in the system
3 Being Processed