Now Updating

Summarizing by Michael Holmes


Case Type:
Case Status:
Reversed and Remanded
EW-22-1016-FLB (9th Circuit, Nov 02,2022) Published
Publishing to explain the effect of a “100% of FMV” exemption claim and to reiterate that parties must timely object to any improper exemption claim despite its frivolity, the U.S. Bankruptcy Appellate Panel of the Ninth Circuit (BAP) reversed the U.S, Bankruptcy Court for the Eastern District of Washington (BC), which had held that the surviving co-debtor was bound by § 522(d)(1)'s statutory limit though, pre-conversion and years before, the debtors, had claimed a “100% of FMV” exemption in their homestead without objection, and remanded for the BC to decide on the proper remedy..
Procedural context:
Years before the motions from which this appeal spawned were filed, Monte L. Masingale (MM) and Rosana D. Masingale (RM and, together with MM, Masingales) filed a chapter 11 bankruptcy petition. The duo claimed a “100% of FMV [fair market value]” exemption in their homestead; no one objected. Years later, the BC converted the case to chapter 7. At that point, RM, MM having died during the pendency of the bankruptcy case, and the new chapter 7 trustee (TR) disputed the amount of the homestead exemption to which the former was entitled. The TR argued that RM was bound by the statutory limit under § 522(d)(1), but RM contended that she was entitled to the entire fair market value of the property, because no one had objected to the claimed homestead exemption. The BC agreed with the TR and approved his request to sell the property, limiting the homestead exemption to $45,950. RM timely appealed.
In 2015, the Masingales filed a chapter 11 bankruptcy petition. In their Schedule A, they listed their residential real property in Greenacres, Washington, and reported that the property was worth $165,430 and was encumbered by a $130,724 mortgage lien. In their schedule of exempt property (Schedule C), they claimed a homestead exemption pursuant to § 522(d)(1) for “100% of FMV." The Masingales’ meeting of creditors concluded on November 25, 2015, and though creditors thereafter had thirty days to object to the claimed exemptions, no one objected to any exemption. MM passed away in 2016, and the BC confirmed RM's chapter 11 plan on August 23, 2017. Because RM proved unable to complete the plan, the United States Trustee's office moved to dismiss or convert the case for failure to file required reports. On November 19, 2018, over a year after plan confirmation, the BC converted RM's chapter 11 case to a chapter 7 one.
Robert J. Faris; William J. Lafferty; and Julia W. Brand

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