In re Tracey Nubia

Case Type:
Case Status:
Ninth Circuit Bankruptcy Appellate Panel Case No. CC-20-1194-GKT (9th Circuit, Apr 21,2021) Not Published
The bankruptcy court’s factual determinations are supported by the record and Tracey Nubia (“Debtor”) has not shown that the court clearly erred in valuing her residence.
Procedural context:
Debtor filed her chapter 13 petition in December 2019. Debtor then filed a motion to avoid the junior lienholder's mortgage on the Debtor's residence pursuant to Sec. 506(d). The bankruptcy court, based upon the parties agreement, considered the issue of valuation on the existing record including declarations and appraisals submitted by the parties. The bankruptcy court entered an order determining that the value of the Debtor's residence, as of the petition date, was $430,000. The Debtor appealed the bankruptcy court’s order valuing her residence denying her motion to avoid the junior lien encumbering the Debtor's residence. The BAP reasoned that the parties elected to forgo an evidentiary hearing on the disputed valuation issues. Since the parties stipulated that the appraisals and declaration admittance into evidence, the bankruptcy court did not err in considering the junior lienholder's appraisal. The bankruptcy court's valuation is not illogical, implausible, or without support in the record. Thus, the bankruptcy court's ruling was affirmed.
The Debtor listed her residence in Schedule A/B with a value of $390,000. This was based on an appraisal the Debtor obtained effective post-petition. The Debtor's appraisal noted the average sales prices for homes in the surrounding area were in the amount of $500,000; however, this amount was adjusted due to the purported estimated $110,000 in deferred maintenance of the residence. The Debtor's appraiser based the deferred maintenance estimation on an unnamed contractor. The junior lienholder also obtained an appraisal, effective as of the petition date, but only considered an estimated $20,000 in deferred maintenance. The junior lienholder's appraiser based the reduction on local contractors and handymen. However, the deferred maintenance noted water damage and junior lienholder's appraisal was subject to an inspection by a mold expert. Debtor obtained a mold expert report that was included in support of her reply, which estimated a cost of $131,925 to remove the mold in the residence. The bankruptcy court noted that the primary difference in the competing appraisals is the extent of deferred property maintenance. Meaning the Debtor's appraisal included work beyond mold removal; and, junior lienholder's appraisal did not take into consideration mold removal. Therefore, based on the pleadings and documents submitted to the bankruptcy court, it was determined that the value of the residence was $430,000.
Honorable Gan, Klein and Taylor, Bankruptcy Judges (Hon. Christopher M. Klein sitting by designation)

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