Maestas v. Old World Construction, Inc. (In re Maestas)

Summarized by Brandon Bickle , Gable & Gotwals, PC
12 years 7 months ago

Citation:

BAP No. CO-12-100, Appeal from U.S. Bankr. Ct., D. Colo., Case No. 12-20125

Tag(s):

Ruling:

The BAP held that the appeal was not rendered moot by the abandonment of the property, and affirmed the bankruptcy court's order denying the debtors' claim of exemption. The BAP held that the appeal was not moot because: (1) the foreclosure process was not complete and the debtor still owned the property, therefore, effective relief could be granted; and (2) abandonment does not divest a bankruptcy court of jurisdiction to enforce the rights of a debtor to claim an exemption under section 522 of the Bankruptcy Code. As to the merits of the exemption claim, the BAP upheld the bankruptcy court's interpretation of the Colorado statute, concluding that the statute applies to specific enumerated items "used and kept for the purpose of carrying on any gainful occupation" and commonly accepted and understood as being personal in nature. Relying on the Black's Law Dictionary definition of "personal property," the BAP concluded that real property may not be claimed as exempt under the statute as a "tool-of-the-trade."

Procedural context:

Appeal from an order of the U.S. Bankruptcy Court for the District of Colorado denying a claim of exemption of certain chapter 7 debtors.

Facts:

Chapter 7 debtors claimed a $30,000 exemption in an office building and storage warehouse, based on a Colorado statute, section 13-54-102(1)(i), which exempts "[t]he stock in trade, supplies, fixtures, maps, machines, tools, electronics, equipment, books, and business materials of any debtor used and kept for the purpose of carrying on any gainful occupation in the aggregate value of twenty thousand dollars . . . ." A creditor objected, and the bankruptcy court sustained the objection concluding that the statute's reach is limited to personal property. Following the bankruptcy court's order denying the exemption, the creditor filed a motion to require the trustee to abandon the property, to which the debtors did not object. The motion was granted and the trustee filed a notice of intent to abandon the property. The debtors appealed the order denying the exemption. The issues on appeal were: (1) the bankruptcy court's interpretation of the Colorado exemption statute; and (2) the creditor's argument that the appeal was rendered moot by the abandonment of the property.

Judge(s):

Michael, Jacobvitz, and Marker. Opinion by Hon. Joel T. Marker, U.S. Bankruptcy Judge, District of Utah.

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