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Showalter v. Hopper (In re Showalter)

Citation:
Showalter v. Hopper (In re Showalter), B.A.P. Case No. EC-12-1419-DJuMk (9th Cir. B.A.P. Apr. 11, 2013)
Tag(s):
Ruling:
The Bankruptcy Appellate Panel for the Ninth Circuit Court of Appeals (the “Panel”) affirmed the holding of the United States Bankruptcy Court for the Eastern District of California (the “Bankruptcy Court”). The Panel held that the Bankruptcy Court did not err in refusing, due to lack of sufficiently analogous facts, to apply the ruling in Arrol v. Broach (In re Arroll), 170 F.3d 934 (9th Cir. 1999), which states that the California homestead statute may apply to exempt a residence outside of California. The Panel determined that, declaration of homestead under California Code of Civil Procedure (“CCP”) § 704.920 only applies in the voluntary sale context. The Panel determined that, under California law, the primary factors a bankruptcy court should consider in determining residency for homestead exemption purposes are physical occupancy of the claimed domicile and the intent with which the property is occupied. Based on the facts presented to the Bankruptcy Court—notably the Debtor’s residence in Vallejo, California for years prepetition, the Debtor’s confirmation thereon in his statement of financial affairs, the lack of vacancy of the property, and the lack of credibility of the Debtor through his misstatements of Florida residence in the Homestead Declaration—the Panel held that the Bankruptcy Court did not err in finding that the Debtor did not reside in Florida at the petition date and had no credible intent to return in the future. Finally, the Panel held that (1) the Debtor waived its homestead exemption pursuant to the Florida Constitution when it amended out the reference to the Florida Constitution, and (2) regardless of the waiver, the applicable exemption laws in the case are the laws of California.
Procedural context:
Appeal to the Bankruptcy Appellate Panel for the Ninth Circuit Court of Appeals from a decision by the United States Bankruptcy Court for the Eastern District of California sustaining the chapter 7 trustee’s objection to the Debtor’s claimed homestead exemption.
Facts:
Just over one month prepetition and while in Vallejo, California, Michael Showalter (the "Debtor") signed a Homestead Declaration stating that his homestead in Florida is his principal dwelling and that he currently resided there. In the Debtor's petition, he listed his address in Vallejo, California, asserted a one-third interest in the Florida property in Schedule A, and claimed a homestead exemption in Schedule C for the Florida property under California Code of Civil Procedure ("CCP") § 704.910. The Debtor subsequently amended Schedule C to claim the exemption under CCP § 704.910 and Article X, § 4 of the Florida Constitution, and then amended a second time to assert the exemption solely under CCP § 704.910. Upon objection from the chapter 7 trustee (the "Trustee") to the first amended Schedule C, the Bankruptcy Court sustained the objection without prejudice to the Debtor to claim an appropriate exemption under applicable law. The Debtor amended Schedule C a third time, claiming an exemption under CCP § 704.920, which provides that “[a] dwelling in which an owner . . . resides may be selected as a declared homestead . . . by recording a homestead declaration . . . . From and after the time of recording, the dwelling is a declared homestead. . . .” Upon the Trustee’s objection to the third amended Schedule C, the Bankruptcy Court sustained the objection and determined that (1) the property to which a valid homestead exemption claim would attach had to be the principal abode of the Debtor (2) that the Debtor did not reside a the Florida property pre- or postpetition, and (3) the Debtor’s statements of intent to reside at the Florida property in the future were not credible. The Debtor appealed.
Judge(s):
Dunn, Jury, and Markell, Bankruptcy Judges

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