Todd v. Rothschild (In re Todd)

Summarized by Thomas Phinney , Felderstein Fitzgerald Willoughby Pascuzzi & Rios LLP
10 years 10 months ago

Citation:

9th Cir BAP No. NV-14-1255-JuKuD (April 7, 2015) (Not for Publication)

Tag(s):

Ruling:

Based upon lack of subject matter jurisdiction, BAP vacated a bankruptcy court judgment determining the amount of a debtor's exemption in certain funds held in an account. The BAP held that a prior final order had determined that such funds were not property of the estate, but instead were the property of another bankruptcy estate. "The bankruptcy court no longer had jurisdiction over the [funds] since it was neither property of Debtor’s estate nor property of the Debtor. See 28 U.S.C. § 1334(e)(1). Further, under § 522(b), the debtor may exempt certain property “from property of the estate.” “[O]bviously, then, an interest that is not possessed by the estate cannot be exempted.” See Owen v. Owen, 500 U.S. 305, 308 (1991)."

Procedural context:

The bankruptcy court held a trial to determine the amount of the debtor's exemption in certain funds traceable to a settlement of claims arising from a car accident. The exemption claims was that a portion of the funds was compensation for loss of future earnings. Both the Debtor and her Chapter 7 trustee appealed the bankruptcy judgment on the issue of the correct amount of the exemption. On appeal, the BAP held that the bankruptcy court lacked subject matter jurisdiction, and there was no ability to claim an exemption in the funds. The BAP vacated the judgment and dismissed the appeal.

Facts:

The Debtor was in a serious car accident and settled her claims arising from the accident, including attorneys fee, punitive damages, reimbursement of medical expenses, and loss of future compensation for $2.5 million. The Debtor also became a judgment debtor under a judgment for over $18 million. In an order approving a settlement between the bankruptcy trustees for the Debtor and the judgment creditor, it was determined that the funds in a certain account, which funds were largely traceable to the car accident settlement funds, belonged to the judgment creditor. There was evidence that the parties had an understanding that the Debtor's exemption claims in the funds were "preserved," but the order did not so provide. The BAP "expressed no opinion whether Debtor could successfully move to modify the Rule 9019 Settlement Order under Civil Rule 60(b)(6)."

Judge(s):

JURY, KURTZ, and DUNN, Bankruptcy Judges.

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