In re- CHRISTINA GREENFIELD
- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- BAP No. ID-21-1150-SFB (9th Circuit, Apr 14,2022) Not Published
- Tag(s):
-
- Ruling:
- A chapter 7 debtor whose estate is insolvent lacks standing to object to any claim if the estate is insolvent because the debtor will not be affected by the outcome of the claims litigation.
- Procedural context:
- The bankruptcy court affirmed the Chapter 7 trustee's motion to sell the debtor's residence over the debtor's objections. The bankruptcy court rejected the debtor's objections and ruled, in the alternative, that the debtor did not have standing to object because the estate was insolvent.
The debtor appealed.
- Facts:
- The debtor, Christina Greenfield, had been engaged in state-court litigation with her former neighbors, Eric and Rosalynd Wurmlinger. The Wurmlingers prevailed, and a judgment was entered against Greenfield. The judgment was amended several times, and the courts awarded the Wurmlingers their trial and appellate costs and attorney's fees. The Wurmlingers filed the judgments in the appropriate county, giving them a judgment lien against Greenfield. In 2017, the Wurmlingers moved to have their judgment renewed. The Wurmlingers recorded the Renewal Order on September 4, 2018.
Greenfield filed her chapter 7 petition in December 2019.
In her Chapter 7 schedules, Greenfield identified her house as an asset subject to a mortgage lien. Greenfield also claimed a $100,000 homestead exemption in her house.
The Wurmlingers filed a proof of claim for $261,083.21.
In May 2020, the bankruptcy court entered an order discharging Greenfield from her pre-petition debts.
In April 2021, the chapter 7 trustee moved to sell Greenfield's house and to pay the first priority deed of trust and the Wurmlingers' judgment lien from the proceeds. Greenfield objected, arguing that the ten-month delay between the entry of the Renewal Order and recording of the Renewal Order made it untimely under state law. The bankruptcy court rejected Greenfield's arguments and, in the alternative, ruled that she did not have standing because the estate was "hopelessly insolvent."
The trustee sold the house for $600,000. $400,111.95 was paid to satisfy the first priority deed of trust and the Wurmlingers on their judgment lien. $41,505.58 was paid for the real estate commission and closing costs. Greenfield received $100,000 on her homestead exemption. The estate then held $58,382.47 for disbursement to others. Even if the Wurmlingers' judgment lien were set aside, the estate would still be insolvent by more than $71,000.
- Judge(s):
- SPRAKER, FARIS, and BRAND, Bankruptcy Judges
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