Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-22-60055/USCOURTS-ca9-22-60055-0/pdf.json

Parties Involved:
Karl T. Anderson
Appellee
Corrine Long
Appellee
Michele Lynn McKee

Laura O'Kane
Appellee

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: MICHELE LYNN MCKEE,

Debtor, 

____________________________

MICHELE LYNN MCKEE,

Appellant,

 v. 

KARL T. ANDERSON, Chapter 7 

Trustee; LAURA O'KANE; 

CORRINE LONG,

Appellees.

No. 22-60055 

BAP No.

22-1042 

OPINION

Appeal from the Ninth Circuit

Bankruptcy Appellate Panel

Gan, Taylor, and Spraker, Bankruptcy Judges, Presiding

Submitted December 6, 2023*

Pasadena, California

Filed January 17, 2024

* The panel unanimously concludes this case is suitable for decision 

without oral argument. See Fed. R. App. P. 34(a)(2).

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2 IN RE: MCKEE V. ANDERSON

Before: Milan D. Smith, Jr., Kenneth K. Lee, and 

Lawrence VanDyke, Circuit Judges.

Opinion by Judge Lee 

SUMMARY**

Bankruptcy

The panel affirmed the Bankruptcy Appellate Panel’s 

decision affirming the bankruptcy court’s order denying 

chapter 7 debtor Michele McKee a homestead exemption for 

a Palm Springs property where she formerly lived with her 

partner, Laura O’Kane. 

McKee claimed California’s “automatic” homestead 

exemption, which exempts from a bankruptcy estate a 

property in which a debtor resides on the date of her 

bankruptcy petition. The panel held that McKee did not meet 

her burden of proving that she either physically occupied the 

property or intended to return to it. The panel rejected the 

argument that, because O’Kane’s abuse made it impossible 

for McKee to go back to the Palm Springs property, her 

testimony that she desired to do so should be enough to 

establish homestead. The panel affirmed the bankruptcy 

court’s finding that McKee demonstrated no indicia of intent 

to return, such as leaving her personal belongings at the 

property or retaining its address on her driver’s license, and 

** This summary constitutes no part of the opinion of the court. It has 

been prepared by court staff for the convenience of the reader.

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IN RE: MCKEE V. ANDERSON 3 

therefore did not show entitlement to a homestead 

exemption. 

COUNSEL

Summer Shaw (argued), Shaw & Hanover PC, Palm Desert, 

California, for Appellant. 

W. Derek May (argued), Law Office of W. Derek May, 

Upland, California; Leonard M. Shulman and Melissa D. 

Lowe, Shulman Bastian Friedman & Bui LLP, Irvine, 

California; for Appellees. 

OPINION

LEE, Circuit Judge: 

Breaking up is hard to do—and a messy break-up led to 

this bankruptcy dispute. 

Michele McKee bought a house in Palm Springs with her 

long-time partner, Laura O’Kane. But their rocky 

relationship reached a tumultuous end after over a decade 

together. McKee left their home and soldiered on with her 

life. Her financial situation, however, turned for the worse, 

leading to bankruptcy. She now argues that she should be 

entitled to California’s homestead exemption, which 

partially shields the debtor’s home from creditors. She 

claims that she always intended to move back into the Palm 

Springs home, and did not do so only because O’Kane still 

lived there.

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4 IN RE: MCKEE V. ANDERSON

But the overwhelming objective evidence suggests that 

McKee did not intend to return to the Palm Springs home. 

McKee responds that it was “impossible” to live there 

because O’Kane was emotionally abusive. But California 

does not recognize an “impossibility” carve-out to the 

homestead exemption rule. And thus because McKee no 

longer lived at and did not intend to return to the home, we 

affirm the Bankruptcy Appellate Panel’s decision to deny her 

the homestead exemption. 

Factual and Procedural Background

Michele McKee met Laura O’Kane in late 2003 and they 

started dating. They began living together in San Francisco. 

Several years later, the two, along with O’Kane’s mother, 

bought a lot in Palm Springs to build their new home. 

But as they were building their new home in Palm 

Springs, their oft-troubled relationship began to crumble. 

McKee testified that O’Kane inflicted “years of repeated and 

extreme verbal abuse” on her. And after only about a year 

at their new Palm Springs home, McKee broke up with 

O’Kane around September 2016. 

McKee testified that she intended to keep living at the 

Palm Springs home until it could be sold, but their 

relationship had become so frayed by December 2016 that 

McKee felt she had to leave. In October 2017, McKee and 

O’Kane signed a settlement agreement that contemplated the 

eventual buyout of McKee’s interest in the property. Under 

that agreement, McKee would, among other things, remove 

her personal effects and return her garage door opener and 

keys. O’Kane, in turn, would take responsibility for the

payment of all property taxes, mortgage payments, and 

insurance premiums due on the house after April 2017.

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IN RE: MCKEE V. ANDERSON 5

McKee moved on. She rented a condominium and listed 

that address on both her driver’s license and voter 

registration. But her finances deteriorated, and she filed for 

chapter 7 bankruptcy in February 2021. In her bankruptcy 

petition, McKee claimed a $488,250 homestead exemption 

over the Palm Springs property, which had not yet been sold. 

O’Kane, her mother, and Karl T. Anderson—the chapter 7 

trustee in McKee’s bankruptcy proceeding—objected 

because McKee did not reside there at the time. 

The bankruptcy court sustained those objections. 

McKee appealed the bankruptcy court’s order to the 

Bankruptcy Appellate Panel (BAP), which affirmed. McKee 

next appealed to this court. We have jurisdiction under 28 

U.S.C. § 158(d).

Discussion

The filing of a chapter 7 petition creates a bankruptcy 

estate, which generally consists of all the debtor’s nonexempt property. 11 U.S.C. §§ 541(a), 522. California has 

opted out of the federal bankruptcy exemption scheme, so its 

debtors claim exemptions under state law. Cal. Civ. Proc. 

Code § 703.130. “[F]ederal courts decide the merits of state 

exemptions” in bankruptcy actions, “but the validity of the 

claimed state exemption is controlled by the applicable state 

law.” In re LaFortune, 652 F.2d 842, 846 (9th Cir. 1981). 

We review a bankruptcy court’s determination of the scope 

of a statutory exemption de novo, and its factual findings for 

clear error. In re Gilman, 887 F.3d 956, 964 (9th Cir. 2018).

I. California’s homestead exemption partially 

shields debtors’ homes. 

McKee claims California’s “automatic” homestead 

exemption. See Cal. Civ. Proc. Code § 704.730. That 

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6 IN RE: MCKEE V. ANDERSON

exemption protects a debtor “who resides (or who is related 

to one who resides) in the homestead property at the time of 

a forced judicial sale of the dwelling.” In re Anderson, 824 

F.2d 754, 757 (9th Cir. 1987); see Cal. Civ. Proc. Code 

§ 704.720(a). The filing of a bankruptcy petition constitutes 

a forced judicial sale for this exemption. See Gilman, 887 

F.3d at 964. If the exemption applies, then the debtor’s 

homestead cannot be sold unless the proceeds are enough to 

pay out all encumbrances on the property and the debtor’s 

homestead exemption in full. Cal. Civ. Proc. Code 

§ 704.800. So, as a practical matter, the homestead 

exemption can protect a debtor’s substantial assets in a 

homestead from creditors. 

Relevant here, the statute defines a “homestead” as “the 

principal dwelling (1) in which the judgment debtor or the 

judgment debtor’s spouse resided on the date the judgment 

creditor’s lien attached to the dwelling, and (2) in which the 

judgment debtor or the judgment debtor’s spouse resided 

continuously thereafter until the date of the court 

determination that the dwelling is a homestead.” Cal. Civ. 

Proc. Code § 704.710(c). A debtor’s exemptions are 

“determined as of the date the bankruptcy petition is filed.” 

Cal. Civ. Proc. Code § 703.140(c). McKee can thus only 

claim the homestead exemption over the Palm Springs 

property if she resided there on the date of her petition. She 

bears the burden of proof. Cal. Civ. Proc. Code 

§ 703.580(b).

“To determine whether a debtor resides in a property for 

homestead purposes, courts consider the debtor’s physical 

occupancy of the property and the intent to reside there.” 

Gilman, 887 F.3d at 965 (citing Ellsworth v. Marshall, 196 

Cal. App. 2d 471, 474 (1961)). But physical occupancy is 

not strictly necessary—if a debtor does not live there, she 

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IN RE: MCKEE V. ANDERSON 7

may still claim the homestead exemption if she “intend[s] to 

return” to it. Michelman v. Frye, 238 Cal. App. 2d 698, 706 

(1965). In other words, if the debtor still retains “a bona fide 

intention to make the place his residence, his home,” 

Ellsworth, 196 Cal. App. 2d at 475, his lack of physical 

occupation is only a “temporary absence,” Michelman, 238 

Cal. App. 2d at 706. 

II. McKee does not qualify for a homestead 

exemption because she no longer lived at the home 

and had no intention to do so.

The parties agree that McKee did not physically occupy 

the Palm Springs property when she filed her bankruptcy 

petition. But they dispute whether she had the requisite 

intent to return. The bankruptcy court determined that 

McKee did not. The bankruptcy court acknowledged that 

McKee initially moved out of the home only because her 

relationship with O’Kane made it “impractical” for her to 

stay. But it also found that, by the time of her petition, 

McKee’s primary desire was not to live in the Palm Springs 

home—it was to cash out her interest so that she could buy 

a new home. The “only evidence” supporting McKee’s 

claim of homestead was “just her testimony” that she 

intended to return to the property should O’Kane ever 

vacate. The rest of the record suggested that “she had no 

intent to ever move back into the house.”

McKee argues that the bankruptcy court failed to 

recognize that California law distinguishes between 

circumstances where the debtor “is not intending to return to 

the residence versus it being impossible to return.” In 

essence, McKee claims that because O’Kane’s abuse made 

it impossible for her to return to the Palm Springs property, 

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8 IN RE: MCKEE V. ANDERSON

her testimony that she desired to do so should be enough to 

establish homestead.

McKee hooks her argument onto two California cases—

Moss and Michelman—but neither provides much support 

for her position. In Moss, the Warner family in mid-19th 

century California fled their homestead “on account of the 

hostility of the Indians of the vicinity.” 10 Cal. 296, 297 

(1858). Mrs. Warner and her children spent the next three 

and a half years with “different families of her acquaintance 

in San Diego,” as “during this period it was unsafe for her 

and her children” to return home. Id. The California 

Supreme Court held that the Warners had not abandoned the 

homestead but were instead “merely sojourners,” who were 

entitled to the exemption. Id. at 298. And in Michelman, her 

husband’s domestic violence drove Mrs. Frye and her 

children from the home. She then demanded her husband to 

vacate the property—which he did, on court order, in March 

1964. 238 Cal. App. 2d at 700–01. Mrs. Frye promptly 

returned to the property with her children. Id. The 

California court of appeal concluded that Mrs. Frye’s 

“forced removal” from the home did not “deprive[] her of 

her right to declare a homestead” because she had “intended 

to and later did return” to the home. Id. at 704. 

Moss and Michelman merely stand for the unremarkable 

proposition that a debtor may claim California’s homestead 

exemption even when it is impossible for her to return home. 

But neither case shows that “impossibility” alone entitles her 

to the exemption, regardless of intent to return to the home. 

In contrast, both Moss and Michelman noted objective 

evidence reflecting the claimant’s intent to return to the 

homestead. Mrs. Warner established “no permanent place of 

residence,” and instead lived an itinerant lifestyle, drifting 

through San Diego. Moss, 10 Cal. at 297–98. Mrs. Frye 

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IN RE: MCKEE V. ANDERSON 9

“left most of her clothing and furnishings and all of the 

furniture at the family home” and “at no time changed her 

voting address.” Michelman, 238 Cal. App. 2d at 700. These 

are the same indicia that courts have looked to in other cases 

to determine the debtor’s entitlement to homestead: for 

example, whether the debtor (1) left his personal belongings 

at the homestead, see In re Karr, 2006 WL 6810996, at *3 

(9th Cir. BAP Oct. 2, 2006); (2) retained the homestead’s 

address on his driver’s license, see In re Bruton, 167 B.R. 

923, 925–26 (Bankr. S.D. Cal. 1994); or (3) regularly visited 

the property, see In re Pham, 177 B.R. 914, 919 (Bankr. C.D. 

Cal. 1994). In short, whenever debtors claim California’s 

automatic homestead exemption—in circumstances of 

“impossibility” or not—we assess “whether the debtors 

demonstrated, rather than merely claimed, their intent to 

return to their home after the absence.” Karr, 2006 WL 

6810996, at *5 (citation omitted). 

Here, the bankruptcy court correctly found that McKee 

demonstrated none of these indicia. She changed her 

driver’s license and her voter registration to her new rental 

address. She removed all of her personal effects from the 

home. And she sought to cash out her interest in the Palm 

Springs property. McKee’s post hoc testimony that she 

would have returned—had O’Kane ever vacated—does not 

save her claim. A debtor’s testimony about her own 

intentions may be probative. But where, as here, “other facts 

to which she testified were inconsistent with such intention,” 

a court is “not bound to accept her statement that she 

intended to reside [at the homestead] as conclusive[.]” 

Tromans v. Mahlman, 111 Cal. 646, 647 (1896).1

1 McKee also invokes § 704.720(d), the spousal exception to the 

residence requirement of the homestead exemption. Cal. Civ. Proc. 

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10 IN RE: MCKEE V. ANDERSON

We AFFIRM the BAP’s decision affirming the 

bankruptcy court’s order sustaining objections to McKee’s 

claimed homestead exemption.

Code § 704.720(d). McKee argues that: (1) because § 704.720(d) 

applies to former spouses (who are no longer married), it should also 

apply to her and O’Kane, even though they were never married; and 

(2) because legislative history suggests § 704.720(d) was in part enacted 

to protect domestic violence victims, we should recognize McKee’s 

“impossibility” exception. We reject both. Neither the plain language 

of the statute nor the caselaw supports McKee’s first argument. And 

McKee’s second argument impermissibly requires us to extend 

California law—which we cannot and do not do. See Klingebiel v. 

Lockheed Aircraft Corp., 494 F.2d 345, 346 (9th Cir. 1974) (“[T]he duty 

of the federal court is to ascertain and apply the existing California law, 

not to predict that California may change its law and then to apply the 

federal court’s notion of what that change might or ought to be.”). 

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