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FILED

FEB 01 2017

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

NOTFOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. SC-16-1066-JuFY

)

NASHAT NAOOM and MANAL NAOOM ) Bk. No. 15-02484-LT7

)

Debtors. )

______________________________)

)

CREDIT ONE CORPORATION, )

)

Appellant, )

v. ) M E M O R A N D U M*

)

NASHAT NAOOM; MANAL NAOOM, )

)

Appellees. )

______________________________)

Argued and Submitted on January 19, 2017

at San Diego, California 

Filed - February 1, 2017

Appeal from the United States Bankruptcy Court

for the Southern District of California 

Honorable Laura S. Taylor, Chief Bankruptcy Judge, Presiding

_________________________

Appearances: Dixon Leon Gardner of Madison Harbor, ALC for

appellant Credit One Corporation; David E.

Britton of Lockhart & Britton for appellees

Nashat and Manal Naoom.

_________________________

Before: JURY, FARIS, and YUN,** Bankruptcy Judges.

* This disposition is not appropriate for publication.

Although it may be cited for whatever persuasive value it may

have (see Fed. R. App. P. 32.1), it has no precedential value. 

See 9th Cir. BAP Rule 8013-1.

** Hon. Scott H. Yun, United States Bankruptcy Judge for the

Central District of California, sitting by designation.

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Credit One Corporation (“Credit One”) appeals the decision

of the bankruptcy court which (1) after an evidentiary hearing,

valued Chapter 71 debtors’, Manal Naoom and Nashat Naoom

(“Debtors”), investment property at $600,000.00, and

(2) partially avoided Credit One’s judicial lien pursuant to

§ 522(f)(1). Credit One argues on appeal that the bankruptcy

court failed to consider evidence at trial that would value the

property at a higher amount. For the reasons set forth below, we

AFFIRM. 

I. FACTS

The instant appeal centers around a contested evidentiary

dispute on the value of Debtors’ investment property located at

4189 Rolando Blvd., San Diego, California 92115 (the

“Property”).

On April 17, 2015, Debtors filed a joint chapter 7 petition

listing the Property on Schedule A with a value of $450,000.00.

The Property was encumbered by a first deed of trust in favor of

Wells Fargo Bank, N.A. (“Wells Fargo”) in the amount of

$516,399.67. It was also encumbered by a judicial lien recorded

by Credit One in the amount of $122,747.39, and a $5,889.62 lien

for delinquent property taxes recorded by San Diego County.

Debtors claimed the Property as exempt in the amount of

1 Unless otherwise indicated, all chapter and section

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and 

“Rule” references are to the Federal Rules of Bankruptcy

Procedure.

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$26,765.00 pursuant to California Code of Civil Procedure

§ 704.730(b)(5).2

Debtors primarily leased the Property to auto repair and

service tenants. The Property is improved with two separate

concrete block buildings. The first building is approximately

1,008 square feet and can be leased to one tenant

(“Building A”). USA Smog has been a longstanding tenant in

Building A. The second building is approximately 2,000 square

feet, but is divided into two units. (“Building B”). Cartunist

Auto Repair has been a longstanding tenant in one unit in

Building B. The second unit in Building B had been vacant for

awhile on the petition date, but was leased shortly thereafter

to Peter Auto Repair.

On July 23, 2015, Debtors filed a motion under § 522(f)(1)

to avoid Credit One’s judicial lien. Credit One filed an

opposition on August 5, 2015, disputing the value of the

Property. On August 19, 2015, Debtors filed a reply, attaching

an appraisal report prepared by John Agamata (“Agamata”), who

valued the Property at $450,000.00 (the “Agamata Appraisal”).

Notably, Agamata had appraised the Property at various times

prior to the Agamata Appraisal, and two of his earlier

appraisals were received into evidence. The first was conducted

in 2011 when Agamata valued the Property at $535,000.00. The

2 On the petition date, Debtors did not claim the Property

as exempt. However, after various amendments to Schedule C, the

last of which occurred just prior to the evidentiary hearing,

Debtors claimed the Property as exempt in the full amount of

$26,765.00.

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second was conducted in 2013 when he valued the Property at

$550,000.00.

On August 26, 2015, the bankruptcy court issued a tentative

ruling allowing Credit One an opportunity to obtain an

appraisal. On that same day, Credit One filed an appraisal

report and two supporting declarations from Jeff Greenwald

(“Greenwald”) and John Morgan (“Morgan”), who opined that the

value of the Property was $600,000.00 on the petition date (the

“Morgan Appraisal”). On October 30, 2015, the bankruptcy court

set an evidentiary hearing in January 2016 to reconcile the

differences between the Agamata Appraisal and the Morgan

Appraisal.

Prior to the evidentiary hearing, Credit One filed a

supplemental brief and declaration of Morgan which asserted that

the Property should be valued at $653,091.20. Credit One argued

that the increase in value was due to Debtors providing Morgan

incorrect information regarding (1) the longevity of the

leasehold interests,3 and (2) the correct rent roll information.4

Morgan then used the rent roll information from the Agamata

Appraisal in his own analysis to arrive at the $653,091.20

3 Morgan asserted that Debtors represented to him that all

of the tenants occupying the Property were on a month-to-month

tenancy, when in fact, USA Smog and Cartunist Auto Repair had

prior long-term tenancies, which only became month-to-month

because of the bankruptcy.

4 Morgan asserted that Debtors represented to him that the

monthly rental income from all of the tenants was $4,800 per

month (or $57,600 per year). However, after reviewing the Agamata

Appraisal in August of 2015, Morgan became aware that the actual

rental income was $6,000 per month (or $72,000 per year).

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figure; in the written Morgan Appraisal, Morgan had used the

allegedly incorrect figures provided by Debtor.5

The bankruptcy court held a two-day evidentiary hearing

where the court heard extensive testimony from Morgan, Agamata,

Debtors, and the owner of Cartunist Auto Repair, Tang In. In its

written closing argument, Credit One argued that the Property

should be valued at $680,320.00. It based the $680,320.00 value

on Morgan’s testimony at trial when he calculated the figure on

the stand by using the correct rent roll information. On

February 12, 2016, Debtors filed their reply to Credit One’s

closing argument, still asserting Agamata’s value.

On March 9, 2016, the court issued its oral ruling, valuing

the Property at $600,000.00. In doing so, the court made various

factual findings, weighed the exhibits and testimony presented

at trial, accepted the written Morgan Appraisal as the proper

valuation of the Property, and totally rejected the Agamata

Appraisal. As a result of this valuation, the court partially

avoided Credit One’s judicial lien in the amount of $71,801.68.

Credit One filed a timely appeal.

II. JURISDICTION

The bankruptcy court had jurisdiction pursuant to 28 U.S.C.

§§ 1334 and 157(b)(2)(A). We have jurisdiction under 28 U.S.C.

§ 158.

5 Although Morgan was provided with incorrect rent roll

information, Morgan had based his appraisal on projected market

rent. As a result, Morgan projected that market rent would be

$72,879.00 per year, which is only a $879.00 difference from the

actual rental income of $72,000.00.

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III. ISSUE

Whether the bankruptcy court committed clear error in

valuing the Property at $600,000.00 rather than $680,320.00.

IV. STANDARD OF REVIEW

In reviewing decisions of the bankruptcy court, the Panel

reviews legal conclusions de novo, factual findings for clear

error, and mixed questions of law and fact de novo. Murray v.

Bammer (In re Bammer), 131 F.3d 788, 792 (9th Cir. 1997);

Jorgensen v. Fed. Land Bank of Spokane (In re Jorgensen),

66 B.R. 104, 109 (9th Cir. BAP 1986). 

We review a bankruptcy court’s findings of fact based on an

evidentiary hearing under the clearly erroneous standard. Rand

v. Rowland, 154 F.3d 952, 957 n.4 (9th Cir. 1997) (en banc);

Diamant v. Bank of Levy (In re Rossi), 86 B.R. 220, 222 (9th

Cir. BAP 1987). A finding of fact is clearly erroneous when,

after reviewing the evidence, we are left with the definite and

firm conviction that a mistake has been committed. Dewhirst v.

Citibank (Ariz.) (In re Contractors Equip. Supply Co.), 861 F.2d

241, 243 (9th Cir. 1988).

Credit One suggests that the standard of review in the

present matter varies between de novo, abuse of discretion, and

clearly erroneous. This suggestion misses the mark. Credit One’s

only argument before this Panel is that the bankruptcy court

erred in assigning value to the Property, a disputed fact at

trial. Although Credit One attempts to create different

standards of review by restating the same issue on appeal with

varying emphasis, this differentiation fails. Each argument

boils down to the same thing: Credit One disagrees with the

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court’s factual findings of value. Therefore, because Credit One

does not challenge whether its judicial lien is avoidable under

the requirements of § 522(f)(1) as a matter of law, we can only

disturb the bankruptcy court’s findings if we determine they

were clearly erroneous. See Joseph F. Sanson Inv. Co. v.

268 Limited (In re 268 Limited), 789 F.2d 674, 677 (9th Cir.

1986); see also Rule 7052(a)(6).

V. DISCUSSION

Section 522(f)(1) permits a debtor to avoid the lien of a

judgment creditor on exempt property. It states, in relevant

part, that “the debtor may avoid the fixing of a [judicial] lien

on an interest of the debtor in property to the extent that such

lien impairs an exemption to which the debtor would have been

entitled under [§ 522(b)] . . . .” In the Ninth Circuit, in

order to avoid a judicial lien, a debtor must satisfy three

conditions: (1) there was a fixing of a lien on an interest of

the debtor in property; (2) the lien impairs an exemption to

which the debtor would have been entitled; and (3) the lien is a

judicial lien. Culver, LLC v. Chiu (In re Chiu), 304 F.3d 905,

908 (9th Cir. 2002). 

As stated above, Credit One does not challenge whether the

bankruptcy court properly determined that each condition was met

in order to avoid its judicial lien as a matter of Ninth Circuit

law. Rather, Credit One centers its arguments only around

whether the bankruptcy court properly valued the Property,

asserting that the court erred by not considering all of the

evidence at trial.

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We disagree that there was error. Following the two-day

evidentiary hearing, the bankruptcy court made detailed factual

findings that the Property should be valued at $600,000.00. We

can only disturb these findings if we are left with a definite

and firm conviction that a mistake has been committed. 

In re Contractors Equip. Supply Co., 861 F.2d at 243. That is an

unlikely determination when, as here, the court’s ruling

addresses each and every factual argument Credit One put

forward. 

In valuing the Property, the bankruptcy court made a

lengthy oral ruling that carefully considered the exhibits and

testimony presented at trial. Based on all of the evidence, the

court found the value to be $600,000.00. Although Credit One

challenges the outcome, the simple fact is that the court

actually accepted Credit One’s written appraisal which valued

the Property at $600,000.00. 

To reach this conclusion, the court principally relied on

the following five points. First, the court found that Agamata’s

prior appraisals undercut the current Agamata Appraisal value of

$450,000.00. The court found that this current valuation was not

credible based on his valuing the Property at a much higher

amount twice before, during the depths of the real estate

recession. Second, the court considered each appraisal with

respect to Building A, unit one in Building B, and unit two in

Building B, and found that the Morgan Appraisal properly

determined market rent and, using the market rent, properly

evaluated the Property. The court found that market rent is what

a potential buyer would assume when purchasing the Property and

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therefore this valuation methodology was sound. Third, in

looking at the comparable rentals submitted by both parties, the

court found that the Morgan Appraisal properly adjusted the

comparable properties, properly differentiated between

Building A and Building B, and considered historical rent and

market rent. Fourth, the court found that the Morgan Appraisal

was much more accurate than the Agamata Appraisal with respect

to comparable sales. Last, the court found that the Morgan

Appraisal properly considered the impact of parking on the

value, weighing various factors including parking at night in

the various units, the informal relationship with Debtors’

neighbors, O’Reilly’s Auto Parts, the fact that there is no

reciprocal easement, and the possibility of being towed if

parked illegally overnight. The court’s careful consideration of

these factors shows there is clear evidence in the record to

support its factual findings that the Property should be valued

at $600,000.00. We cannot disturb these findings on appeal.

Contrary to Credit One’s claims, the bankruptcy court did

specifically consider evidence offered through Morgan’s

testimony which asserted that the Property should be valued at

$680,320.00 when accounting for an increase in rent roll and

actual expenses. In addressing the higher rent roll information,

the court stated: 

[Credit One] suggested [this] court, in effect,. . .

determine its own number, assuming greater income from the

property . . . and plug in these numbers into the equation

utilized by . . . Morgan. The court declines this

suggestion. During trial, both parties asked the appraisers

about averaging things, about using real numbers generated

by the property, and both parties miss the mark when they

do this. 

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(Emphasis added). The court explained:

appraisal methodology is not a matter of mere math and

averages. Instead, the appraiser must gather market data

and come to conclusions based on his expertise. The court

is not an appraiser, and while simple mathematical errors

may be capable of correction and result in a different

number, the suggestion by the creditor requires

recalculation at a much more sophisticated level . . .

Mr. Morgan did some math as suggested by his client . . .

but it was not a full reappraisal that really went back,

factored those additional numbers in, and resulted in . . .

a completely redone appraisal. 

As made clear by these comments, the bankruptcy court weighed

the evidence and determined that it was unwilling to accept a

higher appraised value by solely accounting for additional rent

and expense figures; instead, it would have only considered a

full re-appraisal of the Property taking into account all

valuation factors, something Credit One did not provide. Even if

this panel was convinced that, had it been sitting as the trier

of fact, it would have weighed this evidence differently, we

must affirm the bankruptcy court’s ruling because the decision

here is plausible in light of record viewed in its entirety. See

Anderson v. City of Bessemer City, 470 U.S. 564, 573–74 (1985).

Therefore, because there is evidence in the record to

support the bankruptcy court’s factual findings, we conclude

that the court’s findings were not clearly erroneous.

VI. CONCLUSION

For the reasons stated above, we AFFIRM.

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