# FIL ED
OCT 8 2019 SUSAN M . SPRAUL, CLERK U. S. BKCY

. APP. PANEL O F T HE NI NT H CI RCUI T 

### NOT FOR PU BLICA TION

U NIT E D ST A T E S BA NK RU PT CYA PPE L L A T E PA N E L

OF T HE NINT H CIRCU IT In re: A LELI A . HER N A N D EZ ,

Deb to r. A SSET MA N A GEMEN T HO LDIN GS, LLC, A p pellant,

v. A LELI A . HER N A N D EZ ,

A p pellee. BA P N o . C C -19-1013-FSTa Bk. N o . 8:15-b k-10563-TA

M E M ORA ND U M *

Sub m itted W itho ut A rgum ent o n Septemb er 26, 2019

Filed – O c to b er 8, 2019 A ppeal fro m the U nited States Bankruptcy C o urt fo r the C entral Distric t o f C alifo rnia

* Thi s di sposi ti on i s not appr opr i ate for publi cati on. Although i t may be ci ted for whatev er per suasi v e v alue i t may hav e, see Fed. R. App. P. 32.1, i t has no pr ecedenti al v alue, see 9th Ci r . BAP Rule 8024-1.Ho no rab le Theo d o r C . A lb ert, Bankruptc y Judge, Presiding

A ppearanc es: David R . Hab erb u sh, Vanessa M. Hab erb ush, and Lo uis

H. A ltm an o f Hab erb ush & A sso c iates, LLP o n the b rief fo r appellant A sset Managem ent Ho ldings, LLC ; Grego ry M. Salvato and Jo seph Bo ufadel o f Salvato Law O ffic es o n the b rief fo r appellee A leli A . Hernandez.
Befo r e: FA R IS, SPRA K ER , and TAY LO R

, Bankruptc y Judges. INT ROD U CT I ON Deb to r A leli A
. Hernandez o b tained a chapter 7 1 discharge, then later initiated this c hapter 13 pro c eeding to strip o ff the sec o nd m o rtgage lien held b y appellant A sset Managem ent Ho ldings, LLC (“A MH”). She
o b tained a lien avo idanc e o rder, b ut she did no t im m ediately c hallenge A MH’s assertio n o f an unsec ured c laim, so the trustee b egan m aking distrib utio ns under the c o nfirm ed plan to A M H as an unsecu red c redito r. O ver two years into her plan, Ms. Hernandez filed an objec tio n to A MH’s pro o f o f c laim, arguing that her deb t to A M H was no t an allo wed
unsec ured c laimb ec ause her perso nal liab ility had b een wiped o ut b y the prio r c hapter 7 discharge. The b ankruptc y c o urt vo ic ed its disappro val o f Ms. Hernandez’s tardiness b ut sustained the objec tio n.

1 Unless speci fi ed other wi se, all chapter and secti on r efer ences ar e to the Bankr uptcy Code, 11 U.S
. C. §§ 101-1532, and all “Rule” r efer ences ar e to the Feder al Rules of Bankr uptcy Pr ocedur e. 2A MH appeals fro mthe o rder sustaining the c laimobjec tio n, arguing

that § 506 and the language o f the lien avo idanc e o rder dic t a te that its c laim
m ust b e treated as unsecu red deb t under the plan. It also argues that Ms. Hernandez ac quiesc ed to such treatm ent and that equitab le do c trines prec lude her fro mc hallenging its c laim
. The b ankruptc y c o urt’s ho lding c o m po rts with o ur rec ent dec isio n in W a shingto n v. R ea l Tim e R eso lutio n, Inc. (In re W a s hingto n) , 602 B.R
. 710 (9th C ir. BA P 2019). W e A FFIR M
. FA CT U A L BA CK GROU ND 2 A . M s . Hernandez’searlier c hapter 7 c as e and dis c harg e Ms. Hernandez previo usly so ught c hapter 7 b a nkruptc y pro tec tio n in 2010. She scheduled her real pro perty lo c ated in Missio n Viejo , C alifo rnia (the “Pro perty”). A c c o rding to her schedules, the Pro perty was
enc umb ered b y a first deed o f trust in the am o u nt o f $963,180 and a sec o nd deed o f trust (“Junio r Lien”) sec uring a deb t o f $278,396. Ms. Hernandez rec eived her c hapter 7 discharge in A u gust 2010. B. M s . Hernandez’sc hapter 13 c as e Y ears later, Ms. Hernandez filed a chapter 13 petitio n. She again
scheduled the Pro perty, this tim e valued at $950,000. The am o unt due

2 We exer ci se our di scr eti on to r ev i ew the bankr uptcy cour t’s docket, as appr opr i ate. See Woods & Erickson, LLP v. Leonard (In re AVI, Inc.) , 389 B.R. 721, 725 n.2 (9th Ci r. BAP 2008). 3under the first deed o f trust had inc r eased to $1,036,490.

Ms. Hernandez scheduled the Junio r Lien, no w held b y SWLinear Investm ent Gro u p , LLC (“SWLinear”). Bec ause the am o u nt sec u red b y the first deed o f trust exc eeded the value o f the Pro p erty, she scheduled SW Linear’s c laimas an unsecured no nprio rity c laimin the am o unt o f $278,396 and a secured c laimin the am o unt o f $0. She indic ated that she intended to strip o ff the Junio rLien. Mr. Hernandez’s chapter 13 plan (“Plan”) pro p o sed to pay five perc ent o f the $285,244.71 allo wed no nprio rity unsec u red c laim s, the b ulk
o f whic h was attrib utab le to the Junio r Lien. SWLinear filed a pro o f o f c laim (“C laim ”) b ased o n the Junio rLien fo r $459,221. A MH is SWLinear’s suc c esso r in interest. Ms. Hernandez filed a m o tio n to avo id the Junio r Lien. She represented that the value o f the Pro p erty was ec lipsed b y the first-po sitio n lien, so the Junio r Lien was who lly unsec u red and c o uld b e avo ided. The c o urt granted the m o tio n and ruled that the Junio r Lien was to b e avo ided. The c o urt’s fo rmo r der (“A vo idanc e O r der”) pro vided that “[a]ny filed pro o f o f c laim o f the junio r lienho lder is to b e treated as an unsecured
c laimand is to b e paid thro u gh the plan pro rata with all o ther unsec ured
c laim s.” It further stated that “[t]he junio r lienho lder’s c laimo n the deed o f trust, m o rtgage o rlien shall b e allo wed as a no n-prio rity general unsec ured
c laimin the am o unt per the filed Pro o f o f C laim .”
4A MH obj ec ted to c o nfirm atio n o f the Plan and filed a m o tio n to

dism iss the b ankruptc y c a se b ec ause Ms. Hernandez’s deb ts exc eeded the jurisdic tio nal lim its o f § 109(e). The b ankruptc y c o urt denied the m o tio n to dism iss and granted plan c o nfirm atio n. This Panel and the N inth C irc uit affirm ed. A sset M

gm t. H o ldings, LLC

v. H erna ndez (In re H

erna ndez ) , BA P N o s. C C -16-1228-LKuF, C C -16-1244-LK u F, 2017 W L 1395741 (9th C ir. BA P A pr. 11, 2017), a

ff’d , 754 F. A pp’x 632 (9th C ir. 2019). C. M s . Hernandez’sobjec tion to A M H’s proof of c laim W hile the appeal was pending, Ms. Hernandez b egan m aking her
m o nthly paym ents under the Plan. The chapter 13 trustee m ade distrib utio ns to unsec ured c redito r s, inc luding A MH. A MH rec eived paym ents under the Plan fo rten m o nths b efo re Ms. Hernandez filed an objec tio n (“Objec tio n”) to the C laim
. She argued that its Junio r Lien was avo ided pursuant to the A vo idanc e O rder and that the unsec ured deb t had b een disc harged in her c hapter 7 c ase. Thus, she argued that A MH did no t have an allo wed c laimpayab le under the Plan. A MH ac kno wledged that the c hapter 7 discharge m eant that Ms. Hernandez was no t perso nally liab le under the Junio rLien. But it stated that the A vo idanc e O rder c learly indic a ted that A MH was to b e treated as an unsecured c redito r. A M H also argued that Ms. Hernandez failed to tim ely o bjec t to its C laimand that her inac tio n was tantam o unt to an adm issio n that A MH held an allo wed, unsecured c laim . Finally, A MH
5c o ntended that the Objec tio n was b arred b y the do c trines o f lac hes and

esto ppel and prec luded b y pub licpo lic y interests. A fter a hearing, the b ankruptc y c o urt rejec ted A MH’s po sitio n: The o nly lo gic ally c o nsistent c o nc lusio n has to b e that inso far as in perso na m liab ility o f A leli Hernandez existed at that tim e [o f the c hapter 7 c ase], it was discharged. So fast-fo rward to the sec o nd filing, whic h is chapter 13. There is an o rder under Sec tio n 506 saying . . . soso rry, A sset Managem ent, b ut yo ur lien has attached to no thing b ec ause the value o f the residenc e is o nly, as I rec all, 950,000 and Chase has a lo a n o ver a m illio n. So yo u effec tively have no thing. It c o nc luded, “I think it’s a question o f do es [Ms. Hernandez] o we anything at this po int. . . . I c an’t c o nc lude that she o w es yo u anything at this po int. . . . Bec a use I’ve already determ ined that the in rem p o rtio n is also go ne b y reaso n o f the happenstanc e o f value.” The b ankruptc y c o urt ac kno wledged that the language o f the A vo idanc e O rder c r eated c o nfusio n, b ut stated, “O b vio u sly, the fo rmo rder do es no t c o ntem plate the so m ewhat unusual c ase like this o ne where deb to r is already discharged fro mher in perso namliab ility and thus [A MH] sho u ld no t expec t a windfall dividend fro mthe C hapter 13 estate.” 3

3 Ms. Her nandez asked the cour t to or der di sgor gement of the payments AMH had r ecei v ed. The cour t deni ed the r equest, explai n i ng that i t would not r ewar d Ms. Her nandez for her “fai lur e of di li gence.” Ms. Her nandez di d not cr oss-appeal fr om the Av oi dance Or der , so we do not consi der whether di sgor gement was appr opr i ate. 6The b ankruptc y c o urt sustained the O bj ec tio n, and A MH tim ely appealed. JU RISD ICT ION The b ankruptc y c o urt had jurisdic tio n pursuant to 28 U .S.C . §§ 1334 and 157(b )(2)(B). W e have jurisdic tio n under 28 U
. S.C
. § 158. ISSU E W hether the b a nkruptc y c o urt erred in sustaining Ms. Hernandez’s Objec tio n to A MH’s C laim
. ST A ND A RD S OF RE V IE W “The pro per interpretatio ns o f statutes and rules are legal questions that we review de no vo .” H e a th v. Am . Express Tra v el R ela ted S e rvs. Co . (In re H ea th) , 331 B.R . 424, 428 (9th C ir. BA P 2005) (c iting K ir Tem eculav. LPM C o rp. (In re LPM

Co rp.) , 300 F.3d 1134, 1136 (9th Cir. 2002)). “De no vo review requires that we c o nsider a m a tter anew, as if no dec isio n had b een m ade previo usly.” F ra ncis v. W a lla c e (In re F ra ncis) , 505 B.R
. 914, 917 (9th C ir. BA P 2014) (c itatio ns o m itted). W e review fo r an ab u s e o f disc retio n the b ankruptc y c o u rt’s dec isio n whether to exerc ise its equitab le po wers. S ee Bitters v. N e two rks Elec. Co rp. (In re N etwo rks Elec. Co rp.) , 195 B.R . 92, 96 (9th C ir. BA P 1996). W e apply a two -part test to determ ine whether the b ankruptc y c o urt ab used its disc retio n. United S ta tes v. Hinks o n , 585 F.3d 1247, 1261-62 (9th Cir. 2009) (en b anc ). First, we c o nsider de no vo whether the b a nkruptc y c o urt applied
7the c o rrec t legal standard to the relief requested. Id. Then, we review the

b ankruptc y c o urt’s fac tual findings fo rc lear erro r. Id. at 1262. W e m ust affirm the b ankruptc y c o u r t’s fac tual findings unless we c o nc lude that they are illo gic al, im p lausib le, o r witho ut suppo r t in inferenc es that m a y b e drawn fro mthe fac ts in the rec o rd. Id. D ISCU SSION A . T he bankruptcy c ourt did not err in holding that A M H had no allowed uns ec u red c laim . A MH argues that b o th § 506 4 and the A vo idanc e O rder m andate that its C laimb e treated as an allo wed unsec ured c laimunder the Plan. W e rec ently rejec ted b o th o f these argum ents in W a shingto n . W a shingto n deals with the sam e fac tual pattern and legal questio ns as the present c ase. The deb t o r had ob tained a chapter 7 discharge, then filed

4 S ecti on 506(a)(1) pr ov i d es: An allowed clai m of a cr edi tor secur ed by a li en on pr oper ty i n whi ch the estate has an i n ter est, or that i s subj ect to setoff under secti on 553 of thi s ti tle, i s a secur ed clai m to the extent of the v alue of such cr edi tor ’s i nter est i n the estate’s i n ter est i n such pr oper ty, or to the extent of the amount subj ect to setoff, as the case may be, and is an unsecured claim to the extent that the value of such creditor’s interest or the amount so subject to setoff is less than the amount of such allowed claim
. S uch v a lue shall be deter mined i n li ght of the pur pose of the v aluati on and of the pr oposed di sposi ti on or use of such pr oper ty, and i nconj uncti on wi th any hear in g on such di sposi ti on or use or on a plan affecting such cr edi tor ’s i nter est. § 506(a)(1) (emphasi s added). 8a chapter 13 c ase and so ught to avo id her who lly unsec ured junio rdeed o f

trust. A fter the b ankruptc y c o urt c o nfirm ed the deb to r’s chapter 13 plan, the c redito r filed a pro o f o f c laimb ased o n the junio rdeed o f trust. The deb to r objec ted, b u t the b ankruptc y c o urt o verruled her o bjec tio n, ho lding that the plain language o f § 506(a) requires that the valuatio n o f the lien fo llo wing the c hapter 7 discharge results in an unsecured c laimthat m ust b e addressed in a chapter 13 plan. 602 B.R . at 712. The b ankruptc y c o urt also agreed with the c redito r that the fo rm language used in the lien avo idanc e o r der pro vided that the junio r lien was to b e treated as an unsecured c laimunder the plan. Id. at 712-13. In o ther wo r ds, the b ankruptc y c o urt b ased its dec isio n o n the exac t
sam e argum ents A MH no wraises in this appeal. W e reversed. First, we explained that, after a lien is “stripped” in a
c hapter 13 c ase, “the junio r lienho lder will o rdinarily b e left with an allo w ed unsec ured c laimthat m ust b e pro vided fo r in the deb t o r’s plan in the sam e m anner as o ther general unsec u red c laim s.” Id. at 713. W e held, ho wever, that the result is different when the deb t o r ob tains
a chapter 7 discharge, then avo ids a who lly unsec ured lien in a sub sequent
c hapter 13 c ase (the so -c alled “chapter 20” sc enario ). W e ruled that the
c hapter 7 discharge extinguishes the deb t o r’s perso nal liab ility to the
c redito r, leaving the c redito r with no allo wed unsec ured c laimin the sub sequent chapter 13 c ase. Id. at 716.
9W e additio nally rejec ted the c r edito r’s argum ent that the fo rmo rder

required the junio r c laimto b e treated as unsecured deb t, b ec ause “[t]he lo c a l b ankruptc y fo rm s at issue sim ply do no t address the situatio n where a deb to rhas previo usly discharged her perso nal liab ility o n the underlying deb t.” Id. at 717. Based o n o ur ho lding in W a shingto n , whic h is o n all fo urs with this appeal, we rejec t A MH’s argum ent that § 506 and the A vo idanc e O rder
m andate the existenc e o f an allo w ed unsec ured c laimwhen a lien is stripped in a chapter 13 c ase fo llo w ing a c hapter 7 discharge. A c c o rdingly, the b ankruptc y c o urt did no t err. 5 B. E quitable and polic y c ons iderations c annot s av e A M H’s Claim . A MH additio nally argues that vario us equitab le and po lic y c o nsideratio ns suppo rt its po sitio n. These argum ents are all m eritless. A MH c ites Federal Rule o f Evidenc e (“FR E”) 801(d)(2)(B) 6 fo r the

5 Ms. Her nandez ar gued that the law of the case doctr i ne pr ecludes AMH fr om r eli ti gati n g the i ssues that wer e alr eady deci ded i n the ear li er appeals. As a gener al r ule, “one panel of an appellate cour t wi ll not as a gener al r u le r econsi der questi ons whi ch another panel has deci ded on a pr i or appeal i n the same case.” Merritt v. Mackey , 932 F.2d 1317, 1320 (9th Ci r. 1991) (ci tati on omi tted). We decli ne to apply the law of the case doctr i ne because the exact i s sue pr esented i n thi s appeal, whi le si mi lar to and ov er lapping wi th the i ssues r ai sed in the ear li er appeals, was not speci fi cally addr essed or d eci ded ei ther by the BAP or the Ni nth Ci r cui t.

6 FRE 801(d)(2)(B) pr ov i des that “a per son’s or al asser ti on, wr i tten asser ti on, or nonv erbal conduct, i f

the per s on i ntended i t as an asser ti on[,]” i s not hear say i f “[t]he statement i s offer ed agai nst an opposi ng par ty and: . . . (B) i s one the par ty mani fested (conti nued...) 10pro po sitio n that Ms. Hernandez’s failure toearlier o bjec t to the C laimwas

an “adm issio n” that A MH ho lds an allo wed unsec ured c laim . But FR E 801 is a rule o f evidenc e that determ ines whether a c o urt c a n c o nsider c ertain statem ents in m a king fac tual determ inatio ns. In this c ase, ho wever, the allo w ab ility o f A MH’s unsecured c laimpresents a pure questio n o f law. The b ankruptc y c o urt was duty b o und to m ake a c o rrec tlegal determ inatio n regardless o f Ms. Hernandez’s prio r po s itio n. A MH argues that it is inequitab le to allo wMs. Hernandez to objec tto the C laimso b elatedly. Ho w ever, as A MH c o nc edes, neither the Plan no r the Bankruptc y C o de im p o ses a tim e lim it to o bjec t to a c laim : “[T]here has b een no c a se law in the N inth C irc uit pro hib iting po stc o nfirm atio n c laim
o bjec tio ns. Rule 3007 do es no t pro vide a tim e lim it fo r objec tio ns to pro o fs
o f c laim s, and such an objec t io n m ay b e filed at any tim e.” S ho o k v. C BIC (In re S ho o k) , 278 B.R . 815, 828 (9th C ir. BA P 2002) (c itatio n o m itted). The plan
c o nfirm atio n o rder pro vided that “[c ]o nfirm a tio n is witho ut prejudic e to deb to r (s) [sic ] right to objec t to any c laim filed in this c ase, either pre o r po st c o nfirm a tio n.” Thus, it was no t inequitab le fo r the b ankruptc y c o urt to
c o nsider the Objec tio n. Mo reo ver, reviving A MH’s discharged C laimwo uld b e inequitab le to W ells Fargo C ard Servic es, ano ther unsec ured c r edito r. U nder the Plan,

6 (...conti nued) that i t adopted or beli ev ed to be tr ue[.]” Fed. R. Ev i d. 801. 11it wo uld have rec eived o nly five perc ent o f its c laim
. Ho wever, fo llo wing

the disallo wanc e o f A M H’s C laim, it rec eived 100% o f its c laim . Barring Ms. Hernandez fro mobjec ting to A MH’s C laimwo uld prejudic e W ells Fargo , whic h did no thing wro ng. Finally, A MH c o ntends that Ms. Hernandez is attem pting to
c irc u m vent the Bankruptc y C o de to avo id the Junio r Lien. A t b o tto m, this is an attac k o n the legitim ac y o f a “chapter 20” c a se. But the N inth C irc uit has already rejec ted this po s itio n in A M H’s prio r appeal. In re H erna ndez, 754 F. A pp’x at 633. CONCL U SION Therefo re, the b a nkruptc y c o urt did no t err in sustaining the Objec tio n and disallo w ing A MH’s C laim . W e A FFIR M.

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