FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

IN RE PAUL RICHARD CHERRETT;

COLLEEN COURTNEY CHERRETT,

Debtors,

ASPEN SKIING COMPANY,

Appellant,

v.

PAUL RICHARD CHERRETT; COLLEEN

COURTNEY CHERRETT; ART

CISNEROS, Chapter 7 Trustee,

Appellees.

No. 14-60079

BAP No.

14-1056

OPINION

Appeal from the Ninth Circuit

Bankruptcy Appellate Panel

Kirscher, Dunn, and Taylor, Bankruptcy Judges, Presiding

Argued and Submitted November 8, 2016

Pasadena, California

Filed October 16, 2017

Before: Marsha S. Berzon, Morgan Christen,

and Jacqueline H. Nguyen, Circuit Judges.

Opinion by Judge Christen;

Dissent by Judge Nguyen
2 IN RE CHERRETT

SUMMARY*

Bankruptcy

The panel affirmed the Bankruptcy Appellate Panel’s

decision affirming the bankruptcy court’s denial of a

creditor’s motion to dismiss a Chapter 7 bankruptcy petition

for abuse under 11 U.S.C. § 707(b)(1).

Agreeing with other circuits, the panel held that the

bankruptcy court’s order was final and appealable because it

conclusively resolved the debtors’ ability to file a Chapter 7

bankruptcy petition and conclusively determined the discrete

issue whether a debt was primarily non-consumer and

therefore subject to discharge under Chapter 7.

The panel held that the debtor’s housing loan, made by an

employer to an employee as a key part of a compensation

package, qualified as non-consumer debt. The panel held that

the bankruptcy court did not clearly err in finding that the

debtor incurred the housing loan primarily for a nonconsumer purpose connected to furthering his career. 

Accordingly, § 707(b)(1), which allows the bankruptcy court

to dismiss a case filed by a debtor whose debts are primarily

consumer debts, did not apply.

Dissenting, Judge Nguyen wrote that the correct standard

of review was de novo because the case involved undisputed

facts and the only issue was the legal conclusion to be drawn

from those facts, and the panel majority created an intra- 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.
IN RE CHERRETT 3

inter-circuit split by reviewing for clear error. Judge Nguyen

wrote that under de novo review, it was clear that the housing

loan was consumer debt incurred by an individual primarily

for a personal, family, or household purpose.

COUNSEL

Scott Talkov (argued) and Michael G. Kerbs, Reid & Hellyer

APC, Riverside, California, for Appellant.

Kathleen J. McCarthy (argued) and Thomas H. Casey, Law

Office of Thomas H. Casey Inc., Rancho Santa Margarita,

California; Leslie Keith Kaufman, Law Offices of Kaufman

& Kaufman, Santa Ana, California; for Appellees.

OPINION

CHRISTEN, Circuit Judge:

This case calls for the court to decide whether a housing

loan, made by an employer to an employee as a key part of a

compensation package, qualified as a non-consumer debt. If

the loan was a non-consumer debt, the bankruptcy court

properly denied Aspen Skiing Company’s motion to dismiss

the Cherretts’ Chapter 7 bankruptcy petition under 11 U.S.C.

§ 707(b)(1). On the other hand, if the loan was a consumer

debt, the bankruptcy court erred by denying the motion to

dismiss. The BankruptcyAppellate Panel (BAP) affirmed the

bankruptcycourt, ruling that the bankruptcycourt’s order was

final and appealable and that there was sufficient evidence

that the Cherretts incurred the loan for a non-consumer
4 IN RE CHERRETT

purpose. We have jurisdiction under 28 U.S.C. § 158(d), and

we affirm the BAP.

I. BACKGROUND

A. Cherrett’s Employment with Aspen

Paul Cherrett (Cherrett) began working in the hospitality

industry in 1979. He spent approximately twenty-five years

with the Four Seasons hotel chain, including five years at the

Four Seasons in Jackson Hole, Wyoming. In December

2006, while Cherrett lived and worked in Jackson Hole, he

heard about an open managerial position at Aspen Skiing

Company (Aspen) in Colorado. He did not apply for the

position because it did not offer any new responsibilities

compared to his job at the Four Seasons. Months later, in

2007, Cherrett learned that Aspen had created a new uppermanagement position with expanded responsibilities. He

expressed interest to an executive search firm and interviewed

for the job.

Aspen offered Cherrett a position leading its hospitality

division as a senior vice president heading up the expansion

of Aspen’s “Little Nell Hotel” brand, Aspen’s prestigious

“flagship property.” Cherrett understood that if the Little

Nell Hotel expansion continued, he might have the

opportunity to oversee brand development in Jackson Hole

and move back to his home there. Cherrett also understood

that if he accepted the position with Aspen, he would need to

live near Aspen’s office in Colorado, at least initially. This

represented a challenge because his daughter had two years

of high school left, Cherrett and his wife did not want to

relocate her to a new school, and in Cherrett’s view, the

salary proposed by Aspen did not cover the high cost of
IN RE CHERRETT 5

living in the Aspen area nor offer sufficient incentive to

disrupt his family’s life in Wyoming. The salary was not

enough for him to afford to buy a home in Aspen, and rentals

there were “few and far between” and also very expensive.

In negotiationsregarding compensation, Aspen eventually

offered a $500,000 housing loan (Housing Loan) in addition

to an annual salary of $300,000. The Housing Loan was

interest-only for the first ten years and it was coupled with a

bonus plan providing Cherrett a guaranteed annual bonus of

up to $33,750 to cover the interest payments on the loan. The

annual bonuses were timed to coincide with the date the

annual interest payments were due, ensuring that, for the first

ten years, Cherrett would have no out-of-pocket expenses

related to the loan. If Cherrett left his position for any reason

other than death or disability within two years, he would have

to repay the loan and pay Aspen an additional $140,000. He

would have to pay $120,000 for leaving within three to four

years; $100,000 for leaving within five to six years; and

$80,000 for leaving within seven to eight years. Cherrett

would not have to repay any additional interest on the loan if

he continued to work for Aspen through 2015. Aspen

estimated the value of the plan at $330,750 over a period of

ten years.

Only with the Housing Loan did Cherrett find Aspen’s

offer attractive enough to accept. He left his job and family

in Jackson Hole, and purchased a condominium near Aspen

for $995,000. The Housing Loan covered $500,000 of the

purchase price, and Cherrett financed $417,000 with a loan

from a market-rate lender.

Cherrett’s wife and daughter remained at the family home

in Jackson Hole so that his daughter could finish high school
6 IN RE CHERRETT

there. The condominium in Colorado was smaller than the

family home in Jackson Hole and did not have enough space

to accommodate Cherrett’s wife and two children. With

hopes of relocating back to Jackson Hole to develop the Little

Nell Hotel brand, Cherrett considered the Colorado

condominium a “place holder” and only moved clothing and

personal items there. He visited his home and family in

Jackson Hole “at every opportunity,” returning for holidays,

birthdays, anniversaries, and his daughter’s prom and high

school graduation. He continued using financial institutions

in Wyoming, and kept his vehicle registration there.

In 2008, the economy crashed and Aspen abandoned

plans to expand the Little Nell Hotel brand. It became clear

that Aspen would not be relocating Cherrett back to Jackson

Hole. So in 2009, after Cherrett’s daughter graduated from

high school and moved away to college, his wife joined him

in Colorado and they sold their home in Jackson Hole. In

2011, four years after joining Aspen, Cherrett resigned from

his position.

B. Bankruptcy Proceedings

Cherrett and his wife filed a voluntary Chapter 7

bankruptcy petition on August 30, 2013. They owed Aspen

$550,000 under the terms of the Housing Loan. Aspen filed

a motion to dismiss the Chapter 7 petition for abuse under

11 U.S.C. § 707(b)(1). The statute allows a court to “dismiss

a case filed by an individual debtor under this chapter whose

debts are primarily consumer debts . . . if it finds that the

granting of relief would be an abuse of the provisions of this

chapter.” 11 U.S.C. § 707(b)(1). Aspen argued that because

the Cherretts incurred the Housing Loan to purchase a

personal residence, the debt was a consumer debt, and they
IN RE CHERRETT 7

were not entitled to Chapter 7 relief in light of their ability to

pay their creditors in a hypothetical Chapter 13 plan.1

The bankruptcy court held an evidentiary hearing to

determine whether the debt owed to Aspen qualified as

consumer debt. After hearing testimony from Cherrett, the

bankruptcy court found that Aspen offered Cherrett the

Housing Loan to entice him “to leave a secured position,” and

that Cherrett purchased the Colorado property so he could

“make more money” and “work at a very prestigious, top of

the line” resort. The bankruptcy court thus determined that

the Housing Loan “was incurred for a business purpose” and

did not constitute consumer debt. The bankruptcy court

denied Aspen’s motion to dismiss.

Aspen appealed to the BAP. The BAP concluded that the

order denying Aspen’s motion was final and appealable, and

also concluded that the bankruptcy court’s finding that

Cherrett incurred the Housing Loan for a non-consumer

purpose was subject to clear error review. Based on the

testimony and facts presented to the bankruptcy court, the

BAP ruled that there was sufficient evidence to find that

Cherrett obtained the Housing Loan primarily “for a business

purpose with respect to his employment with Aspen.” The

BAP therefore affirmed the bankruptcy court’s order denying

Aspen’s motion to dismiss under 11 U.S.C. § 707(b)(1).

1 The Cherretts do not dispute that they would be ineligible to file a

Chapter 7 bankruptcy petition based on means if they incurred primarily

consumer debts.
8 IN RE CHERRETT

II. STANDARD OF REVIEW

“Decisions of the BAP are reviewed de novo.” Carrillo

v. Su (In re Su), 290 F.3d 1140, 1142 (9th Cir. 2002). “We

independently review a bankruptcy court’s ruling on appeal

from the BAP.” Id. “We review the bankruptcy court’s

conclusions of law de novo and its factual findings for clear

error.” Id.

III. DISCUSSION

A. We Have Jurisdiction Over This Appeal.

The bankruptcy court’s ruling must be final for this court

to exercise jurisdiction under 28 U.S.C. § 158(d). Zolg v.

Kelly (In re Kelly), 841 F.2d 908, 911 (9th Cir. 1988). Here,

the bankruptcy court denied Aspen’s motion to dismiss, and

the BAP affirmed. Ordinarily, orders denying a motion to

dismiss would not constitute final, appealable orders because

they do not “end[] the litigation on the merits and leave[]

nothing for the court to do but execute the judgment.” 

Sahagun v. Landmark Fence Co. (In re Landmark Fence

Co.), 801 F.3d 1099, 1102 (9th Cir. 2015) (quoting Firestone

Tire & Rubber Co. v. Risjord, 449 U.S. 368, 373–74 (1981)).

In bankruptcy appeals, however, we have recognized

“that the fluid and sometimes chaotic nature of bankruptcy

proceedings necessitates a degree of jurisdictional

flexibility.” Id. A bankruptcy court’s order that is affirmed

or reversed by the BAP is final and appealable where the

order: “1) resolves and seriously affects substantive rights

and 2) finally determines the discrete issue to which it is

addressed.” SS Farms, LLC v. Sharp (In re SK Foods, L.P.),
IN RE CHERRETT 9

676 F.3d 798, 802 (9th Cir. 2012) (quoting Dye v. Brown (In

re AFI Holding), 530 F.3d 832, 836 (9th Cir. 2008)).

We have not expressly decided whether a bankruptcy

court’s order denying a motion to dismiss under 11 U.S.C.

§ 707(b) constitutes a final, appealable order. The majority

of circuits that have addressed the issue have concluded that

orders on motions to dismiss for abuse of Chapter 7 are

appealable. See Morse v. Rudler (In re Rudler), 576 F.3d 37,

43 (1st Cir. 2009) (collecting cases); but see Barben v.

Donovan (In re Donovan ), 532 F.3d 1134, 1137 (11th Cir.

2008) (holding that an order denying a motion to dismiss a

Chapter 7 case under an earlier version of § 707(b) was not

appealable). These circuits recognize that the current version

of § 707(b), part of the Bankruptcy Abuse Prevention and

Consumer Protection Act of 2005, “manifest[s] a

congressional policy to police all Chapter 7 cases for abuse at

the outset of a Chapter 7 proceeding” as well as “pragmatic

considerations that indicate that the denial of a § 707(b)

motion to dismiss is different from the denial of other

motions to dismiss.” McDow v. Dudley, 662 F.3d 284, 288

(4th Cir. 2011).

We have often concluded that other bankruptcy court

orders are final and appealable based on “policies of judicial

efficiency and finality.” Kelly, 841 F.2d at 911; see also

Meyer v. U.S. Trustee (In re Scholz), 699 F.3d 1167, 1170

(9th Cir. 2012). These policies apply in this case. As the

Fourth Circuit explained:

Section 707(b) creates a statutory gateway

based on whether the case is abusive, and an

order denying that motion to dismiss as

abusive, in effect, finally and conclusively
10 IN RE CHERRETT

resolves the issue. If the denial of a § 707(b)

motion to dismiss cannot be appealed

immediately . . . , the Chapter 7 proceedings

would have to be completed before it could be

determined whether the proceedings were

abusive in the first place.

McDow, 662 F.3d at 289–90. Here, the bankruptcy court’s

order resolved the Cherretts’ ability to file a Chapter 7

bankruptcy petition. The order conclusively determined the

discrete issue whether the Cherretts’ debt was primarily nonconsumer and therefore subject to discharge under Chapter 7. 

We thus hold that the bankruptcy court’s order denying

Aspen’s motion to dismiss under § 707(b) was final and

appealable to this court.2

B. The Bankruptcy Court Did Not Err by Finding that

the Housing Loan Was a Non-Consumer Debt.

1. We Review for Clear Error the Bankruptcy

Court’s Findings Regarding the Purpose of the

Debt.

2 On December 3, 2014, after Aspen filed a notice of appeal in this

court, the bankruptcy court issued a discharge of the Cherretts’ debts. 

Aspen argues that the bankruptcy court did not have jurisdiction to enter

the discharge and that this court should vacate it. But Aspen did not

appeal the discharge to the BAP, seek a stay of proceedings pending

appeal, or amend its notice of appeal. The record does not show any

exceptional circumstances for failing to appeal the issue to the BAP or a

district court. Thus, whether the discharge was erroneously issued is not

properly before us. See Int’l Union of Bricklayers & Allied Craftsman

Local Union No. 20 v. Martin Jaska, Inc., 752 F.2d 1401, 1404 (9th Cir.

1985).
IN RE CHERRETT 11

If the bankruptcy court applied fact to law in a way that

“‘requires an inquiry that is essentially factual,’ we review it

as if it were a factual finding,” but if the bankruptcy court

applied fact to law in a way that “requires reference to ‘the

values that animate legal principles,’ we review it as if it were

a legal finding.” United States v. Hinkson, 585 F.3d 1247,

1259 (9th Cir. 2009) (quoting United States v. McConney,

728 F.2d 1195, 1202 (9th Cir. 1984) (en banc), abrogated on

other grounds as recognized by Teutscher v. Woodson,

835 F.3d 936, 942 (9th Cir. 2016)). Inquiries that are

essentiallyfactual “include[] questions such as motive, intent,

and negligence.” Id. at 1260. “[M]ixed questions of law and

fact” are those “in which the historical facts are admitted or

established, the rule of law is undisputed, and the issue is

whether the facts satisfy the statutory standard, or to put it

another way, whether the rule of law as applied to the

established facts is or is not violated.” Pullman-Standard v.

Swint, 456 U.S. 273, 289 n.19 (1982). “Mixed questions are

typically reviewed de novo, but, depending on the nature of

the inquiry involved, may be reviewed under a more

deferential clearly erroneous standard.” United States v.

Lang, 149 F.3d 1044, 1047 (9th Cir. 1998), amended by

157 F.3d 1161 (9th Cir. 1998) (emphasis added).

Aspen argues that because the parties do not dispute the

underlying facts concerning the use of the Housing Loan, de

novo review applies. Aspen further argues that a debt

incurred to purchase a personal residence is a consumer debt

as a matter of law. Aspen cites our holding in Zolg v. Kelly

(In re Kelly), 841 F.2d 908 (9th Cir. 1988), in support of its

arguments.

The debtors in Kelly filed a Chapter 7 bankruptcy petition

with multiple mortgages against their home. Id. at 910. The
12 IN RE CHERRETT

bankruptcycourt found that the debt was primarily consumer,

but the BAP reversed on the basis that debts secured by real

estate mortgages categorically do not qualify as consumer

debt. Id. at 911. On appeal to this court, the debtors

continued to argue that debts secured by real property can

never be consumer debt. Id. at 912. We disagreed and held

that consumer debt can include mortgages. Id. at 912–13. In

doing so, we reviewed the BAP’s ruling de novo because the

question whether mortgages could ever qualify as consumer

debt was purely one of law. Id. at 911; see also id. at 911–12

(concluding that legal issues predominated where “the Kellys

argue[d] that debts secured by real property are never

consumer debts, relying on floor statements made in the

House and Senate prior to the enactment of the 1978 Act”).

We did not hold that all debts secured by real property are

consumer debt. In fact, we expressly left open the possibility

that some are not: “While secured debt is not automatically

excluded from consumer debt, it is not automatically included

either. We must look to the purpose of the debt in

determining whether it falls within the statutory definition.” 

Id. at 913 (emphasis added). Kelly acknowledged that in

most cases “the purchase of a home and the making of

improvements thereon” will meet the statutory definition of

consumer debt, but it did not fashion a bright line rule. Id. 

Aspen’s argument—that because most debts used to purchase

homes are consumer debts, all mortgages must be consumer

debts—is contrary to our case law.

We have never, as Aspen and the dissent suggest, held

that debts used to purchase homes are consumer debts as a

matter of law, and unlike in Kelly, where there was no dispute

regarding the purpose of the loan, the parties here dispute

whether Cherrett incurred the Housing Loan primarily for a
IN RE CHERRETT 13

business purpose. Whether Cherrett’s primary purpose

satisfies the statutory requirements for a Chapter 7

bankruptcy filing is a mixed question of law and fact. 

Although we would typically review such a question de novo,

the bankruptcy court’s weighing of Cherrett’s multiple

motives for incurring the Housing Loan was primarily a

factual, rather than legal, inquiry. See Ornelas v. United

States, 517 U.S. 690, 702 (1996) (“Where a trial court makes

. . . commonsense determinations based on the totality of

circumstances, it is ordinarily accorded deference.”). In this

case, the purpose of the Housing Loan is the sort of

“essentially factual” inquiry that we review for clear error,

United States v. Hinkson, 585 F.3d 1247, 1259 (9th Cir.

2009),3but we would reach the same result on de novo

review.

3 Courts are split on this standard of review. The Eighth Circuit BAP

is in accord with our conclusion that the purpose of a debt is a factual

finding reviewed for clear error. See Lapke v. Mut. of Omaha Bank (In re

Lapke), 428 B.R. 839, 842 (B.A.P. 8th Cir. 2010). The Tenth and Fifth

Circuits have reached the opposite conclusion. See Stewart v. U.S.

Trustee (In re Stewart), 175 F.3d 796, 803 (10th Cir. 1999); Matter of

Booth, 858 F.2d 1051, 1053 n.5 (5th Cir. 1988). But like our decision in

Kelly, the Fifth Circuit’s decision in Booth turned on whether an entire

category of debt must always be consumer or non-consumer, a legal rather

than factual question. See Booth, 858 F.2d at 1055 (“Similarly, the district

court erred in its determination that a signature loan, no matter what use

to which it is put, is always consumer debt.” (emphasis added)). The

same is true of IRS v. Westberry (In re Westberry), 215 F.3d 589 (6th Cir.

2000) and Cypher Chiropractic Ctr. v. Runski (In re Runski), 102 F.3d

744 (4th Cir. 1996), unilluminating cases the dissent suggests we

overlook. The sole issue presented in Westberry was legal: “whether

federal income and self-employment taxes should be considered consumer

debt” categorically. Westberry, 215 F.3d at 590. Runski also addressed

a categorical question: whether medical equipment used at the debtor’s

business was nevertheless intended primarily for personal use solely

because it was titled in the debtor’s name. Runski, 102 F.3d at 747.
14 IN RE CHERRETT

2. The Bankruptcy Court Did Not Clearly Err by

Finding That Cherrett Incurred the Housing Loan

Primarily for a Non-Consumer Purpose.

“Consumer debt” is defined as “debt incurred by an

individual primarily for a personal, family, or household

purpose.” 11 U.S.C. § 101(8). We have held that “[d]ebt

incurred for business ventures or other profit-seeking

activities is plainly not consumer debt.” Kelly, 841 F.2d at

913. Courts determine the debtor’s purpose as of the time the

debt was incurred. See Bushkin v. Singer (In re Bushkin),

BAP No. CC-15-1285-KiKuF, 2016 WL 4040679, at *7

(B.A.P. 9th Cir. July 22, 2016).4

Evidence that a debtor incurred a debt “purely or

primarily as a business investment, albeit an investment in

herself or himself, much like a loan incurred for a new

business,” can serve as an important factor in determining the

debtor’s purpose. Stewart v. U.S. Trustee (In re Stewart),

215 B.R. 456, 465 (B.A.P. 10th Cir. 1997), aff’d, 175 F.3d

796 (10th Cir. 1999) (discussing how courts should determine

a debt’s purpose in the context of student loans). To

determine the purpose of a home loan, it is not sufficient that

a debtor hoped that the asset purchased with it would

appreciate in value. See Cox v. Fokkena (In re Cox),

315 B.R. 850, 855 (B.A.P. 8th Cir. 2004) (holding that it is

insufficient that debtors “subjectively hope[] that [a]

Residence [will] appreciate in value” when “the objective

evidence in the record amply supports the bankruptcy court’s

finding that Debtors incurred the debts primarily for family

or household purposes under § 101(8)”). Instead, it is

4 The appeal in Bushkin is currently stayed pending resolution of this

case.
IN RE CHERRETT 15

appropriate to consider all the circumstances indicative of the

debtor’s primary purpose. Westberry, 215 F.3d at 593

(“[W]hile the profit motive analysis may assist in the

determination of which debts are not consumer debt, it does

not prohibit other debts from falling outside of the category

of consumer debt.”); Kestell v. Kestell (In re Kestell), 99 F.3d

146, 149 (4th Cir. 1996) (determining that a debt owed

pursuant to a divorce judgment was consumer debt because

it was not incurred “with a profit motive or in connection

with a business transaction” (emphasis added)) .

Here, the bankruptcy court found that Cherrett primarily

had a business purpose—not a personal, family, or household

purpose—for incurring the Housing Loan. Cherrett testified

that he accepted Aspen’s offer and the Housing Loan so that

he could “grow in salary and responsibility” and have the

opportunity to oversee expansion of the Little Nell Hotel

brand. The bankruptcy court found that Cherrett incurred the

debt “so he could work at a very prestigious, top of the line,

equal to the Four Seasons, equal to the best hotels in the

world,” resort. The record leaves little doubt that the Housing

Loan helped entice Cherrett to “leave a secured position.”

Cherrett further testified that when he incurred the

Housing Loan, his family did not intend to relocate to

Colorado with him, and he considered the condominium a

“place holder.” He lived alone in the condominium for two

years, moving only his clothing and some personal effects

from Wyoming. It is clear that the Housing Loan did not go

toward the purchase of a primary residence, or even a

secondary vacation residence, for his family. Indeed, the

condominium did not even accommodate his family of four. 

At the time Cherrett incurred the debt, he did not intend to

remain in Colorado for any substantial length of time. In fact,
16 IN RE CHERRETT

he hoped that he would get the chance to relocate back to

Jackson Hole to spearhead the Little Nell Hotel brand

development there.

Cherrett purchased the Colorado condominium using the

Housing Loan and relied on the annual bonus of $33,750 for

interest payments.5 The Housing Loan was a below-marketrate loan that Cherrett likely could only have obtained from

his employer. The lender that originated the loan was an

affiliate of Aspen, controlled by one of Aspen’s principals,

and later transferred the debt to Aspen itself. Without

Aspen’s assistance, Cherrett could not have afforded to buy

real estate close enough to work at Aspen’s Colorado office. 

Cherrett also testified that renting a home was not an option

based on both availability and price. The Housing Loan was

a key component of Cherrett’s compensation, made through

his employer, which covered all of his annual out-of-pocket

expenses related to its financing for the first ten years through

bonuses and continued employment. No evidence suggests

the Housing Loan would have been commercially available

on the terms Cherrett received. This is not the ordinary

situation where a person takes out a loan to move closer to a

job for convenience or better schools, for example. This is

5 Correspondence confirming Cherrett’s acceptance of Aspen’s job

offer memorialized that Cherrett’s compensation included a “deferred

compensation/executive bonus plan” that was guaranteed to provide

annual bonuses timed to coincide with “the date upon which annual

interest on the [Housing Loan] [was] due.” This arrangement was

designed “to ensure that [Cherrett had] no annual out of pocket expenses

related to the financing of [the] loan” for its first ten years. Before the

bankruptcy court, Aspen’s lawyers characterized this arrangement as the

employer “provid[ing] a bonus to the employee equivalent to the interest

on the loan, pay[ing] itself the interest from that bonus, and pay[ing] the

employee the taxes on that income at the assumed tax rate of 35%.”
IN RE CHERRETT 17

the unusual situation where a person accepts a loan from his

employer as part of a larger transaction to further his career. 

On these facts, the bankruptcy court did not clearly err when

it found the Housing Loan and the annual bonus were part of

Cherrett’s negotiated compensation package, undertaken for

a business purpose connected to furthering his career, rather

than a personal, family, or household expense. See Bushkin,

2016 WL 4040679, at *8 (explaining that in this case, “the

home loan had a business purpose” because “it was an

integral part of the business arrangement between the

parties”).

IV. CONCLUSION

We affirm the BAP’s judgment on the order denying

Aspen’s motion to dismiss.

AFFIRMED.

NGUYEN, Circuit Judge, dissenting:

The majority applies the wrong standard of review,

creating a circuit split in the process, and with undue

deference to the Bankruptcy Appellate Panel’s (“BAP”)

erroneous decision, affirms it. When a case involves

undisputed facts and the only issue is the legal conclusion to

be drawn from those facts, review is de novo. As for the

substantive law, it’s clear: When you take out a loan to buy

property at which you plan to reside for at least two years

without renting it out or otherwise profiting from it, the loan

is consumer debt. I therefore dissent.
18 IN RE CHERRETT

I.

According to the majority, “whether Cherrett incurred the

Housing Loan primarily for a business purpose” is an

“essentially factual” dispute. Maj. Op. at 12–13. That simply

isn’t true. The parties agree that there are no factual disputes,

including Cherrett’s subjective intent in obtaining the

Housing Loan. Compare Aspen’s OpeningBr. at 7 (asserting

that “[t]he only facts found to be relevant by any prior court

are undisputed” while acknowledging Cherrett’s contention

“that other, undisputed facts . . . are also relevant”), with

Cherrett’s Br. at 6 (“None of the facts in this case are in

contention . . . . Aspen has not asserted that any mistake was

committed by the Bankruptcy Court in its findings of fact.”).

What the parties contest is whether these undisputed

facts—including, to the extent relevant, Cherrett’s various

reasons for obtaining the Housing Loan—render the Loan

“debt incurred by an individual primarily for a personal,

family, or household purpose.” In re Kelly, 841 F.2d 908,

912 (9th Cir. 1988) (quoting 11 U.S.C. § 101(8)). Kelly held

in no uncertain terms that when “the underlying facts are not

disputed,” the question of “whether [a particular debt]

qualifies as a ‘consumer debt’ under” the Bankruptcy Code

“is one in which legal issues predominate and is thus subject

to de novo review.” Id.

As a three-judge panel, we aren’t free to disregard our

prior holdings. See Miller v. Gammie, 335 F.3d 889, 899 (9th

Cir. 2003) (citing the “unassailable” proposition “that a threejudge panel may not overrule a prior decision of the court”). 

Not only that, it’s beyond debate that “where no facts are in

dispute our entire review is de novo.” Norcia v. Samsung

Telecomms. Am., LLC, 845 F.3d 1279, 1283 (9th Cir. 2017)
IN RE CHERRETT 19

(quoting Davis v. Nordstrom, Inc., 755 F.3d 1089, 1091 (9th

Cir. 2014)); see also In re Crawford, 194 F.3d 954, 957 (9th

Cir. 1999) (“Because the relevant facts here are undisputed,

our review focuses on the bankruptcy court’s legal

conclusions, which are subject to de novo review.”). This

firmly settled standard is an outgrowth of the principle,

fundamental to Anglo-American jurisprudence, that “it is the

province of the trial court to decide questions of fact, [and] of

the appellate court to decide questions of law . . . .” Reay v.

Butler, 30 P. 208, 209 (Cal. 1892); see Bose Corp. v.

Consumers Union of U.S., Inc., 466 U.S. 485, 501 (1984)

(recognizing “an appellate court’s power to correct errors of

law, including those that may infect a so-called mixed finding

of law and fact, or a finding of fact that is predicated on a

misunderstanding of the governing rule of law”); Wiscart v.

D’Auchy, 3 U.S. (3 Dall.) 321, 329 (1796) (“[T]he law directs

that in cases of appeal, part shall be decided by one tribunal,

and part by another; the facts by the court below, and the law

by this court. Such a distribution of jurisdiction has long

been established in England.”); cf. In re McLinn, 739 F.2d

1395, 1400 (9th Cir. 1984) (en banc) (rejecting as “unsound”

the “assumption that the district judge has some particular

knowledge or experience in the field of law in issue that is to

be given great weight apart from the authorities presented by

the parties or articulated by the district judge”).

This principle is, for example, the reason why

“[d]ecisions of the BAP are reviewed de novo.” Maj. Op. at

8 (quoting In re Su, 290 F.3d 1140, 1142 (9th Cir. 2002)). 

The BAP acts in an appellate capacity, deciding questions of

law based on facts determined in the bankruptcy court. 

Because we also review legal questions de novo, it makes no

difference whether we formally review the BAP’s

determinations or the bankruptcy court’s, for “we are in as
20 IN RE CHERRETT

good a position as the BAP to review bankruptcy court

rulings.” In re Findley, 593 F.3d 1048, 1050 (9th Cir. 2010)

(quoting In re Taggart, 249 F.3d 987, 990 (9th Cir. 2001));

see In re Burley, 738 F.2d 981, 986 (9th Cir. 1984).

“[B]ecause the application of law to fact will generally

require the consideration of legal principles, . . . most mixed

questions will be reviewed independently,” i.e., under a de

novo standard. United States v. McConney, 728 F.2d 1195,

1204 (9th Cir. 1984) (en banc), abrogated on other grounds

by Pierce v. Underwood, 487 U.S. 552, 557–63 (1988). An

“application of the rule of law to the facts” is an “essentially

factual” inquiry if it is “founded ‘on the application of the

fact-finding tribunal’s experience with the mainsprings of

human conduct,’” id. at 1202 (quotingComm’r v. Duberstein,

363 U.S. 278, 289 (1960)), or if “some of the elements that

bear upon [the legal question] may be known only to the

district court,” Pierce, 487 U.S. at 560. That isn’t the case

here. Like the BAP, we are determining whether certain

agreed-upon facts fall within a statutory definition.

Nor is this a case that involves “a multifarious and novel

question, little susceptible . . . of useful generalization,” id. at

562. The majority isn’t publishing our decision today

because of its importance to Cherrett—though he will

undoubtedly be relieved to avoid his debt obligation. Rather,

the majority understands that other debtors will find

themselves in similar circumstances and will need guidance

as to the legal characterization of their debt.

The majority asserts that “[c]ourts are split on this

standard of review.” Maj. Op. at 13 n.3. They aren’t, aside

from the wayward Eighth Circuit BAP decision that the

majority cites. Every circuit (including our own in Kelly) to
IN RE CHERRETT 21

review a bankruptcy court’s ruling on whether a particular

obligation is “consumer debt” has done so de novo. The

majority acknowledges two such cases: In re Stewart,

175 F.3d 796, 803 (10th Cir. 1999), and In re Booth, 858 F.2d

1051, 1053 n.5 (5th Cir. 1988). There are others. See In re

Westberry, 215 F.3d 589, 590 (6th Cir. 2000) (“The issue

presented here, whether federal income taxes should be

considered consumer debt for purposes of 11 U.S.C. § 1301,

is a question of law, which we review de novo.”); In re

Runski, 102 F.3d 744, 745, 747 (4th Cir. 1996) (“determining

whether debt is for ‘personal, family, or household purposes’

under § 101(8)” to “aid in determining the proper meaning of

the nearly identical language found in § 722” and appearing

to treat the question as a matter of statutory construction,

“subject to plenary review”). Today the majority needlessly

creates an intra- and inter-circuit split.1

II.

“It is difficult to conceive of any expenditure that serves

a ‘family . . . or household purpose’ more directly than does

the purchase of a home . . . .” Kelly, 841 F.2d at 913. The

condo that Cherrett purchased with the Housing Loan may

not have felt to him like a “home” in an emotional sense

given that his wife and children were living in a different

state for much of the time. That Cherrett’s heart was in

Wyoming shows only that his Colorado condo may not have

been his legal domicile, i.e., that “true, fixed, principal, and

permanent home, to which [a] person intends to return and

remain even though currently residing elsewhere.” Domicile,

1 There’s no reason for the majority’s oddly deferential approach. 

The majority acknowledges that it would reach the same result under de

novo review. Maj. Op. at 13.
22 IN RE CHERRETT

Black’s Law Dictionary (10th ed. 2014). It was, however, his

“home” in the legal sense of being his “dwelling place,”

Home, Black’s Law Dictionary (10th ed. 2014), or “principal

residence,” 11 U.S.C. § 101(13A). A “temporary home” (as

Cherrett described it), perhaps—but still a home. Cherrett

intended to live there for at least two years. Cf. Stolk v.

Comm’r, 40 T.C. 345, 356 (1963) (holding that New York

apartment where taxpayer moved to be near his office was his

“principal residence” for a year notwithstanding weekend and

holiday trips to his Virginia farm where he and his wife

planned to settle).

I agree with the majority that the Housing Loan’s

classification as consumer or non-consumer debt should be

based on the purpose of the debt at the time Cherrett incurred

it. And the majority properly rejects any contention that the

debt was for a business purpose merely because Cherrett

expected eventuallyto profit from the “skyrocketing” housing

prices in the Aspen area. In re Cherrett, 523 B.R. 660, 672

(B.A.P. 9th Cir. 2014). Virtually all homebuyers in certain

regions of the country expect to profit when they sell their

homes.

But the majority conflates Cherrett’s purpose in moving

to Colorado with his purpose in taking out the Housing Loan. 

The fact that he moved to Colorado primarily if not

exclusively for business purposes proves too little. Under the

majority’s analysis, a person could move her family across

town in order to be closer to a new job and, if she takes out a

home loan to finance her new residence, it would be for a

business rather than a personal, family, or household purpose. 

It makes no difference that this hypothetical move is out of

convenience and Cherrett’s was arguably out of necessity. A

person’s primary purpose in making a decision isn’t
IN RE CHERRETT 23

dependent on the existence of alternative options. Moreover,

how is a court even to determine whether it’s necessary to

purchase a new home for work purposes? Here, for example,

there’s no evidence that Cherrett needed to take a new job out

of state. He made $225,000 a year in Wyoming and “was

very happy in [his] position.”

This line of reasoning ignores the statutory text. The

statute defines “consumer debt” as “debt incurred by an

individual primarily for a personal, family, or household

purpose.” 11 U.S.C. § 101(8) (emphasis added). It is the

purpose of the debt—i.e., what the debt is used for—that

matters. The debtor’s indirect purposes are irrelevant.

Until now, this is the approach we have taken. See In re

Price, 353 F.3d 1135, 1139 (9th Cir. 2004) (“Under Kelly,

whether or not a particular secured debt is excluded from

inclusion as ‘consumer debt’ under § 707(b) depends on the

purpose of the debt.”). In Price, we explained that “Price’s

personal residence was secured by two mortgages. The first

. . . [was] incurred to purchase the home; the second . . .

incurred to finance household improvements.” Id. Thus,

there was “no question that the secured debt at issue was

incurred ‘primarily for a personal, family or household

purpose’ and must be considered ‘consumer debt’ for the

purposes of § 707(b).” Id. We did not examine Price’s

motivation for purchasing a personal residence and making

improvements to it.
24 IN RE CHERRETT

The legislative history supports this interpretation.2

Congress adapted the Bankruptcy Code’s definition of

“consumer debt” from the consumer protection laws—in

particular the Truth in Lending Act (“TILA”), 15 U.S.C.

§ 1602(i), which contains a similar definition. See In re

Booth, 858 F.2d 1051, 1054 (5th Cir. 1988). Compare

11 U.S.C. § 101(8) (“The term ‘consumer debt’ means debt

incurred by an individual primarily for a personal, family, or

household purpose.”), with 15 U.S.C. § 1602(i) (“The

adjective ‘consumer,’ used with reference to a credit

transaction, characterizes the transaction as one in which the

party to whom credit is offered or extended is a natural

person, and the money, property, or services which are the

subject of the transaction are primarily for personal, family,

or household purposes.”). For that reason, courts interpreting

the BankruptcyCode’s definition of “consumer debt” look to

TILA and cases interpreting it. See Booth, 858 F.2d at 1054;

In re Almendinger, 56 B.R. 97, 99 (Bankr. N.D. Ohio 1985).

In determining whether a transaction is commercial or

personal for the purposes of TILA, we generally consider the

factors employed by the Federal Reserve Board under

Regulation Z, 12 C.F.R. pt. 226 supp. I, subpt. A, § 226.3(a). 

See Bloom v. I.C. Sys., Inc., 972 F.2d 1067, 1069 (9th Cir.

1992). Crucially, “[c]redit extensions by a company to its

employees” are “consumer-purpose” loans under the

regulations “if the loans are used for personal purposes.” Id.

2 To be fair, there is support in the legislative history that “consumer

debt does not include a debt to any extent the debt is secured by real

property.” 124 Cong. Rec. 32,393 (1978) (statement of Rep. Edwards). 

However, Kelly and “most [other] courts have declined to follow this

legislative history and instead include home mortgages in the

determination of whether a debtor has primarily consumer debts.” 

6 Collier on Bankruptcy ¶ 707.04[2][b] (16th ed. 2017).
IN RE CHERRETT 25

pt. 226, supp. I, subpt. A, § 226.3(a)(3)(iii)(A). That’s

precisely the situation here. Aspen subsidized Cherrett’s

condo loan, but the condo itself was used for a personal

purpose—Cherrett lived there. “[D]ebt incurred to purchase

the debtor’s principal residence . . . is a ‘consumer debt’

under [11 U.S.C.] § 101(8).” In re Fadel, 492 B.R. 1, 15

(B.A.P. 9th Cir. 2013) (citing Kelly, 841 F.2d at 913); see

also 15 U.S.C. § 1602(x) (defining “residential mortgage

transaction” as “a transaction in which a . . . consensual

security interest is created or retained against the consumer’s

dwelling to finance [its] acquisition”); cf. Slenk v. Transworld

Sys., Inc., 236 F.3d 1072, 1076 (9th Cir. 2001) (looking to

“the actual use to which [a] backhoe was put” in concluding

that its financing was consumer debt under the similarly

worded Fair Debt Collection Practices Act, 15 U.S.C.

§ 1692a(5), because “the backhoe was used strictly for

personal use, and was never used by [the owner’s

company]”).

The majoritytheorizes that Cherrett’s debt is work-related

because he incurred it as an incident of his employment; even

though the loan money was directly used to purchase his

residence, it was indirectly used as a means of extracting

more income from his employer in the form of subsidized

interest. The majority emphasizes that Cherrett could not

have afforded to live close to his new job without this

housing assistance. Maj. Op. at 16.

The Tenth Circuit rejected a similar argument about a

loan’s ultimate purpose in Stewart. The debtor borrowed

$320,000 from his former in-laws, which “his ex-wife used

. . . to support their family, including use for house payments,

groceries, pre-school, children’s activities, moving expenses,

and family vacations” while he pursued a medical degree so
26 IN RE CHERRETT

that he could earn more money for his family. 175 F.3d at

807. The Tenth Circuit concluded that “the main purpose of

these loans was [not] to finance [the debtor’s] actual

educational expenses. Rather, [he] used the moneyto support

his family because he did not earn enough for his family to

live comfortably.” Id. The Tenth Circuit also concluded that

“a substantial portion of [the debtor’s $200,000 in] student

loan debt is indeed ‘consumer debt’” because it “went toward

his family’s expenses.” Id. In short, Stewart repudiated the

idea that a loan could be for a particular purpose just because

it indirectly facilitated that goal.

To see the difficulties the majority’s analysis entails, one

need look no further than the instant case. Cherrett’s

purposes were several: He needed a place in Colorado to live

and sleep when not at work or visiting his family in

Wyoming. That’s a consumer purpose. Cherrett’s reason for

being in Colorado was to take a new job, which is a business

purpose. But the “primary driver” for Cherrett in accepting

the new job was that he might “end up” in Jackson Hole with

his family “for the mid to long term” if and when Aspen

expanded its operations there. That’s a personal purpose. 

Under the majority’s holding, any of these purposes could

have been found controlling. The characterization of

Cherrett’s loan as business debt turned only on the whims of

the bankruptcy court.

The majority contends that this was not an “ordinary”

home loan because Cherrett’s employer “covered all of his

annual out-of-pocket expenses related to its financing for the

first ten years” so long as Cherrett remained in his job. Maj.

Op. at 16. That is enormously inaccurate.
IN RE CHERRETT 27

Aspen didn’t pay the interest that Cherrett owed on the

debt. Aspen merely compensated him for the interest

payments that he was contractually obligated to make to the

lender—a third party—on commercially reasonable terms.3

Although from Cherrett’s perspective, Aspen’s bonusesmade

his obligation to make interest payments relatively painless,

the two were legally unrelated. Home mortgage interest

payments potentially reduce one’s tax liability, whereas the

bonuses from Aspen increased Cherrett’s tax burden. For that

very reason, Aspen provided Cherrett with additional

compensation to cover most (but not all) of his assumed 35%

tax liability on the bonuses.4

This compensation for interest and taxes, a total of

$33,750 per year, isn’t at issue. What’s at issue is Cherrett’s

indebtedness on the loan. Cherrett wasn’t entitled to the

housing compensation unless “[t]he proceeds of the loan

[were] used to acquire [the] condominium.” And so they

were.

The majority’s holding today does not help debtors so

much as create massive uncertainty for lenders in gauging the

riskiness of home loans, thereby imposing greater financing

costs on homebuyers. The majority replaces Kelly’s

straightforward standard—all loans to purchase a home are

consumer debt—with an unworkable one thatrequires lenders

3 The $500,000 note, secured by a second deed of trust in favor of

Areljay, L.P., the lender, required interest payments at a rate of 5% per

year during the loan’s 10-year term. Cherrett agreed to repay the principal

at the end of the loan term or it would be subject to a 10% annual interest

rate thereafter.

4 Cherrett was out of pocket about $3,000 per year in uncompensated

taxes based on the assumed tax rate of 35%.
28 IN RE CHERRETT

to assess a homebuyer’s amorphous purposes in changing

residences. Since lenders cannot easily make this

determination, interest rates for all homebuyers will rise. 

Lenders unable to predict whether particular homebuyers can

potentially abuse the bankruptcy process to write off

mortgage debt will face higher risks for which they must be

compensated.

III.

Properly classifying the Housing Loan as consumer debt

would not preclude Cherrett from obtaining bankruptcyrelief. 

“[T]he existence of primarily consumer debt alone does not

result in dismissal under § 707(b), because the bankruptcy

court must still make a finding of substantial abuse.” Price,

353 F.3d at 1139. This factual finding is based on a number

of case-specific factors, and the bankruptcy court is

appropriately afforded considerable discretion in making it. 

See id. at 1140. “Consequently, a debtor truly in need of a

fresh start will not be subject to dismissal” just because the

majority of his debt is a home loan. Id. at 1139 (citing Kelly,

841 F.2d at 913).

I respectfully dissent.