## United States Bankruptcy Appellate Panel FOR THE EIGHTH CIRCUIT

________________ No. 10-6042

________________ In re: *
* Lawrence D. Danduran, Jr., *
* Debtor. *
* Lawrence D. Danduran, Jr., *
* Debtor – Appellant, *
* v. *
* Kip M. Kaler, Chapter 7 Trustee for the * Estate of Lawrence Danduran, Jr., *
* Defendant – Appellee. *

________________ Submitted: November 4, 2010 Filed: November 23, 2010

_____ Before FEDERMAN, VENTERS, and SALADINO, Bankruptcy Judges.

_____ VENTERS, Bankruptcy Judge.
The Debtor appeals the bankruptcy cour t’s order sustaining the Trustee’s objection to a portion ($7,700) of the Debto r’s homestead exemption. For the reasons set forth below, we reverse.1 In re Waterman , 248 B.R. 567, 570 (B.A.P. 8th Cir. 2000).

2 In re McGowan , 226 B.R. 13, 16 (B.A.P. 8th Cir. 1998).

3 Based on the figures stated by the par ties, the balance of the account would be slightly less ($87,218.66), but no issue has been made of this discrepancy.

4 A pool table, hot tub, washer, dryer, deck patio furniture, barbecue grill, theater seating, mirror, area rub, wreat hs, audio equipment, chair and ottoman, mission style table, and coffee table.
2 I. STANDARD OF REVIEW Findings of fact are reviewed for clear error, and legal conclusions are reviewed de novo. 1 A bankruptcy court's denial of a clai m of exemption is a final, appealable order. 2

II. BACKGROUND On September 15, 2009, the Debtor sold his homestead for $225,000. From the proceeds, the Debtor paid $140,860.38 to satisfy a mortgage held by Washington Mutual and deposited $83,139.62 into a savings account he established for the specific purpose of receiving the proceeds of his hom estead. The only other money placed in the account was $1,000 from the buyers’ down payment and $3,079.04 Washington Mutual refunded from his escrow account. Thus, the entire balance of the Debtor's savings account – $87,501.55 – constituted proceeds of the Debtor's homestead. 3

On December 31, 2009, the Debtor filed a voluntary petition for Chapter 7 bankruptcy relief in the Bankruptcy Court fo r the District of North Dakota. The Debtor claimed a homestead exemption pursuant to N.D. Cent. Code § 28-22-02(7) in the entire $87,501.55 in his savings account . The Chapter 7 trustee, Kip Kaler (“Trustee”), objected to this exemption claim, asserting that $7,700 of the money in his savings account wasn’t exempt because those funds were proceeds of certain nonexempt personal property 4 included in the sale of Debtor's homestead.5 The Debtor also argues that certa in items the bankruptcy considered personal property ( i.e. , the hot tub and the pool table) constituted fixtures under North Dakota law and, therefore, were real property unquestionably covered by his homestead exemption. Because we reverse on other grounds, we do not need to reach this issue, although we note that we are unpersuaded that the hot tub and pool tables were, in fact, fixtures.

6 The Debtor testified that neither he nor the buyers attributed any value to the personal property and did not adjust th e sale price when the personal property was included in the sale. The real estate contract did not apportion any part of the sale price to the personal property.
3 The bankruptcy court held an evidentiary hearing on the Trustee's objection on May 26, 2010, at which time the Debtor te stified that the personal property was included in the sale only at the buyers’ request and that no value was attributed to it. The Debtor’s testimony was uncontradict ed and corroborated by the real estate contract which did not apportion any of th e purchase price to the personal property.
At the conclusion of the hearing, the Bankruptcy Court found that $7,700 of the money in the Debtor's savings account cons tituted proceeds from the sale of personal property and were therefore not exempt as proceeds from his homes tead. This appeal ensued.

III. DISCUSSION The Debtor’s primary argument on appeal is that the Trustee’s objection should have been overruled because, in the absen ce of any evidence or allegation that he intended to hinder, delay, or defraud his creditors, the Debtor’s alleged sale of the personal property was a permissible convers ion of non-exempt assets into exempt homestead proceeds. 5 In other words, to the extent any proceeds from the sale of his home are attributable to the personal property, 6 the Debtor maintains that those proceeds went to the mortgage lender, th ereby increasing the amount of equity the Debtor could claim as exempt under N.D. Cent. Code § 47-18-01.7 See e.g. , Larson v. Cole , 33 N.W.2d 325, 328-29 (N.D. 1948).

8 Farstveet v. Rudolph ex. rel. Eileen Rudolph Estate , 630 N.W.2d 24, 30 n.1 (N.D. 2001). See generally N.D. Cent. Code § 47-18-16 (stating that the proceeds of a sale beyond the amount necessary to satisfy a lien, and not exceeding the amount of the homestead exemption, are entitled to the same protection against legal process as the law gives to the homestead).

9 Hanson v. First Nat’l Bank , 848 F.2d 866, 868 (8th Cir. 1988) (“It is well established that a debtor's conversion of non-exempt property to exempt property on the eve of bankruptcy for the express purpose of placing that property beyond the reach of creditors, without more, will not deprive the debtor of the exemption to which he otherwise would be entitled.”). See also In re Addison , 540 F.3d 805, 813 (8th Cir. 2008); In re Ladd , 450 F.3d 751, 755 (8th Cir. 2006) (citation omitted) (“Maximization of exemptions, esp ecially the homestead exemption, is a fundamental policy of the Bankruptcy Code. . . .”); Norwest Bank Nebraska, NA v. Tveten , 848 F.2d 871, 873-74 (8th Cir. 1988) (“It is well established that under the Code the conversion of non-exempt to exempt property for the purpose of placing the property out of the reach of creditors , without more, will not deprive the debtor of the exemption to which he otherwise would be entitled.”).
4 The Trustee counters here, as he did attrial, that the non-exempt proceeds of the personal property were not converted in to exempt homestead proceeds because the Debtor did not indicate his intent to enga ge in such pre-bankruptcy planning at the time of the transaction. We disagree.
As with most exemptions, the North Dakota homestead exemption is to be construed liberally in favor of a debtor. 7 And under North Dakota law, the proceeds from the sale of a homestead are exempt to the same extent as the homestead. 8

In view of these principles and the Eighth Circuit’s permissive approach to nonfraudulent, pre-bankruptcy planning, 9 we find the Debtor’s establishment of a savings account for the specific purpose of depositing the proceeds of his homestead and his subsequent deposit into that account of the proceeds from the personal property5 (allegedly) sold with his homestead suffici ent indicia of his intent to convert nonexempt personal property into exempt, hom estead property. Because the record is devoid of any contrary evidence or eviden ce that the Debtor acted with fraudulent intent when he converted non-exempt proper ty into exempt property, the Debtor is entitled to claim the entire $87,501.55 in his savings account as his homestead exemption claim. CONCLUSION For the reasons stated above, we reverse the bankruptcy court’s order sustaining the Trustee’s objection to the Debt or’s homestead exemption claim.