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FILED

SEP 03 2015

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. CC-14-1450-TaKuPe

)

MIRIAM M. LOPEZ, ) Bk. No. 2:14-bk-12175-BB

)

Debtor. )

______________________________)

)

MIRIAM M. LOPEZ, )

)

Appellant, )

)

v. ) MEMORANDUM*

)

DAVID ALAN GILL, Chapter 7 )

Trustee, )

)

Appellee. )

______________________________)

Argued and Submitted on July 23, 2015

at Pasadena, California

Filed – September 3, 2015

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Sheri Bluebond, Chief Bankruptcy Judge, Presiding

 

Appearances: Wendolyn E. Arnold argued for appellant; Matthew

F. Kennedy argued for appellee.

 

Before: TAYLOR, KURTZ, and PERRIS,** 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 8024-1(c)(2).

** The Honorable Elizabeth L. Perris, United States

Bankruptcy Judge for the District of Oregon, sitting by

designation.
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INTRODUCTION1

 The bankruptcy court entered an order sustaining

objections to exemptions, requiring turnover of assets, and

extending the discharge objection deadline. We AFFIRM the

bankruptcy court. 

FACTS2

Miriam A. Lopez filed a petition for chapter 7 relief, and

David A. Gill was appointed her trustee. Her initial schedules

did not identify all estate assets; but as relevant to this

appeal, the initial schedule A included a residence located in

Los Angeles, California (the “Property”) and the initial

schedule C claimed a personal property exemption in a 2010 Honda

CR-V (“SUV”). In subsequently amended schedules, the Debtor

modified her election of exemptions to include the following:

C $175,000 in the Property, pursuant to CCP § 704.730; 

C $2,725 in the SUV, pursuant to CCP § 704.010; 

C $4,850 in a 1959 Chevy pick-up truck (“Truck”), pursuant to

CCP § 704.060; and

C $2,725 in a 2005 Harley-Davidson motorcycle (“Motorcycle”),

pursuant to CCP § 704.010 

(the SUV, Truck, and Motorcycle are collectively referred to

1 Unless otherwise indicated, all chapter and section

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

All “Rule” references are to the Federal Rules of Bankruptcy

Procedure and all “CCP” references are to the California Code of

Civil Procedure.

2 We exercise our discretion to take judicial notice of

documents electronically filed in the underlying bankruptcy

case. See Atwood v. Chase Manhattan Mortg. Co. (In re Atwood),

293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).

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hereafter as the “Vehicles”). The Debtor indicated that the

Truck was used “for work.” Her amended Schedule I, however,

evidenced that she was unemployed. 

The Debtor’s amended schedules also included a $4,000 tax

refund that she received post-petition. The Debtor did not

claim any exemption in the refund. After receipt, she turned

the refund over to her bankruptcy attorney, Montaz M. Gerges

(“Gerges”). The Trustee unsuccessfully sought turnover from

Gerges, who continued to hold the tax refund as of the oral

argument in this appeal.

Six months into the case,3 the Trustee objected to the

exemptions claimed in the Property and in the Vehicles. In

particular, he sought complete disallowance of the exemption as

to the Truck and a partial disallowance of the exemptions

claimed in the Property and the Motorcycle. In the same

document (“Trustee’s Motion”), he also moved for turnover of the

tax refund and the Vehicles and requested a second extension of

the discharge objection deadline. As the Trustee made clear

later, he sought possession of the Vehicles in order to value

them. 

The Debtor did not formally oppose or respond to the

Trustee’s Motion. Instead, she vigorously responded to the

3 During this time, the Trustee obtained a bankruptcy

court order extending the time to object to the Debtor’s

discharge, and the Debtor moved to convert her case from

chapter 7 to chapter 13. The bankruptcy court denied the

Debtor’s conversion motion in an order from which she also

appeals. We dispose of that appeal in a separate memorandum

decision. 

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Trustee’s opposition to her concurrently pending motion to

convert and included some argument in support of her claimed

exemptions in that document (the “Response”). In the Response,

Gerges, on behalf of the Debtor, personally attacked the Trustee

and broadly alleged dishonesty, questioned his alleged valuation

of estate assets, and more specifically alleged that the Trustee

sought recovery of estate assets only for personal gain. Gerges

concluded with an unsupported, but less bombastic, assertion

that the Debtor was entitled to claim an enhanced homestead

exemption on account of her age and because she was legally

disabled.

Prior to the hearing on the Trustee’s Motion, the

bankruptcy court issued a tentative ruling,4 indicating its

intent to sustain the Trustee’s objections and grant his

requested relief. The ruling noted the Debtor’s failure to

supply evidence showing that she was entitled to the enhanced

homestead exemption based on disability and agreed that an

inoperable pickup truck could not be used in the operation of

the debtor’s business. The ruling concluded by asking how the

Debtor wished to allocate her undisputed $2,900 vehicle

exemption. 

Only the Trustee appeared at the hearing, and the

bankruptcy court granted relief consistent with its tentative

ruling. Having received no input from the Debtor regarding

allocation of the vehicle exemption, the bankruptcy court

4 The September 3, 2014 tentative ruling is not in the

record. It was instead obtained from the bankruptcy court’s

website: http://www.cacb.uscourts.gov/.

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allowed the Debtor additional time to make an election but also

stated that, unless the Debtor timely designated otherwise, it

would allocate the exemption to the SUV. 

The subsequent order provided relief consistent with the

bankruptcy court’s oral ruling; because the Debtor took no

position on allocation of the vehicle exemption, the exemption

attached to the SUV. The order also required that the Debtor

turn over possession of the Vehicles and the tax refund to the

Trustee. The Debtor timely appealed. 

JURISDICTION

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

§§ 1334 and 157(b)(2)(B), (E), and (O). We have jurisdiction

under 28 U.S.C. § 158.

ISSUES5

1. Whether the bankruptcy court erred when it sustained the 

Trustee’s objections to the claimed exemptions.

2. Whether the Trustee overvalued estate assets. 

3. Whether the bankruptcy court erred when it extended the 

Trustee’s time to object to the Debtor’s discharge. 

STANDARDS OF REVIEW

As a question of law, we review de novo the right of a

debtor to claim an exemption. Elliot v. Weil (In re Elliott),

523 B.R. 188, 191 (9th Cir. BAP 2014). A bankruptcy court’s

findings of fact as to a claimed exemption, however, are

5 The Debtor also argues that the bankruptcy court abused

its discretion in extending the deadline to object to

exemptions. Not only did the Debtor fail to raise this issue

before the bankruptcy court, it is beyond the scope of the order

on appeal. Therefore, we do not further address the issue.

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reviewed for clear error. Id. A finding of fact is clearly

erroneous if illogical, implausible or without support from

inferences that may be drawn from facts in the record. See

Trafficschool.com v. Edriver Inc., 653 F.3d 820, 832 (9th Cir.

2011). 

We review for an abuse of discretion the bankruptcy court’s

decision to grant a timely motion to extend the time for filing

a complaint objecting to the debtor’s discharge. See Willms v.

Sanderson, 723 F.3d 1094, 1103 (9th Cir. 2013). A bankruptcy

court abuses its discretion if it applies an incorrect legal

standard or misapplies the correct legal standard, or if its

factual findings are clearly erroneous. Shahrestani v. Alazzeh

(In re Alazzeh), 509 B.R. 689, 692 (9th Cir. BAP 2014).

DISCUSSION

The reasons offered by the Debtor for her failure to oppose

the Trustee’s Motion are conflicting. In her brief on appeal,

the Debtor contends that she “did not oppose . . . since she had

raised the same issues” in the Response. Apl’t Op. Br. at 14. 

But, at oral argument, the Debtor asserted that neither she nor

her counsel had notice of the hearing (or, by extension, the

Trustee’s Motion). As a result, they did not oppose or attend

the hearing and were unaware of the bankruptcy court’s

determinations until after the ruling.

As the Trustee pointed out, the record belies counsel’s

assertion. The proof of service attached to the Trustee’s

Motion evidences that the Debtor was served with the Trustee’s

Motion and notice of the related hearing at the Property via

U.S. mail. In addition, pursuant to general orders and the

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local bankruptcy rules for the Central District of California,

Gerges was served electronically via the bankruptcy court’s

Notice of Electronic Filing. In both cases, service occurred on

August 6, 2014 - approximately 26 days before the hearing. The

allegation of a lack of notice or knowledge of the Trustee’s

Motion is simply untrue.

Against this background, most of the Debtor’s arguments are

presented for the first time on appeal. Even so, given the

legal issues implicated and the fact that the record is fully

developed, we exercise our discretion and briefly consider the

Debtor’s arguments. See Mano–Y & M, Ltd. v. Field (In re The

Mortg. Store, Inc.), 773 F.3d 990, 998 (9th Cir. 2014). 

A. The bankruptcy court did not err in disallowing the

Debtor’s claimed exemptions.

The Debtor argues broadly that the bankruptcy court erred

by finding bad faith conduct or prejudice when it disallowed

some of her claimed exemptions. Relying on Law v. Siegel,

134 S.Ct. 1188 (2014), she argues that a bankruptcy court may

not disallow an amended exemption claim on the basis of bad

faith conduct. 

Unfortunately for the Debtor, however, the bankruptcy court

disallowed the exemptions based on the Debtor’s failure to

provide evidence of entitlement to the state law exemptions she

claimed. It did not disallow the exemptions pursuant to

§ 105(a), let alone make a determination of bad faith conduct or

prejudice. Consequently, the Debtor’s myopic focus on the

ability to liberally amend exemptions and discussion of the

impact of Law v. Siegel is inapt.

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Further, after applying de novo review, we discern no error

in the bankruptcy court’s decisions to disallow or limit the

claimed exemptions.

1. Partial disallowance of the homestead exemption 

in the Property. 

California law provides for an enhanced homestead exemption

in the amount of $175,000 to a person who is: (1) 65 years old

or older; (2) “physically or mentally disabled who as a result

of that disability is unable to engage in substantial gainful

employment”; or (3) 55 years old or older with an annual gross

income of no more than $25,000 (or $35,000, if married). Cal.

Code Civ. P. § 704.730(a)(3)(A)-(C). These provisions are in

the disjunctive; thus, a person qualifies for the enhanced

homestead exemption if she meets any one of the three

requirements. 

Here, the bankruptcy court sustained the Trustee’s

objection because the Debtor failed to provide evidence that she

qualified for an enhanced homestead exemption under any theory. 

After the Trustee called into question the enhanced homestead

exemption claim, the burden shifted to the Debtor to provide

evidence of entitlement. See In re Tallerico, 532 B.R. 774,

790-91 (Bankr. E.D. Cal. 2015) (extensive discussion on the

evidentiary burdens as to California exemption claims). No one

disputes that the Debtor was not 65; thus, she needed to provide

evidence of a qualifying disability or evidence that her

household’s annual gross income fell below $35,000. Her

schedules made clear that she did not meet the income

requirement given her husband’s income. She never provided

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declaratory or documentary evidence of a qualifying disability.

The Debtor’s schedules did evidence that she received

workers’ compensation benefits during the bankruptcy case, but

not at the date of petition. Case authority makes clear that a

qualifying disability must exist as of the date of petition. 

See Neff v. Denoce (In re Neff), 2014 WL 448885, at *8 (9th Cir.

BAP Feb. 4, 2014); In re Rolland, 317 B.R. 402, 413, 419-20

(Bankr. C.D. Cal. 2004); In re Rostler, 169 B.R. 408, 411

(Bankr. C.D. Cal. 1994).

And, as Debtor’s counsel acknowledged at oral argument, the

showing of disability necessary for CCP § 704.730(a)(3)(B) is

not per se equivalent to that required for receipt of workers’

compensation under California law. The enhanced homestead

exemption requires a disability that precludes “substantial

gainful employment”; that term is defined as significant mental

or physical work activity, done for pay or profit, in a

competitive or self-employed position. In re Rostler, 169 B.R.

at 412. There is a rebuttable presumption of an inability to

engage in substantial gainful employment if the debtor receives

social security or supplemental social income benefits. Cal.

Code Civ. P. § 704.730(a)(3)(B). A qualifying workers’

compensation disability, however, may be of temporary duration

and based on a less than total disability that merely impairs

the ability to work. Thus, evidence that the Debtor received

post-petition workers’ compensation benefits was not dispositive

on the issue of whether she was precluded from substantial

gainful employment as a result of disability; additional

evidence on this point was required.

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2. Disallowance of the exemption claim in the Truck.

California law also provides for an exemption in

“[p]ersonal property necessary to and used in exercise of trade,

business or profession.” Cal. Code Civ. P. § 704.060. A

vehicle claimed under this exemption must be necessary to the

debtor’s trade, business, or profession. In re Rawn, 199 B.R.

733, 735 (Bankr. E.D. Cal. 1996).

Here, again, the bankruptcy court sustained the Trustee’s

objection because the Debtor failed to provide evidence that the

Truck qualified for a California tool of the trade exemption. 

The Debtor failed to provide any evidence as to how she used the

Truck, and the bankruptcy court was reasonably skeptical of this

claim. It noted that the Debtor’s schedules indicated that the

truck was inoperable. Further, in the Response, the Debtor

asserted that her non-debtor husband used the Motorcycle for

work – not the Truck. Thus, there was no evidence in the record

to support the Debtor’s entitlement to a tool of the trade

exemption under Cal. Code Civ. P. § 704.060. 

B. Whether the Trustee overvalued estate assets.

The Debtor also argues that the Trustee improperly inflated

the values of the assets, so as to increase the equity available

for liquidation, notwithstanding her claimed exemptions. 

Nothing in the record, however, evidences that the bankruptcy

court made any valuation determinations. While emails between

the Trustee and Gerges evidence a valuation dispute,

that dispute never carried over to the bankruptcy court for

adjudication. Indeed, the Trustee requested possession of the

Vehicles for the purpose of subsequent valuation. 

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Further, given our conclusion that the bankruptcy court

appropriately sustained the Trustee’s objections to exemptions,

whether he overvalued assets (which we do not determine) is

ultimately irrelevant. 

Finally, the equity issue in regards to the SUV is now

irrelevant. During oral argument, Debtor’s counsel disclosed,

for the first time since case commencement and in contradiction

to the Debtor’s schedules, that the SUV was a leased vehicle. 

Both parties conceded that the leased SUV would not generate

equity for the estate.

C. The bankruptcy court did not abuse its discretion in 

extending the deadline to file an objection to 

discharge.

Finally, the Debtor argues that, given the absence of

evidence of bad faith, there is no local rule, statute, or case

authority that permitted the bankruptcy court to extend the time

to object to the Debtor’s discharge. Once again, we disagree. 

Rule 4004 provides that a complaint objecting to a debtor’s

chapter 7 discharge must “be filed no later than 60 days after

the first date set for the [§ 341(a)] meeting of creditors.” 

That time may be extended, but the motion must be filed prior to

the expiration of the 60-day date.

Here, the 60th day following the initial § 341(a) meeting

was May 16, 2014. What the Debtor fails to mention on appeal is

that the Trustee timely moved for and obtained an initial order

from the bankruptcy court extending the discharge objection date

to August 16, 2014. The Trustee then sought a second extension

of the discharge objection deadline in the Trustee’s Motion and

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filed the Trustee’s Motion prior to the extended deadline date. 

Neither the Code nor the national rules nor the local rules

nor case authority restricts or eliminates the bankruptcy

court’s authority to grant a second deadline extension when the

request is timely. Nor does any authority limit the

justification for an extension request to a debtor’s bad faith.

Here, the second extension – an additional 90 days – was

timely and neither unreasonable nor capricious. The Trustee

stated, repeatedly, that his efforts to obtain additional,

necessary information from the Debtor and Gerges were

consistently thwarted. Nothing in the record suggests

hyperbolic rhetoric on his part. We, thus, discern no abuse of

discretion. 

CONCLUSION

Based on the foregoing, we AFFIRM the bankruptcy court.

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