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FILED

APR 07 2015

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. NV-14-1255-JuKuD

) BAP No. NV-14-1280-JuKuD

BRENDA B. TODD, ) (Cross-Appeals)

)

Debtor. ) Bk. No. 09-14362

______________________________)

)

BRENDA B. TODD, )

)

Appellant/Cross-Appellee,)

)

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

)

LOWELL E. ROTHSCHILD, Chapter )

11 Trustee for Fort Defiance )

Housing Corp., Inc., )

)

Appellee/Cross-Appellant,)

)

VICTORIA L. NELSON, Chapter 7 )

Trustee, )

)

Appellee. )

______________________________)

Argued and Submitted on March 19, 2015

at Las Vegas, Nevada

Filed - April 7, 2015

Appeal from the United States Bankruptcy Court

for the District of Nevada

Honorable Linda B. Riegle, Bankruptcy Judge, Presiding

_________________________

Appearances: Brenda Todd argued pro se; Frederick J. Peterson

of Mesch, Clark & Rothschild, P.C. argued for

Lowell E. Rothschild, Chapter 11 Trustee for Fort

* 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.

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Defiance Housing Corp., Inc.**

_________________________

Before: JURY, KURTZ, and DUNN, Bankruptcy Judges.

Chapter 71 debtor, Brenda Todd (Debtor), was in a car

accident and suffered significant injuries. Debtor filed a

state court action against the driver and his employer seeking

general and special damages, punitive damages, and attorneys’

fees and costs. The litigation ended in the settlement and

release of Debtor’s claims for $2.5 million (Personal Injury

Settlement). The settlement agreement did not allocate the

lump-sum amount to any damage theory.

 Subsequently, in the chapter 11 bankruptcy case of Fort

Defiance Housing Corporation (FDHC), the Arizona bankruptcy

court entered a judgment for $18,500,883.59 in favor of the

chapter 11 trustee, Brenda Moody Whinery (Whinery), and against

Debtor, Lodgebuilder Inc. (Lodgebuilder), and others, jointly

and severally (Arizona Judgment). The court also issued a

permanent injunction, enjoining Debtor from, among other things,

accessing her Solomon Smith Barney account (SSB Account), which

contained monies from her Personal Injury Settlement. In

February 2013, appellee and cross appellant, Lowell E.

** Appellee Victoria L. Nelson is the successor chapter 7

trustee to James Lisowski. Nelson has not filed a brief or

otherwise participated in this appeal.

1 Unless otherwise indicated, all chapter and section

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

“Rule” references are to the Federal Rules of Bankruptcy

Procedure and “Civil Rule” references are to the Federal Rules of

Civil Procedure.

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Rothschild, was appointed the successor trustee (Creditor

Trustee) in the FDHC case. 

Soon after the Arizona Judgment was entered against her,

Debtor filed a chapter 11 petition in the Nevada bankruptcy

court, which was later converted to chapter 7. Months after her

filing, in an amended and corrected Schedule C attached to a

pleading, Debtor claimed as exempt more than $1 million from the

Personal Injury Settlement proceeds as compensation for loss of

future earnings under Nev. R. Stat. (N.R.S.) § 21.090(1)(w). 

Debtor did not file or docket the amended Schedule C, but

e-mailed it to the chapter 7 case trustee and Creditor Trustee’s

attorney. 

Meanwhile, Creditor Trustee and the chapter 7 trustee

entered into a settlement agreement to avoid litigation over the

ownership of Debtor’s assets, which were subject to the Arizona

Judgment and injunction (Rule 9019 Settlement). The parties

agreed, among other things, that the SSB Account belonged to

FDHC’s estate. Debtor objected to the settlement by asserting

her exemption rights in various assets, including the Personal

Injury Settlement proceeds that were deposited into the SSB

Account. The bankruptcy court overruled Debtor’s objection and

entered an order approving the settlement (Rule 9019 Settlement

Order). Debtor attempted to appeal the order by filing a notice

of appeal (NOA) in Lodgebuilder’s bankruptcy case and not her

own. She also did not seek a stay pending appeal. The Nevada

district court dismissed the appeal based on Debtor’s lack of

standing. 

Creditor Trustee then filed a motion for summary judgment

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(MSJ) on the issue of whether Debtor was entitled to an

exemption on any portion of the Personal Injury Settlement

proceeds for loss of future earnings. The bankruptcy court

granted Creditor Trustee’s MSJ. Debtor filed an appeal to the

district court. Since there was no stay pending appeal,

Creditor Trustee withdrew monies from the SSB Account and made

distributions pursuant to the terms of the Rule 9019 Settlement

and the confirmed FDHC chapter 11 plan. Meanwhile, the district

court reversed the bankruptcy court’s order granting Creditor

Trustee’s MSJ, finding there was a genuine issue of material

fact as to whether Debtor was entitled to exempt any portion of

the Personal Injury Settlement proceeds as loss of future

earnings. 

Subsequently, the bankruptcy court conducted a trial on the

proper allocation of the loss of future earnings damages in the

Personal Injury Settlement award to determine the amount of

Debtor’s exemption. The court entered its findings of fact and

conclusions of law (FFCL) and a judgment, finding Debtor was

entitled to exempt $461,608.02 for loss of future earnings. 

Creditor Trustee filed a motion for additional findings,

reconsideration, or to alter or amend the judgment (Motion to

Alter or Amend), which the bankruptcy court denied. 

Debtor appealed from the judgment and Creditor Trustee

filed a cross appeal. Both parties assign error to the

bankruptcy court’s decision on the amount of the exemption. 

Debtor claims that the exemption for loss of future earnings

should be $1,081,540.00. Creditor Trustee contends the amount

should be no more than $108,008.13 or, alternatively, that the

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exemption should be disallowed in its entirety based on the

doctrines of res judicata and judicial estoppel. 

We conclude that Debtor’s exemption rights in the SSB

Account are determined by the Rule 9019 Settlement Order and the

Bankruptcy Code. The plain language in the Rule 9019 Settlement

Order stated that the FDHC estate owned the funds in the SSB

Account, the account was transferred to Creditor Trustee, and

there was no carve-out for Debtor’s exemption. As a result, the

bankruptcy court no longer had jurisdiction over the SSB Account

since it was neither property of Debtor’s estate nor property of

the Debtor. See 28 U.S.C. § 1334(e)(1). Further, under

§ 522(b), the debtor may exempt certain property “from property

of the estate.” “[O]bviously, then, an interest that is not

possessed by the estate cannot be exempted.” See Owen v. Owen,

500 U.S. 305, 308 (1991). Accordingly, the issue of Debtor’s

exemption in the funds in the SSB Account became moot once the

funds were no longer property of Debtor’s estate or the Debtor. 

For these reasons, we VACATE the judgment and DISMISS this

appeal. 

I. FACTS

The facts are mostly taken from the parties’ Joint PreTrial Statement in which they stipulated to certain facts and

the bankruptcy court’s FFCL entered on May 6, 2014. 

A. Prepetition Events

1. Debtor’s Employment

Debtor was employed by Lodgebuilder, a building contractor

which did business with FDHC and other entities. FDHC is a

nonprofit Navajo corporation, incorporated for the sole purpose

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of building and leasing low income housing on the Navajo

reservation. FDHC operations were funded by federal grants and

federally supported loans. Debtor owned a 20% stake in

Lodgebuilder, and William Aubrey (Aubrey) owned 80%. Debtor

received a $10,000 monthly salary from Lodgebuilder prior to and

after her car accident. 

In addition to her interest in Lodgebuilder, Debtor owned

and managed a restaurant called Blondie’s in Glacier, Montana. 

Blondie’s had a gaming license and provided customers with slot

machines, food and drinks. 

2. The Car Accident

On May 25, 2003, Debtor was injured in a serious car

accident. She filed a state court action against Aaron Wade

Melancon and Casablanca Resorts, LLC, alleging causes of action

for negligence, negligence per se, respondeat superior, and

negligent hiring and supervision. Debtor sought general

damages, special damages, property damages, punitive damages,

and attorneys’ fees and costs.

After some time, the parties settled the matter. In

exchange for a lump-sum cash payment of $2.5 million, Debtor

released all claims, demands, and causes of action and damages

of any kind arising out of the incident. The settlement

agreement did not allocate the lump-sum amount to any specific

damage claim. After paying her attorney $634,339.42, Debtor

received $1,865,660.58 (Settlement Proceeds) and deposited that

amount into her checking account at Mountain America Credit

Union (MACU). 

In May 2006, Debtor transferred $1.5 million of the

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Settlement Proceeds from her MACU account to her pre-existing

SSB Account which had a balance of $535,640.86. Debtor

purchased six mutual funds with the $1.5 million and some

additional cash. On May 31, 2005, the account balance was

$2,037,991.86, consisting of stocks and cash.

After the car accident, Lodgebuilder paid Debtor’s medical

expenses and continued to pay her salary. Debtor used $130,000

of the Settlement Proceeds, plus money from other accounts and

payments from Allstate insurance, to repay Lodgebuilder for the

medical expenses.

3. The FDHC Bankruptcy Case

In 2005, FDHC filed a chapter 11 petition in the Arizona

bankruptcy court. Whinery was appointed the chapter 11 trustee. 

In October 2006, Whinery filed an adversary complaint against

Lodgebuilder, Debtor, Aubrey, and Everett Ross, alleging breach

of contract, conversion, misrepresentation, negligence, breach

of fiduciary duty, civil conspiracy/aiding and abetting,

fraudulent conveyance, and unjust enrichment, and seeking

general and punitive damages. At the same time, she requested a

temporary restraining order and preliminary injunction freezing

the defendants’ assets and bank accounts. 

In March 2009, the Arizona bankruptcy court entered a

judgment in favor of Whinery and against Lodgebuilder, Aubrey,

and Debtor, in the amount of $18,500,883.59.2 The court also

enjoined the transfer of assets that were traceable proceeds of

2 The Arizona bankruptcy court found that Debtor and Aubrey

converted over $16 million of FDHC’s money by transferring it to

various Las Vegas casinos.

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FDHC’s assets and which were in the name of Debtor and the

others, including funds in Debtor’s SSB Account. Although the

Arizona bankruptcy court froze Debtor’s SSB Account, the court

allowed her to withdraw $206,158.00 from the account for legal

fees and living expenses. Debtor withdrew this amount from the

cash portion of the monies contained in the account. 

In February 2013, Rothschild became the successor trustee

in the FDHC case.

B. Bankruptcy Events

Shortly after the Arizona Judgment was entered against her, 

Debtor filed a chapter 11 petition in the Nevada bankruptcy

court.3 

Prior to her filing, the balance in the SSB Account

decreased due to withdrawals authorized by the Arizona

bankruptcy court and stock market losses in 2008. On March 26,

2009 — the date she filed her petition — the SSB Account had a

balance of $1,340,719.00. After Debtor filed her bankruptcy

petition, the funds in the SSB Account remained largely

untouched, with the exception of withdrawals authorized by the

Arizona bankruptcy court.

On April 10, 2009, Debtor filed her schedules and statement

of financial affairs. In Schedule B, under “Description and

Location of Property,” Debtor listed “Smith Barney” with a value

of $1,340,719.00. In Schedule C, Debtor did not list an

exemption for loss of future earnings under N.R.S.

3 Aubrey and Lodgebuilder also filed bankruptcy petitions. 

Those cases were jointly administered with Debtor’s case.

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§ 21.090(1)(w).

On April 30, 2009, Debtor filed amended Schedules B and C,

listing her property claimed as exempt. Again, in Schedule B

under “Description and Location of Property,” Debtor put “Smith

Barney” with a value of $1,340,719.00, but she did not list an

exemption for loss of future earnings in her amended Schedule C.

In early September 2009, the bankruptcy court converted

Debtor’s chapter 11 case to chapter 7. James Lisowski was

appointed the chapter 7 trustee. 

On November 25, 2009, Creditor Trustee filed an objection

to Debtor’s claimed exemptions, none of which were based on the

loss of future earnings under N.R.S. § 21.090(1)(w). On

December 31, 2009, Creditor Trustee filed an amended objection. 

On January 5, 2010, Debtor filed a response to Creditor

Trustee’s amended objection. Attached to the response as

“Exhibit 1" was a “Corrected & Amended” Schedule C which, for

the first time, claimed an exemption under N.R.S. § 21.090(1)(w)

in the amount of $1,122,384.00 and another exemption for

compensation for personal injury - pain and suffering - in the

amount of $377,616.00. The certificate of service showed that

Debtor e-mailed her response to Creditor Trustee’s attorney,

Fred Petersen, and to the chapter 7 case trustee. Debtor did

not separately file and docket the “Corrected & Amended”

Schedule C attached as “Exhibit 1" to her response.

In July 2011, Creditor Trustee filed a motion to approve a

settlement agreement between himself and the chapter 7 trustee

the purpose of which was to avoid litigation relating to the

ownership of Debtor’s assets. Paragraph 2.5 entitled 

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“Accounts” provided:

Lisowski acknowledges and agrees that all funds held

in the following accounts: (1) Solomon Smith Barney

Account #5240043413532 . . . , all in the name of

Todd, which accounts are subject to the Injunction,

are properly owned by, and the assets of, FDHC and

subject to the provisions of the FDHC Plan. Lisowski

agrees that such funds will be turned over to Whinery

on the Effective Date and that he will cooperate in

such turnover, including executing any documents

necessary to effectuate such turnover.

(Emphasis added). 

Debtor objected to the settlement, arguing that it ignored

her exemption rights in various assets, including, but not

limited to, her homestead, her car, and for loss for future

earnings. Debtor argued that any settlement agreement

liquidating her estate should first include and identify her

exemptions permitted by law.

Relying on the properly filed Schedule C, Creditor Trustee

responded by pointing out that the bankruptcy court could

determine the limited issue of whether Debtor’s homestead

assertion trumped Creditor Trustee’s consensual lien on Debtor’s

residence and that Debtor had never claimed an exemption for her

car, which was also subject to a consensual lien by Creditor

Trustee.

At the August 10, 2011 hearing on the matter, the

bankruptcy court stated: 

With respect to Ms. Todd’s complaints, any issue as to

what exemption she may have are not resolved in this

settlement. . . .the point is all you’re doing is

settlement inter se. If, for example, she titled

[sic] to the exemptions she claims, the estate doesn’t

get it. Is that -- everybody agrees that’s the correct

-- analysis. 

Counsel for Creditor Trustee responded “Yes.” Liskowki stated: 

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“I agree completely. I don’t think this resolve [sic] any

issues with the exemptions.” The bankruptcy court then said: 

Everybody agrees. All right. So to the extent there

are exemptions, those exemption issues are preserved. 

If you have outstanding objections to exemptions, you

better bring them back on calendar. Otherwise, the

exemptions stand.

Neither the Rule 9019 Settlement nor the Rule 9019

Settlement Order contained any provision regarding Debtor’s

exemption rights nor did it provide for the carve-out of any

funds in the SSB Account pending the determination of those

rights. The order provided that Solomon Smith Barney accept any

and all instructions concerning transactions in the SSB Account

from Whinery, “as Creditor Trustee, who is the owner of the

accounts as of the date of this Order.” Finally, although the

funds in the SSB Account were no longer property of Debtor’s

estate per the settlement’s plain terms, the bankruptcy court

did not expressly retain jurisdiction to decide Debtor’s

exemption rights in those funds. Debtor and Aubrey appealed the

Rule 9019 Settlement Order to the Nevada district court by

filing a NOA in Lodgebuilder’s bankruptcy case and not their

own. Lodgebuilder did not file a NOA of the order. The Nevada

district court dismissed the appeal in May 2012, finding that

neither Debtor nor Aubrey had standing.4

Relying on the Rule 9019 Settlement Order, Creditor Trustee

withdrew funds from the SSB Account and disbursed those funds to

4 We take judicial notice of the dismissal which was

docketed and imaged in Bankr. Case No. NV-09-14103 at Dkt.

No. 289. Atwood v. Chase Manhattan Mortg. Co. (In re Atwood),

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

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the chapter 7 trustee and others pursuant to the terms of the

settlement and FDHC’s confirmed chapter 11 plan.

In late November 2011, Creditor Trustee filed a renewed

objection to Debtor’s homestead exemption. Debtor responded,

arguing that her claims of exemption were contained in the

Schedule C that she filed on April 30, 2009.

Debtor then filed an emergency motion for turnover of funds

based on the exemptions claimed in her “Corrected & Amended”

Schedule C. Debtor asserted that the Settlement Proceeds were

exempt under N.R.S. § 21.090(1)(w), and argued that the entire

amount was reasonably necessary for her support. 

Creditor Trustee responded, arguing that Debtor had failed

to preserve her exemption for loss of future earnings because,

among other things, the “Corrected & Amended” Schedule C had not

been docketed as an amendment. Creditor Trustee further

submitted that under the Rule 9019 Settlement with the chapter 7

trustee, the funds in the SSB Account belonged to the FDHC

estate. Creditor Trustee maintained that Debtor could not now

claim an exemption since the funds had already been transferred

to FDHC and administered per the terms of the settlement

agreement. Based on these arguments, Creditor Trustee asserted

that the doctrines of res judicata, judicial estoppel, and

mootness barred Debtor’s motion. Finally, Creditor Trustee

contended that creditors of Debtor’s estate and FDHC’s estate

would be prejudiced due to Debtor’s late amendment of her

Schedule C.

In April 2012, the bankruptcy court held a hearing

regarding Debtor’s exemptions. In responding to the prejudice

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concerns raised by Creditor Trustee, the court held that,

although Debtor’s attached January amendment was not filed in

compliance with the Rules, it was sufficient to give Creditor

Trustee notice of her intent to claim the exemptions. The

bankruptcy court ordered Debtor to properly file the exemptions. 

Despite the court’s directive, Debtor did not file a separately

docketed Amended Schedule C listing an exemption for loss of

future earnings. 

On May 8, 2012, at a status hearing, the court again told

Debtor to file an official amendment to the claim of exemption

and gave her a deadline to do so. About two weeks later, Debtor

filed a “Debtor’s Resubmission of Amended Exemptions” with an

attached Schedule C listing “Payments for comp. for future

earnings” in the amount of $1,122,384.00. Debtor did not file a

separately docketed amended Schedule C.

Creditor Trustee then filed a “Notice of Creditor Trustee’s

Objection To Debtor’s Alleged Exemptions” in which he objected

to Debtor’s loss of future earnings exemption and others as

well. 

Subsequently, Creditor Trustee filed a Motion for Summary

Judgment (MSJ) on the issue of whether Debtor was entitled to an

exemption on any portion of the Settlement Proceeds for loss of

future earnings. Creditor Trustee argued that the Personal

Injury Settlement agreement did not allocate the funds to any

damage theory and did not mention “loss of future earnings.” 

Creditor Trustee further argued that Debtor continued to receive

substantial wages and other payments from Lodgebuilder after her

accident. The bankruptcy court granted Creditor Trustee’s MSJ

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finding that none of the Settlement Proceeds were exempt as

payment for compensation for loss of future earnings. Debtor

appealed the MSJ ruling to the Nevada district court. There was

no stay pending appeal. The district court reversed the

bankruptcy court’s decision, finding that there was a genuine

issue of material fact whether the settlement was for lost wages

or some other purpose.

The bankruptcy court then scheduled a trial on the matter. 

Both parties submitted trial briefs and the joint pre-trial

statement in which they stipulated to certain facts for purposes

of the trial. Debtor again claimed she was entitled to an

exemption for loss of future earnings in the amount of

$1,122,384.00. Creditor Trustee asserted that Debtor’s claim

for loss of future earnings should be zero and certainly no

greater than $108,008.13. After the trial, the bankruptcy court

took the matter under submission.

On May 6, 2014, the bankruptcy court issued its FFCL. 

After tracing the Settlement Proceeds which were commingled in

the SSB Account with Debtor’s pre-existing balance, and

deducting amounts attributed to future medical expenses and

bodily injury, the court concluded that Debtor was entitled to

exempt $461,608.02 for loss of future earnings and that the

entire amount was reasonably necessary for her support.

The bankruptcy court also found that although Debtor had

never filed an amended Schedule C, Creditor Trustee’s objection

to her exemption for loss of future earnings was timely. The

bankruptcy court opined that the matter should be determined on

its merits, not prejudicing either party for any apparent

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failure to abide by the Bankruptcy Code and Rules. 

Finally, the bankruptcy court found that the permanent

injunction imposed by the Arizona bankruptcy court did not

preclude Debtor from litigating her entitlement to exempt the

Settlement Proceeds in the SSB Account. The court did not

address the impact of the Rule 9019 Settlement on Debtor’s

exemption rights apparently because it thought those rights were

properly reserved by virtue of the parties’ consent to preserve

them at the August 10, 2011 hearing. The bankruptcy court

entered the judgment on the same day it issued the FFCL. 

Debtor filed a timely appeal and Creditor Trustee filed a

timely cross-appeal. Creditor Trustee filed a Motion to Alter

or Amend which the bankruptcy court denied on September 29,

2014. Creditor Trustee then filed an amended notice of cross

appeal.

Debtor has since filed a motion for collection on the

judgment regarding her exemption. Creditor Trustee filed a

motion for a stay pending appeal in response. The bankruptcy

court denied both motions.

II. JURISDICTION

We address the bankruptcy court’s jurisdiction and our own

jurisdiction to decide the merits of the appeal below.

III. ISSUE

Did the bankruptcy court have subject matter jurisdiction

to decide Debtor’s exemption claim for loss of future earnings

after it entered the Rule 9019 Settlement Order? 

IV. STANDARD OF REVIEW

We review de novo questions of subject matter jurisdiction.

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Montana v. Goldin (In re Pegasus Gold Corp.), 394 F.3d 1189,

1193 (9th Cir. 2005).

V. DISCUSSION

We are required to consider the presence or absence of

subject matter jurisdiction sua sponte. Cannon v. Haw. Corp.

(In re Haw. Corp.), 796 F.2d 1139, 1141 (9th Cir. 1986). The

bankruptcy court’s jurisdiction is grounded in, and limited by,

statute. Kirton v. Valley Health Sys. (In re Valley Health

Sys.), 471 B.R. 555, 563 (9th Cir. BAP 2012). Under 28 U.S.C.

§ 1334(e)(1), the bankruptcy court has exclusive jurisdiction

“of all the property, wherever located, of the debtor as of the

commencement of such case, and of property of the estate.” 

The parties do not dispute that the SSB Account contained

the Settlement Proceeds. The Rule 9019 Settlement entered into

between Creditor Trustee and the chapter 7 trustee placed

ownership of the SSB Account in FDHC’s estate. When property is

no longer property of the estate the court’s jurisdiction ends. 

See In re Hall’s Motor Transit Co., 889 F.2d 520, 522 (3d Cir.

1989) (“The bankruptcy court’s jurisdiction does not follow the

property, but rather, it lapses when the property leaves the

debtor’s estate.”); Elscint, Inc. v. First Wis. Fin. Corp.

(Matter of Xonics, Inc.), 813 F.2d 127, 131 (7th Cir. 1987)

(once property of the estate is sold, the bankruptcy court must

obtain a new source of federal jurisdiction); see also Gardner

v. United States (In re Gardner), 913 F.2d 1515, 1518 (10th Cir.

1990) (“A bankruptcy court has jurisdiction over disputes

regarding alleged property of the bankruptcy estate at the

outset of the case. When property leaves the bankruptcy estate,

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however, the bankruptcy court’s jurisdiction typically lapses,

and the property’s relationship to the bankruptcy proceeding

comes to an end.”). Accordingly, once the bankruptcy court

entered the Rule 9019 Settlement Order, the court’s jurisdiction

over the SSB Account lapsed since it was no longer property of

the estate nor was it property of the Debtor. See 28 U.S.C.

§ 1334(e)(1); see also 28 U.S.C. § 157(b)(2)(B) (recognizing

proceedings relating to “exemptions from property of the estate”

as core proceedings over which the bankruptcy court has

jurisdiction).

The Rule 9019 Settlement Order did not provide for the

bankruptcy court’s retention of jurisdiction over the SSB

Account for purposes of determining Debtor’s exemption rights. 

Further, although the bankruptcy court orally confirmed with

Creditor Trustee and the chapter 7 trustee that Debtor’s

exemption rights in the SSB Account were preserved, that

colloquy did not preserve such rights, nor did it cure the

jurisdictional defect that confronts us. The parties cannot

create subject matter jurisdiction by consent. Arbaugh v. Y & H

Corp., 546 U.S. 500, 514 (2006). Subject matter jurisdiction,

which involves a court’s power to hear a case, “can never be

forfeited or waived.” Id. A court which lacks subject matter

jurisdiction cannot hear the matter at all and must dismiss it.

The plain language of § 522(b) also demonstrates why the

preservation of Debtor’s exemption rights was ineffective. 

Section “522(b) provides that the debtor may exempt certain

property ‘from property of the estate’; obviously, then, an

interest that is not possessed by the estate cannot be

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exempted.” See Owen, 500 U.S. at 308. Once the SSB Account was

transferred out of Debtor’s bankruptcy estate, there was nothing

to exempt per the plain language of § 522(b).

Finally, we considered whether the bankruptcy court’s

jurisdiction to determine Debtor’s exemption rights could

survive under a “related to” jurisdictional analysis. “Related

to” jurisdiction exists when “the outcome of the proceeding

could conceivably have any effect on the estate being

administered in bankruptcy.” Fietz v. Great W. Sav.

(In re Fietz), 852 F.2d 455, 457 (9th Cir. 1988) (adopting the

test in Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir.

1984)). The United States Supreme Court endorsed Pacor’s

conceivability standard with the caveats that “related to”

jurisdiction “cannot be limitless,” and that the critical

component of the Pacor test is that “bankruptcy courts have no

jurisdiction over proceedings that have no effect on the estate

of the debtor.” Celotex Corp. v. Edwards, 514 U.S. 300, 308 &

n.6 (1995). 

“Related to” jurisdiction does not exist for essentially

the same reason as noted above. Because the Rule 9019

Settlement transferred 100% ownership of the SSB Account to

FDHC’s estate, the chapter 7 trustee gave up any rights to the

funds. Thus, the outcome of Debtor’s claim to exemption rights

in those funds could not impact creditor recoveries or impact or

involve the chapter 7 trustee in her estate.

In sum, the bankruptcy court did not have subject matter

jurisdiction to decide Debtor’s exemption rights in the SSB

Account which was no longer property of her estate. This

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unexpected jurisdictional defect resulting from the Rule 9019

Settlement Order leaves us without authority to consider the

merits of Debtor’s exemption claim for loss of future earnings

and the alleged allocation errors raised in this appeal. We

express no opinion whether Debtor could successfully move to

modify the Rule 9019 Settlement Order under Civil Rule 60(b)(6). 

VI. CONCLUSION

For the reasons stated, we VACATE the judgment and DISMISS

this appeal.

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