FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

IN RE EDWIN EARL ELLIOTT,

EDWIN EARL ELLIOTT,

Appellant,

v.

PACIFIC WESTERN BANK, a 

California state-chartered bank,

Appellee.

No. 18-17421

D.C. No.

3:18-cv-00416-

VC

OPINION

Appeal from the United States District Court

for the Northern District of California

Vince Chhabria, District Judge, Presiding

Argued and Submitted February 6, 2020

San Francisco, California

Filed August 12, 2020

Before: Richard A. Paez and Carlos T. Bea, Circuit Judges, 

and Lynn S. Adelman,* District Judge.

Opinion by Judge Paez

* The Honorable Lynn S. Adelman, United States District Judge for 

the Eastern District of Wisconsin, sitting by designation.
2 IN RE ELLIOTT

SUMMARY**

Bankruptcy

The panel affirmed the district court’s judgment 

summarily affirming the bankruptcy court’s dismissal for 

failure to state a claim of a chapter 7 debtor’s adversary 

proceeding seeking to exempt retirement funds from the 

bankruptcy estate.

Pacific Western Bank declared a default on a loan on 

which the debtor was either the borrower or guarantor. The 

Bank obtained a state court judgment against the debtor and 

a writ of execution, and it instructed the sheriff to levy on 

the debtor’s individual retirement account, creating an 

execution lien. After the sheriff levied on the debtor’s 

individual retirement account, he filed for bankruptcy. The 

debtor claimed all assets in his IRA were exempt from 

creditors under a California statute and 11 U.S.C. 

§ 522(b)(3)(C), which exempt retirements funds from being 

used to satisfy a money judgment. He sought avoidance of 

the transfer of his levied IRA funds to the Bank under 

§ 522(h) or (f).

The panel held that the debtor failed to state a claim 

under § 522(h), which allows a debtor to step into the role of 

the bankruptcy trustee and avoid certain transfers of exempt 

property made before the filing of the bankruptcy petition. 

The panel concluded that because the judicial lien was 

satisfied prior to the petition date, it was not voidable under 

§ 522(f). Because it was not voidable, the debtor could not 

** 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 ELLIOTT 3

succeed on his separate § 522(f) claim nor establish that the 

transfer of his IRA funds was a preferential transfer under 

11 U.S.C. § 547. The debtor having failed to allege the 

elements of a preferential transfer, the bankruptcy court 

correctly concluded that he failed to state a claim under 

§ 522(h).

COUNSEL

David M. McKim (argued), Law Offices of David M. 

McKim, Santa Rose, California, for Appellant.

J. Alexandra Rhim (argued), Hemar Rousso & Heald LLP,

Encino, California, for Appellee.

OPINION

PAEZ, Circuit Judge:

A little over three months after a sheriff levied on Edwin 

Earl Elliott’s individual retirement account (“IRA”) funds, 

Elliott filed for chapter 7 bankruptcy. During the liquidation 

of his bankruptcy estate and later in the present adversary 

proceeding, Elliott claimed that his retirement funds were 

exempt from the bankruptcy estate.

In dismissing the adversary complaint for failure to state 

a claim, the bankruptcy court held that Elliott could not 

reclaim his retirement funds because he filed the bankruptcy 

petition after the execution lien had been satisfied. The 

district court summarily affirmed. Largely for the reasons 

stated by the bankruptcy court, we affirm the district court’s 

judgment.
4 IN RE ELLIOTT

I.

Pacific Western Bank (“the Bank”)’s predecessor in 

interest issued a loan on which Elliott was either the 

borrower or guarantor. The Bank eventually declared a 

default on the loan, at least in part because of nonrepayment. 

To recover the amount owed, the Bank sued Elliott in 

California Superior Court for the County of San Mateo and 

obtained a judgment in its favor. Following entry of the 

state-court judgment, the Bank obtained a writ of execution 

and instructed the San Mateo County Sheriff to levy on IRA 

Trust Services Company, which held Elliott’s IRA funds.1 

The parties agree that this levy created an execution lien 

under California law. See Cal. Civ. Proc. Code (“CCP”) 

§ 697.710.

On December 2, 2016, the Sheriff levied $28,870.19 

from Elliott’s IRA account with IRA Trust Services. Before 

the Sheriff released the funds to the Bank, Elliott filed a 

claim of exemption in state court. He argued that the funds 

should be treated as a needs-based exemption under CCP 

§ 704.115. That section shields from money judgments 

private retirement plans, profit-sharing plans designed for 

retirement purposes, and other forms of retirement assets. 

See CCP § 704.115(a)–(b). IRAs are exempt under the 

statute “only to the extent necessary to provide for the 

support of the judgment debtor when [he] retires . . . taking 

into account all resources that are likely to be available[.]” 

McMullen v. Haycock, 54 Cal. Rptr. 3d 660, 660 (Ct. App. 

2007) (internal quotation marks omitted).

1 The Bank also recorded its notice of lien with the California 

Secretary of State.
IN RE ELLIOTT 5

The superior court denied Elliott’s exemption claim the 

following month. Shortly thereafter, on or about 

February 15, 2017, the San Mateo County Sheriff’s Office 

released the levied funds to the Bank. The parties agree that 

the present litigation concerns only the levied funds; the 

balance of Elliott’s IRA account consists of illiquid assets 

which remain in the possession of IRA Trust Services. The 

Bank claims no interest in those assets.

On March 13, 2017, Elliott filed his chapter 7 bankruptcy 

petition. He claimed all assets in his IRA were exempt from 

creditors under a different section of the California’s 

exemption statutes, CCP § 703.140(b)(10)(E), and a 

provision of the Bankruptcy Code, 11 U.S.C. 

§ 522(b)(3)(C). Both sections exempt certain retirement 

funds from being used to satisfy a money judgment. Section 

703.140(b)(10)(E) provides that a debtor in a bankruptcy 

proceeding (like Elliott) may exempt his right to receive a 

“payment under a stock bonus, pension, profit-sharing, 

annuity, or similar plan or contract on account of illness, 

disability, death, age, or length of service[.]” Section 

522(b)(3)(C) of the Bankruptcy Code exempts “retirement 

funds to the extent that those funds are in a fund or account 

that is exempt from taxation under” various provisions of the 

Internal Revenue Code.

The Bank did not object to Elliott’s claimed exemptions 

because, in its view, “the Bank had completed its prepetition 

levy” on the IRA funds, and therefore the funds no longer 

“constitute[d] property of the Debtor or the estate.” The 

Bank maintains that when the funds were paid to the Sheriff, 

the lien expired under CCP § 700.140, effectively 

terminating any rights Elliott had to the funds. Thus, the 

Bank argues, Elliott cannot claim an exemption on assets 
6 IN RE ELLIOTT

that were neither his nor part of the bankruptcy estate. See 

In re Hernandez, 483 B.R. 713, 720 (B.A.P. 9th Cir. 2012).

The chapter 7 trustee eventually filed a no-distribution 

report, and the bankruptcy court closed the case on June 21, 

2017. Elliott filed the present adversary proceeding shortly 

thereafter. Before the bankruptcy court, he argued he could 

avoid the transfer of his levied IRA funds to the Bank under 

sections 522(h) or (f) of the Bankruptcy Code.

The Bank moved to dismiss the adversary complaint. It 

argued that Elliott could not state a claim under either section 

522(h) or (f) and, even if he could, the action was timebarred under section 550(f) or should be dismissed for lack 

of subject-matter jurisdiction under Federal Rule of 

Bankruptcy Procedure 7012(b)(1). Elliott then moved to 

reopen the bankruptcy case, which the court granted. The 

bankruptcy court mentioned the time-bar argument but, in 

ruling for the Bank, rested its holding entirely on Elliott’s 

failure to state a claim under sections 522(h) or (f).2 On 

appeal, the district court summarily affirmed the dismissal.

2 The bankruptcy court did not address the Bank’s jurisdictional 

argument in its order. The Bank argued in its motion to dismiss that the 

court lacked jurisdiction under the Rooker-Feldman doctrine, which 

prevents federal district courts from reviewing the “final determinations 

of a state court in judicial proceedings.” Worldwide Church of God v. 

McNair, 805 F.2d 888, 890 (9th Cir. 1986). “In apparent contradiction 

to the Rooker-Feldman theory,” however, “bankruptcy courts are 

empowered to avoid state judgments, to modify them, and to discharge 

them.” In re Gruntz, 202 F.3d 1074, 1079 (9th Cir. 2000) (citations 

omitted). For this reason, “final judgments in state courts are not 

necessarily preclusive in United States bankruptcy courts.” Id. We agree 

this adversary proceeding constitutes a core proceeding over which the 

bankruptcy court had jurisdiction pursuant to 28 U.S.C. § 157(b).
IN RE ELLIOTT 7

Elliott appeals the district court’s and bankruptcy court’s 

rulings, arguing that the bankruptcy court erred in 

concluding that the transfer of the IRA funds was not 

avoidable under sections 522(h) or (f).

II.

A.

We have jurisdiction over the district court’s order 

affirming the bankruptcy court’s judgment under 28 U.S.C. 

§ 158(d)(1). The Bank sought dismissal of the adversary 

complaint under Federal Rule of Bankruptcy Procedure 

7012(b)(1) and (b)(6), which incorporate Federal Rules of 

Civil Procedure 12(b)(1) and (b)(6). We review de novo a 

district court’s decision on appeal from a bankruptcy court. 

In re Smith’s Home Furnishings, Inc., 265 F.3d 959, 962–63 

(9th Cir. 2001).

B.

We first address whether the district court erred in 

affirming the bankruptcy court’s determination that Elliott 

failed to state a claim under 11 U.S.C. § 522(h). When a 

trustee does not seek avoidance of transferred property, a 

debtor may step into the role of the trustee under section 

522(h) of the Bankruptcy Code and attempt to avoid certain 

transfers of exempt property. In re DeMarah, 62 F.3d 1248, 

1250 (9th Cir. 1995).

Under section 522(h), a debtor may “avoid,” i.e., undo, a 

transfer of exempt property made before the filing of a 

bankruptcy petition. Section 522(h) states:

The debtor may avoid a transfer of property 

of the debtor or recover a setoff to the extent 
8 IN RE ELLIOTT

that the debtor could have exempted such 

property under subsection (g)(1) of this 

section if the trustee had avoided such 

transfer, if—

(1) such transfer is avoidable by the 

trustee under section . . . 547. . . of this 

title . . . ; and

(2) the trustee does not attempt to avoid 

such transfer.

We have explained that section 522(h) requires a debtor 

to establish five conditions to shield his property from the 

bankruptcy estate:

(1) the transfer cannot have been a voluntary 

transfer of property by the debtor; (2) the 

debtor cannot have concealed the property; 

(3) the trustee cannot have attempted to avoid 

the transfer; (4) the debtor must exercise an 

avoidance power usually used by the trustee 

that is listed within § 522(h); and (5) the 

transferred property must be of a kind that the 

debtor would have been able to exempt from 

the estate if the trustee (as opposed to the 

debtor) had avoided the transfer pursuant to 

one of the statutory provisions in § 522(g). 

See 11 U.S.C. §§ 522(g) and (h).

In re DeMarah, 62 F.3d at 1250. The first four factors are 

not in dispute: Elliott did not voluntarily transfer the IRA 

funds, there is no evidence he attempted to conceal it or that 

the trustee attempted to avoid the transfer, and Elliott’s 

avoidance power—assuming the money at issue can still be 
IN RE ELLIOTT 9

considered his property—is one the trustee could have 

exercised under section 522(h).

To establish the fifth condition, Elliott argues that “the 

transferred property [was] of a kind that [he] would have 

been able to exempt from the estate,” id., because the 

transfer would have been avoidable by the trustee under 

section 547. See 11 U.S.C. § 522(h)(1).

Section 547 allows the bankruptcy trustee (or, the debtor, 

when he is acting in the place of the trustee) to set aside 

“preferential” transfers and recapture the transferred 

property. To establish a preferential transfer, the trustee or 

debtor must show that the transfer, among other things, 

“enables such creditor to receive more than such creditor 

would receive” if (A) “the case were a case under chapter 7” 

of the Bankruptcy Code; (B) “the transfer had not been 

made”; and (C) “such creditor received payment of such debt 

to the extent provided by the provisions” of the Bankruptcy 

Code. 11 U.S.C. § 547(b)(5). The bankruptcy court held 

that Elliott failed to establish a preferential transfer because 

“the Bank did not receive more than it would have received 

in liquidation, a prerequisite to any preferential transfer 

liability.”

1.

We must evaluate, then, whether Elliott can establish that 

the Bank received more from the prepetition levy than it 

would have received from his chapter 7 liquidation. The 

section 547(b)(5) inquiry is called the “greater amount test.” 

In re Tenderloin Health, 849 F.3d 1231, 1235 (9th Cir. 

2017). It requires “‘the court to construct a hypothetical 

chapter 7 case and determine what the creditor would have 

received if the case had proceeded under chapter 7’ without 

the alleged preferential transfer.” Id. (quoting In re LCO 
10 IN RE ELLIOTT

Enters., 12 F.3d 938, 941 (9th Cir. 1993)); see also Palmer 

Clay Prods. Co. v. Brown, 297 U.S. 227, 229 (1936).

Elliott argues that the Bank would have received nothing 

in the ordinary course of his chapter 7 liquidation, because 

the lien is voidable under an entirely separate provision, 

section 522(f). If Elliott can indeed avoid the fixing of the 

lien under section 522(f), then the funds may be exempt 

under 547(b)(5). See In re Washkowiak, 62 B.R. 884, 887 

(Bankr. N.D. Ill. 1986) (“If the lien can be avoided, [the 

creditor], in effect, retroactively becomes unsecured and 

payments to a nonpriority unsecured creditor on the eve of 

bankruptcy are almost inevitably voidable as preferences.”).

2.

We then consider whether the execution lien is avoidable 

under section 522(f) of the Bankruptcy Code. In relevant 

part, section 522(f) states that

(1) . . . the debtor may avoid the fixing of a 

lien on an interest of the debtor in 

property to the extent that such lien 

impairs an exemption to which the debtor 

would have been entitled under 

subsection (b) of this section, if such lien 

is –

(A) a judicial lien, other than a judicial 

lien that secures a debt of a kind that 

is specified in section 523(a)(5);

The parties do not dispute that an execution lien under CCP 

section 697.710 is a judicial lien; they dispute only whether 

the lien can be avoided despite its satisfaction prior to the 

petition date.
IN RE ELLIOTT 11

To avoid a lien under section 522(f), the lien in question 

must “impair[] an exemption as of the bankruptcy petition 

date.” In re Wilding, 475 F.3d 428, 433 (1st Cir. 2007); see 

also In re Ricke, 84 B.R. 408, 410 (Bankr. W.D. Pa. 1988) 

(“§ 522(f) cannot be construed to allow avoidance of a lien 

no longer in existence at the date of bankruptcy.”) Whether 

the lien impaired an exemption as of the petition date 

depends in part on whether Elliott maintained any 

outstanding property interest in the levied funds on the date 

he filed for bankruptcy. See In re Camacho, 18 B.R. 967, 

968–69 (Bankr. D. Neb. 1982).

“The nature and extent” of a debtor’s interest in 

purportedly exempt property is a question controlled by nonbankruptcy law. In re Hernandez, 483 B.R. at 720; see also 

Stead v. United States, 419 F.3d 944, 947 (9th Cir. 2005). 

Under California law, Elliott’s ownership interest in the 

funds either terminated when the funds were paid to the 

sheriff, see CCP § 700.140(f), or after Elliott’s state-court 

exemption claim was denied and the funds were released to 

the Bank, see CCP §§ 703.580(d)–(f), 703.610; In re 

Hernandez, 483 B.R. at 720–22; In re Neilson’s Estate, 

5 Cal. Rptr. 542, 545 (Ct. App. 1960). Either way, however, 

the lien terminated prior to the date Elliott filed for 

bankruptcy. At the latest, Elliott’s ownership interest 

terminated on or about February 15, 2017, the date on which 

the sheriff’s office released the funds to the Bank.3 Elliott 

3 It is unclear when IRA Trust Services transferred the funds to the 

Sheriff. The Sheriff served the levy request on IRA Trust Services on 

December 2, 2016. Elliott filed his state-court exemption claim on 

December 8. A Memorandum of Garnishee in the record indicates that 

the funds were still in Elliott’s IRA account on January 5, 2017, albeit 

with a hold placed on them pending the state court’s ruling on the claim 

of exemption. The state court entered an order denying the exemption 
12 IN RE ELLIOTT

filed his petition for bankruptcy on March 13, 2017, almost 

one month after the funds were released to the Bank. The 

Bank has since abandoned any claim to assets other than the 

levied funds. Elliott cites no authority supporting the 

proposition that he can avoid a lien that was satisfied prior 

to the filing of his bankruptcy petition.

* * *

Because the judicial lien was satisfied prior to the 

petition date, it is not voidable under section 522(f). Because 

it is not voidable, Elliott cannot succeed on his separate 

522(f) claim nor establish that the transfer of his IRA funds 

was a preferential transfer under section 547 of the 

Bankruptcy Code. Having failed to allege the elements of a 

section 547 preferential transfer, the bankruptcy court 

correctly concluded that Elliott failed to state a claim under 

section 522(h).4

III.

To successfully claim his IRA funds as exempt and avoid 

their transfer to the Bank under section 522, Elliott has an 

additional deadline to overcome. A debtor who successfully 

avoids a preferential transfer “may recover in the manner 

prescribed by, and subject to the limitations of, section 

claim on January 20, and the funds were released to the Bank by 

February 15.

4 In dismissing Elliott’s adversary proceeding, the bankruptcy court 

also briefly noted the Bank’s alternate ground for dismissal, that the lien 

was perfected outside of the 90-day time limit imposed by section 

547(b)(4). Because Elliott failed to demonstrate that the Bank received 

more than it would have in liquidation—an independent requirement for 

establishing a preference—we do not discuss the 90-day requirement.
IN RE ELLIOTT 13

550[.]” 11 U.S.C. § 522(i)(1). Section 550(f) states that an 

action or proceeding under section 522 “may not be 

commenced after the earlier of – (1) one year after the 

avoidance of the transfer on account of which recovery 

under this section is sought; or (2) the time the case is closed 

or dismissed.”

As the bankruptcy court noted, we have not yet 

addressed whether the re-opening of Elliott’s bankruptcy 

proceeding re-starts the clock for purposes of the deadline 

imposed by section 550. For this reason, the bankruptcy 

court did not rest its holding on section 550 grounds; “[b]oth 

parties cite[d] opposing non-binding authority,” and the 

court fully resolved the motion to dismiss on substantive 

grounds.

Because we affirm the district and bankruptcy courts’ 

holding on substantive grounds, it is unnecessary to resolve 

the section 550 issue and we do not address it here.

IV.

The perfected lien on Elliot’s IRA funds is not voidable 

under section 522(f) because the lien did not impair an 

interest in his property on the date he filed his chapter 7 

bankruptcy petition. Without demonstrating that the lien is 

voidable under section 522(f), he cannot establish a section 

547 preference or state a claim under section 522(h). For 

these reasons, we affirm the district court’s dismissal of 

Elliott’s adversary complaint.

AFFIRMED.