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UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. NV-15-1074-JuKiD

)

PATRICK HEATH CALDWELL, ) Bk. No. 2:14-bk-16024-LED

)

Debtor. )

______________________________)

)

PATRICK HEATH CALDWELL, )

)

Appellant, )

)

v. ) O P I N I O N

)

VICTORIA L. NELSON, Chapter 7 )

Trustee, )

)

Appellee. )

______________________________)

Argued and Submitted on February 18, 2016

at Las Vegas, Nevada

Filed - February 24, 2016

Appeal from the United States Bankruptcy Court

for the District of Nevada

Honorable Laurel E. Davis, Bankruptcy Judge, Presiding _________________________

Appearances: A.J. Kung, Kung & Brown, argued for appellant

Patrick Heath Caldwell. Jacob L. Houmand, 

Nelson & Houmand, P.C., argued for appellee

Victoria L. Nelson, chapter 7 trustee. ________________________

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

FILED

FEB 24 2016

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT
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JURY, Bankruptcy Judge:

Chapter 71

 trustee, Victoria L. Nelson (Trustee), objected

to the Nevada homestead exemption in the amount of $550,000

claimed by debtor Patrick Heath Caldwell (Debtor), seeking to

limit it to the statutory cap of $155,675 under § 522(p)(1). 

Trustee argued that Debtor acquired an interest in the homestead

property within the meaning of § 522(p)(1) because the property

was conveyed by Caldwell Family Investments II, LLC (LLC) to

Debtor and his spouse as trustees of the Caldwell Family 1998

Trust (Trust) during the 1215-day period preceding the date of

the filing of Debtor’s petition. Debtor asserted that the

limitation under § 522(p)(1) was not triggered since he retained

a beneficial and equitable interest in the property at all times

despite transfers of the fee title to the property to and from

the Trust and the LLC.

The bankruptcy court sustained Trustee’s objection. 

Looking first to the laws of Nevada and Delaware regarding

limited liability companies, the court found that Debtor did not

have an ownership interest in the property during the time when

the LLC was the record title holder. Next, the court relied

upon Nevada case law which required a debtor to have some form

of equity in the property in order to claim a homestead — the

court finding that this equity contemplated ownership. Finally,

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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the bankruptcy court followed out-of-jurisdiction case law which

rejected a debtor’s attempt to claim a homestead exemption in

real property held in the name of an LLC. Debtor moved for

reconsideration which the bankruptcy court denied. This appeal

followed. For the reasons explained below, we REVERSE.

I. FACTS

A. Prepetition Transfers Of Debtor’s Property

The facts are undisputed. Debtor and his spouse

(Ms. Caldwell) purchased real property located on Eagle Hills

Drive, Las Vegas, Nevada (Property) in March 1994. The record

shows that Debtor and Ms. Caldwell have continuously resided in

the home on the Property since they purchased it and have made

all mortgage payments, paid taxes, maintained insurance and

assumed all other responsibilities of a real property owner. 

Since 1994 they have transferred title to the Property seven

times to and from the Trust and the LCC. These transfers were

for no consideration and, per Debtor’s declaration, for estate

planning purposes.

In June 1998, they transferred the Property to the Trust

with Debtor and Ms. Caldwell as the sole trustees via a recorded

quitclaim deed. Over five years later, in October 2003, the

Property was transferred from the Trust back to Debtor and

Ms. Caldwell as joint tenants via a recorded quitclaim deed. In

February 2006, Debtor and Ms. Caldwell transferred the Property

back to the Trust via a recorded quitclaim deed.

On October 14, 2008, Debtor formed the LLC, a Delaware

limited liability company, by filing Articles of Organization

with the Delaware Secretary of State. Debtor and Ms. Caldwell

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are the sole members of the LLC. In November 2010, the Property

was transferred from the Trust to the LLC via a recorded

quitclaim deed. On April 26, 2011, a declaration of homestead

was recorded against the Property by the LLC.

On October 10, 2011, the Property was transferred from the

LLC to the Trust. On the same date, a declaration of homestead

was recorded against the Property, this time by the Trust, which

stated the following: “This declaration constitutes an

abandonment of the former declaration recorded on April 26,

2011.”

B. Bankruptcy Events

On September 5, 2014, 1061 days after the LLC transferred

title to the Property to the Trust, Debtor filed his chapter 7

petition (Petition Date). Ms. Nelson was appointed as the

chapter 7 trustee.

In his schedules, Debtor listed the Property value as

$1,065,000 and total liens of $516,802, leaving a net equity of

$548,198 in the Property. Debtor claimed the full $550,000

homestead exemption in the Property under Nevada Revised

Statutes (NRS) 21.090(1)(l) and 115.050.

Trustee objected to Debtor’s homestead exemption in the

amount of $550,000, seeking to limit it to $155,675 under

§ 522(p)(1) due to the transfer from the LLC to the Trust within

the 1215-day period prior to the Petition Date.

In response, Debtor argued that the limitation under

§ 522(p)(1) did not apply because he always retained a

beneficial and equitable interest in the Property despite the

numerous transfers of legal title to and from the Trust and the

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LLC. Debtor reasoned that such interests were retained since he

and his spouse were the sole trustees of the Trust and the sole

members of the LLC and thus Debtor was “merely transferring

title from himself to an entity owned by him.” He also asserted

that although the LLC held the title to the Property, his

continuing payment of taxes, the mortgage, and insurance

indicated that he and Ms. Caldwell continued to use and consider

the Property as their own. Debtor further maintained that

neither he nor Ms. Caldwell needed to be vested with legal title

to validly declare a homestead under NRS 115.020. For these

reasons, Debtor argued anew that he received no “interest” for

purposes of § 522(p)(1) or the homestead exemption under Nevada

law when the LLC transferred legal title to the Trust. Finally,

Debtor pointed out that the purpose behind § 522(p)(1) would not

be served under the facts of this case as he never attempted to

shield assets or liquidate nonexempt assets to artificially

increase the equity in his home.

In a supporting declaration, Debtor testified that the

transfers of title to the Property were “made for estate

planning purposes only, pursuant to advice from [his] financial

planners and/or counsel.” He also declared:

My wife and I have always been the sole trustee and

members of the Family Trust and Family Investment LLC;

and the Family Trust and Family Investment LLC held

legal title to the Eagle Hills Home at various times,

in trust for my wife and I.

After a hearing on January 27, 2015, the bankruptcy court

placed its findings of fact and conclusions of law on the record

on February 17, 2015. The court ruled that Debtor acquired an

interest in the Property on October 10, 2011, the date the LLC

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transferred the Property to the Trust, and because this date was

1061 days prior to the petition date, § 522(p)(1) limited

Debtor’s homestead exemption to $155,675. In reaching this

conclusion, the court noted that under either Nevada or Delaware

limited liability law, Debtor did not hold an interest in the

Property while it was titled in the name of the LLC because the

LLC was a separate legal entity and a member’s interest in a

limited liability company is personal property. The court

further noted that a requirement for exempting equity in a

homestead under Nevada law was an ownership interest rather than

a general or possessory interest in the Property, citing Savage

v. Pierson, 157 P.3d 697 (Nev. 2007). Finally, relying on outof-jurisdiction case law which interpreted exemption statutes in

other states, the bankruptcy court rejected Debtor’s contention

that he could claim a homestead exemption in real property held

in the name of an LLC. Based on all these authorities, the

court found that Debtor acquired his interest in the Property

within the meaning of § 522(p)(1)(A) on October 10, 2011, when

title to the Property was transferred by the LLC to the Trust.

On February 24, 2015, the bankruptcy court entered the

order sustaining Trustee’s objection (Exemption Order). On the

same day, Debtor filed a motion for reconsideration. There,

Debtor maintained that the LLC held the Property “in trust” for

Debtor and Ms. Caldwell. As a result of this trust-like

arrangement, Debtor asserted that he retained a beneficial or

equitable interest in the Property and, therefore, he could

claim a homestead exemption in the Property under Nevada

homestead law even though the LLC was the record titleholder of

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the Property.

On March 3, 2015, Debtor filed a notice of appeal (NOA)

from the Exemption Order. Subsequently, the bankruptcy court

rejected Debtor’s “in trust” theory on the ground that there was

no evidence of an express trust between Debtor and the LLC and

thus even if such a trust existed, it was a “secret” trust. The

court denied his motion for reconsideration by an order entered

on March 13, 2015 (Reconsideration Order). Debtor then filed an

amended NOA indicating that he was appealing both the Exemption

Order and the Reconsideration Order.2

II. JURISDICTION

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

§§ 1334 and 157(b)(2)(B). We have jurisdiction under 28 U.S.C.

§ 158.

III. ISSUE

Whether the bankruptcy court erred by finding that

2 Trustee subsequently entered into a compromise with U.S.

Bank, N.A. which held a stipulated judgment lien on the

Property. The parties disputed whether such lien was perfected. 

Pursuant to the compromise, the estate would receive 67% of the

net proceeds from the sale of the Property and the bank would

receive 33% of the proceeds. Trustee then listed the Property

for sale. Debtor moved for a stay pending appeal which the

bankruptcy court denied. On June 10, 2015, the Panel denied

Debtor’s request for an emergency stay. On September 4, 2015,

the Panel granted Debtor’s renewed motion for an emergency stay

to prevent the sale of the Property pending resolution of this

appeal, as the sale would not provide enough proceeds to satisfy

Debtor’s homestead exemption claimed in the amount of $550,000

should he prevail. In other words, if Debtor prevails, the

estate will net no money after the homestead is paid, which

would make such sale of no benefit to the estate. The stay was

conditioned upon Debtor’s continued payments on the secured debt

and maintenance of insurance on the Property.

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§ 522(p)(1) applied under these circumstances.

IV. STANDARDS OF REVIEW

A bankruptcy court’s interpretation of the Bankruptcy Code

is a matter of law subject to de novo review. Predovich v.

Staffer (In re Staffer), 262 B.R. 80, 82 (9th Cir. BAP 2001),

aff’d, 306 F.3d 967 (9th Cir. 2002).

We review a bankruptcy court’s interpretation of state law

de novo in order to determine if it correctly applied the

substantive law. Kipperman v. Proulx (In re Burns), 291 B.R.

846, 849 (9th Cir. BAP 2003) (citing Astaire v. Best Film &

Video Corp., 116 F.3d 1297, 1300 (9th Cir. 1997) (issues of

state law are reviewed de novo).

Findings of fact are reviewed under a clearly erroneous

standard. A court’s factual determination is clearly erroneous

if it is illogical, implausible, or without support in the

record. United States v. Hinkson, 585 F.3d 1247, 1261-62 & n.21

(9th Cir. 2009) (en banc).

V. DISCUSSION

Section 522(p)(1) imposes a limitation on the homestead

exemption a debtor can claim regardless of the applicable state

law exemptions. In re Kane, 336 B.R. 477, 481 (Bankr. D. Nev.

2006); In re Virissimo, 332 B.R. 201, 207 (Bankr. D. Nev. 2005).

Section 522(p)(1) provides in relevant part:

Except as provided in paragraph (2) of this subsection

and sections 544 and 548, as a result of electing

under subsection (b)(3)(A) to exempt property under

State or local law, a debtor may not exempt any amount

of interest that was acquired by the debtor during the

1215-day period preceding the date of the filing of

the petition that exceeds in the aggregate $155,675 in

value in--

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(A) real or personal property that the debtor or a

dependent of the debtor uses as a residence; . . . .

To determine whether the statutory cap applies, we consider

whether Debtor “acquired an interest” within 1215 days of filing

for relief.

In this regard, Trustee submits that Debtor had no interest

in the Property prior to the October 10, 2011 transfer of legal

title from the LLC to the Trust because (1) the LLC held legal

title to the Property; (2) the LLC was the legal owner of the

Property under Delaware and Nevada limited liability laws; and

(3) Debtor could not have claimed a homestead exemption while

the Property was held in the name of the LLC. According to

Trustee, it follows that the upon the transfer of legal title

from the LLC to the Trust,3

 Debtor “acquired an interest” in the

Property within the meaning of § 522(p)(1).

In response, Debtor asserts that he retained a beneficial

and equitable interest in the Property since 1994 despite the

transfers of title to and from the LLC and the Trust over the

years. To demonstrate his retained interest, he points out that

he and Ms. Caldwell have continuously resided in the dwelling on

the Property since 1994 and have paid the mortgage, taxes, and

insurance. Debtor further asserts that he could claim a

homestead exemption under Nevada law while title was held by the

LLC because of his use and continued possession of the Property

as a “householder,” and there is no requirement that he hold

3 Trustee concedes that when title is in a revocable trust

where a debtor is the settlor and beneficiary, the debtor may

claim a homestead.

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legal title to the Property for it to be a homestead under

Nevada law. According to Debtor, since he retained an interest

in the Property and it was always his homestead, the Property

was always an exempt asset under Nevada law despite the transfer

of title to the LLC. Based on these premises, Debtor contends

that he did not “acquire an interest” when the LLC transferred

title to the Property to the Trust within 1061 days before the

Petition Date, and thus the limitation of § 522(p)(1) is not

applicable. In short, Debtor’s position, for purposes of the

homestead exemption, is that he retained a sufficient interest

in the Property during all the multiple conveyances of legal

title to and from the LLC. For the reasons discussed below,

Debtor has the better argument.

We look to Nevada law to determine whether Debtor held an

interest in the Property which would support a claim of

homestead while the LLC was the sole titleholder. Butner v.

United States, 440 U.S. 48, 54–55 (1979) (determination of

property rights is controlled by state law). NRS 21.090(1)(l)

exempts homestead property from execution “as provided for by

law.” Under NRS 115.005(2)(a), the “Homestead” is broadly

defined as “the property consisting of . . . [a] quantity of

land, together with the dwelling house thereon and its

appurtenances; . . . .” These statutes do not designate how

title to the property is to be held, and they do not limit the

estate that must be owned, i.e., fee simple or some lesser

interest. Nevada courts have held that the exemption should be

liberally and beneficially construed in favor of the debtor and

protecting the family home. See In re Norris, 203 B.R. 463, 465

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(Bankr. D. Nev. 1996) (citing Jackman v. Nance, 857 P.2d 7 (Nev.

1993)).

In Nevada, to secure the benefits of the statutory

provisions exempting the homestead from forced sale, it is

necessary that a declaration of homestead be filed for record.4

NRS 115.020; I.H. Kent Co. v. Busscher, 277 F.2d 901, 905 (9th

Cir. 1960). “The declaration must state: (a) When made by a

married person or persons, that they or either of them are

married, or if not married, that he or she is a householder.” 

NRS 115.020(2)(a). The Nevada Supreme Court has “defined the

term householder as ‘one who keeps house,’ further stating that

a householder ‘must be in actual possession of the house’ and

must be ‘the occupier of a house.’” Van Meter v. Nilsson (In re

Nilsson), 315 P.3d 966, 969 (Nev. 2013) (quoting Goldfield

Mohawk Mining Co. v. Frances–Mohawk Mining & Leasing Co., 102 P.

963, 965 (Nev. 1909)). In Goldfield, the court stated that

“householder” referred “to the civil status of a person, not his

property, and a man may be a householder without owning real

estate.” 102 P. at 966.

Debtor maintains that he was the “householder” of the

Property since he and his family continuously occupied the

Property as their primary residence since 1994. We note that

the requirement of “householder” as used in the declaration

statute is directed at persons “not married.” NRS

115.020(2)(a). As we understand the record, Debtor was married. 

4 The declaration may be filed at any time prior to an

execution sale.

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Nonetheless, the “householder” definition is useful for our

analysis. Based on the undisputed evidence that Debtor

continually resided on the Property since 1994 and was at all

times in actual possession of the house, we have no doubt that

Debtor meets the definition of a “householder” under Nevada law. 

Debtor met the possession and occupancy requirements for a

“householder” and did not need to hold fee simple title to the

Property to achieve that status under Nevada law. Accordingly,

Debtor has established that the Property was protected as a

homestead even when the LLC was the titleholder.

Although Debtor was a “householder,” Nevada law requires

that a homestead claimant have some type of interest in the

property to claim the “equity” exemption up to $550,000 under

NRS 115.010. While Nevada law does not distinguish between the

types of interests in property that qualify for the homestead

exemption,5

 the Nevada Supreme Court has held that a claimant

must have more than a general interest in or right to possession

of the property claimed to be exempt. Savage, 157 P.3d at 701-

02. There, the court considered whether a security deposit in a

residential lease was exempt from execution under NRS

21.090(1)(l) or Nevada’s homestead law.6 The court first noted

that the homestead exemption extended only to the “equity” in

the property held by the claimant. “Equity” is defined in NRS

5 Likewise, it is not necessary for us to do so in the

context of this appeal.

6

 The court also considered the exempt status of the

security deposit under NRS 21.090(1)(m) - Nevada’s dwelling

exemption. In that analysis, the court came to the same

conclusion that it was not exempt.

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115.005(1) as “the amount that is determined by subtracting from

the fair market value of the property the value of any liens

excepted from the homestead exemption pursuant to subsection 3

of NRS 115.010 or NRS 115.090.” In interpreting the statutory

language, the court concluded that “the statutory definition of

‘equity’ [under NRS 115.005(1)] contemplates more than a general

‘interest’ in the property or the right to possession, it

contemplates ownership.” 157 P.3d at 701. Since the security

deposit did not qualify as “equity,” the court decided that the

debtor could not claim it exempt under Nevada’s homestead law.

Although Savage is factually distinguishable from this

case, the Nevada court’s interpretation of “equity” in the

context of the homestead exemption provides some guidance for

our review in this appeal. In contrast to Trustee’s position,

the holding in Savage does not say that a debtor has to have an

ownership interest in the property equivalent to fee simple

ownership in order to claim a homestead exemption. Although the

court found that the definition of “equity” contemplated

“ownership,” it did not limit the estate that must be owned

beyond saying that the interest had to be more than a “general

interest” or right to possession. Read in the context of the

definition of a “householder” and the case law we cited above,

the “ownership” required by Savage cannot be limited to only fee

simple title.

The record shows that the interest Debtor retained in the

Property after the transfer of legal title to the LLC was more

than a general interest or the mere right to exclusive

possession. According to the record, he retained all the

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indicia of ownership by his possession and use of the Property

along with the payment of the mortgage, taxes, and insurance. 

Plainly, the “equity” in the Property which is subject to the

exemption was the result of payments made by Debtor over the

years. Trustee did not present any evidence to controvert these

facts. We thus conclude that Debtor was not divested of all

interests in the Property by the transfer of legal title to the

Property to the LLC. Accordingly, Debtor’s homestead rights in

the Property before and after the transfers of title remained

unchanged.

Finally, it does not matter that a declaration of homestead

with respect to the Property was filed on October 10, 2011,

within 1061 days of the filing of the petition. The filing of a

homestead declaration does not trigger the statutory cap under

§ 522(p)(1). Greene v. Savage (In re Greene), 583 F.3d 614, 620

(9th Cir. 2009). Like the debtor in Greene, Debtor acquired his

exemptible interest in the Property in 1994, well outside the

statutory period contained in § 522(p)(1), and, as discussed

above, that exemptible interest never changed.

In enacting § 522(p)(1), we do not believe that Congress

envisioned limiting a debtor’s homestead exemption where as here

(1) debtor purchased the property in 1994, well before the start

of the 1215-day period, (2) continuously possessed and occupied

the Property as his homestead, and (3) accumulated the “equity”

by making regular mortgage payments throughout his occupancy.

In sum, we conclude that the transfer of title from the LLC

to the Trust did not constitute an “interest” that was

“acquired” by Debtor to limit his homestead claim, within the

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meaning of § 522(p)(1). As discussed above, Nevada law

protected Debtor’s homestead rights in the Property throughout

the various transfers of title. Therefore, the statutory cap

does not apply.7

VI. CONCLUSION

We REVERSE the bankruptcy court’s order limiting Debtor’s

homestead exemption pursuant to § 522(p)(1).

7 Because we reverse on other grounds, it is not necessary

for us to address Debtor’s other argument that the LLC held the

Property “in trust.”

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