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NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. EC-16-1196-TaBJu

)

SCOTT CHARLES POMEROY, ) Bk. No. 15-26465

)

Debtor. )

______________________________)

)

JOHN R. ROBERTS, Chapter 7 )

Trustee, )

)

Appellant, )

)

v. ) MEMORANDUM*

)

SCOTT CHARLES POMEROY, )

)

Appellee. )

______________________________)

Argued and Submitted on March 23, 2017

at Sacramento, California

Filed – April 24, 2017

Appeal from the United States Bankruptcy Court

for the Eastern District of California

Honorable Robert S. Bardwil, Bankruptcy Judge, Presiding

 

Appearances: Gregory Joseph Hughes of Hughes Law Corporation

argued for appellant; Lucas B. Garcia of The Law

Office of Luke Garcia argued for appellee.

 

Before: TAYLOR, BRAND, and JURY, Bankruptcy Judges.

FILED

APR 24 2017

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

* 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).
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INTRODUCTION

Chapter 71 debtor Scott Pomeroy’s tax-exempt retirement

plan holds approximately $400,000 in assets, including a vacant

lot. After filing a chapter 7 petition, he claimed the entire

value in the plan as exempt. The chapter 7 trustee objected. 

The bankruptcy court overruled the exemption objection and

concluded that Debtor could exempt the full amount of the Plan

under both federal and state law. On appeal, the Trustee argues

that the court erred in both respects. We find that the

bankruptcy court did not err in overruling the objection to the

state law exemption.

We AFFIRM the bankruptcy court. 

FACTS

Debtor’s bankruptcy petition. Debtor filed a voluntary

chapter 7 petition in August 2015. On Schedule B, he listed the

“Pomeroy Retirement Trust” (the “Plan”) and disclosed that it

included: (1) property in Truckee, California valued at $185,000

(the “Property”); (2) a Wells Fargo deposit account with balance

of $170,780.74; and (3) a Scottrade account valued at

$53,602.27. He claimed the full amount as exempt on Schedule C

under California Code of Civil Procedure (“CCP”)

§ 703.140(b)(10)(E).

On Schedule I, Debtor reported that he was a “Chip

Runner/Dealer” at a casino, where he made $2,130.44 per month in

gross income; he reported his take-home pay as $1,563.90. He

1 Unless otherwise indicated, all chapter and section

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

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also reported an additional $1,800 per month in income from

“[c]ontributions from room mate”. His combined monthly income,

thus, was $3,363.90. Debtor’s Schedule J expenses totaled

$3,715 per month, resulting in a monthly net income of –$351.10. 

He noted: “Girlfiend [sic] helps with living expenses on some

rare occations [sic] when she can but is not responsible for any

of the bills”.

The Trustee objects to Debtor’s exemption. In February

2016, the Trustee timely objected to Debtor’s exemption of the

Plan under CCP § 703.140(b)(10)(E).

In response, Debtor amended Schedule C. He now claimed the

Plan exempt under CCP § 703.140(b)(10)(E) for $409,383.01 of the

$409,383.01 value and § 522(b)(3)(C) for 100% of the value.

The Trustee then timely filed an amended objection to

include the § 522(b)(3)(C) exemption claim. The Trustee argued,

in part, that Debtor’s Schedule I was inaccurate: Debtor was

receiving “off the books” quarterly payments of more than

$2,000, directed towards repayment of a loan from Plan assets;

at the § 341(a) meeting, Debtor acknowledged the loan was made

with Plan assets, but admitted that the repayments went to his

personal bank account.

Debtor opposed. He provided supporting declarations from:

Ben Eastman, who advised Debtor about the Plan; David M. Kahn,

an attorney; and himself.

Debtor declared, among other things: First, he hired Ben

Eastman to create the Plan in 1994 and has used him for advice

and as the Plan administrator ever since. Second, due “to a

divorce in 2009,” he “had to make changes to [his] retirement

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plan provisions.” Third, his “live in girl friend” contributed

$1,800 per month to help with the household expenses, “which are

all in [his] name.” Accordingly, he “cannot hold her to this

contribution and in fact she lost her job in February and I am

right now relying on her contribution of her unemployment claim

to keep the expenses going.” And if “she leaves, and we have

had our rough patches and neither of us foresees marriage, I

would be reduced to living in the cargo van trailer or

purchasing another Recreational Vehicle to continue my dwelling

needs.” Fourth, he is “56 years old with a future employment

duration of perhaps 10 years until retirement.” In particular,

he has “been treated for nervousness and anxiety disorders and

could have to take retirement early.” If he does, he

“calculated that [he] would receive $2200 per month maximum from

Social Security” and had no other retirement funds.

Debtor also sought to explain the $2,000 quarterly

payments. He said that, on Mr. Eastman’s advice, he decided to 

treat the repayments as a hardship distribution and

correspondingly would amend three years of tax filings: “I was

informed about my alternative option to take it as a participant

loan and have determined that the hardship distribution will

better serve the retirement trust and myself in the long run.” 

The Trustee replied.

The court heard the matter and entertained oral argument. 

Hr’g Tr. (May 4, 2016).2 It then continued the matter to allow

2 The bankruptcy court had apparently issued a tentative

ruling in advance of the hearing. See Hr’g Tr. (May 4, 2016)

(continued...)

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Debtor to supplement the record. Debtor did so, and the Trustee

again replied. After another hearing, the bankruptcy court took

the matter under submission.3

The next week, the bankruptcy court issued its memorandum

decision, discussed in more depth below, overruling the

Trustee’s objection and allowing the exemption in its entirety

under CCP § 703.140(b)(10)(E) and § 522(b)(3)(C). Memorandum

Decision, June 21, 2016 (“Mem. Dec.”). That same day, the court

entered its order overruling the Trustee’s objection. 

The Trustee timely appealed.

JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C.

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

§ 158.

ISSUE

Whether the bankruptcy court erred in overruling the

Trustee’s objection and upholding Debtor’s claimed exemption in

the Plan.

STANDARD OF REVIEW

We review de novo a debtor’s right to claim an exemption. 

2(...continued)

14:5-9 (“[W]hat I anticipate doing is giving the debtor an

opportunity to supplement the record, to address what I have

raised in the tentative, and I will continue it; and in all

likelihood, I will also address the 703 issue.”). The parties

did not provide us with a copy.

3 Again, the bankruptcy court issued a tentative ruling in

advance of the hearing. See Hr’g Tr. (June 15, 2016) 3:13-14

(The Court: “The court has issued a lengthy tentative.”). 

Again, the parties did not provide us with a copy.

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Kelley v. Locke (In re Kelley), 300 B.R. 11, 16 (9th Cir. BAP

2003). We review the bankruptcy court’s factual findings for

clear error. Id.; Gonzalez v. Davis (In re Davis), 323 B.R.

732, 734 (9th Cir. BAP 2005) (“The court’s findings regarding

the necessity of retirement accounts for debtor’s support are

reviewed for clear error.”). A factual finding is clearly

erroneous if illogical, implausible, or without support in

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

TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 832

(9th Cir. 2011) (citing United States v. Hinkson, 585 F.3d 1247,

1262 (9th Cir. 2009) (en banc)).

DISCUSSION

“When a debtor files a Chapter 7 bankruptcy petition, all

of the debtor’s assets become property of the bankruptcy estate,

see 11 U.S.C. § 541, subject to the debtor’s right to reclaim

certain property as ‘exempt,’ § 522(l).” Schwab v. Reilly,

560 U.S. 770, 774 (2010). Unless a party in interest objects, a

debtor’s claimed exemption “is exempt.” 11 U.S.C. § 522(l).

We start by clarifying the scope of the appeal: it

exclusively concerns the Property. Debtor claimed the entire

Plan, comprised of three assets (the Property and two accounts),

as exempt. The bankruptcy court concluded that the entire

retirement plan was exempt under § 522(b)(3)(C) and CCP

§ 703.140(b)(10)(E). The Trustee does not dispute the Scottrade

or Wells Fargo exemptions. See Appellant’s Reply Br. at 1

(“Although Trustee sought in the bankruptcy court to disallow

all of Debtor’s Plan Assets . . ., Trustee is focusing his

appeal solely on the Truckee Lot.”). Accordingly, this appeal

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turns on whether the Property may be exempted under either

statute: First, is the value the Property brings to the Plan

reasonably necessary for Debtor’s support under CCP

§ 703.140(b)(3)? Second, is the term “retirement funds” in

§ 522(b)(3)(C) broad enough to include real property?4 Because

we conclude that the bankruptcy court properly upheld the CCP

§ 703.140(b)(10)(E) exemption, we decline to reach the

§ 522(b)(3)(C) issue.

A. The bankruptcy court correctly determined that the

Plan, and thus the Property, was exempt under CCP

§ 703.140(b)(10)(E).

California’s bankruptcy exemption statute allows a debtor

to exempt the “debtor’s right to receive” “[a] payment under a

stock bonus, pension, profitsharing, annuity or similar plan or

contract on account of . . . age . . . to the extent reasonably

necessary for the support of the debtor . . . unless all of the

following” three conditions apply. The bankruptcy court

determined, and the Trustee does not challenge, that the Plan

was on account of Debtor’s age and that at least one of the

4 Debtor contends that the Trustee’s failure to challenge

the bankruptcy court’s determination that § 522(b)(4) applied is

a separate basis for affirmance. We disagree. Section

522(b)(4) is not a separate exemption; it discusses further

parameters for § 522(b)(3)(C) and (d)(12). 11 U.S.C.

§ 522(b)(4) (“For purposes of paragraph (3)(C) and subsection

(d)(12), the following shall apply . . . .”). It allocates

presumptions for determining if an account is tax-exempt,

§ 522(b)(4)(A), (b)(4)(B), addresses transfers between

tax-exempt accounts, § 522(b)(4)(C), and discusses distributions

that qualify as rollover distributions, § 522(b)(4)(D). The

Trustee does not argue the Plan’s tax-exempt status on appeal. 

Instead, the Trustee’s argument is that the Property does not

qualify as “retirement funds.”

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three conditions was not present. 

On appeal, the Trustee focuses on the “to the extent

reasonably necessary for the support of the debtor” prong; he

argues the bankruptcy court erred because it: (1) applied the

wrong legal standard; (2) misapplied the standard; and

(3) lacked sufficient evidence to make its factual findings. We

disagree and consider each in turn.

1. The bankruptcy court applied the correct legal

standard.

In its decision, the bankruptcy court decided that it “will

consider whether the Plan is reasonably necessary for the

debtor’s support based on what his income and expenses are

likely to be in retirement and based on what changes are likely

to take place between now and then.” Mem. Dec. at 8. 

On appeal, the Trustee argues that the bankruptcy court

applied the wrong legal standard: “The standard is whether the

asset is ‘reasonably necessary for support,’ not whether the

asset is ‘reasonably necessary for the debtor’s support when he

retires.’” Appellant’s Opening Br. at 16. He contends that the

factors listed in Moffat v. Habberbush (In re Moffat), 119 B.R.

201 (9th Cir. BAP 1990), aff’d 959 F.2d 740 (9th Cir. 1992), and

Hamo v. Wilson (In re Hamo), 233 B.R. 718 (6th Cir. BAP 1999),

all focus on a debtor’s present needs, not needs some twenty

years in the future. He asserts that none of the listed factors

include support during retirement. Also, had Congress or the

California legislature “wanted to connect assets in a retirement

plan with support during retirement,” they could have mentioned

“the word ‘retirement’ in connection with support needs . . . .” 

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Id. at 19. Next, he suggests that the bankruptcy court

improperly inserted “retirement needs” into the required

evaluation of what is “reasonably necessary for the support of

the debtor”; he contends that none of the other CCP § 703.140

exemptions involving “reasonably necessary for the support of

the debtor” language involve retirement plans or retirement

needs, so neither should CCP § 703.140(b)(10)(E). Id. at 20.

The Trustee misses the point. The statute exempts Debtor’s

right to receive payments to the extent those payments are

reasonably necessary for Debtor’s support. Here, the Trustee

concedes that Debtor will not receive penalty-free payments

until he retires.5 The relevant inquiry is, thus, whether those

payments (when Debtor retires) will be reasonably necessary for

Debtor’s support. When evaluating the “reasonably necessary”

part, courts look to a variety of factors: 

the debtor’s present and anticipated living expenses

and income; the age and health of the debtor and his

or her dependents; the debtor’s ability to work and

earn a living; the debtor’s training, job skills and

education; the debtor’s other assets and their

liquidity; the debtor’s ability to save for

retirement; and any special needs of the debtor and

his or her dependents.

In re Moffat, 119 B.R. at 206.

The Trustee’s arguments are not persuasive. First, the

Moffat factors are discretionary and, what’s more, direct the

bankruptcy court to consider anticipated (i.e., future and

5 Of course, Debtor may elect to take hardship

distributions early, as he already has. The bankruptcy court

determined that “the debtor’s right to receive payments under

the Plan without penalty, will, absent a hardship, arise at

retirement age.” Mem. Dec. at 8.

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forward-looking) expenses and income. Second, neither Congress

nor the California legislature inserted “retirement” in

“reasonably necessary for the support the debtor” because CCP

§ 703.140(b)(10)(E) also protects the right to receive payments

on account of more than just age; it also includes payments on

account of disability, death, or length of service. As the

bankruptcy court put it, the Trustee’s analysis ignores “the

nature of the asset exempted by the particular statute . . . .” 

Mem. Dec. at 7. True, “the statute contains the same

‘reasonably necessary’ language as those [statutes] exempting

alimony, payments in compensation of lost earnings, and so on,”

but the “statutes must be considered in light of the” statute’s

purpose “and the asset being exempted—here, the right to receive

retirement income.” Mem. Dec. at 8.

Accordingly, we conclude that the bankruptcy court did not

apply the wrong legal standard.

2. The bankruptcy court did not misapply the legal

standard.

Next, the Trustee argues that the bankruptcy court abused

its discretion because it misapplied the proper legal standard:

it did not separately consider whether “each of the assets was

or was not necessary for support, in light of the treatment of

the other assets.” Appellant’s Opening Br. at 21-23. The

Trustee focuses on the “to the extent” part of the statute:

“where there are three plan assets . . ., the proper analysis

under [CCP] § 703.140(d)(10)(E) would have required the court to

analyze whether each of the assets was or was not necessary for

support, in light of the treatment of the other assets.” Id.

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at 21. If the Wells Fargo and Scottrade Accounts are enough on

their own, he urges, then the Property cannot be exempted. 

We disagree. First, the Trustee faces a logic problem. 

The bankruptcy court concluded that the entirety of the plan was

reasonably necessary for Debtor’s support. By definition, then,

if one removes any part from the fund, it is no longer enough. 

Second, considering the bankruptcy court’s entire decision, we

are not convinced it would find otherwise. Littered throughout

are indications that the bankruptcy court suspected that, even

with the whole plan exempt, Debtor may not have enough to

support himself in retirement.

Now, had the bankruptcy court determined that only part of

the Plan was reasonably necessary for Debtor’s support, then we

agree that the bankruptcy court would have needed to separately

parse the Plan’s assets. Likewise, if we determine that the

bankruptcy court clearly erred in finding that the entire Plan

was reasonably necessary for Debtor’s support because only some

lesser amount is reasonably necessary, then we would need to

consider the Plan assets individually. But the bankruptcy court

did not so determine; nor do we.

3. The bankruptcy court did not clearly err in finding

that the Plan was reasonably necessary for Debtor’s

support.

The bankruptcy court framed the issue as: “Thus, assuming

the debtor does not need to take hardship distributions from the

Plan in the next nine years (and the evidence suggests he may

need to), the court will need to consider whether $409,383 in

assets is reasonably necessary for 18 years of retirement.” 

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Mem. Dec. at 8.6 After weighing the various factors and

considering Debtor’s petition and declarations, the bankruptcy

court concluded:

In short, given the debtor’s age, his likely life

expectancy, his meager income at this time and likely

for the rest of his working life, the relatively

modest amount he may expect from social security in

retirement, the very basic level of his living

expenses, and the fact that he has little, if any,

assurance of being able to meet those expenses while

he is still working, let alone after retirement, the

court readily concludes the Plan is reasonably

necessary for the debtor’s support . . . .

Id. at 13.

On appeal, the Trustee contends that Debtor failed to meet

his burden of proof because he did not provide enough evidence

to show that the Plan was reasonably necessary for his support. 

Accordingly he contends that the bankruptcy court clearly erred

because it lacked sufficient evidence. We disagree. Everyone

agrees that Debtor had the burden of proof. Diaz v. Kosmala

(In re Diaz), 547 B.R. 329, 336-37 (9th Cir. BAP 2016). And

Debtor submitted a declaration about his needs. The Trustee

submitted no counter-evidence of his own; instead, he relies on

the burden of proof and repeatedly argues that Debtor’s

declaration provided nothing but speculation, which he asserts

is not admissible evidence. But he appears to fundamentally

6 To reach the “18 years” number, the bankruptcy court

took judicial notice of Social Security Administration

calculator. In his reply, the Trustee faults the court for

“going outside the record to find an online document . . . .” 

Appellant’s Reply Br. at 19. But, having failed to raise that

issue in his opening brief, the Trustee waived the point. Kaass

Law v. Wells Fargo Bank, N.A., 799 F.3d 1290, 1293 (9th Cir.

2015).

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misunderstand the nature of the proceedings below: the

bankruptcy court received evidence and found facts. The Trustee

could have put on evidence; he could have cross-examined Debtor. 

But he did not do so.

The Trustee argues that because Debtor’s income is

sufficient to meet his current needs without drawing from the

Plan, the Plan is not reasonably necessary for his support. The

Trustee asserts that this analysis holds true even when Debtor

retires because Debtor’s anticipated social security income

($2,200 per month) would substitute for his present income

($2,130 per month).

But the Trustee’s argument suffers a major flaw. He

acknowledges that Debtor’s Schedule I income includes Debtor’s

girlfriend’s contributions ($1,800). The bankruptcy court,

however, did not include those contributions in its analysis:

“Although the debtor presently receives contributions from his

girlfriend, she is under no legal obligation to continue making

them. For purposes of this analysis, the court declines to

assume she or anyone else will be willing and able to contribute

to the debtor’s household income once he retires.” Mem. Dec.

at 12. The Trustee faults the bankruptcy court for this: “The

Debtor’s statements concerning his girlfriend’s contributions to

their mutual living expenses are nothing more than speculation

about what might happen in the future.” Appellant’s Opening Br.

at 27. He continues: “Based on the admissible evidence before

the court, it is as likely that the status quo will continue as

that it will change.” Id. But we review the bankruptcy court’s

factual finding for clear error, and “[w]here there are two

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permissible views of the evidence, the factfinder’s choice

between them cannot be clearly erroneous.” Anderson v. City of

Bessemer City, 470 U.S. 564, 574 (1985). As a result, the

Trustee’s argument overestimates Debtor’s anticipated income by

$1,800 per month. 

The Trustee, perhaps, misunderstands the standard of

review. In his reply brief, the Trustee asserts: “The

bankruptcy court made assumptions and inferences as to each of

these items [i.e., Debtor’s projected expenses in ten years, the

value of Debtor’s Plan’s assets in ten years, Debtor’s likely

medical expenses in ten years, or Debtor’s life expectancy]

(mostly extrapolating from Debtor’s present situation), but they

were not based on evidence presented by Debtor concerning his

anticipated income and expenses.” Appellant’s Reply Br. at 19

(emphasis added). A bankruptcy court does not clearly err when

it makes findings that are supported by inferences in the

record. See Hinkson, 585 F.3d at 1262. 

The Trustee never separately argues that, even if the

bankruptcy court is correct about Debtor’s income and expenses,

its determination that $409,383 in assets is reasonably

necessary for 18 years of retirement was an error. But we

briefly consider the numbers. We take the $409,383 total,

divide it by 216 months of retirement, and reach about $1,895

per month. Given Debtor’s anticipated $2,200 per month in

social security income, Debtor’s anticipated monthly income when

he retires would then be $4,095; Debtor’s present monthly

expenses are $3,315; that results in $780 in positive monthly

income. Of course, the bankruptcy court also determined: first,

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that the Plan’s value will not grow significantly in the next

10 years; second, that Debtor likely will need to use the assets

before he retires (depleting the amount); and third, that

Debtor’s expenses in retirement will likely increase. Given

these substantial uncertainties, we conclude that the bankruptcy

court did not clearly err in finding that $409,383 is reasonably

necessary for Debtor’s retirement.

The Trustee also asserts that the $315 monthly shortfall

between Debtor’s Schedule I and J is illusory because Debtor did

not include in Schedule I the $2,000 quarterly repayments on the

Plan’s loan, which Debtor was depositing into his personal

account and not returning to the Plan. The bankruptcy court,

however, concluded that Debtor’s interest in the quarterly

payments ($333 per month, after accounting for Debtor’s exspouse’s interest) was “not sufficient to alter the court’s

conclusion as to the reasonably necessary test.” Mem. Dec.

at 9–10 n.4. This was not clear error.

Further, these circumstances undercut the Trustee’s general

point. He argues that the Plan is not reasonably necessary for

Debtor’s support because Debtor’s presents needs are met. But,

to meet his needs, Debtor decided to take hardship distributions

from the Plan and suffer the corresponding tax penalties. 

Debtor is thus effectively already using the Plan; he may

continue to need it in the future. See Mem. Dec. at 8–9 (“Thus,

assuming the debtor does not need to take hardship distributions

from the Plan in the next nine years (and the evidence suggests

he may need to), the court will need to consider . . . .”); id.

at 13 (“Without [the $1,800 monthly contribution from his

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girlfriend], the debtor would need to deplete the Plan assets

significantly even before he retires.”). 

In short, the bankruptcy court looked at Debtor’s age, life

expectancy, present and anticipated income and expenses, assets,

future employment prospects, and other things; it relied on

Debtor’s testimony and Debtor’s schedules, which were submitted

under penalty of perjury. The Trustee believes that this was

clear error because Debtor’s testimony was inadmissible as

offering only speculation. We disagree. Having reviewed the

record, we are not left with the firm conviction that the

bankruptcy court made a mistake. See Hinkson, 585 F.3d at 1262.

B. We need not reach the § 522(b)(3)(C) exemption.

The bankruptcy court also determined that the Property was

properly exempt under § 522(b)(3)(C) because it fell within the

purview of the phrase “retirement funds.” On appeal, the

parties devote substantial briefing to this point. But, as the

Trustee acknowledges, to prevail in this appeal he has to show

that the bankruptcy court erred in relation to both exemptions. 

Having concluded that the Property is exempt under CCP

§ 703.140(b)(10)(E), we need not decide the § 522(b)(3)(C)

matter.

CONCLUSION

Based on the foregoing, we AFFIRM.

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