1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

FILED

JAN 31 2017

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. SC-15-1390-FYJu

)

WILLIAM GUTHRIE, ) Bk. No. 15-03397-MM7

)

Debtor. )

_____________________________ )

)

WILLIAM GUTHRIE, )

)

Appellant, )

)

v. ) MEMORANDUM*

)

RONALD E. STADTMUELLER, )

Chapter 7 Trustee, )

)

Appellee. )

______________________________)

Argued and Submitted on January 19, 2017

at San Diego, California

Filed – January 31, 2017

Appeal from the United States Bankruptcy Court

for the Southern District of California

Honorable Margaret M. Mann, Bankruptcy Judge, Presiding

 

Appearances: Gregory S. Cilli of The Feldman Law Group argued

on behalf of Appellant William Guthrie; Ronald E.

Stadtmueller, Chapter 7 Trustee argued pro se.

 

Before: FARIS, YUN,** and JURY, Bankruptcy Judges.

* This disposition is not appropriate for publication. 

Although it may be cited for whatever persuasive value it may

have, see Fed. R. App. P. 32.1, it has no precedential value, see

9th Cir. BAP Rule 8024-1.

** The Honorable Scott H. Yun, United States Bankruptcy

Judge for the Central District of California, sitting by

designation.
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

INTRODUCTION

Appellant William Guthrie appeals from the bankruptcy

court’s order sustaining chapter 71 trustee Ronald E.

Stadtmueller’s (“Trustee”) objection to his claimed homestead

exemption pursuant to § 522(g). The bankruptcy court did not err

in sustaining the objection. Accordingly, we AFFIRM.

FACTUAL BACKGROUND

A. Prepetition events

Mr. Guthrie and his wife, Christine Guthrie, divorced in

2005 over concerns about his finances. He claimed that one of

the financial concerns was his debt stemming from his failure to

pay taxes in 2004. In 2007, Mr. Guthrie reached a settlement

with the Internal Revenue Service (“IRS”), whereby he agreed to

pay $152,000 in taxes, penalties, and interest.

In May 2012, Mr. Guthrie purchased a home in Vista,

California (the “Property”). Title to the Property was initially

in Mr. Guthrie’s name only. However, in December 2012, he

transferred title to the Property to Ms. Guthrie, with whom he

was still living, via quitclaim deed for no consideration. As we

shall see, he has given a wide variety of explanations for this

transfer.

After a series of unsuccessful business ventures,

Mr. Guthrie contemplated filing for bankruptcy protection. He

met with a paralegal at a San Diego law firm, who allegedly told

1 Unless specified otherwise, all chapter and section

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

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

Procedure, Rules 1001-9037.

2
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

him not to transfer title to the Property back to himself without

first consulting the firm. Mr. Guthrie claimed that, after

speaking to the paralegal, he believed that he still owned the

Property, even though Ms. Guthrie held legal title.

B. The bankruptcy schedules and claimed homestead exemption

Mr. Guthrie filed for bankruptcy pro se because he could not

afford to hire an attorney. He filed a chapter 7 petition,

statements, and schedules on May 21, 2015, which scheduled the

Property as his real property (with a value of $400,000 and

encumbered by a secured lien of $191,000), and claimed a “home”

exemption in the amount of $400,000 and a “homestead” exemption

for $125,000. He said that he “wanted to make sure the

bankruptcy court knew about my home, and to make sure that it did

not appear that I was trying to hide anything.” He neglected to

mention, however, that Ms. Guthrie owned legal title to the

Property.

At a § 341(a) meeting of creditors, the Trustee informed

Mr. Guthrie that there were a number of deficiencies in his

filings. In particular, the claimed $400,000 homestead exemption

exceeded the allowable exemption under state law. The Trustee

continued the meeting of creditors to allow Mr. Guthrie to

provide certain documentation regarding other matters. 

Shortly thereafter, Mr. Guthrie retained counsel to

represent him in the bankruptcy proceedings. He claimed that

attorney Gregory Cilli advised him “that I should inform the

trustee at the next creditors’ meeting that I had transferred the

property to her which I did without giving it any thought.”

By the second session of the meeting of creditors,

3
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Mr. Guthrie had not amended his schedules. The Trustee then

advised Mr. Guthrie and Mr. Cilli that he would object to the

homestead exemption. Mr. Guthrie informed the Trustee that his

ex-wife owned the Property and that he would amend Schedule C to

reflect her ownership. He further told the Trustee that he had

transferred the Property to Ms. Guthrie because he was not good

with finances. The Trustee continued the meeting of creditors

again to permit Mr. Guthrie to amend his schedules.

After the second session of the meeting of creditors,

Mr. Guthrie amended his schedules to remove the Property and the

claimed exemption, thus apparently disavowing any interest in the

Property.

At the third session of the meeting of creditors, the

Trustee questioned Mr. Guthrie about a number of issues,

including the Property. After Mr. Cilli confirmed that they had

removed the Property and claimed exemption from the schedules,

the Trustee asked about Mr. Guthrie’s reasons for transferring

the Property to his ex-wife. Mr. Guthrie said that it was

“because of my I.R.S. debts that I – that I realized I wouldn’t

be able to pay quickly enough.” He said that he wanted to make

sure that the IRS “wouldn’t come after it [the Property] right

away and [to] try to get time so I’d have enough income to do

it.” The Trustee pressed Mr. Guthrie: 

TRUSTEE: Okay. But you transferred the house to

your ex to - to - maybe I’m misunderstanding your

testimony. I thought your testimony was you

transferred the house to your ex-spouse to avoid the

I.R.S. from levying your house or going after your

house? 

MR. GUTHRIE: It - uh - in reality, yes, because -

4
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

TRUSTEE: Okay.2

The day after the third session of the meeting of creditors,

the Trustee filed an ex parte application to employ general

counsel.3 The Trustee stated that he wanted to employ counsel to

pursue avoidance claims, including to regain estate assets:

Assist the Trustee in analyzing certain pre and

post-bankruptcy transactions completed by the debtor

regarding possible avoidance claims, and to prosecute

such avoidance claims to the extent they exist. 

Counsel may be required to file adversary proceedings

against third parties to regain assets of the estate,

as well as to prepare all necessary documents and court

pleading in support of such proceeding or any other

issues related to the debtor’s inappropriate transfers

of estate property[.]

The court granted the application to employ Davis & Stadtmueller,

LLP.

A few days later, Mr. Guthrie amended his schedules again. 

This time, he rescheduled the Property with a value of $350,000

(reduced from $400,000). He also amended his Schedule C to claim

a $9,000 exemption under California Code of Civil Procedure

(“CCP”) § 704.730(a)(1) and a $150,000 exemption under CCP

§ 704.730(a)(3).4

2 Later, Mr. Guthrie tried to explain away this testimony. 

He said, “I personally have no real fear that the IRS would take

the home because they had not tried once to do so in eight

years.” He claimed that he was too nervous or embarrassed to

explain that he had transferred the Property to his ex-wife to

make her feel more secure.

3 Mr. Guthrie claimed that his ex-wife attempted to commit

suicide after she learned that the Trustee filed an application

to employ general counsel as a precursor to objecting to the

homestead exemption.

4 CCP § 704.730(a) provides, in relevant part: 

(continued...)

5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

On the same day, Mr. Guthrie arranged to transfer the title

to the Property back to himself, “so that [he] would not get in

trouble with the lender for having transferred title, and to

avoid the possibility of the Trustee objecting to [his] homestead

exemption claim . . . .”

Four days later, Mr. Guthrie amended his schedules for the

third time to claim a $175,000 exemption in the Property under

CCP § 704.730(a)(3).

4(...continued)

(a) The amount of the homestead exemption is one of the

following:

(1) Seventy-five thousand dollars ($75,000) unless

the judgment debtor or spouse of the judgment

debtor who resides in the homestead is a person

described in paragraph (2) or (3).

. . . 

(3) One hundred seventy-five thousand dollars

($175,000) if the judgment debtor or spouse of the

judgment debtor who resides in the homestead is at

the time of the attempted sale of the homestead

any one of the following:

(A) A person 65 years of age or older.

. . . 

(C) A person 55 years of age or older with a

gross annual income of not more than

twenty-five thousand dollars ($25,000) or, if

the judgment debtor is married, a gross

annual income, including the gross annual

income of the judgment debtor’s spouse, of

not more than thirty-five thousand dollars

($35,000) and the sale is an involuntary

sale.

CCP § 704.730(a).

6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

C. The Trustee’s objection to the homestead exemption

The Trustee timely filed his objection (“Objection”) to

Mr. Guthrie’s claimed homestead exemption pursuant to

§ 522(g)(1). He objected to the homestead exemption under § 522

because Mr. Guthrie had no legal interest in the Property on the

date of bankruptcy. He also argued that § 522(g)(1) barred

Mr. Guthrie’s exemption claim because he had voluntarily

quitclaimed the Property to his ex-wife to avoid the IRS’s

attempt to levy the Property, which constituted a fraudulent

transfer under § 548.

In response to the Objection, Mr. Guthrie denied any

fraudulent intent. He claimed that he “transferred the property

to Christine to help her and make her feel better about our

finances and feel like she had something to live for[.]”

Prior to the hearing on the Objection, the bankruptcy court

issued a tentative ruling. Regarding avoidance of the transfer

of the Property to Ms. Guthrie, the court stated, “Debtor and

Trustee agree that legal title to the Property was transferred

without receiving reasonably equivalent value, and Debtor

testified at his third 341(a) hearing that he believed he would

be unable to pay his IRS debts as they came due, making the

Transfer at a minimum avoidable under Cal. UFTA § 3439.04(a)(2)

incorporated under § 544.”

Regarding the Trustee’s efforts to recover the Property, the

court said that “it is not clear whether Trustee’s actions in

this case constitute recovery [of] the property” under Glass v.

Hitt (In re Glass), 60 F.3d 565 (9th Cir. 1995), because

Mr. Guthrie arguably retained equitable title.

7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

The bankruptcy court tentatively concluded that, “[i]f the

transfer is voidable under § 544 and was returned to the estate

as a result of Trustee’s efforts, Debtor is not entitled to

exempt the Property under § 522(g)(1)(A).” 

D. Hearing on the Trustee’s Objection

The bankruptcy court held a hearing on the Objection on

October 29, 2015. The court informed the parties that it had

reviewed the facts again and concluded that the Trustee had

recovered the Property because (1) the Trustee filed his

application to employ counsel to pursue avoidance actions;

(2) the Property was reconveyed to Mr. Guthrie eight days later;

and (3) the purpose of the reconveyance was to avoid the

Trustee’s Objection to the homestead exemption.

The court said that Mr. Guthrie had a form of equitable

interest in the Property, but lacked legal title. However, the

transfer and recovery of legal title to the Property invoked

§ 522(g).

On November 10, 2015, the bankruptcy court issued its order

sustaining the Trustee’s Objection. The bankruptcy court said

that there was no triable issue of fact regarding whether legal

title to the Property was returned to the estate as a result of

the Trustee’s efforts pursuant to § 522(g) and Glass. “Transfer

of legal title was sufficient to trigger the transfer provisions

of § 522(g) because legal title was necessary for the Trustee to

transfer the Property without litigation.”

Mr. Guthrie timely appealed.

JURISDICTION

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

8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

§§ 1334 and 157(b)(2)(B) and (H). We have jurisdiction under

28 U.S.C. § 158.

ISSUES

(1) Whether the bankruptcy court erred in determining that

the Property was returned to the estate as a result of the

Trustee’s efforts.

(2) Whether the bankruptcy court erred in determining that

Mr. Guthrie was not entitled to claim a homestead exemption,

despite holding an equitable interest in the Property.

STANDARDS OF REVIEW

We review legal issues de novo and the bankruptcy court’s

factual findings under a clearly erroneous standard. Village

Nurseries v. Gould (In re Baldwin Builders), 232 B.R. 406, 409-10

(9th Cir. BAP 1999). “[Q]uestions regarding the right of a

debtor to claim exemptions are questions of law subject to de

novo review, whereas the issue of a debtor’s intent is a question

of fact to be reviewed under the clearly erroneous standard.” 

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

2003) (citing Coughlin v. Cataldo (In re Cataldo), 224 B.R. 426,

428-29 (9th Cir. BAP 1998)).

De novo review means that we review a matter anew, as if no

decision previously had been rendered. Dawson v. Marshall,

561 F.3d 930, 933 (9th Cir. 2009).

We must affirm the bankruptcy court’s factual findings

unless we determine that those findings are illogical,

implausible, or without support in inferences that may be drawn

from the facts in the record. United States v. Hinkson, 585 F.3d

1247, 1262 (9th Cir. 2009) (en banc).

9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

We may affirm the bankruptcy court on any basis supported by

the record. Heilman v. Heilman (In re Heilman), 430 B.R. 213,

216 (9th Cir. BAP 2010).

DISCUSSION

A. A trustee may object to the homestead exemption under

§ 522(g) where he recovers property that the debtor either

transferred voluntarily or concealed.

Section 522(g) provides: 

(g) Notwithstanding sections 550 and 551 of this title,

the debtor may exempt under subsection (b) of this

section property that the trustee recovers under

section 510(c)(2), 542, 543, 550, 551, or 553 of this

title, to the extent that the debtor could have

exempted such property under subsection (b) of this

section if such property had not been transferred, if -

(1)(A) such transfer was not a voluntary transfer

of such property by the debtor; and

(B) the debtor did not conceal such property; or

(2) the debtor could have avoided such transfer

under subsection (f)(1)(B) of this section.

§ 522(g). In other words, § 522(g) “allows the debtor to exempt

property that the trustee recovers under [various sections of the

Bankruptcy Code] as long as the transfer was involuntary and the

property was not concealed by the debtor.” 4 Collier on

Bankruptcy ¶ 522.12[1] (Alan N. Resnick & Henry J. Sommer, eds.,

16th ed.). Conversely, a debtor may not exempt property that the

trustee recovers under one of the enumerated provisions if the

debtor voluntarily transferred the property or if the debtor

concealed the property.

B. The bankruptcy court properly held that § 522(g) applies. 

Mr. Guthrie argues that § 522(g) does not apply to his

claimed exemption in the Property. We disagree.

10
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1. The Trustee was entitled to recover the Property

under § 544(b).

The bankruptcy court did not err when it determined that the

Trustee was entitled to recover the Property under § 544(b). The

court noted that the Trustee recovered the Property under § 550,

insofar as, “under § 544, also incorporated into § 522(g) under

§ 550, trustees can avoid transfers that are otherwise voidable

by an unsecured creditor under applicable law.” It noted that

California’s Uniform Fraudulent Transfer Act (“UFTA”)

§ 3439.04(a)(1) provides that a transfer is voidable if it is

made with the actual intent to hinder, delay, or defraud. A

transfer is also avoidable if the debtor made the transfer

without receiving a reasonably equivalent value in exchange for

the transfer and the debtor intended to incur, or believed or

reasonably should have believed, that he would incur debts beyond

his ability to pay as they came due. Because (1) Mr. Guthrie

transferred the Property with the actual intent to hinder, delay,

and defraud and to avoid the IRS’s lien; (2) legal title to the

Property was transferred without receiving reasonably equivalent

value; and (3) Mr. Guthrie admitted that he believed that he

would be unable to pay the IRS debts as they came due, the

transfer was avoidable under the California UFTA § 3439.04(a)(2). 

We find no error in these decisions.

2. The transfer was voluntary.

There is no dispute that Mr. Guthrie voluntarily transferred

the Property to his ex-wife. As a result, because

§§ 522(g)(1)(A) and (B) are written in the conjunctive, it does

not matter whether Mr. Guthrie also concealed the Property.

11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Mr. Guthrie argues that, because he did not conceal the

Property from the court or the Trustee, sustaining the Objection

did not serve the purpose of § 522(g). While it is true that

Mr. Guthrie listed the Property in his original schedules, he

omitted the crucial fact that he did not have title to the

Property at that point. He then amended his schedules several

times to avoid the Trustee’s Objection to his homestead

exemption: (1) after the second session of the meeting of

creditors in which the Trustee questioned his exemption, he

removed the Property entirely from his amended schedules;

(2) after the Trustee continued to question him about the

Property at the third session of the meeting of creditors and he

admitted that he had transferred the Property so that the IRS

“wouldn’t come after it [the Property] right away and [he could]

try to get time[,]” he again amended his schedules to include the

Property; and (3) after the Trustee filed an application to

employ counsel to avoid the transfer of the Property, he arranged

to transfer the Property from his ex-wife to himself, admittedly

“to avoid the possibility of the Trustee objecting to [his]

homestead exemption claim . . . .” 

These are not the actions of a forthright debtor that the

Bankruptcy Code is meant to protect.5

5 Mr. Guthrie also argues that he relied on the advice of

the paralegal (whose firm he did not retain) and his counsel in

deciding what information to disclose. Mr. Guthrie cannot blame

advice from non-retained attorneys and his counsel for his

decision to not disclose the prepetition transfer of the

Property. See Ehrenberg v. Hidalgo (In re Hidalgo), BAP No.

CC-06-1399-PaAK, 2007 WL 7540950, at *8 (9th Cir. BAP July 9,

(continued...)

12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

In any event, Mr. Guthrie’s supposed honesty and nonconcealment of the Property alone are not determinative. Section

522(g) provides that an exemption is only valid as to property

recovered by the trustee if “(A) such transfer was not a

voluntary transfer of such property by the debtor; and (B) the

debtor did not conceal such property[.]” § 522(g)(1) (emphasis

added). Because these requirements are stated in the

conjunctive, both must be present in order allow the exemption. 

Mr. Guthrie’s exclusive focus on the latter requirement ignores

the fact that he voluntarily transferred the Property. 

3. Glass is controlling; the Trustee recovered the

Property within the meaning of § 522(g).

Mr. Guthrie contends that the Trustee did not recover the

Property for the estate because Mr. Guthrie arranged for his exwife to return the Property to him, but not in response to

anything that the Trustee did. We disagree.

Both parties rely on this panel’s decision in Glass v. Hitt

(In re Glass), 164 B.R. 759 (9th Cir. BAP 1994), which the Ninth

Circuit affirmed, 60 F.3d 565 (9th Cir. 1995). In that case, the

debtor had transferred his residence to his son for “love and

affection.” He did not include his house in his schedules or

disclose the transfer, and he did not claim a homestead

exemption. When the trustee discovered the transfer, the debtor

amended his schedules to include the property and assert a claim

5(...continued)

2007) (Klein, J., concurring) (“It is worth noting that an advice

of counsel defense is not availing where the debtor either does

not rely in good faith or is trying to keep an asset out of

view.”).

13
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

of homestead exemption. 164 B.R. at 760. 

The trustee objected to the claimed exemption, arguing that

§ 522(g) precluded the debtor from claiming a homestead exemption

under § 522(b). Id. at 760-61. The trustee said that he

intended to seek avoidance of the conveyance as a § 548

fraudulent transfer. Id. at 761.

Three days after the trustee filed his objection (and before

the trustee commenced any avoidance action), the debtor’s son

conveyed the property back to the debtor in consideration of

“love and affection.” The debtor again amended his schedules by

listing a fee interest in the residence and claiming the

homestead exemption. Id.

The bankruptcy court overruled the trustee’s objection

because the trustee had not shown that he had directed any action

against the son in order to achieve reconveyance of the residence

to the estate. Accordingly, the trustee had not “recovered” the

property and could not object under § 522(g). Id.

On appeal, the panel noted that “[n]o court has addressed a

situation in which the trustee has not filed a complaint for

avoidance or recovery but has been instrumental in recovery of

the property.” It considered the plain meaning of the statute

and said, although a “literal interpretation of the statute . . .

seems to indicate that ‘recovery’ of the property must be

accomplished pursuant to an action commenced under one of the

enumerated code sections[,]” “requiring the Trustee to recover

property through a formal avoidance action would defeat the

drafters’ intent of limiting exemptions where a debtor has

voluntarily transferred property in a manner giving rise to the

14
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

trustee’s avoiding powers or has engaged in fraudulent conduct by

failing to disclose the transfer or an interest in the property.” 

Id. at 763. The panel concluded: 

Accordingly, we hold that where a debtor

voluntarily transfers property in a manner that

triggers the trustee’s avoidance powers or the debtor

knowingly conceals a prepetition transfer or an

interest in property, and such property is returned to

the estate as a result of the trustee’s actions

directed toward either the debtor or the transferee,

the debtor is not entitled to claim an exemption under

§ 522(g)(1). It is not necessary for the trustee to

commence a formal adversary proceeding or obtain a

final judgment to prevail on an objection to a debtor’s

claim of exemption pursuant to § 522(g)(1).

A trustee, however, must present sufficient facts

upon which a bankruptcy court could reasonably conclude

that a debtor transferred property in such a manner as

to invoke the trustee’s avoidance powers under

§§ 510(c)(2), 542, 543, 550, 551 or 553, the transfer

was voluntary or the debtor knowingly concealed the

transfer or an interest in the property, and the

property was returned to the estate as the result of

the trustee’s efforts, not limited to actions directed

toward the transferee.

Id. at 764-65.

The panel held that the bankruptcy court erred in overruling

the objection. It said that the “overwhelming inference” from

the voluntary transfer of the property for no consideration and

the debtor’s failure to disclose the property or its transfer “is

that the Debtor was attempting to hide assets from his creditors,

thus giving rise to a cause of action under § 548(a)(1).” Id. at

765. Additionally, the trustee’s actions 

were instrumental in the return of the property to the

estate. Three days after the Trustee filed his

Objection, the Debtor’s son reconveyed the property to

the Debtor by quitclaim deed. Since the Debtor and the

transferee are father and son and the transfer occurred

on the heels of the Objection, the only reasonable

inference to be drawn is that the Trustee’s promise of

legal action had a coercive effect on father and son,

directly resulting in the return of the property to the

15
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

estate.

Id. The panel thus reversed the bankruptcy court’s overruling of

the trustee’s objection.

The debtor appealed to the Ninth Circuit, arguing, in

relevant part, that the panel had misconstrued the term

“recovers.” The Ninth Circuit affirmed. It noted that,

“following the debtor’s failure to properly disclose the property

transfer there was not only a ‘suggestion’ by the trustee, but

also a filed objection that contained the threat of use of

avoidance powers.” 60 F.3d at 569. It held that “[t]he filing

of the objection containing the threat to use avoidance powers

which resulted in the reconveyance of the property for the estate

was ‘some action.’” Id.

Glass is nearly on all fours with this case. The Trustee

recovered the Property through “some action” when, after learning

that Mr. Guthrie had transferred the property to his ex-wife to

avoid IRS liens, he filed the application to employ counsel

potentially to file an avoidance claim to recover property to the

estate. We do not think it a coincidence that, roughly a week

after the Trustee sought to employ counsel and gave notice that

he would seek to prosecute avoidance claims, Ms. Guthrie conveyed

the Property back to Mr. Guthrie, and Mr. Guthrie again listed

the Property in his schedules. 

As in Glass, the Trustee’s filing “contained the threat of

use of avoidance powers.” See id. We similarly conclude that

“the only reasonable inference to be drawn is that the Trustee’s

promise of legal action had a coercive effect on [transferor and

transferee], directly resulting in the return of the property to

16
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

the estate.” See In re Glass, 164 B.R. at 765. Mr. Guthrie

effectively admitted the force of the Trustee’s “threat” when he

stated that his ex-wife attempted to commit suicide upon learning

that the Trustee had retained counsel to pursue avoidance claims. 

Accordingly, the bankruptcy court properly determined that

the Trustee recovered the Property for the estate within the

meaning of § 522(g).

4. Mr. Guthrie’s equitable interest in the Property

under state law does not overcome § 522(g).

Mr. Guthrie claims, and the bankruptcy court acknowledged,

that he had an equitable interest in the Property. Under

California law, a debtor may claim a homestead exemption in an

equitable interest in estate property, even if he has

fraudulently transferred the property. See Putnam Sand & Gravel

Co. v. Albers, 92 Cal. Rptr. 636, 639 (Cal. Ct. App. 1971)

(“notwithstanding the fraudulent conveyance, the defendants . . .

retained an equitable interest in the property which would enable

them to file a valid claim of homestead before judgment”). 

Moreover, under California law, a debtor may claim a homestead

exemption in his primary residence, even if he does not own it. 

See Elliott v. Weil (In re Elliott), 523 B.R. 188, 195-96 (9th

Cir. BAP 2014) (“Elliott I”) (holding that, under California’s

automatic exemption in CCP § 704.730, the debtor’s conveyance of

the property’s “title to a third party does not defeat his right

to an automatic exemption, because continuous residency, rather

than continuous ownership, controls the Article 4

analysis . . .”).

Mr. Guthrie is also correct that his equitable interest in

17
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

the Property became part of his bankruptcy estate. Section

541(a) provides that the commencement of a bankruptcy case

creates an estate that is composed of “all legal or equitable

interests of the debtor in property as of the commencement of the

case.” § 541(a)(1). 

Mr. Guthrie argues that, at most, the Trustee recovered only

legal title to the Property. He contends that the bankruptcy

court should have allowed his homestead exemption in the

equitable interest he retained despite his fraudulent transfer.

We disagree. 

We addressed a similar question in Elliott v. Weil

(In re Elliott), 544 B.R. 421 (9th Cir. BAP 2016)

(“Elliott III”). In that case, the debtor transferred his real

property to his company before he filed his bankruptcy petition,

did not disclose the property in his bankruptcy case, and then

had the company reconvey the property to him after he received

his discharge. The BAP affirmed the bankruptcy court’s decisions

that the debtor had concealed his interest in the property for

purposes of § 522(g)(1)(B), and that the court’s judgment in the

trustee’s § 542(a) turnover action6 constituted a “recovery” for

purposes of § 522(g). Id. at 433. The BAP then turned to the

debtor’s argument that the bankruptcy court erred in not

considering whether California law still permitted his homestead

6 The debtor appealed this issue in a second appeal to the

BAP, Elliott v. Weil (In re Elliott), 529 B.R. 747 (9th Cir. BAP

2015) (“Elliott II”). On remand, the court required that the

debtor immediately turn over possession of the property to the

trustee under § 542(a). The debtor did not appeal that decision

further.

18
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

exemption, notwithstanding his misconduct. Id. The BAP

disagreed, holding instead that the court’s § 522(g)

determination ended the analysis: “Since the bankruptcy court

appropriately denied [the debtor’s] claimed homestead exemption

under an applicable Bankruptcy Code provision, § 522(g)(1), it

fully resolved the Trustee’s objection and was not required to

proceed further to analyze [the debtor’s] homestead exemption

claim under state law.” Id. at 436 (emphasis added).7

We agree with the Elliott III panel’s reasoning. Section

522(g) limits a debtor’s ability to assert exemption rights in

certain circumstances, even if state law would permit the debtor

to assert an exemption in those very circumstances. Once the

bankruptcy court has determined that § 522(g) applies, a state

exemption law cannot overcome the trustee’s objection.

Mr. Guthrie relies on the BAP’s unpublished disposition in

Gray v. Bova (In re Bova), BAP No. EC-05-1307-NMaPa, 2006 WL

6810940 (9th Cir. BAP Mar. 7, 2006). In that case, the debtor

had five siblings. Their parents transferred certain California

property to the debtor and two of his siblings, but the family

always understood that the property belonged to all six siblings

in equal shares. Thirteen years prior to filing his chapter 7

petition, the debtor transferred his 1/3 legal interest to his

sisters who owned the other 2/3 interest so that the sisters

could refinance the mortgage. Despite this transfer of legal

title, the family still understood that all six siblings,

7 Elliott III is currently on appeal to the Ninth Circuit,

9th Cir. No. 16-60020 (Mar. 28, 2016).

19
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

including the debtor, owned the property in equal shares. When

the debtor filed for bankruptcy, he claimed a homestead exemption

in his 1/6 interest in the amount of $150,000 pursuant to CCP

§ 704.730(a)(3). 2006 WL 6810940 at *1.

The trustee objected to the debtor’s claimed exemption,

arguing that it should be disallowed under § 522(g). The

bankruptcy court disagreed, and the BAP affirmed. The BAP held

that the debtor retained an equitable interest in the property

despite the conveyance of legal title to his sisters thirteen

years prior, and that the debtor could claim a homestead

exemption in that equitable interest under California law. The

BAP held that § 522(g) did not apply because there was no

transfer that the trustee could avoid under any of the sections

listed in § 522(g). Id. at *4.

Bova is not binding on us because it is unpublished, and in

any event it is readily distinguishable. In Bova, the trustee

was able to realize for the estate the full value of the debtor’s

true interest in the property without invoking any of the

avoiding powers; he could simply sell the debtor’s interest in

the property together with the interests of his co-owners under

§ 363(h) (which was designated § 363(g) when we decided Bova) and

claim the debtor’s share of the proceeds from his sisters, who

held the property in a resulting trust for his benefit. The

trustee did not need to employ any of the statutory powers

enumerated in § 522(g) in order to recover and liquidate the

debtor’s interest in the property; the trustee asserted a claim

under § 542(a), but as the panel noted, this was entirely

unnecessary. In this case, however, the Trustee could not have

20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

recovered the Property without invoking one of the sections

listed in § 522(g).8

Section 522(g) might present difficult questions in a case

where the trustee recovered only a limited interest in certain

property.9 But we need not reach those issues here. We hold

that, where the debtor signs a deed purporting to make a

voluntary, outright transfer of his entire interest in certain

property and the trustee recovers that property by using (or

threatening to use) his avoiding powers under § 544 or § 548,

§ 522(g) bars the debtor from claiming any exemption in that

property. 

CONCLUSION

For the reasons set forth above, the bankruptcy court did

8 Ehrenberg v. Hidalgo (In re Hidalgo), BAP No.

CC-06-1399-PaAK, 2007 WL 7540950 (9th Cir. BAP July 9, 2007),

which none of the parties cited, is similar to Bova. The debtor

conveyed to his sister his legal interest in property that they

jointly owned. When he filed for bankruptcy without listing the

property in his schedules and later claimed a homestead exemption

in his equitable interest, the trustee objected under § 522(g). 

The bankruptcy court overruled the objection, and the BAP agreed

on appeal, noting that the objection was premature because the

trustee had not yet recovered anything. Like Bova, Hidalgo is

unpublished and not binding. It is also distinguishable because,

unlike Hidalgo, the Trustee in this case has recovered the

Property.

9 Most courts considering this issue hold that § 522(g)

applies even if the only interest that the trustee recovers is a

lien. See, e.g., Russell v. Kuhnel (In re Kuhnel), 495 F.3d

1177, 1181 (10th Cir. 2007) (creditor’s release of its security

interest in a truck constituted recovery of property by the

trustee); In re Lamping, 8 B.R. 709, 711 (Bankr. E.D. Wis. 1981)

(under § 522(g), “transfers of a security interest are voluntary

transfers and are not subject to exemption claims by the debtor

after the property is recovered by the trustee”).

21
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

not err in sustaining the Objection to the homestead exemption. 

Therefore, we AFFIRM.

22