2010 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 7-9-2010 

# In Re M es sin a P r e c e de nt i al or N on-P r e c e de nt i al : N on-P r e c e de nt i al D ocke t N o . 08-1134

F o llow thi s and a dd it ion al work s at : http://d i git alc ommon s .l a w . vi ll anova . e du/thir dc ir c uit_2010

Thi s de c i sion i s br ou ght t o you for f r e e and ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. It h as be e n a c c ept e d for inclusion in 2010 D e c i sion s b y an author i z e d a dmini s tr at or of V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. F or mor e inform at ion, p le as e c ont a ct Be n j amin . C arl s on@l a

w . vi ll anova . e du . Re c omme nde d C it at ion " In Re M e s sin a " (2010). 2010 D e cisio n s . P ape r 980. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2010/980NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT

____________ N o. 08- 1134

____________ I N R E : S T E RG I OS AND R E NE E M E S S I NA,

D eb tors S TE VEN R. NEUNER, A ppel l ant

____________ O n A p p ea l from the U n it ed S tat es D istri ct C o u rt

fort he D i s t r i ctof N ew J er s ey ( D . C . N o. 07- cv- 01677) D istric t Ju d g e : H o n o ra b le J e ro m e B . S im a n d le

____________ A r gued M ar ch 3, 2009 B e f o re : S L O V IT E R , S C IR IC A a n d H A R D IM A N , C i r cui tJudges .

( Fi l ed: J ul y9, 2010) D avi d A . K as en [A r gued] K as en & K as en 1874 E as tM ar l t on Pi ke, Sui t e 3 C herr yH i l l , N J 08003 A t t or ney f

orAppel l ees St even R. N euner[A r gued] N eu n er & V en tura 7 5 0 R o u te 7 3 S o u th Sui t e 210 M ar l t on, N J 08053- 0000 A t t or ney f

orAppel l ant2 ____________ OPI NI ON O F THE COURT

____________ H A R D IM A N , C i r cui tJudge . B ankrupt cyT rus t ee St even N euner( t he Trus t ee) appea l s t he D i s t r i ctC our t ’ s or der barr i ng hi s m ot i on t o val ue atzer o t he exe m pt i on cl ai m ed byD ebt or s St er gi os and R enee M e ss in a . W e h e ld th is a p p e a l c. a. v. pendi ng t he Supr eme C our t ’ s deci s i on i n Schw ab v. R e ill y , __ S .C t. __ , N o . 0 8 -5 3 8 , 2 0 1 0 W L 2 4 0 0 0 9 4 (U .S . Ju n e 1 7 , 2 0 1 0 ). W e w ill v a c a te t he D i s t r i ctC our t ’ s O r derand r emand forr edet erm i nat i on i n l i ghtof Schw ab . I. B eca us e w e w r i t e fort he part i es , w e w i l l r ecountonl yt hos e fa ct s es s ent i al t o our deci s i on. O n M ay26, 2006, t he M es s i nas fi l ed thei rbankrupt cys chedul es , w her ei n t hey c la im e d a $ 3 6 ,9 0 0 h o m e s te a d e x e m p tio n u n d e r 1 1 U .S .C . § 5 2 2 (d )( 1 ) o n S c h e d u le C . S e p a ra tely , S c h e d u le D id e n tifie d a se c u re d m o rtg a g e in th e a m o u n t o f $ 1 1 3 ,6 5 7 .8 6 h e ld byL i t t on L oans and Schedul e F l i s t ed an uns ecur ed cl ai m of $396, 171. 13 fora di s put ed m or t gage he l d byN at i onal Penn B ank. T he Trus t ee di d notobj ecti ni t i al l yt o t he hom es t ead e xempt i on. O n J une 14 and 21, t he M es s i nas s entt he Trus t ee tw o l et t er s out l i ni ng t he al l eged d ef ec ts i n the N ati o n al P en n m o rt g ag e. O n Ju ly5 , the T rustee init iat ed an ad v ersa ry pr ocee di ng agai ns tN at i onal Penn t o avoi d t he mort gage. O n A ugus t21, t he Trus t eeT her e i s no di s put e thatt hi s m ot i on i s t o be tr eat ed as an obj ect i on t o t he 1 exempt i on. 3 s ubm i t t ed forcour tappr oval a $200, 209. 64 offe rt o pur chas e the M es s i nas ’ r es i dence , w hi ch the B ankrupt cyC our tappr oved on Sept ember11, and the Trus t ee c om pl et ed the s al e on Sept ember13. O n O ct ober18, t he Trus t ee s ett l ed the avoi dance act i on, w her eby N a tio n a l P e n n c o n se n ted to a v o id its m o rtg a g e w ith re g a rd to th e b a n k ru p tcy es tate a n d to o t h e rl i e n - h o l d e r s w i t h v a l i d , p e r f e c t e d a n d u n a v o i d a b l e l i e n s o n t h e p r o p e r t y. T he M es s i nas t hen cl ai m ed thei rhom es t ead e xempt i on s houl d be s at i s fi ed byt he r emai ni ng pr ocee ds fr om t he s al e of thei rhom e. O n N ovember17, t he Trus t ee moved for a courtor derval ui ng t he M es s i nas ’ exempt i on atzer o, on t he gr ounds t hatt he M es s i nas 1 had no equi t yi n t hei rhom e t o w hi ch the homest ead e xempt i on coul d at t ach. T he M e ss in a s c ro ss -m o v e d f o r a c o u rt o rd e r to h a v e th e T ru ste e p a yth e m th e a m o u n t o f th e ir exem pti on . T he B ank rupt cyC ou rtgrant ed the T rust ee’s m oti on and valued t he M essi nas’ exempt i on atzer o. T he M es s i nas appea l ed t o t he U ni t ed St at es D i s t r i ctC our tfort he D istri ct of

N ew Jerse y , w h ich re v erse d the B an k rup tcyC o u rt , h o lding the M essin as w ere ent i t l ed t o t hei rexempt i on beca us e the Trus t ee’ s m ot i on w as an unt i m el yobj ect i on under 11 U . S. C . § 522( l ) and R ul e 4003 of the Feder al R ul es of B ankrupt cyas i nt erpr et ed by Tayl orv. Fr eeland & Kronz , 5 0 3 U . S . 6 3 8 (19 9 2 ). I n Sc h w a b v . R e ill

y , t he Supr eme C ourtm odi fi ed Tayl or . R e lev a n t to th is a p p e a l, Schw ab hel d t hatR ul e 4003’ s t hi r t y - dayt i m e l i m i tappl i es t o obj ect i ons bas ed on “thr ee, and onl yt hr ee” el ement s of a c l ai m ed Schedul e C exempt i on: ( 1) t he des cr i pt i on of the4

exempt ed pr oper t y ; ( 2) “the C ode pr ovi s i ons governi ng t he cl ai m ed exe m pt i ons ; ” and ( 3) the a m o u n t “l ist ed in the co lum n ti tl ed ‘va lue o f c lai m ed ex em p ti o n . ’” Schw ab , s l i p op. at 12 -13 . B u t w h en the o b jecti o n is ba sed o n o ther e lem en ts— in tha t case , the d eb tor’s m a r k e tv a l u e e s t i m a t i o n a n d “ t h e e s t a t e ’ s r i g h tt o r e t a i n a n y v a l u e i n t h e [ p r o p e r t y] b e y o n d th e v a lu e o f

th e e x e m p te d in te re s t”

— th e th ir ty-d a ytim e lim it d o e s n o t a p p ly. I d. at18- 19, 22- 23. B eca us e the D i s t r i ctC our tdi d nothave the bene fi tof Schw ab , w e w ill v a c a te its or derand r emand forfur t herpr ocee di ngs i n l i ghtof Schw ab .