Source: https://law.justia.com/cases/federal/appellate-courts/F2/967/1316/464790/
Timestamp: 2019-08-18 08:55:27
Document Index: 775366967

Matched Legal Cases: ['§ 704', '§ 704', '§ 704', '§ 704', '§ 704', '§ 704', '§ 704', '§ 704', '§ 522', '§ 506', '§ 1124']

In Re Irwin Hyman; Janice Hyman, Debtors.irwin Hyman; Janice Hyman, Appellants, v. Gary A. Plotkin, Trustee, Appellee, 967 F.2d 1316 (9th Cir. 1992) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Ninth Circuit › 1992 › In Re Irwin Hyman; Janice Hyman, Debtors.irwin Hyman; Janice Hyman, Appellants, v. Gary A. Plotkin,...
In Re Irwin Hyman; Janice Hyman, Debtors.irwin Hyman; Janice Hyman, Appellants, v. Gary A. Plotkin, Trustee, Appellee, 967 F.2d 1316 (9th Cir. 1992)
US Court of Appeals for the Ninth Circuit - 967 F.2d 1316 (9th Cir. 1992)
Argued and Submitted Feb. 7, 1992. Decided June 22, 1992
This case turns largely on the proper interpretation of California's homestead exemption statute. That statute defines "homestead" as a judgment debtor's principal dwelling place, Cal.Civ.Proc.Code § 704.710(c), and "homestead exemption" as a fixed dollar amount generated from the sale of the homestead. Id., § 704.730. For the Hymans that amount is $45,000. Id., § 704.730(a) (2).2 State law also provides that a judgment debtor's homestead may not be sold by judgment creditors unless the sale price of the homestead "exceeds the amount of the homestead exemption plus any additional amount necessary to satisfy all liens and encumbrances on the property...." Id., § 704.800(a). If the sale price does exceed these amounts, the homestead may be sold and the judgment debtor is entitled to a sum equal to his homestead exemption from the proceeds of the sale. Id., § 704.720(b).3
Of course, the Hymans were not "judgment debtors" under California law, but bankruptcy petitioners under federal law. Nevertheless, section 522(b) (2) (A) of the Bankruptcy Code excludes from a debtor's bankruptcy estate "any property that is exempt under ... State or local law that is applicable ... at the place in which the debtor's domicile has been located...." Because the Hymans had been domiciled in California "for the 180 days immediately preceding the date of the filing of [their] petition," id., section 522 entitled them to exempt from their estate any property qualifying under California's homestead exemption statute.
However, " [w]e have reviewed Debtor's bankruptcy petition, 'Schedule B-4--Property claimed as exempt,' and find this assertion to be erroneous." In re Reed, 940 F.2d 1317, 1321 n. 3 (9th Cir. 1991).5 The Hymans' schedule of exempt property listed "homestead" as an exemption under Cal.Civ.Proc.Code § 704.720, and valued the exemption at $45,000. Based on this information, the Hymans did not sufficiently notify others that they were claiming their entire homestead as exempt property; their schedule only gave notice that they claimed $45,000 as exempt, which is the proper amount of their homestead allowance under sections 704.720 and 704.730. See Reed, 940 F.2d at 1321 n. 3. Thus, the trustee had no basis for objecting, and could well have suffered the bankruptcy judge's ire had he objected to the $45,000 exemption to which the Hymans were clearly entitled.6
Although Cal.Civ.Proc.Code § 704.730(a) (2) was amended to increase the homestead exemption to $75,000, the Hymans are only entitled to a $45,000 homestead exemption because an exemption amount is determined on the date the petition is filed. See In re Herman, 120 B.R. 127, 130 (9th Cir. BAP 1990)
To use the Hymans' own words, they argue that under the definition of "homestead" contained in Cal.Civ.Proc.Code § 704.710, " [t]he Homestead is the dwelling house.... [Thus, w]hen the Trustee failed to object to the claim that the entire dwelling house was exempt, pursuant to section 522(a) of the Bankruptcy Code, the dwelling house revested in the Debtors and was no longer a part of the Bankruptcy Estate and thus, cannot be sold." Opening Brief of Appellants Irwin and Janice Hyman, at 6-7
Unless there is a timely objection from a party in interest, any property claimed as exempt by a debtor--regardless of whether the claimed exemption is valid--is automatically exempt under section 522(l) . See Taylor v. Freeland & Kronz, --- U.S. ----, 112 S. Ct. 1644, 118 L. Ed. 2d 280 (1992). Because the time to object is relatively short, see Bankr.Rule 4003(b), it is important that trustees and creditors be able to determine precisely whether a listed asset is validly exempt simply by reading a debtor's schedules. Given that the debtor controls the schedules, we construe any ambiguity therein against him
In making these calculations, the relevant figure is the actual sale price of the property, not the value of the property listed by the debtor on his schedule of assets. The Hymans' argument that the trustee is bound by the value listed on their schedule of assets because he did not object to that value within the 30 days allowed by Rule 4003 is misplaced. According to their own schedule of exemptions, the Hymans only claimed a $45,000 homestead exemption. See page 1318 supra. That figure is fixed "as of the date of the filing the petition." 11 U.S.C. § 522(a) (2). However, nothing in section 522, or anywhere else in the Bankruptcy Code for that matter, requires that non-exempt assets have their values frozen on the petition date. Cf. 11 U.S.C. § 506 & Bankr.Rule 3012 (value of property encumbered by a lien determined at time of hearing before the court); 11 U.S.C. §§ 1124, 1129 (value of property determined on effective date of plan of reorganization)