Court Opinion

ID: 802820
Source: CourtListenerOpinion
Date Created: 2012-06-21 17:18:43+00
Date Added: 2024-06-11T08:34:44.934947
License: Public Domain

FOR PUBLICATION
 UNITED STATES COURT OF APPEALS
      FOR THE NINTH CIRCUIT

In re EDRA D. BLIXSETH,             
                          Debtor,

                                         No. 11-60042
RICHARD JOSEPH SAMSON, Chapter 7
Trustee,                                 BAP No.
                                           10-1334
                       Appellant,
                                          OPINION
               v.
WESTERN CAPITAL PARTNERS, LLC,
                        Appellee.
                                    
              Appeal from the Ninth Circuit
                Bankruptcy Appellate Panel
Hollowell, Jury, and Markell, Bankruptcy Judges, Presiding

                Argued on May 10, 2012
               Submitted on June 14, 2012
                  Seattle, Washington

                   Filed June 21, 2012

Before: Ronald M. Gould, Jay S. Bybee, and Carlos T. Bea,
                    Circuit Judges.

                   Per Curiam Opinion

                          7319
                       IN RE BLIXSETH                  7321

                        COUNSEL

Bradley R. Duncan, Hugh R. McCullough, and Anthony S.
Wisen of Davis Wright Tremaine LLP, Seattle, Washington;
and David B. Cotner of Datsopoulos, MacDonald & Lind,
P.C., Missoula, Montana, for the appellant.

Robert W. Hatch, II and Christopher J. Conant of Hatch Hals-
tead LLC, Denver, Colorado, for the appellee.
7322                        IN RE BLIXSETH
                              OPINION

PER CURIAM:

  We adopt in full the opinion of the Bankruptcy Appellate
Panel in this case, published at 454 B.R. 92 (B.A.P. 9th Cir.
2011), which we reproduce below:1

   The Bankruptcy Code requires an individual debtor in a
chapter 72 case to undertake certain obligations with respect
to personal property that secures a debt. 11 U.S.C.
§ 521(a)(2). A debtor must file a statement of intention indi-
cating whether she intends to surrender or retain such prop-
erty and must file and perform on her intention within a
certain time frame. 11 U.S.C. § 521(a)(2)(A). If a debtor fails
to timely meet those obligations, the automatic stay termi-
nates and the property is removed from the estate unless the
chapter 7 trustee obtains a determination that the property is
of consequential value or benefit to the estate. 11 U.S.C.
§§ 521(a)(2)(C), 362(h)(1) and (2).

   In this case, the debtor did not file a statement of intention
with respect to personal property that was pledged to a credi-
tor and the chapter 7 trustee did not seek a determination that
the property was of value or benefit to the estate. However,
the chapter 7 trustee appeals the bankruptcy court’s ruling that
§ 362(h) terminated the automatic stay on all of the debtor’s
personal property secured by the creditor’s claim and not just
on personal property scheduled as securing the claim. We
AFFIRM.
  1
     We have jurisdiction under 28 U.S.C. § 158(d)(1), which grants juris-
diction to each circuit court of appeals over appeals from final orders of
its Bankruptcy Appellate Panel. The grant or denial of a motion for relief
from an automatic stay is a final order. Cimarron Investors v. WYID Prop-
erties (In re Cimarron Investors), 848 F.2d 974, 975 (9th Cir. 1988).
   2
     Unless otherwise indicated, all chapter and section references in the
text are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532. All “Rule” refer-
ences are to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.
                             IN RE BLIXSETH                          7323
                              I.   FACTS

   Edra Blixseth (the Debtor) guaranteed a $13,650,000 loan
(Loan) made to her son by Western Capital Partners, LLC
(Western Capital). The Debtor also pledged certain personal
property as collateral for the Loan (the Collateral).3 Western
Capital’s security agreement (Security Agreement) describes
the Collateral as including all interests owned by the Debtor
in any corporation, partnership or limited liability company,
all instruments, general intangibles, rights of action, contracts,
accounts, goods, antiques, art, and automobiles, wherever
located. On June 19, 2007, Western Capital filed a UCC
Financing Statement, referencing the Loan and Security
Agreement. The UCC Financing Statement, like the Security
Agreement, contained a comprehensive description of the
Collateral, and encompassed “all personal property of the
Debtor wherever located.”

   On March 26, 2009, the Debtor filed for chapter 11 relief.
She filed her bankruptcy schedules and statement of financial
affairs on April 29, 2009 (the Schedules). In her Schedules,
Western Capital was listed as a secured creditor holding a
$13,298,628.13 claim secured by $2 million in “ALL PER-
SONAL PROPERTY OWED [sic] BY DEBTOR, FAMILY
COMPOUND AT YELLOWSTONE MOUNTAIN CLUB.”
The Debtor’s Schedule B listed personal property valued at
$76 million.

   On May 29, 2009, the case was converted to chapter 7 and
Richard Samson was appointed the chapter 7 bankruptcy
trustee (the Trustee). The Debtor amended her Schedules on
  3
    The personal property appears to secure the Loan rather than the Debt-
or’s guarantee. Western Capital described the Collateral as securing the
Loan. The trustee asserted that the Debtor guaranteed the Loan and “[t]o
secure payment of the note (but not the guarantee, . . .), she also pledged
certain personal property.” A copy of the Loan agreement is not included
in the record.
7324                          IN RE BLIXSETH
June 14, 2009 (the Amended Schedules) to, among other
things, correct the list of personal property assets to reflect a
value of $69,216,315. The Amended Schedules did not alter
the description of Western Capital’s debt or the $2 million
value given to the Collateral.

   On June 30, 2009, the chapter 7 § 341 meeting of creditors
was held.4 By that date, the Debtor had not filed a statement
of intention regarding the Collateral, as required by
§ 521(a)(2)(A).5 The Trustee did not move for a determination
of consequential value or benefit under § 362(h)(2) or for an
extension of time to do so.6

   During the bankruptcy case, Western Capital filed three
motions for relief from the automatic stay (the Stay Relief
Motions). The Stay Relief Motions sought relief under
§ 362(d)(2) and were filed on May 1, 2009 (pre-conversion),
June 30, 2009, and August 24, 2009. In its May 1, 2009 Stay
Relief Motion, Western Capital sought relief from the stay in
order to liquidate the Debtor’s stock in BLX Group, Inc.
(BLX).

  In its June 30, 2009 Stay Relief Motion, Western Capital
sought relief in order to liquidate the Debtor’s fine art, fur-
  4
    A previous § 341 meeting of creditors was held in the chapter 11 case
on May 15, 2009.
  5
    A debtor is required to file a statement of intention indicating whether
she will surrender or retain personal property pledged to secure a debt
within 30 days after filing a petition under chapter 7 or on or before the
date of the § 341 meeting of creditors, whichever is earlier, or within such
additional time as the court, for cause, fixes. 11 U.S.C. § 521(a)(2)(A).
   When a case has been converted to chapter 7, the statement of intention
must be filed within 30 days after entry of the order of conversion or
before the first date set for the meeting of creditors, whichever is earlier,
or within an extended time if sought and granted. Rule 1019(1)(B).
   6
     The consequential value or benefit motion must be made “before the
expiration of the applicable time set by § 521(a)(2).” 11 U.S.C.
§ 362(h)(2).
                           IN RE BLIXSETH                       7325
nishings, collectibles, jewelry and other personal property
located at the Debtor’s California residence, known as Porcu-
pine Creek, in Rancho Mirage, California. In its August 24,
2009 Stay Relief Motion, Western Capital sought relief in
order to liquidate some of the Debtor’s jewelry. The Trustee
did not file objections to the Stay Relief Motions.

   On October 6, 2009, the bankruptcy court held a hearing on
Western Capital’s May 1, 2009 and August 24, 2009 Stay
Relief Motions.7 Western Capital and the Trustee both
attended the hearing. Western Capital argued that, notwith-
standing its request for relief under § 362(d)(2), it was addi-
tionally entitled to relief under § 362(h) since the Debtor had
not timely filed a statement of intention regarding the Collat-
eral. The bankruptcy court agreed and entered an order grant-
ing Western Capital’s two Stay Relief Motions on October 6,
2009 (the Order Granting Relief). The Order Granting Relief
found that:

  (1)   the Debtor had not filed a statement of intention; and

  (2) the Trustee had not objected to the Stay Relief
Motions “indicating to this Court that the bankruptcy estate
has determined that Debtor’s personal property is of inconse-
quential value to the bankruptcy estate.” The bankruptcy court
held that § 362(h) provided Western Capital mandatory relief.

   Western Capital subsequently filed various notices of UCC
sales to liquidate the Collateral. The sales were postponed
while Western Capital and the Trustee worked to resolve the
Trustee’s concerns regarding the sales, including the Trustee’s
assertion that the sales violated the automatic stay. However,
on March 22, 2010, Western Capital moved forward with a
sale of BLX stock, which was the subject of the Order Grant-
  7
   The June 30, 2009 Stay Relief Motion regarding the property located
at Porcupine Creek was continued to November and later withdrawn by
Western Capital.
7326                       IN RE BLIXSETH
ing Relief (the March Sale). The March Sale also sold the
Debtor’s interest in two entities and various accounts receiv-
able, which were not the subject of the Order Granting Relief.
Western Capital was the successful bidder at the sale for
$250,000.

   On May 3, 2010, Western Capital filed a notice of sale (the
May Sale) that proposed to sell some of the Debtor’s contract
rights. The May Sale was postponed several times at the
request of the Trustee but was ultimately scheduled for
August 11, 2010. On August 4, 2010, the Trustee filed a
Motion to Enforce the Automatic Stay Against Western Capi-
tal (Motion to Enforce) in order to stop the May Sale.

   In his Motion to Enforce, the Trustee contended that the
May Sale proposed to sell property that was protected by the
automatic stay because the automatic stay never terminated
under § 362(h) on all of the Collateral, but only terminated on
personal property identified on the Debtor’s Schedules.8 The
Trustee interpreted the Schedules as limiting the Collateral to
the Debtor’s personal property located at the “Family Com-
pound [at] Yellowstone Mountain Club.” Because the contract
rights referenced in the May Sale notice were not located at
the Yellowstone Mountain Club, the Trustee argued they
remained under the protection of the automatic stay.

   Western Capital filed an objection to the Motion to
Enforce, contending that § 362(h) applied to all the Collateral
securing the Loan. On August 10, 2010, the bankruptcy court
held a hearing on the Motion to Enforce. It issued a Memo-
randum of Decision on August 16, 2010, holding that
§ 362(h) terminated the automatic stay on the Collateral
regardless of whether it was listed on the Schedules. An order
denying the Motion to Enforce was entered the same day (the
  8
    The Schedules and Amended Schedules are collectively referred to in
this Opinion as the Schedules.
                          IN RE BLIXSETH                   7327
Order Denying Enforcement). On August 30, 2010, the
Trustee filed a notice of appeal.

                    II.   JURISDICTION

  The bankruptcy court had jurisdiction pursuant to 28
U.S.C. § 157(b)(2)(A). We address our jurisdiction under 28
U.S.C. § 158 below.

                          III.   ISSUE

   Whether § 362(h) terminates the automatic stay on all per-
sonal property of the estate pledged to secure a scheduled debt
or only terminates the stay on personal property specifically
identified in a debtor’s schedules as securing the debt.

             IV.    STANDARDS OF REVIEW

   We review issues of statutory construction and conclusions
of law, including the bankruptcy court’s interpretation of the
Bankruptcy Code, de novo. Am. Express Bank, FSB v. Smith
(In re Smith), 418 B.R. 359, 364 (9th Cir. BAP 2009);
Dumont v. Ford Motor Credit Co. (In re Dumont), 383 B.R.
481, 484 (9th Cir. BAP 2008), aff’d, 581 F.3d 1104 (9th Cir.
2009).

                     V.    DISCUSSION

A.   Jurisdiction

   We lack jurisdiction over an appeal that is not timely filed.
Saunders v. Band Plus Mortg. Corp. (In re Saunders), 31 F.3d
767 (9th Cir. 1994) (requirement of timely notice of appeal is
mandatory and jurisdictional). Western Capital contends that
this appeal is untimely. See Rule 8002 (a notice of appeal
must be filed within 14 days of the date of the entry of the
judgment or order). According to Western Capital, the Order
Granting Relief, entered on October 16, 2009, determined that
7328                         IN RE BLIXSETH
the automatic stay terminated under § 362(h) on the Collat-
eral, and therefore, the Trustee should have appealed that
order.

   [1] Although the bankruptcy court granted relief pursuant
to § 362(h), the Trustee’s argument that § 362(h) applies only
to personal property identified by the Debtor on her Schedules
was not at issue. The Trustee did not object to the Stay Relief
Motions because the personal property subject to the Stay
Relief Motions was either scheduled or the Trustee had deter-
mined it was of no value to the estate. When Western Capital
refused to postpone the May Sale of personal property, which
was not the subject of the Order Granting Relief or among
that described on the Schedules, the Trustee filed the Motion
to Enforce.9 The bankruptcy court’s subsequent ruling in the
Order Denying Enforcement essentially amended the Order
Granting Relief and was a final disposition on the question of
what property was subject to § 362(h). The Trustee timely
filed his notice of appeal within 14 days from the Order
Denying Enforcement. As a result, the appeal is timely and
we have jurisdiction to address its merits.

B.     Merits

   The Trustee contends that when the Debtor did not file a
statement of intention, § 362(h) terminated the automatic stay
only on the personal property identified on the Debtor’s
Schedules as securing Western Capital’s claim. According to
the Trustee, § 362(h)’s application was limited to personal
property located at the Family Compound at Yellowstone
Mountain Club because the Debtor’s Schedules identified
Western Capital’s claim as having a value well below the total
value of all of the Debtor’s personal property and because the
  9
   We note that the Trustee’s position on appeal is somewhat inconsistent
with his prior conduct. The March Sale included a sale of some Collateral
not identified on the Debtor’s Schedules or covered by the Order Granting
Relief, but the Trustee did not seek to enforce the stay until the May Sale.
                                IN RE BLIXSETH                            7329
Schedules referenced the “Yellowstone Mountain Club” in
the description of Western Capital’s security interest.

   Admittedly, the description of Western Capital’s secured
claim, “ALL PERSONAL PROPERTY OWED [sic], FAM-
ILY COMPOUND AT YELLOWSTONE MOUNTAIN
CLUB,” is unclear. However, as we explain below, the effects
of § 362(h) and § 521(a)(2) do not depend on how (or even
if) personal property securing a debt is scheduled.

   Because this case presents a question of statutory interpre-
tation, “our interpretation of the Bankruptcy Code starts
‘where all such inquiries must begin: with the language of the
statute itself.’ ” Ransom v. FIA Card Servs., N.A. (In re Ran-
som), ___ U.S. ___, 131 S. Ct. 716, 723-24 (2011) quoting
United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241
(1989).

   Section 362(h) terminates the automatic stay “with respect
to personal property of the estate or of the debtor securing in
whole or in part a claim . . . if the debtor fails within the appli-
cable time set by section 521(a)(2) . . . to file timely any state-
ment of intention required under § 521(a)(2)” indicating
whether she will surrender or retain such personal property.10
11 U.S.C. § 362(h)(1).
  10
    Section 362(h):
       (1) In a case in which the debtor is an individual, the stay pro-
       vided by subsection (a) is terminated with respect to personal
       property of the estate or of the debtor securing in whole or in part
       a claim, . . . and such personal property shall no longer be prop-
       erty of the estate if the debtor fails within the applicable time set
       by section 521(a)(2) —
           (A)   to file any statement of intention required under sec-
                 tion 521(a)(2) with respect to such personal property or
                 to indicate in such statement that the debtor will either
                 surrender . . . or retain it . . . .
           (B)   to take timely the action specified in such statement
                 ....
7330                        IN RE BLIXSETH
   [2] Section 362(h) applies to personal property of the
estate securing a claim. “Property of the estate” is defined in
§ 541(a) as all of a debtor’s legal or equitable interests in
property, wherever located, as of the commencement of the
case, and includes nine non-exclusive subcategories of prop-
erty. 11 U.S.C. § 541(a)(1)-(a)(9). Nothing in § 541 limits
property of the estate to property scheduled by a debtor.
Moreover, property of the estate includes non-debtor interests
in property recovered or recoverable through the Bankruptcy
Code’s transfer and lien avoidance provisions. 11 U.S.C.
§ 541(a)(3),(4); Owen v. Owen, 500 U.S. 305, 308 (1991).
Property of the estate, therefore, includes property not identi-
fied or listed on the bankruptcy schedules.

   When language is used in one section of a statute and the
same language is used in another section, we “can infer that
Congress intended the same meaning.” Consol. Freightways
Corp. of Del. v. Aetna, Inc. (In re Consol. Freightways Corp.
of Del.), 564 F.3d 1161, 1165 (9th Cir. 2009); N. Sports, Inc.
v. Knupfer (In re Wind N’ Wave), 509 F.3d 938, 944 (9th Cir.
2007) (“identical words used in different parts of the same act
are intended to have the same meaning”). We assume, there-
fore, that when a debtor fails to timely file her statement of
intention, § 362(h) terminates the stay on “property of the
estate” as defined by § 541.

   The Trustee asserts that because § 362(h) refers to
§ 521(a)(2), there is a requirement that personal property sub-
ject to § 362(h) be scheduled. He focuses on the following
language of § 521(a)(2) to support his argument: “if an indi-
vidual debtor’s schedule of assets and liabilities includes

   (2) Paragraph (1) does not apply if the court determines, on the
   motion of the trustee filed before the expiration of the applicable
   time set by 521(a)(2), after notice and a hearing, that such per-
   sonal property is of consequential value or benefit to the estate,
   ....
                                IN RE BLIXSETH                            7331
debts which are secured by property of the estate” then a
debtor must timely file a statement of intention with regard to
“such property.”11 The Trustee contends that the word “if” is
“the most essential part of the statute because it means that
section 362(h) does not have any effect unless and until the
predicate condition is satisfied: the appearance of property on
the schedules.”

   The language of § 521(a)(2) requires that the secured debt
be listed but does not require that the property securing the
debt be scheduled: “if a debtor’s schedule of assets and liabili-
ties includes debts secured by property of the estate . . . .” 11
U.S.C. § 521(a)(2) (emphasis added). The reference to “such
property” in the statute refers to the “property of the estate”
that secures the debt. Where the language is plain and does
not lead to absurd or impractical consequences, the words are
taken as the final expression of the meaning intended. In re
Dumont, 581 F.3d at 1111.

   [3] The combined effect of §§ 362(h) and 521(a)(2) is to
lift the stay and remove personal property from the estate
when no timely statement of intention is filed and a trustee
fails to timely file a motion to determine the value or benefit
of the property. The result may be harsh but is not absurd.
Lamie v. United States Trustee, 540 U.S. 526, 538 (2004) (a
  11
    Section 521(a)
       (2) if an individual debtor’s schedules of assets and liabilities
       includes debts which are secured by property of the estate—
              (A) within thirty days after the date of the filing of a peti-
           tion under chapter 7 of this title or on or before the date of
           the meeting of creditors, whichever is earlier, or within such
           additional time as the court for cause within such period
           fixes, the debtor shall file with the clerk a statement of his
           intention with respect to the retention or surrender of such
           property and, if applicable, specifying that such property is
           claimed as exempt, that the debtor intends to redeem such
           property, or that the debtor intends to reaffirm debts secured
           by such property.
7332                     IN RE BLIXSETH
plain, non-absurd meaning is enforceable even if outcome is
harsh).

   Because § 362(h) is not ambiguous and its effect is not
absurd, we need not look to legislative history to inform our
analysis. See Joye v. Franchise Tax Bd. (In re Joye), 578 F.3d
1070, 1076 (9th Cir. 2009). Even if were we to do so, the leg-
islative history does not support the Trustee’s limited interpre-
tation.

   Section 362(h) was added to the Bankruptcy Abuse Preven-
tion and Consumer Protection Act of 2005 (BAPCPA) as part
of the amendments characterized as “Protections for Secured
Creditors.” H.R. REP. NO. 109-31(I), 109th Cong., 1st Sess.
2005, reprinted in 2005 U.S.C.C.A.N. 88, 103. Section 362(h)
was intended to provide greater protection to creditors by ter-
minating the automatic stay with respect to personal property
of the debtor if the debtor failed to timely reaffirm the under-
lying obligation or redeem the property. Id.; see also In re
Dumont, 581 F.3d at 1111 (secured creditors have been the
subject of particular congressional solicitude in BAPCPA).
Under the Trustee’s interpretation, secured creditors would
not be afforded the protection of the 2005 amendments
because the deadlines of §§ 362(h) and 521(a)(2) would never
be triggered if a debtor failed to properly describe, or sched-
ule, personal property securing a scheduled debt.

   The Trustee asserts that if § 362(h) is interpreted to apply
to unscheduled property, it will harm the bankruptcy system
because trustees, creditors, and the courts would remain “en-
tirely ignorant of the existence of property that would be
removed from the estate.” The Trustee argues that trustees
would be compelled in every case to move for blanket protec-
tion under § 362(h) to “guard against the possibility that some
property has been left off the schedules.”

  The Trustee ignores that §§ 521(a)(2) and 362(h) apply
only if the schedules list debts secured by personal property.
                              IN RE BLIXSETH                           7333
As long as a debt is scheduled as secured, it provides notice
to other creditors and the trustee that there is a creditor with
a security interest in personal property of the estate. If there
is a concern about the benefit that property may have for the
estate, the trustee has the ability to keep the property pro-
tected by filing a motion under § 362(h).12

   The Trustee also suggests that the failure to adopt his inter-
pretation of § 362(h) will permit debtors and secured creditors
to collude to deprive unsecured creditors of valuable assets.
We disagree, but even if it were so, there are remedies for
such conduct. If a debtor fraudulently completes her sched-
ules, a trustee or creditor may seek to deny her a discharge
under § 727(a)(4). Furthermore, if a debtor and a creditor col-
lude to mischaracterize a claim or collateral, they may be sub-
ject to prosecution under 18 U.S.C. § 152.

   Accordingly, we conclude that the plain language of
§ 362(h) and § 521(a)(2) does not lead to an absurd result.
   12
      On appeal, the Trustee urges us to adopt the holding of Noland v.
HSBC Auto Fin., Inc. (In re Baine), 393 B.R. 561, 568 (Bankr. S.D. Ohio
2008) that § 362(h)(1)’s removal of property from the estate is tantamount
to abandonment because it “divests the estate of all its interests in the
property.” He contends that because there is a long line of authority hold-
ing that a failure to schedule an asset does not result in its abandonment
when a case is closed, only scheduled property is subject to § 362(h). We
decline to address the Trustee’s abandonment argument because it was not
squarely raised before the bankruptcy court. Moldo v. Matsco, Inc. (In re
Cybernetic Servs., Inc.), 252 F.3d 1039, 1045 n.3 (9th Cir. 2001) (appel-
late court need not explore ramifications of argument not raised below).
While the Trustee argued that it was against public policy to permit
unscheduled assets to be removed from the estate, he did not assert that
§ 362(h) is effectively equivalent to abandonment under § 554. In any
event, In re Baine is unpersuasive. See generally, Neil C. Gordon, Section
362(h) Does Not Deprive a Trustee of Standing to Avoid a Lien, 29-Jan.
AM. BANKR. INST. J. 50 (2010); see also, 11 U.S.C. § 521(a)(2)(C) (except
for § 362(h)(1), a trustee’s rights to the property are otherwise unaltered);
Catalano v. Comm’r, 279 F.3d 682, 687 (9th Cir. 2002) (“[P]roperty is not
considered abandoned from the estate unless the procedures specified in
§ 554 are satisfied.”).
7334                     IN RE BLIXSETH
Under the unambiguous language of § 362(h), all personal
property secured by a scheduled debt is released from the
automatic stay if a debtor fails to timely file and comply with
her statement of intention.

                   VI.    CONCLUSION

  For the reasons given above, we AFFIRM.