Court Opinion

ID: 4181443
Source: CourtListenerOpinion
Date Created: 2017-06-27 20:01:23.204264+00
Date Added: 2024-06-11T14:39:21.749578
License: Public Domain

NOT FOR PUBLICATION                          FILED
                    UNITED STATES COURT OF APPEALS                         JUN 27 2017
                                                                       MOLLY C. DWYER, CLERK
                                                                        U.S. COURT OF APPEALS
                             FOR THE NINTH CIRCUIT

                                                 No. 15-56814
In re: ROSALVA LUA,
                                                 D.C. No. 2:15-cv-04026-CJC
          Debtor,
__________________________________
                                                 MEMORANDUM*
ROSALVA LUA,

              Appellant,

  v.

ELISSA MILLER, Chapter 7 Trustee,

              Appellee.

                   Appeal from the United States District Court
                      for the Central District of California,
                   Cormac J. Carney, District Judge, Presiding

                          Argued and Submitted April 6, 2017
                                 Pasadena, California

Before:       McKEOWN and CALLAHAN, Circuit Judges, and QUIST, Senior
              District Judge.**

          *
        This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
       **
        The Honorable Gordon J. Quist, Senior District Judge for the United
States Court for the Western District of Michigan, sitting by designation.
      Debtor Rosalva Lua appeals the district court’s order affirming the

bankruptcy court’s order sustaining the Chapter 7 Trustee’s objection to Lua’s

claim of a homestead exemption. Lua argues that the bankruptcy court erred in

applying state law to disallow her exemption and, to the extent the bankruptcy

court could properly consider state law, it erred in not limiting the source of law to

state statutory law. Finally, Lua argues that the bankruptcy court erred in applying

the doctrine of equitable estoppel to disallow her exemption.

      We have jurisdiction pursuant to 28 U.S.C. § 158(d), and we reverse.

                                             A.

      Lua failed to raise below her arguments that the bankruptcy court could not

consider state law or state case law as a basis for disallowing Lua’s claimed

homestead exemption. We generally will not consider arguments raised for the

first time on appeal. Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999). We

conclude that none of the exceptions to this rule applies. See United States v.

Echavarria-Escobar, 270 F.3d 1265, 1267–68 (9th Cir. 2001) (noting exceptions

to the first-time-on-appeal rule). Thus, we limit our review to the bankruptcy

court’s application of equitable estoppel.

                                             2
                                            B.

      “We apply the same standard of review applied by the district court,

reviewing the bankruptcy court’s legal conclusions de novo and its factual

determinations for clear error.” Neilson v. Chang (In re First T.D. & Inv., Inc.),

253 F.3d 520, 526 (9th Cir. 2001).

       A party urging equitable estoppel must demonstrate “(a) a representation or

concealment of material facts (b) made with knowledge, actual or virtual, of the

facts (c) to a party ignorant, actually and permissibly, of the truth (d) with the

intention, actual or virtual, that the ignorant party act on it, and (e) that party was

induced to act on it.” Behnke v. State Farm Gen. Ins. Co., 196 Cal. App. 4th 1443,

1462 (2011) (quoting 13 Witkin Summary of Cal. Law § 191, at 527–28 (10th ed.

2005)). Estoppel will not be found unless all elements are satisfied. Moore v.

State Bd. of Control, 112 Cal. App. 4th 371, 384 (2003).

      The bankruptcy court found that Lua’s First Amended Schedules were a

representation, under oath, that she was not claiming a homestead exemption in the

Property. But the First Amended Schedules cannot form the basis of an estoppel

because they set forth all of the existing facts known to Lua. Those same facts

were readily available to the Trustee, and the Trustee was fully aware of them.

“[W]here the person pleading estoppel had knowledge of the facts, there is no

                                            3
reliance.” Sidebotham v. Robinson, 216 F.2d 816, 829 (9th Cir. 1954). The

Trustee also knew, or should have known, that in the event circumstances changed,

Lua could amend her exemptions “as a matter of course at any time before the case

[wa]s closed.” Fed. R. Bankr. P. 1009(a); see also Martinson v. Michael (In re

Michael), 163 F.3d 526, 529 (9th Cir. 1998) (“No court approval is required for an

amendment, which is liberally allowed.”), abrogated on other grounds by Law v.

Siegel, 134 S. Ct. 1188 (2014).

      The bankruptcy court found that the Trustee had no knowledge or indication

that Lua was going to file her Second Amended Schedules. However, the Trustee

failed to present any evidence that at the time Lua filed her First Amended

Schedules, she had reason to believe that she would amend her schedules again at

some point in the future. Moreover, nothing in Lua’s First Amended Schedules

can be deemed a representation by Lua that she would not amend her exemptions

again if circumstances changed. In fact, circumstances changed almost three years

later when, at the request of the Trustee, the bankruptcy court entered an order

finding that the Property was 100% community property, providing Lua a new

factual basis to claim a homestead exemption.

      Accordingly, the bankruptcy court shall allow Lua’s claimed homestead

exemption.

                                          4
REVERSED AND REMANDED with directions.

                         5
                                                                             FILED
Lua v. Miller, No. 15-56814
                                                                             JUN 27 2017
CALLAHAN, Circuit Judge, dissenting:                                     MOLLY C. DWYER, CLERK
                                                                           U.S. COURT OF APPEALS

      Based on the applicable standard of review, I respectfully dissent. We

review the application of equitable estoppel for abuse of discretion. See, e.g., Red

Lion Hotels Franchising, Inc. v. MAK, LLC, 663 F.3d 1080, 1087 (9th Cir. 2011).

We may reverse only if “we have a definite and firm conviction that the

[bankruptcy] court committed a clear error of judgment in the conclusion it reached

upon weighing the relevant factors.” S.E.C. v. Coldicutt, 258 F.3d 939, 941 (9th

Cir. 2001). Here, I lack the requisite conviction.

      By amending her initial schedules to remove her claim for a homestead

exemption, Lua represented that she would not be seeking such an exemption

during her bankruptcy. Based on this representation, the Trustee spent the next

roughly three years attempting to maximize the value of the bankruptcy estate by

monetizing Lua’s interest in her home. While it is true that Lua did not know her

exact interest in the home at the time she filed her first amended schedules and that

Lua never affirmatively stated she would not change her amended exemption

election at a later time, Lua stood idly by as the Trustee toiled away, failing to give

the Trustee even so much as an indication that she was contemplating claiming the

homestead exemption. In light of these particular facts, I cannot say that the

bankruptcy court abused its discretion in finding that this case’s equities favored
not allowing Lua to amend her first amended schedules. As a result, I would

affirm the bankruptcy court’s application of equitable estoppel.