Court Opinion

ID: 4192634
Source: CourtListenerOpinion
Date Created: 2017-08-03 17:01:58.660735+00
Date Added: 2024-06-11T13:25:37.479527
License: Public Domain

FILED
                                                             JAN 31 2017
 1                         NOT FOR PUBLICATION
                                                         SUSAN M. SPRAUL, CLERK
 2                                                         U.S. BKCY. APP. PANEL
                                                           OF THE NINTH CIRCUIT

 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )      BAP No.      SC-15-1390-FYJu
                                   )
 6   WILLIAM GUTHRIE,              )      Bk. No.      15-03397-MM7
                                   )
 7                  Debtor.        )
     _____________________________ )
 8                                 )
     WILLIAM GUTHRIE,              )
 9                                 )
                    Appellant,     )
10                                 )
     v.                            )      MEMORANDUM*
11                                 )
     RONALD E. STADTMUELLER,       )
12   Chapter 7 Trustee,            )
                                   )
13                  Appellee.      )
     ______________________________)
14
                    Argued and Submitted on January 19, 2017
15                          at San Diego, California
16                          Filed – January 31, 2017
17             Appeal from the United States Bankruptcy Court
                   for the Southern District of California
18
          Honorable Margaret M. Mann, Bankruptcy Judge, Presiding
19
     Appearances:     Gregory S. Cilli of The Feldman Law Group argued
20                    on behalf of Appellant William Guthrie; Ronald E.
                      Stadtmueller, Chapter 7 Trustee argued pro se.
21
22   Before: FARIS, YUN,** and JURY, Bankruptcy Judges.
23
24        *
            This disposition is not appropriate for publication.
25   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
26   9th Cir. BAP Rule 8024-1.

27        **
            The Honorable Scott H. Yun, United States Bankruptcy
     Judge for the Central District of California, sitting by
28   designation.
 1                                INTRODUCTION
 2        Appellant William Guthrie appeals from the bankruptcy
 3   court’s order sustaining chapter 71 trustee Ronald E.
 4   Stadtmueller’s (“Trustee”) objection to his claimed homestead
 5   exemption pursuant to § 522(g).    The bankruptcy court did not err
 6   in sustaining the objection.    Accordingly, we AFFIRM.
 7                             FACTUAL BACKGROUND
 8   A.   Prepetition events
 9        Mr. Guthrie and his wife, Christine Guthrie, divorced in
10   2005 over concerns about his finances.      He claimed that one of
11   the financial concerns was his debt stemming from his failure to
12   pay taxes in 2004.   In 2007, Mr. Guthrie reached a settlement
13   with the Internal Revenue Service (“IRS”), whereby he agreed to
14   pay $152,000 in taxes, penalties, and interest.
15        In May 2012, Mr. Guthrie purchased a home in Vista,
16   California (the “Property”).    Title to the Property was initially
17   in Mr. Guthrie’s name only.    However, in December 2012, he
18   transferred title to the Property to Ms. Guthrie, with whom he
19   was still living, via quitclaim deed for no consideration.      As we
20   shall see, he has given a wide variety of explanations for this
21   transfer.
22        After a series of unsuccessful business ventures,
23   Mr. Guthrie contemplated filing for bankruptcy protection.      He
24   met with a paralegal at a San Diego law firm, who allegedly told
25
26        1
            Unless specified otherwise, all chapter and section
27   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532 and
     all “Rule” references are to the Federal Rules of Bankruptcy
28   Procedure, Rules 1001-9037.

                                       2
 1   him not to transfer title to the Property back to himself without
 2   first consulting the firm.    Mr. Guthrie claimed that, after
 3   speaking to the paralegal, he believed that he still owned the
 4   Property, even though Ms. Guthrie held legal title.
 5   B.   The bankruptcy schedules and claimed homestead exemption
 6        Mr. Guthrie filed for bankruptcy pro se because he could not
 7   afford to hire an attorney.    He filed a chapter 7 petition,
 8   statements, and schedules on May 21, 2015, which scheduled the
 9   Property as his real property (with a value of $400,000 and
10   encumbered by a secured lien of $191,000), and claimed a “home”
11   exemption in the amount of $400,000 and a “homestead” exemption
12   for $125,000.   He said that he “wanted to make sure the
13   bankruptcy court knew about my home, and to make sure that it did
14   not appear that I was trying to hide anything.”    He neglected to
15   mention, however, that Ms. Guthrie owned legal title to the
16   Property.
17        At a § 341(a) meeting of creditors, the Trustee informed
18   Mr. Guthrie that there were a number of deficiencies in his
19   filings.    In particular, the claimed $400,000 homestead exemption
20   exceeded the allowable exemption under state law.    The Trustee
21   continued the meeting of creditors to allow Mr. Guthrie to
22   provide certain documentation regarding other matters.
23        Shortly thereafter, Mr. Guthrie retained counsel to
24   represent him in the bankruptcy proceedings.    He claimed that
25   attorney Gregory Cilli advised him “that I should inform the
26   trustee at the next creditors’ meeting that I had transferred the
27   property to her which I did without giving it any thought.”
28        By the second session of the meeting of creditors,

                                       3
 1   Mr. Guthrie had not amended his schedules.    The Trustee then
 2   advised Mr. Guthrie and Mr. Cilli that he would object to the
 3   homestead exemption.    Mr. Guthrie informed the Trustee that his
 4   ex-wife owned the Property and that he would amend Schedule C to
 5   reflect her ownership.    He further told the Trustee that he had
 6   transferred the Property to Ms. Guthrie because he was not good
 7   with finances.    The Trustee continued the meeting of creditors
 8   again to permit Mr. Guthrie to amend his schedules.
 9          After the second session of the meeting of creditors,
10   Mr. Guthrie amended his schedules to remove the Property and the
11   claimed exemption, thus apparently disavowing any interest in the
12   Property.
13          At the third session of the meeting of creditors, the
14   Trustee questioned Mr. Guthrie about a number of issues,
15   including the Property.    After Mr. Cilli confirmed that they had
16   removed the Property and claimed exemption from the schedules,
17   the Trustee asked about Mr. Guthrie’s reasons for transferring
18   the Property to his ex-wife.    Mr. Guthrie said that it was
19   “because of my I.R.S. debts that I – that I realized I wouldn’t
20   be able to pay quickly enough.”    He said that he wanted to make
21   sure that the IRS “wouldn’t come after it [the Property] right
22   away and [to] try to get time so I’d have enough income to do
23   it.”    The Trustee pressed Mr. Guthrie:
24               TRUSTEE: Okay. But you transferred the house to
            your ex to - to - maybe I’m misunderstanding your
25          testimony. I thought your testimony was you
            transferred the house to your ex-spouse to avoid the
26          I.R.S. from levying your house or going after your
            house?
27
                 MR. GUTHRIE: It - uh - in reality, yes, because -
28

                                       4
 1                 TRUSTEE: Okay.2
 2          The day after the third session of the meeting of creditors,
 3   the Trustee filed an ex parte application to employ general
 4   counsel.3      The Trustee stated that he wanted to employ counsel to
 5   pursue avoidance claims, including to regain estate assets:
 6          Assist the Trustee in analyzing certain pre and
            post-bankruptcy transactions completed by the debtor
 7          regarding possible avoidance claims, and to prosecute
            such avoidance claims to the extent they exist.
 8          Counsel may be required to file adversary proceedings
            against third parties to regain assets of the estate,
 9          as well as to prepare all necessary documents and court
            pleading in support of such proceeding or any other
10          issues related to the debtor’s inappropriate transfers
            of estate property[.]
11
12   The court granted the application to employ Davis & Stadtmueller,
13   LLP.
14          A few days later, Mr. Guthrie amended his schedules again.
15   This time, he rescheduled the Property with a value of $350,000
16   (reduced from $400,000).        He also amended his Schedule C to claim
17   a $9,000 exemption under California Code of Civil Procedure
18   (“CCP”) § 704.730(a)(1) and a $150,000 exemption under CCP
19   § 704.730(a)(3).4
20
            2
            Later, Mr. Guthrie tried to explain away this testimony.
21
     He said, “I personally have no real fear that the IRS would take
22   the home because they had not tried once to do so in eight
     years.” He claimed that he was too nervous or embarrassed to
23   explain that he had transferred the Property to his ex-wife to
     make her feel more secure.
24
            3
            Mr. Guthrie claimed that his ex-wife attempted to commit
25   suicide after she learned that the Trustee filed an application
26   to employ general counsel as a precursor to objecting to the
     homestead exemption.
27
            4
                CCP § 704.730(a) provides, in relevant part:
28                                                             (continued...)

                                           5
 1        On the same day, Mr. Guthrie arranged to transfer the title
 2   to the Property back to himself, “so that [he] would not get in
 3   trouble with the lender for having transferred title, and to
 4   avoid the possibility of the Trustee objecting to [his] homestead
 5   exemption claim . . . .”
 6        Four days later, Mr. Guthrie amended his schedules for the
 7   third time to claim a $175,000 exemption in the Property under
 8   CCP § 704.730(a)(3).
 9
10        4
           (...continued)
          (a) The amount of the homestead exemption is one of the
11
          following:
12
               (1) Seventy-five thousand dollars ($75,000) unless
13             the judgment debtor or spouse of the judgment
               debtor who resides in the homestead is a person
14             described in paragraph (2) or (3).
15
               . . .
16
               (3) One hundred seventy-five thousand dollars
17             ($175,000) if the judgment debtor or spouse of the
               judgment debtor who resides in the homestead is at
18             the time of the attempted sale of the homestead
19             any one of the following:

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

21                     . . .
22
                       (C) A person 55 years of age or older with a
23                     gross annual income of not more than
                       twenty-five thousand dollars ($25,000) or, if
24                     the judgment debtor is married, a gross
                       annual income, including the gross annual
25                     income of the judgment debtor’s spouse, of
26                     not more than thirty-five thousand dollars
                       ($35,000) and the sale is an involuntary
27                     sale.

28   CCP § 704.730(a).

                                        6
 1   C.   The Trustee’s objection to the homestead exemption
 2        The Trustee timely filed his objection (“Objection”) to
 3   Mr. Guthrie’s claimed homestead exemption pursuant to
 4   § 522(g)(1).   He objected to the homestead exemption under § 522
 5   because Mr. Guthrie had no legal interest in the Property on the
 6   date of bankruptcy.   He also argued that § 522(g)(1) barred
 7   Mr. Guthrie’s exemption claim because he had voluntarily
 8   quitclaimed the Property to his ex-wife to avoid the IRS’s
 9   attempt to levy the Property, which constituted a fraudulent
10   transfer under § 548.
11        In response to the Objection, Mr. Guthrie denied any
12   fraudulent intent.    He claimed that he “transferred the property
13   to Christine to help her and make her feel better about our
14   finances and feel like she had something to live for[.]”
15        Prior to the hearing on the Objection, the bankruptcy court
16   issued a tentative ruling.   Regarding avoidance of the transfer
17   of the Property to Ms. Guthrie, the court stated, “Debtor and
18   Trustee agree that legal title to the Property was transferred
19   without receiving reasonably equivalent value, and Debtor
20   testified at his third 341(a) hearing that he believed he would
21   be unable to pay his IRS debts as they came due, making the
22   Transfer at a minimum avoidable under Cal. UFTA § 3439.04(a)(2)
23   incorporated under § 544.”
24        Regarding the Trustee’s efforts to recover the Property, the
25   court said that “it is not clear whether Trustee’s actions in
26   this case constitute recovery [of] the property” under Glass v.
27   Hitt (In re Glass), 60 F.3d 565 (9th Cir. 1995), because
28   Mr. Guthrie arguably retained equitable title.

                                       7
 1        The bankruptcy court tentatively concluded that, “[i]f the
 2   transfer is voidable under § 544 and was returned to the estate
 3   as a result of Trustee’s efforts, Debtor is not entitled to
 4   exempt the Property under § 522(g)(1)(A).”
 5   D.   Hearing on the Trustee’s Objection
 6        The bankruptcy court held a hearing on the Objection on
 7   October 29, 2015.   The court informed the parties that it had
 8   reviewed the facts again and concluded that the Trustee had
 9   recovered the Property because (1) the Trustee filed his
10   application to employ counsel to pursue avoidance actions;
11   (2) the Property was reconveyed to Mr. Guthrie eight days later;
12   and (3) the purpose of the reconveyance was to avoid the
13   Trustee’s Objection to the homestead exemption.
14        The court said that Mr. Guthrie had a form of equitable
15   interest in the Property, but lacked legal title.   However, the
16   transfer and recovery of legal title to the Property invoked
17   § 522(g).
18        On November 10, 2015, the bankruptcy court issued its order
19   sustaining the Trustee’s Objection.   The bankruptcy court said
20   that there was no triable issue of fact regarding whether legal
21   title to the Property was returned to the estate as a result of
22   the Trustee’s efforts pursuant to § 522(g) and Glass.   “Transfer
23   of legal title was sufficient to trigger the transfer provisions
24   of § 522(g) because legal title was necessary for the Trustee to
25   transfer the Property without litigation.”
26        Mr. Guthrie timely appealed.
27                              JURISDICTION
28        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.

                                      8
 1   §§ 1334 and 157(b)(2)(B) and (H).     We have jurisdiction under
 2   28 U.S.C. § 158.
 3                                   ISSUES
 4        (1) Whether the bankruptcy court erred in determining that
 5   the Property was returned to the estate as a result of the
 6   Trustee’s efforts.
 7        (2) Whether the bankruptcy court erred in determining that
 8   Mr. Guthrie was not entitled to claim a homestead exemption,
 9   despite holding an equitable interest in the Property.
10                           STANDARDS OF REVIEW
11        We review legal issues de novo and the bankruptcy court’s
12   factual findings under a clearly erroneous standard.     Village
13   Nurseries v. Gould (In re Baldwin Builders), 232 B.R. 406, 409-10
14   (9th Cir. BAP 1999).   “[Q]uestions regarding the right of a
15   debtor to claim exemptions are questions of law subject to de
16   novo review, whereas the issue of a debtor’s intent is a question
17   of fact to be reviewed under the clearly erroneous standard.”
18   Kelley v. Locke (In re Kelley), 300 B.R. 11, 16 (9th Cir. BAP
19   2003) (citing Coughlin v. Cataldo (In re Cataldo), 224 B.R. 426,
20   428-29 (9th Cir. BAP 1998)).
21        De novo review means that we review a matter anew, as if no
22   decision previously had been rendered.     Dawson v. Marshall,
23   561 F.3d 930, 933 (9th Cir. 2009).
24        We must affirm the bankruptcy court’s factual findings
25   unless we determine that those findings are illogical,
26   implausible, or without support in inferences that may be drawn
27   from the facts in the record.    United States v. Hinkson, 585 F.3d
28   1247, 1262 (9th Cir. 2009) (en banc).

                                       9
 1        We may affirm the bankruptcy court on any basis supported by
 2   the record.    Heilman v. Heilman (In re Heilman), 430 B.R. 213,
 3   216 (9th Cir. BAP 2010).
 4                                DISCUSSION
 5   A.   A trustee may object to the homestead exemption under
          § 522(g) where he recovers property that the debtor either
 6        transferred voluntarily or concealed.
 7        Section 522(g) provides:
 8        (g) Notwithstanding sections 550 and 551 of this title,
          the debtor may exempt under subsection (b) of this
 9        section property that the trustee recovers under
          section 510(c)(2), 542, 543, 550, 551, or 553 of this
10        title, to the extent that the debtor could have
          exempted such property under subsection (b) of this
11        section if such property had not been transferred, if -
12               (1)(A) such transfer was not a voluntary transfer
                 of such property by the debtor; and
13
                 (B) the debtor did not conceal such property; or
14
                 (2) the debtor could have avoided such transfer
15               under subsection (f)(1)(B) of this section.
16   § 522(g).    In other words, § 522(g) “allows the debtor to exempt
17   property that the trustee recovers under [various sections of the
18   Bankruptcy Code] as long as the transfer was involuntary and the
19   property was not concealed by the debtor.”    4 Collier on
20   Bankruptcy ¶ 522.12[1] (Alan N. Resnick & Henry J. Sommer, eds.,
21   16th ed.).    Conversely, a debtor may not exempt property that the
22   trustee recovers under one of the enumerated provisions if the
23   debtor voluntarily transferred the property or if the debtor
24   concealed the property.
25   B.   The bankruptcy court properly held that § 522(g) applies.
26        Mr. Guthrie argues that § 522(g) does not apply to his
27   claimed exemption in the Property.    We disagree.
28

                                      10
 1        1.   The Trustee was entitled to recover the Property
               under § 544(b).
 2
 3        The bankruptcy court did not err when it determined that the
 4   Trustee was entitled to recover the Property under § 544(b).      The
 5   court noted that the Trustee recovered the Property under § 550,
 6   insofar as, “under § 544, also incorporated into § 522(g) under
 7   § 550, trustees can avoid transfers that are otherwise voidable
 8   by an unsecured creditor under applicable law.”    It noted that
 9   California’s Uniform Fraudulent Transfer Act (“UFTA”)
10   § 3439.04(a)(1) provides that a transfer is voidable if it is
11   made with the actual intent to hinder, delay, or defraud.    A
12   transfer is also avoidable if the debtor made the transfer
13   without receiving a reasonably equivalent value in exchange for
14   the transfer and the debtor intended to incur, or believed or
15   reasonably should have believed, that he would incur debts beyond
16   his ability to pay as they came due.    Because (1) Mr. Guthrie
17   transferred the Property with the actual intent to hinder, delay,
18   and defraud and to avoid the IRS’s lien; (2) legal title to the
19   Property was transferred without receiving reasonably equivalent
20   value; and (3) Mr. Guthrie admitted that he believed that he
21   would be unable to pay the IRS debts as they came due, the
22   transfer was avoidable under the California UFTA § 3439.04(a)(2).
23   We find no error in these decisions.
24        2.   The transfer was voluntary.
25        There is no dispute that Mr. Guthrie voluntarily transferred
26   the Property to his ex-wife.   As a result, because
27   §§ 522(g)(1)(A) and (B) are written in the conjunctive, it does
28   not matter whether Mr. Guthrie also concealed the Property.

                                     11
 1        Mr. Guthrie argues that, because he did not conceal the
 2   Property from the court or the Trustee, sustaining the Objection
 3   did not serve the purpose of § 522(g).   While it is true that
 4   Mr. Guthrie listed the Property in his original schedules, he
 5   omitted the crucial fact that he did not have title to the
 6   Property at that point.   He then amended his schedules several
 7   times to avoid the Trustee’s Objection to his homestead
 8   exemption: (1) after the second session of the meeting of
 9   creditors in which the Trustee questioned his exemption, he
10   removed the Property entirely from his amended schedules;
11   (2) after the Trustee continued to question him about the
12   Property at the third session of the meeting of creditors and he
13   admitted that he had transferred the Property so that the IRS
14   “wouldn’t come after it [the Property] right away and [he could]
15   try to get time[,]” he again amended his schedules to include the
16   Property; and (3) after the Trustee filed an application to
17   employ counsel to avoid the transfer of the Property, he arranged
18   to transfer the Property from his ex-wife to himself, admittedly
19   “to avoid the possibility of the Trustee objecting to [his]
20   homestead exemption claim . . . .”
21        These are not the actions of a forthright debtor that the
22   Bankruptcy Code is meant to protect.5
23
          5
24          Mr. Guthrie also argues that he relied on the advice of
     the paralegal (whose firm he did not retain) and his counsel in
25   deciding what information to disclose. Mr. Guthrie cannot blame
26   advice from non-retained attorneys and his counsel for his
     decision to not disclose the prepetition transfer of the
27   Property. See Ehrenberg v. Hidalgo (In re Hidalgo), BAP No.
     CC-06-1399-PaAK, 2007 WL 7540950, at *8 (9th Cir. BAP July 9,
28                                                      (continued...)

                                     12
 1        In any event, Mr. Guthrie’s supposed honesty and non-
 2   concealment of the Property alone are not determinative.     Section
 3   522(g) provides that an exemption is only valid as to property
 4   recovered by the trustee if “(A) such transfer was not a
 5   voluntary transfer of such property by the debtor; and (B) the
 6   debtor did not conceal such property[.]”   § 522(g)(1) (emphasis
 7   added).   Because these requirements are stated in the
 8   conjunctive, both must be present in order allow the exemption.
 9   Mr. Guthrie’s exclusive focus on the latter requirement ignores
10   the fact that he voluntarily transferred the Property.
11        3.    Glass is controlling; the Trustee recovered the
                Property within the meaning of § 522(g).
12
13        Mr. Guthrie contends that the Trustee did not recover the
14   Property for the estate because Mr. Guthrie arranged for his ex-
15   wife to return the Property to him, but not in response to
16   anything that the Trustee did.   We disagree.
17        Both parties rely on this panel’s decision in Glass v. Hitt
18   (In re Glass), 164 B.R. 759 (9th Cir. BAP 1994), which the Ninth
19   Circuit affirmed, 60 F.3d 565 (9th Cir. 1995).   In that case, the
20   debtor had transferred his residence to his son for “love and
21   affection.”   He did not include his house in his schedules or
22   disclose the transfer, and he did not claim a homestead
23   exemption.    When the trustee discovered the transfer, the debtor
24   amended his schedules to include the property and assert a claim
25
          5
26         (...continued)
     2007) (Klein, J., concurring) (“It is worth noting that an advice
27   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
28   view.”).

                                      13
 1   of homestead exemption.    164 B.R. at 760.
 2        The trustee objected to the claimed exemption, arguing that
 3   § 522(g) precluded the debtor from claiming a homestead exemption
 4   under § 522(b).    Id. at 760-61.    The trustee said that he
 5   intended to seek avoidance of the conveyance as a § 548
 6   fraudulent transfer.    Id. at 761.
 7        Three days after the trustee filed his objection (and before
 8   the trustee commenced any avoidance action), the debtor’s son
 9   conveyed the property back to the debtor in consideration of
10   “love and affection.”    The debtor again amended his schedules by
11   listing a fee interest in the residence and claiming the
12   homestead exemption.    Id.
13        The bankruptcy court overruled the trustee’s objection
14   because the trustee had not shown that he had directed any action
15   against the son in order to achieve reconveyance of the residence
16   to the estate.    Accordingly, the trustee had not “recovered” the
17   property and could not object under § 522(g).      Id.
18        On appeal, the panel noted that “[n]o court has addressed a
19   situation in which the trustee has not filed a complaint for
20   avoidance or recovery but has been instrumental in recovery of
21   the property.”    It considered the plain meaning of the statute
22   and said, although a “literal interpretation of the statute . . .
23   seems to indicate that ‘recovery’ of the property must be
24   accomplished pursuant to an action commenced under one of the
25   enumerated code sections[,]” “requiring the Trustee to recover
26   property through a formal avoidance action would defeat the
27   drafters’ intent of limiting exemptions where a debtor has
28   voluntarily transferred property in a manner giving rise to the

                                         14
 1   trustee’s avoiding powers or has engaged in fraudulent conduct by
 2   failing to disclose the transfer or an interest in the property.”
 3   Id. at 763.    The panel concluded:
 4               Accordingly, we hold that where a debtor
            voluntarily transfers property in a manner that
 5          triggers the trustee’s avoidance powers or the debtor
            knowingly conceals a prepetition transfer or an
 6          interest in property, and such property is returned to
            the estate as a result of the trustee’s actions
 7          directed toward either the debtor or the transferee,
            the debtor is not entitled to claim an exemption under
 8          § 522(g)(1). It is not necessary for the trustee to
            commence a formal adversary proceeding or obtain a
 9          final judgment to prevail on an objection to a debtor’s
            claim of exemption pursuant to § 522(g)(1).
10
                 A trustee, however, must present sufficient facts
11          upon which a bankruptcy court could reasonably conclude
            that a debtor transferred property in such a manner as
12          to invoke the trustee’s avoidance powers under
            §§ 510(c)(2), 542, 543, 550, 551 or 553, the transfer
13          was voluntary or the debtor knowingly concealed the
            transfer or an interest in the property, and the
14          property was returned to the estate as the result of
            the trustee’s efforts, not limited to actions directed
15          toward the transferee.
16   Id. at 764-65.
17          The panel held that the bankruptcy court erred in overruling
18   the objection.    It said that the “overwhelming inference” from
19   the voluntary transfer of the property for no consideration and
20   the debtor’s failure to disclose the property or its transfer “is
21   that the Debtor was attempting to hide assets from his creditors,
22   thus giving rise to a cause of action under § 548(a)(1).”    Id. at
23   765.    Additionally, the trustee’s actions
24          were instrumental in the return of the property to the
            estate. Three days after the Trustee filed his
25          Objection, the Debtor’s son reconveyed the property to
            the Debtor by quitclaim deed. Since the Debtor and the
26          transferee are father and son and the transfer occurred
            on the heels of the Objection, the only reasonable
27          inference to be drawn is that the Trustee’s promise of
            legal action had a coercive effect on father and son,
28          directly resulting in the return of the property to the

                                      15
 1         estate.
 2   Id.   The panel thus reversed the bankruptcy court’s overruling of
 3   the trustee’s objection.
 4         The debtor appealed to the Ninth Circuit, arguing, in
 5   relevant part, that the panel had misconstrued the term
 6   “recovers.”     The Ninth Circuit affirmed.    It noted that,
 7   “following the debtor’s failure to properly disclose the property
 8   transfer there was not only a ‘suggestion’ by the trustee, but
 9   also a filed objection that contained the threat of use of
10   avoidance powers.”     60 F.3d at 569.    It held that “[t]he filing
11   of the objection containing the threat to use avoidance powers
12   which resulted in the reconveyance of the property for the estate
13   was ‘some action.’”     Id.
14         Glass is nearly on all fours with this case.      The Trustee
15   recovered the Property through “some action” when, after learning
16   that Mr. Guthrie had transferred the property to his ex-wife to
17   avoid IRS liens, he filed the application to employ counsel
18   potentially to file an avoidance claim to recover property to the
19   estate.   We do not think it a coincidence that, roughly a week
20   after the Trustee sought to employ counsel and gave notice that
21   he would seek to prosecute avoidance claims, Ms. Guthrie conveyed
22   the Property back to Mr. Guthrie, and Mr. Guthrie again listed
23   the Property in his schedules.
24         As in Glass, the Trustee’s filing “contained the threat of
25   use of avoidance powers.”     See id.    We similarly conclude that
26   “the only reasonable inference to be drawn is that the Trustee’s
27   promise of legal action had a coercive effect on [transferor and
28   transferee], directly resulting in the return of the property to

                                       16
 1   the estate.”   See In re Glass, 164 B.R. at 765.   Mr. Guthrie
 2   effectively admitted the force of the Trustee’s “threat” when he
 3   stated that his ex-wife attempted to commit suicide upon learning
 4   that the Trustee had retained counsel to pursue avoidance claims.
 5        Accordingly, the bankruptcy court properly determined that
 6   the Trustee recovered the Property for the estate within the
 7   meaning of § 522(g).
 8        4.   Mr. Guthrie’s equitable interest in the Property
               under state law does not overcome § 522(g).
 9
10        Mr. Guthrie claims, and the bankruptcy court acknowledged,
11   that he had an equitable interest in the Property.    Under
12   California law, a debtor may claim a homestead exemption in an
13   equitable interest in estate property, even if he has
14   fraudulently transferred the property.   See Putnam Sand & Gravel
15   Co. v. Albers, 92 Cal. Rptr. 636, 639 (Cal. Ct. App. 1971)
16   (“notwithstanding the fraudulent conveyance, the defendants . . .
17   retained an equitable interest in the property which would enable
18   them to file a valid claim of homestead before judgment”).
19   Moreover, under California law, a debtor may claim a homestead
20   exemption in his primary residence, even if he does not own it.
21   See Elliott v. Weil (In re Elliott), 523 B.R. 188, 195-96 (9th
22   Cir. BAP 2014) (“Elliott I”) (holding that, under California’s
23   automatic exemption in CCP § 704.730, the debtor’s conveyance of
24   the property’s “title to a third party does not defeat his right
25   to an automatic exemption, because continuous residency, rather
26   than continuous ownership, controls the Article 4
27   analysis . . .”).
28        Mr. Guthrie is also correct that his equitable interest in

                                     17
 1   the Property became part of his bankruptcy estate.    Section
 2   541(a) provides that the commencement of a bankruptcy case
 3   creates an estate that is composed of “all legal or equitable
 4   interests of the debtor in property as of the commencement of the
 5   case.”   § 541(a)(1).
 6        Mr. Guthrie argues that, at most, the Trustee recovered only
 7   legal title to the Property.   He contends that the bankruptcy
 8   court should have allowed his homestead exemption in the
 9   equitable interest he retained despite his fraudulent transfer.
10   We disagree.
11        We addressed a similar question in Elliott v. Weil
12   (In re Elliott), 544 B.R. 421 (9th Cir. BAP 2016)
13   (“Elliott III”).   In that case, the debtor transferred his real
14   property to his company before he filed his bankruptcy petition,
15   did not disclose the property in his bankruptcy case, and then
16   had the company reconvey the property to him after he received
17   his discharge.   The BAP affirmed the bankruptcy court’s decisions
18   that the debtor had concealed his interest in the property for
19   purposes of § 522(g)(1)(B), and that the court’s judgment in the
20   trustee’s § 542(a) turnover action6 constituted a “recovery” for
21   purposes of § 522(g).   Id. at 433.   The BAP then turned to the
22   debtor’s argument that the bankruptcy court erred in not
23   considering whether California law still permitted his homestead
24
25        6
            The debtor appealed this issue in a second appeal to the
26   BAP, Elliott v. Weil (In re Elliott), 529 B.R. 747 (9th Cir. BAP
     2015) (“Elliott II”). On remand, the court required that the
27   debtor immediately turn over possession of the property to the
     trustee under § 542(a). The debtor did not appeal that decision
28   further.

                                     18
 1   exemption, notwithstanding his misconduct.   Id.   The BAP
 2   disagreed, holding instead that the court’s § 522(g)
 3   determination ended the analysis: “Since the bankruptcy court
 4   appropriately denied [the debtor’s] claimed homestead exemption
 5   under an applicable Bankruptcy Code provision, § 522(g)(1), it
 6   fully resolved the Trustee’s objection and was not required to
 7   proceed further to analyze [the debtor’s] homestead exemption
 8   claim under state law.”   Id. at 436 (emphasis added).7
 9        We agree with the Elliott III panel’s reasoning.     Section
10   522(g) limits a debtor’s ability to assert exemption rights in
11   certain circumstances, even if state law would permit the debtor
12   to assert an exemption in those very circumstances.    Once the
13   bankruptcy court has determined that § 522(g) applies, a state
14   exemption law cannot overcome the trustee’s objection.
15        Mr. Guthrie relies on the BAP’s unpublished disposition in
16   Gray v. Bova (In re Bova), BAP No. EC-05-1307-NMaPa, 2006 WL
17   6810940 (9th Cir. BAP Mar. 7, 2006).   In that case, the debtor
18   had five siblings.   Their parents transferred certain California
19   property to the debtor and two of his siblings, but the family
20   always understood that the property belonged to all six siblings
21   in equal shares.   Thirteen years prior to filing his chapter 7
22   petition, the debtor transferred his 1/3 legal interest to his
23   sisters who owned the other 2/3 interest so that the sisters
24   could refinance the mortgage.   Despite this transfer of legal
25   title, the family still understood that all six siblings,
26
27
          7
            Elliott III is currently on appeal to the Ninth Circuit,
28   9th Cir. No. 16-60020 (Mar. 28, 2016).

                                     19
 1   including the debtor, owned the property in equal shares.     When
 2   the debtor filed for bankruptcy, he claimed a homestead exemption
 3   in his 1/6 interest in the amount of $150,000 pursuant to CCP
 4   § 704.730(a)(3).   2006 WL 6810940 at *1.
 5        The trustee objected to the debtor’s claimed exemption,
 6   arguing that it should be disallowed under § 522(g).    The
 7   bankruptcy court disagreed, and the BAP affirmed.    The BAP held
 8   that the debtor retained an equitable interest in the property
 9   despite the conveyance of legal title to his sisters thirteen
10   years prior, and that the debtor could claim a homestead
11   exemption in that equitable interest under California law.    The
12   BAP held that § 522(g) did not apply because there was no
13   transfer that the trustee could avoid under any of the sections
14   listed in § 522(g).   Id. at *4.
15        Bova is not binding on us because it is unpublished, and in
16   any event it is readily distinguishable.    In Bova, the trustee
17   was able to realize for the estate the full value of the debtor’s
18   true interest in the property without invoking any of the
19   avoiding powers; he could simply sell the debtor’s interest in
20   the property together with the interests of his co-owners under
21   § 363(h) (which was designated § 363(g) when we decided Bova) and
22   claim the debtor’s share of the proceeds from his sisters, who
23   held the property in a resulting trust for his benefit.    The
24   trustee did not need to employ any of the statutory powers
25   enumerated in § 522(g) in order to recover and liquidate the
26   debtor’s interest in the property; the trustee asserted a claim
27   under § 542(a), but as the panel noted, this was entirely
28   unnecessary.   In this case, however, the Trustee could not have

                                        20
 1   recovered the Property without invoking one of the sections
 2   listed in § 522(g).8
 3        Section 522(g) might present difficult questions in a case
 4   where the trustee recovered only a limited interest in certain
 5   property.9   But we need not reach those issues here.   We hold
 6   that, where the debtor signs a deed purporting to make a
 7   voluntary, outright transfer of his entire interest in certain
 8   property and the trustee recovers that property by using (or
 9   threatening to use) his avoiding powers under § 544 or § 548,
10   § 522(g) bars the debtor from claiming any exemption in that
11   property.
12                               CONCLUSION
13        For the reasons set forth above, the bankruptcy court did
14
15        8
            Ehrenberg v. Hidalgo (In re Hidalgo), BAP No.
16   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
17   conveyed to his sister his legal interest in property that they
     jointly owned. When he filed for bankruptcy without listing the
18
     property in his schedules and later claimed a homestead exemption
19   in his equitable interest, the trustee objected under § 522(g).
     The bankruptcy court overruled the objection, and the BAP agreed
20   on appeal, noting that the objection was premature because the
     trustee had not yet recovered anything. Like Bova, Hidalgo is
21   unpublished and not binding. It is also distinguishable because,
22   unlike Hidalgo, the Trustee in this case has recovered the
     Property.
23
          9
            Most courts considering this issue hold that § 522(g)
24   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
25   1177, 1181 (10th Cir. 2007) (creditor’s release of its security
26   interest in a truck constituted recovery of property by the
     trustee); In re Lamping, 8 B.R. 709, 711 (Bankr. E.D. Wis. 1981)
27   (under § 522(g), “transfers of a security interest are voluntary
     transfers and are not subject to exemption claims by the debtor
28   after the property is recovered by the trustee”).

                                     21
 1   not err in sustaining the Objection to the homestead exemption.
 2   Therefore, we AFFIRM.
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