Crystal Holmes v. Rosalina Harris

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS APR 22 2022 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

CRYSTAL HOLMES, No. 21-55330 21-55566 Plaintiff-Appellee, D.C. No. 2:18-cv-03739-PSG-E v.

ROSALINA HARRIS, in her individual and MEMORANDUM* official capacity; DEAN HARRIS, an individual,

Defendants-Appellants,

and

ARLANI HARRIS, an individual; DOES, 1- 10, inclusive,

Defendants.

Appeal from the United States District Court for the Central District of California Philip S. Gutierrez, District Judge, Presiding

Submitted April 13, 2022** Pasadena, California

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). Before: CALLAHAN and VANDYKE, Circuit Judges, and ARTERTON,*** District Judge.

Appellants Dean M. Harris and Rosalina Harris appeal the district court’s

denial of a motion for reconsideration as well as the sale order of their home. We

affirm the district court’s decision and uphold its finding that the Harrises are not

entitled to a homestead exemption.

The present case is the latest chapter in a network of matters, all stemming

from a long-running dispute between the Harrises and their former next-door

neighbor Crystal Holmes. Holmes successfully sued Rosalina Harris—a detective

with the Los Angeles County Sheriff’s Department—for procuring a false arrest of

Holmes in violation of her Fourth Amendment rights. The jury awarded Holmes a

$3 million judgment.

To collect on the judgment, Holmes recorded a judicial lien against the

Harrises’ home, but Dean Harris filed for bankruptcy and claimed a $600,000

homestead exemption—a bankruptcy provision that allows debtors to keep equity

in their home to avoid impoverishment. But the district court found that the

Harrises were not entitled to a homestead exemption and ordered the sale of the

Harris home to satisfy the judgment. On June 2, 2021, the U.S. Marshal sold the

Harrises’ home to Holmes for $620,000.

*** The Honorable Janet Bond Arterton, United States District Judge for the District of Connecticut, sitting by designation.

2 The Harrises filed a motion asking the district court to reconsider the order

for sale of dwelling. The district court denied the motion, and the Harrises

appealed to the Ninth Circuit.

As to the sale order, we review findings of fact for clear error, while

conclusions of law are reviewed de novo. Landis v. Washington State Major

League Baseball Stadium Pub. Facilities Dist., 11 F.4th 1101, 1105 (9th Cir.

2021). As to the motion for reconsideration, we review for abuse of discretion.

Guenther v. Lockheed Martin Corp., 972 F.3d 1043, 1058 (9th Cir. 2020).

The Harrises request that we instruct the district court to revise the sale order

to include the homestead exemption provision and have the U.S. Marshal conduct

a new sale with a higher minimum bid.

California law provides that a sale of property to enforce a judgment “shall

not be set aside for any reason.” Cal. Civ. Proc. Code § 701.680(a). The only

exception is when, as here, the judgment creditor (Holmes) is the purchaser, but in

that instance, the debtor (the Harrises) must “commence an action within 90 days

after the date of the sale to set aside the sale.” Cal. Civ. Proc. Code

§ 701.680(c)(1); First Fed. Bank of Cal. v. Fegen, 131 Cal. App. 4th 798, 801

(2005). The Harrises did not do so. The request to undo the sale order is thus

impermissible.

3 But the Harrises express openness to an alternate remedy in lieu of undoing

the sale. They suggest, among other things, that the court order Holmes to pay the

homestead exemption to the Harrises. To determine whether the Harrises are

entitled to relief, we examine whether they are entitled to the homestead exemption

in the first place.

The applicant for a homestead exemption has the burden of showing that the

real property in question is a homestead. Cal. Civ. Proc. Code § 704.780. The

Harrises did not meet this burden because they never submitted evidence showing

(1) that the property was their principal home on the date of the lien recording

(which was December 30, 2019), and (2) that they intended to continue living at

the home. Id. § 704.710(c). Because the Harrises never submitted the proper

evidence, they did not meet their burden of proof.

The Harrises claim that, by failing to establish that the property was a

homestead, the district court found that they had “waived” their homestead

exemption. They also claim that, under federal law, waiver is irrelevant to whether

they are entitled to their exemption. 11 U.S.C. § 522(f). While the word “waiver”

has many meanings, we do not find there is a waiver issue here. There is simply a

plain failure to follow the California statute. The U.S. Supreme Court has

recognized that a state may include regulations attendant to a homestead

exemption, and that the applicant who neglects to file a homestead declaration in

4 accordance with state regulations is ineligible for the exemption. White v. Stump,

266 U.S. 310, 312 (1924) (“[The Bankruptcy Law] makes the state laws existing

when the petition is filed the measure of the right to exemptions.”); see also

Zimmerman v. Morgan, 689 F.2d 471 (4th Cir. 1982).

Moreover, even if we were to characterize this as a waiver issue, there is still

good reason to find 11 U.S.C. § 522(f) inapplicable. The neighboring provision

explains that a waiver of certain exemptions is “unenforceable.” 11 U.S.C. §

522(e). Such language is contractual in nature, and so several federal courts have

persuasively concluded that this provision applies to contractual waiver. United

States v. Scott, 45 B.R. 318, 321 (M.D.N.C. 1984) (“As the language of this

provision indicates, it is meant to avoid waivers made by contractual means.”); see

also In re Gordon, 199 B.R. 7, 10 (Bankr. D. Md. 1996); 4 Collier Bankruptcy

Practice Guide ¶ 74.05 (Alan N. Resnick & Henry J. Sommer, eds., 2021). Because

the language of waiver here likely refers to contractual waiver, the district court

was correct to find that the Harrises still had the burden of showing the property is

a homestead. But the Harrises failed to show that the property is a homestead, and

so we find they are not entitled to the exemption.

Because the Harrises do not qualify for a homestead exemption, we decline

to address their other arguments.

The district court is AFFIRMED.