In re ANNE M. CUMMINGS

• Court: United States Bankruptcy Court, N.D. California
• Decided: April 1, 2026
• Docket: 25-30262
• Status: Unknown

Opinion

U.S. BANKRUPTCY COURT SS NG NORTHERN DISTRICT OF CALIFORNIA □□□□ Signed and Filed: April 1, 2026 □□□□□□ □□ 2

4 Ve, ahs 5 DENNIS MONTALI U.S. Bankruptcy Judge 6 7 UNITED STATES BANKRUPTCY COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 In re ) Bankruptcy Case 10 ) No. 25-30262-DM ANNE M. CUMMINGS, ) 11 ) Chapter 11 12 Debtor. ) . ) Trial held 13 ) Date: March 23, 2026 ) Time: 10:00 AM 14 ) Place: Courtroom 17 15 ) 450 Golden Gate Avenue ) 16th Floor 16 ) San Francisco, CA )

18 MEMORANDUM DECISION ON VALUATION OF REAL PROPERTY 19 I. INTRODUCTION 20 On March 23, 2026, the court conducted an evidentiary 21 |/hearing on the motion of debtor Anne M. Cummings (“Debtor”) to 22 ||value her real property (the “Property”) where she resides in 23 ||Greenbrae, California. James E. Till, Esq. appeared for Debtor; 24 ||Amanda N. Ferns, Esq. appeared for creditor Navitas Credit Corp 25 (“Navitas”). During the trial, the court heard evidence from 26 ||Debtor’s expert, Brian Rapela, and from Navitas’ expert, Paula 27 ||Saling. For the reasons explained below, the court fixes the 28 ||value of the Property as of the petition date and as of the date

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1 of the concurrently issued order, at $1,735,000. Accordingly, 2 Navitas’ lien does not impair the Debtor’s homestead exemption 3 and Debtor is not entitled to strip any part of that lien or 4 otherwise treat any part of the lien as an unsecured claim in 5 her pending proposed, contested Chapter 11, Subchapter V plan. 6 It will hold a fully secured claim under that plan. 7 II. PROCEDURAL BACKGROUND 8 Debtor filed under Subchapter V of Chapter 11 on April 2, 9 2025. In her sworn Schedules, filed on April 16, 2025 (Dkt 17) 10 she stated that the Property had a value of $1,865,000. She 11 added that the source of value was an appraisal for a divorce. 12 Debtor claimed senior encumbrances on the Property of a 13 first deed of trust held JP Morgan Chase Bank NA (“Chase”) in 14 the amount of $598,973 and Marin County real property taxes in 15 the amount of $9,498.83. 16 Among her secured claims in Schedule D, she listed Balboa 17 Capital Corporation (“Balboa”), with a claim of $281,606.21; she 18 did not indicate any value of collateral securing Balboa’s 19 claim. In that same portion of the Schedule, she listed Navitas 20 as owed an amount of $204,576.21 but, as with Balboa, did not 21 set forth any value of collateral securing that claim. 22 In Schedule C, “Property Claimed as Exempt”, she listed her 23 exemption on the Property in the amount of $722,502. That claim 24 of exemption has never been challenged in this Chapter 11 case. 25 On July 1, 2025, she filed her Chapter 11 Subchapter V Plan 26 (Dkt 36). In her plan, she stated a fair market value of the 27 Property as $1,585,250 and listed classes 2A, 2B, and 2D, inter 28 alia, for which classes she indicated that the respective 1 individual class member was a secured creditor “to the extent 2 allowed as a secured claim under § 506 of the Code.” 1 3 More specifically, the plan listed Chase’s secured claim of 4 $613,691.43 and Balboa’s as $122,237 (secured), with $159,369 5 (unsecured). The plan did not mention the Marin County secured 6 tax claim of $9,498.83. For Navitas, the plan stated that its 7 claim, then at $212,949.26, would be wholly unsecured. Debtor’s 8 own numbers reveal, however, that Navitas would still be 9 partially secured despite her statement to the contrary. 10 On August 1, 2025, Navitas filed an objection to 11 confirmation (Dkt 39), alleged that its secured claim was now 12 $212,949.26 as of the petition date, and indicated in the 13 objection that Debtor had stated that she intended to file a 14 “section 506(a) Motion to strip lien” which would leave Navitas 15 as an unsecured creditor. Navitas’ objection repeated the value 16 of the Property as originally scheduled by the Debtor 17 ($1,865,000), the amount of the Chase lien ($613,691), the 18 homestead exemption ($722,502), and a proof of claim filed by 19 Balboa in the amount of $281,606.21. Based upon those numbers, 20 Navitas contended that at the minimum there was value of 21 $247,209.79, leaving its claim secured or partially secured. 22 Navitas also objected to the unsupported lower value set forth 23 in the plan, notwithstanding the higher value listed in Debtor’s 24 Schedules. 25 26 27 1 Unless otherwise indicated, all chapter, section and rule references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, 28 and to the Federal Rules of Bankruptcy Procedure, Rules 1001- 9037. 1 On August 4, 2025, Debtor filed a Notice of Settlement with 2 Balboa Capital (Dkt 41). In that document, Debtor described an 3 agreement with Balboa where it would receive $50,000 upon 4 confirmation of the Amended Plan, $100,000, payable monthly over 5 five years, with the balance of Balboa’s claim treated as an 6 unsecured claim. Given that agreement on its face, the court 7 considers it as a treatment of a Balboa claim as secured in the 8 amount of no more than $150,000. 9 On August 27, 2025, Debtor filed an Amended Chapter 11 10 Subchapter V Plan (Dkt 44) (the ”Plan”). In the Plan, she 11 repeated her treatment of Chase in the same amount indicated 12 above, clarified that Balboa would have a secured claim in the 13 amount of $150,000 and an unsecured claim of $131,606.21, and 14 that Navitas’ secured claim would be the subject of an adversary 15 proceeding to avoid the lien as a preferential transfer or to 16 file a “section 506(a) motion to strip any lien”. 17 Unsurprisingly, Navitas objected again (Dkt 50), this time 18 adding that its judgment had been recorded prior to the ninety- 19 day preference period that Debtor referred to in her previous 20 filing. It repeated its objection that even with the Balboa 21 lien allowed at $281,606, Navitas’ secured claim was partially 22 secured, based upon Debtor’s sworn Schedules and valuation. 23 Navitas apparently overlooked the Balboa settlement again as the 24 correct number for its secured claim at that time was $150,000. 25 The matter came on for contested confirmation on September 26 12, 2025, and the court deferred consideration of confirmation 27 until resolution of the dispute between Debtor and Navitas 28 regarding the value of the Property. 1 On October 31, 2025, Debtor filed a Motion to Avoid a 2 Judicial Lien Under Section 522(f) (Dkt 65) and supported that 3 motion with a declaration of a real estate broker (not an 4 appraiser) supporting a value of the Property of $1,559,000. 5 Not surprisingly again, Navitas objected (Dkt 83) by taking 6 issue with the change in valuation of the Property from the 7 original Scheduled amount to the later lower amount and raising 8 other issues that are not relevant to the valuation question. 9 The court held a hearing on January 21, 2026 and scheduled 10 trial on the valuation for March 23, 2026. On February 27, 11 2026, Mr. Rapela, for Debtor, filed his expert report, 12 contending that the Property had a value of $1,650,000 as of the 13 petition date. Ms. Saling, for Navitas, filed her expert report 14 on March 2, 2026 (Dkt 95), asserting a value of $2,015,000 as of 15 the petition date. Despite the circuitous route traveled, and 16 the bouncing ball of differing appraisals by the Debtor, the 17 single issue is the fair market value of the Property. 18 III. DETERMINATION OF VALUE OF PROPERTY2 19 Both Mr. Rapela and Ms. Saling are licensed appraisers in 20 good standing in the State of California and demonstrated the 21 requisite training, qualifications and experience to offer 22 expert testimony regarding the value of the Property. Neither 23 side objected to the court’s consideration of their declarations 24 and accompanying reports. The court concurs and accepts their 25 written and oral expert testimony. 26 27 28 2 The following discussion constitutes the court's findings of fact and conclusions of law. Fed. R. Bankr. P. 7052(a). 1 Ms. Saling has over thirty years of experience, largely in 2 connection with single family residence appraisals for various 3 purposes. At least half of her experience over those years is 4 regarding real property in Marin County. 5 Mr. Rapela has far more experience in commercial or multi- 6 family real property appraisals and a relatively small amount of 7 his experience is with appraisals of single family residences 8 anywhere, including Marin County. 9 A significant difference between their opinions has to do 10 with their selection of properties that they regard as 11 comparable to the Property for their appraisals. Ms. Saling 12 only identified three comparables, including one literally 13 around the corner from the Property. The problem with her 14 comparables, however, is that all three of the sales she 15 considered were more than six months prior to the petition date 16 of April 2, 2025. In fact, the comparable “just around the 17 corner” closed on August 15, 2024, nearly eight months before 18 that date. There have been numerous sales of single family 19 residences much closer in time in Greenbrae in the neighborhood 20 of the Property, as shown by Mr. Rapela, so Ms. Saling either 21 ignored or rejected them. Without knowing the reasons why, the 22 court cannot consider her older comparables as credible or 23 reliable for making an accurate finding for the petition date 24 value. 25 Mr. Rapela used five comparables nearby in Greenbrae. The 26 first two closed only weeks or days prior to the petition date; 27 the other three closed within three months after the petition 28 date. Thus, the bases for his value conclusions are far more 1 credible than Ms. Saling’s and will be considered. Under these 2 circumstances, the court will focus on Mr. Rapela’s analyses in 3 making the fact finding necessary to conclude this dispute. 4 The court takes issue with a few of Mr. Rapela’s 5 adjustments to the comparables as set forth in his Improved 6 Sales Adjustment Grid (p. 73 of 89, Dkt 93). 7 First, he makes a downward adjustment of $25,000 based upon 8 his conclusion that the Property has two and one-half bathrooms 9 in contrast to the three bathrooms reported by Ms. Saling. The 10 court has reviewed the photographs presented by both appraisers 11 and clearly can see visual proof that all three bathrooms at the 12 Property are full bathrooms, not half-baths, and therefore a 13 downward adjustment based upon half a bathroom is not 14 appropriate. 15 Next, in discussing the topography of the Property and the 16 comparables, he appears to make a downward adjustment of 17 $107,000 based upon comparable #2’s price without any meaningful 18 explanation or justification other than what appears to be 19 “sloped” for the Property and “flat” for comparable #2. While 20 there is no question that the difference justifies some 21 adjustment, there is no persuasive evidence to support such a 22 large downward adjustment. 23 To make it more confusing for the court, in the few small 24 photographs provided by Mr. Rapela, comparable #1 does not 25 appear to be sloped, nor does #5. Even #3’s position near trees 26 perhaps gives away its topography, but not for certain. The 27 court will adjust the final valuation of the Property upward 28 somewhat for this reason. 1 Next, in his Price/Unit Method Conclusion (p. 74 of 89, Dkt 2 93), Mr. Rapela mentions the recent capital required to cure 3 major cracking in the driveway and elsewhere on the Property. 4 He adds that a buyer would “consider possible future erosion due 5 to the Property sitting above the Greenbrae Creek.” Without 6 quantifying that speculation, his concluding sentence then 7 arrives at a value of $1,650,000, an amount that appears in part 8 to include some speculation that he engages in. 9 For all of this, the court believes that a proper value 10 increase of $85,000 (half bath; topography; speculation about 11 future expenditures) is appropriate, resulting in a valuation of 12 $1,735,000. 13 IV. LEGAL ISSUES 14 A. Section 522(f). 15 Debtor’s Motion to Avoid Judicial Lien was styled as a 16 proceeding under § 522(f), a provision that permits a debtor to 17 avoid a lien to the extent it impairs an exemption. In re 18 Hanger, 217 B.R. 592 (9th Cir. BAP 1997), aff’d by In re Hanger 19 1999 U.S. App. LEXIS 30403 (9th Cir. 1999). Pursuant to Section 20 522(f)(2)(A), “a lien shall be considered to impair an exemption 21 to the extent that the sum of-- 22 (i) the lien; 23 (ii) all other liens on the property; and 24 (iii) the amount of the exemption that the debtor could 25 claim if there were no liens on the property; 26 exceeds the value that that debtor’s interest in the property 27 would have in the absence of any liens.” 28 1 See also In re Hanger, 217 B.R. at 595. Pursuant to 2 Section 522(a)(2), “’value’ means fair market value as of the 3 date of the filing of the petition.” 4 Given that Balboa has agreed that, for confirmation 5 purposes, its lien is $150,000, the formula for whether the 6 Navitas lien impairs Debtor’s Homestead exemption is: 7 The sum of: Navitas Lien $212,949.26 All other liens JP Morgan Chase, $613,691 8 Balboa, $150,000 9 Marin County Tax Assessor, $9,498.83 10 Homestead Exemption $722,502.00 TOTAL: $1,708,641.09 11 12 The Hanger decision instructs trial courts to compare the 13 value of the property claimed exempt with the total determined 14 in this manner. If the result is a positive number, as it is 15 here ($1,735,000 - $1,708,641.09 = $26,359), there is no 16 impairment. Debtor’s exemption is fully intact. 17 This means that only Debtor’s current asserted valuation of 18 $1,650,000 would result in an impairment of her exemption and 19 thus would result in Navitas’ lien being partially stripped. 20 Debtor’s originally scheduled $1,865,000 and Navitas’ valuation 21 of $2,015,000 would each result in no impairment of the 22 homestead exemption. 23 B. Section 506(a) 24 To complete the analysis on the present record that 25 includes Balboa’s agreed treatment as partially secured and 26 partially unsecured, and assumes the Plan, or a variation of it, 27 will be confirmed, the court proceeds as the Debtor originally 28 contended, namely, through the § 506(a) lens that enables the 1 court to value property “in light of the purposes of the 2 valuation and the proposed disposition or use of such property.” 3 Thus, it is also necessary and appropriate to fix a value of the 4 Property for purposes of resolving the contested confirmation 5 that should only be weeks away. This procedure, which is 6 endorsed by Fed. R. Bankr. P. 3012, enables the court to 7 “determine the amount of a secured claim under § 506(a).” It is 8 necessary in addition to resolving the Section 522(f) issue 9 because the Plan needs to be analyzed as of the likely 10 confirmation date in the near future. 11 At the trial on March 23, 2026, the court asked each 12 appraiser whether his or her valuation would vary between that 13 determined as of the petition date or the date of the trial. 14 Mr. Rapela opined that it would generally be the same; Ms. 15 Saling did not opine one way or the other. 16 The parties originally briefed and prepared this matter as 17 a motion under § 522, but Debtor, in her Trial Brief (Dkt 100), 18 cited only § 506. Navitas argued (Dkt 103) that its lien could be 19 avoided only to the extent of any proven impairment. 20 Based upon the statements of the two appraisers and absence 21 of any persuasive evidence that the court’s determination either 22 as of the petition date or the trial date would be different, 23 the court treats its valuation as the same for the petition date 24 and the confirmation date in the very near future. For the 25 reasons stated above, the court is concurrently issuing an order 26 consistent with this Memorandum Decision that fixes the value of 27 the Property for purposes of this Chapter 11 case and the 28 pending Plan, both as of April 2, 2025 and at present under the 1 Plan, at $1,735,000. If confirmation is denied, or the Plan 2 revised to alter the amount of the secured portion of the Balboa 3 claim, thus impacting the junior Navitas lien, the court may 4 need to revisit the Section 522(f) determination. 5 V. CONCLUSION 6 The court will hold a status conference in this case on 7 April 24, 2026, at 10:00 A.M. via Zoom. One week prior, Debtor 8 is directed to file an amended Plan, consistent with the value 9 of the Property fixed by this decision. Prior to the 10 conference, counsel for Debtor and for Navitas should meet and 11 confer about remaining unresolved confirmation issues between 12 them and the time the court should set for the contested 13 confirmation hearing. 14

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