In re: Deepa B. Willingham

United States Bankruptcy Appellate Panel for the Ninth Circuit·Decided March 27, 2024·No. 23-1184·Unpublished

Opinion

FILED

NOT FOR PUBLICATION MAR 27 2024 SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT OF THE NINTH CIRCUIT

In re: BAP Nos. CC-23-1105-FGC DEEPA B. WILLINGHAM, CC-23-1184-FGC Debtor. (Related)

DEEPA B. WILLINGHAM, Bk. No. 9:20-bk-10858-MB Appellant,

v. MEMORANDUM* C. RICHARD WILLINGHAM; JERRY NAMBA, Trustee, Appellees.

Appeal from the United States Bankruptcy Court for the Central District of California Martin R. Barash, Bankruptcy Judge, Presiding

Before: FARIS, GAN, and CORBIT, Bankruptcy Judges.

INTRODUCTION

Chapter 71 debtor Deepa B. Willingham appeals from the bankruptcy court’s docket entry closing her chapter 7 case in March 2023, arguing that

*

This disposition is not appropriate for publication. 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 9th Cir. BAP Rule 8024-1.

1 Unless specified otherwise, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and all “Rule” references are to the Federal Rules of Bankruptcy Procedure.

the chapter 7 trustee failed to administer certain claims against her then- husband. She also challenges orders concerning the sale of her residence and disposition of her homestead exemption that were entered in 2020 and 2021 and orders sustaining the trustee’s objections to her proofs of claim that were entered in 2022.

Ms. Willingham is laboring under an incorrect view of the bankruptcy process. She says that she filed her bankruptcy petition because she expected that the chapter 7 trustee would protect her in a dispute with her then-husband. But the chapter 7 trustee’s primary duty is to generate money with which to pay creditors and return to the debtor any assets that cannot or need not be liquidated for that purpose. In this case, the chapter 7 trustee did his job: he sold enough assets to pay Ms. Willingham’s creditors in full; and when the court closed the bankruptcy case, the remaining assets of the estate became Ms. Willingham’s property again. Ms. Willingham can now pursue whatever claims she has against her ex- husband. She cannot force the trustee to pursue those claims for her.

Ms. Willingham also believes that, at the end of her case, she is entitled to appeal from any orders entered during the case. She is mistaken: the time to appeal many of the orders she challenges expired long ago.

We AFFIRM the closing of the case, and we DISMISS as untimely her appeal from the orders disposing of her homestead exemption and her proofs of claim.

FACTS2

A. Ms. Willingham’s bankruptcy petition Ms. Willingham filed an individual chapter 7 petition in July 2020.

She disclosed that she was in the process of divorcing her estranged husband, Charles Richard Willingham. Appellee Jerry Namba was appointed chapter 7 trustee (“Trustee”).

Ms. Willingham scheduled three pieces of real property:

• Her residence in Solvang, California (“Solvang Property”) that she valued at $2.2 million. She claimed a $175,000 homestead exemption and indicated her intention that the Trustee sell the Solvang Property.

• A condominium unit in Houston, Texas (“Texas Property”) that she described as her husband’s residence that he had allegedly acquired with community assets. She indicated her intention to surrender the property.

• A single-family home in San Bernardino, California (“San Bernardino Property”) that her husband had inherited; she claimed that he used community assets to pay the mortgage. She indicated her intention to surrender the property.

She also scheduled claims against her husband for allegedly transferring nearly $300,000 in community assets without her knowledge

2 We exercise our discretion to take judicial notice of documents electronically filed in the underlying bankruptcy case and related cases. See Atwood v. Chase Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).

or consent. Alternatively, she asserted an equitable interest in the accounts and property allegedly funded with community assets.

Ms. Willingham received her discharge on October 26, 2020.

B. The motion to sell and distribution of the homestead exemption In November 2020, the Trustee filed a motion to sell the Solvang Property (“Motion to Sell”) and pay to Ms. Willingham the $175,000 homestead exemption; no one had objected to her claimed exemption.

Mr. Willingham filed a response to the Motion to Sell. He admitted that the Solvang Property was estate property but asserted that he had a community claim against a substantial portion of the net sale proceeds.

On or around November 30, 2020, Mr. Willingham filed a chapter 7 bankruptcy petition in Houston, Texas. The Trustee filed a supplemental brief to address the effect of Mr. Willingham’s bankruptcy case and urged the court to deny Mr. Willingham’s claim to the sale proceeds.

After a hearing, the bankruptcy court entered its order (“Sale Order”)

on December 11, 2020, authorizing the Trustee to sell the Solvang Property for $1.9 million. The court directed escrow to disburse $87,000 of the homestead exemption to Ms. Willingham and ordered the Trustee to hold the balance of the exemption.

At a further hearing regarding the disbursement of the sale proceeds, the bankruptcy court tentatively ruled that the Texas bankruptcy court should decide the disposition of the remainder of the homestead exemption. Ms. Willingham’s counsel agreed:

[U]pon further thought after reviewing all the pleadings, I think your analysis is correct. I don’t think that this is property of the bankruptcy estate anymore. And I don’t really think that the California bankruptcy court really has jurisdiction to decide where the money goes.

So as it stands, granting the relief requested by the trustee and allowing the homestead exemption to go to the debtor makes sense and then whatever the Texas trustee decides to do, then Ms. Willingham will have to file an appropriate pleading in response to that.

On February 19, 2021, the bankruptcy court issued a supplemental order (“Supplemental Sale Order”) authorizing the Trustee to pay Ms. Willingham the $88,000 balance of her homestead exemption, unless the Texas bankruptcy court ordered otherwise. Ms. Willingham did not appeal from the Sale Order or the Supplemental Sale Order within fourteen days after entry of those orders.

About a month later, the Trustee filed a Motion to Disburse Funds.

He reported that the Texas bankruptcy court had ordered that the $88,000 balance be delivered to the chapter 7 trustee in that case. Ms. Willingham did not object to this motion, so the bankruptcy court entered an order (“Disbursal Order”) granting the Motion to Disburse Funds on April 9, 2021. Ms. Willingham did not appeal from the Disbursal Order within fourteen days after its entry. 3

3 Ms. Willingham says that she later received $12,500 of the $88,000 portion transmitted to Mr. Willingham’s bankruptcy trustee.

C. The Trustee’s Final Report On May 25, 2022, the Trustee filed the Trustee’s Final Report in which he stated that he had administered the estate and that “[a]ll scheduled and known assets of the estate have been reduced to cash, released to the debtor as exempt property . . . or have been or will be abandoned pursuant to 11 U.S.C. § 554.” He stated that he had realized gross receipts of approximately $1.9 million and that the estate retained a balance of $269,422.89 available for distribution. He reported that he had enough money to pay all unsecured claims in full and return a surplus to Ms. Willingham. (Ultimately, the Trustee distributed over $100,000 to Ms. Willingham.)

Additionally, the Trustee noted that the San Bernardino Property and the Texas Property had been fully administered.4 The Trustee filed a notice of the Trustee’s Final Report and hearing.

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