In re: Deepa B. Willingham

CourtUnited States Bankruptcy Appellate Panel for the Ninth Circuit
DecidedMarch 27, 2024
Docket23-1184
StatusUnpublished

This text of In re: Deepa B. Willingham (In re: Deepa B. Willingham) is published on Counsel Stack Legal Research, covering United States Bankruptcy Appellate Panel for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re: Deepa B. Willingham, (bap9 2024).

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FILED NOT FOR PUBLICATION MAR 27 2024 SUSAN M. SPRAUL, CLERK U.S. BKCY.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.

2 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).

3 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:

4 [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.

5 C. The Trustee’s Final Report

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