Martinson v. Michael (In re Michael)

163 F.3d 526, 98 Cal. Daily Op. Serv. 8843, 98 Daily Journal DAR 12405, 1998 U.S. App. LEXIS 30721
CourtCourt of Appeals for the Ninth Circuit
DecidedDecember 4, 1998
DocketNo. 97-35552
StatusPublished
Cited by37 cases

This text of 163 F.3d 526 (Martinson v. Michael (In re Michael)) is published on Counsel Stack Legal Research, covering Court of Appeals 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
Martinson v. Michael (In re Michael), 163 F.3d 526, 98 Cal. Daily Op. Serv. 8843, 98 Daily Journal DAR 12405, 1998 U.S. App. LEXIS 30721 (9th Cir. 1998).

Opinion

BOOCHEVER, Circuit Judge:

Jereld and Shirley Michael amended their voluntary petition for bankruptcy relief under Chapter 7 to claim a homestead exemption. Upon an earlier remand from this court, the Bankruptcy Appellate Panel reversed the Bankruptcy Court and held that the Michaels could amend their schedule to claim the exemption. We affirm.

[528]*528FACTS

In 1979, Jereld J. and Shirley K. Michael, husband and wife, purchased real property in Yellowstone County, Montana. The Mi-chaels entered into a mortgage as security for a loan. The Michaels have lived on the property and treated it as their home from the date of purchase.

In January 1991, the Michaels filed a voluntary petition for bankruptcy relief under Chapter 7, 11 U.S.C. § 101 et seq. They failed, however, to record a declaration of homestead as required by Montana law. Mont.Code Ann. §§ 70-32-105, 106, 107. They subsequently filed the schedules of property and exhibits required by the Bankruptcy Code, but omitted to set forth their intent to claim the real property as exempt under the homestead exemption on them bankruptcy Schedule B-4. In March 1991, when they realized their error, the Michaels advised the trustee that they intended to claim their property as exempt under the homestead exemption. They had not, however, filed a Declaration of Homestead with the Clerk and Recorder of Yellowstone County as required under Montana law. The bankruptcy court granted the Michaels a discharge in May 1991. Two months later in July 1991, the Michaels filed an executed, acknowledged Declaration of Homestead with the county. In May 1992, the Michaels finally filed an amended Schedule B-^4 listing their homestead as exempt property.

In November 1991, the trustee filed a complaint in the bankruptcy court for turnover of the property. The court entered judgment in favor of the trustee, denying the Michaels’ claim that the property was exempt as their homestead. The bankruptcy court ruled that the Michaels’ failure to file a homestead declaration before they filed their bankruptcy petition was fatal to their later attempt to claim the exemption, because the late declaration would not defeat the trustee’s status as bona fide purchaser of the real property. The Michaels appealed to the United States District Court for the District of Nevada, which affirmed the bankruptcy court. The Michaels then appealed to this court.

We held that the trustee could not use any of his “strong arm” powers under 11 U.S.C. § 544(a) to defeat the Michaels’ homestead exemption, and that the bankruptcy court erred in ruling that the Michaels could not claim a homestead exemption, after the petition date. In re Michael, 49 F.3d 499 (9th Cir.1995) (per curiam). We added:

The fact remains, however, that the Mi-chaels did not amend their bankruptcy schedules to claim the exemption until more than a year after filing their petition. When they did’ so, the trustee objected. Because the bankruptcy court ruled-incor-reetly-that section 544(a)(3) prevents the Michaels from claiming a homestead exemption after the petition date, it did not reach the separate question whether the Michaels could amend their schedules under the Federal Rules of Bankruptcy Procedure.

Id. at 502. We then vacated the district court’s decision and remanded to the bankruptcy court for consideration of the amendment issue. . .

The bankruptcy court first rejected a proposed settlement as not fair and equitable to the trustee. In re Michael, 183 B.R. 230 (Bankr.D.Mont.1995). The court reasoned that the Michaels were barred from recording their post-petition homestead declaration by the automatic stay, and that the court would likely rule that the Michaels could not amend their schedules post-petition. Id. at 238. Because “[t]he Trustee is almost certain to prevail,” the- court ruled that the settlement would not be fair to the creditors. Id. at 239.

As it had predicted, the-bankruptcy court ruled against the Michaels shortly thereafter. In re Michael, 185 B.R. 830 (Bankr.D.Mont.1995). The court disallowed the homestead exemption and ordered the Michaels to turn the property over to the Trustee. Id. at 840.

The Michaels appealed to the Bankruptcy Appellate Panel (“BAP”) of the Ninth Circuit. In an unpublished opinion [ER pp. 129-140], the BAP reversed the bankruptcy court, holding that the Michaels’ post-petition amendment to them bankruptcy schedules was proper. The trustee appeals.

[529]*529DISCUSSION

“We are in as good a position as the BAP to review the bankruptcy court’s decision, and so we review the decision independently.” In re Parker, 139 F.3d 668, 671 (9th Cir.1998). This court reviews de novo the bankruptcy court’s conclusions of law. In re Saylor, 108 F.3d 219, 220 (9th Cir.1997).

I. Claiming homestead exemption after date of petition in bankruptcy

We have already held that the bankruptcy court erred in ruling that the Michaels could not claim a homestead exemption after the date of their bankruptcy petition. The issue was thus decided as the law of the case, and “one panel of an appellate court will not as a general rule reconsider questions which another panel has decided on a prior appeal in the same ease.” Merritt v. Mackey, 932 F.2d 1317, 1320 (9th Cir.1991) (quotations omitted). The trustee does not argue that any of the exceptions to the law of the case doctrine apply. See id. Therefore it is the law of the case that the Michaels could claim a homestead exemption after the date of their bankruptcy petition. We remanded, however, for a resolution of the question “whether the Michaels could amend their schedules under the Federal Rules of Bankruptcy Procedure.” In re Michael, 49 F.3d at 502.

II. Amendment of schedules post-petition

Whether the Michaels could amend their schedules post-petition is separate from the question whether the exemption was allowable. See In re Sandoval, 103 F.3d 20, 22 (5th Cir.1997) (“allowing an amendment claiming an exemption is different from allowing the exemption itself’).

Bankruptcy Rule 1009(a) provides: “A voluntary petition, list, schedule, or statement may be amended by the debtor as a matter of course at any time before the case is closed.” Bankr.R. 1009(a) (emphasis added); In re Kahan, 28 F.3d 79, 81 (9th Cir.1994) (as amended).

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Bluebook (online)
163 F.3d 526, 98 Cal. Daily Op. Serv. 8843, 98 Daily Journal DAR 12405, 1998 U.S. App. LEXIS 30721, Counsel Stack Legal Research, https://law.counselstack.com/opinion/martinson-v-michael-in-re-michael-ca9-1998.