FOR PUBLICATION
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
IN RE JESSLYN RENEE ANDERSON, No. 20-60014 Debtor, BAP No. 19-1224 MICHAEL P. KLEIN, Chapter 7 Trustee, Appellant, OPINION
v.
JESSLYN RENEE ANDERSON, Appellee.
Appeal from the Ninth Circuit Bankruptcy Appellate Panel Lafferty III, Brand, and Gan, Bankruptcy Judges, Presiding
Submitted February 5, 2021 * Seattle, Washington
Filed March 1, 2021
* The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). 2 IN RE ANDERSON
Before: M. Margaret McKeown and Richard A. Paez, Circuit Judges, and William Horsley Orrick, ** District Judge.
Per Curiam Opinion
SUMMARY ***
Bankruptcy
The panel affirmed the Bankruptcy Appellate Panel’s judgment affirming the bankruptcy court’s ruling that a debtor was entitled to a homestead exemption under Washington law.
The panel adopted in full the BAP’s opinion and attached it as an appendix. The BAP concluded that the debtor, who occupied the homestead on the petition date, was entitled to her homestead exemption despite the fact that she moved out shortly thereafter and neither re-occupied the property nor filed a declaration of non-abandonment within six months of moving out.
** The Honorable William Horsley Orrick, United States District Judge for the Northern District of California, sitting by designation. *** This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader. IN RE ANDERSON 3
COUNSEL
Thomas A. Buford and Richard B. Keeton, Bush Kornfeld LLP, Seattle, Washington, for Appellant.
Tom Lester, Lester & Associates P.C. Inc., Bellingham, Washington, for Appellee.
OPINION
PER CURIAM:
Appellant Michael P. Klein, Chapter 7 trustee of the bankruptcy estate of Jesslyn Renee Anderson (“Debtor”), appeals from a judgment of the Bankruptcy Appellate Panel affirming the bankruptcy court’s ruling that Debtor was entitled to a homestead exemption under Washington law. We affirm for the reasons stated by the Bankruptcy Appellate Panel in its well-reasoned March 23, 2020 published opinion. In re Anderson, 613 B.R. 279 (B.A.P. 9th Cir. 2020). The opinion of the Bankruptcy Appellate Panel, which is attached as an appendix, is adopted in full.
AFFIRMED. 4 IN RE ANDERSON
APPENDIX IN RE ANDERSON 5 Case: 19-1224, Document: 23, Filed: 03/23/2020 Page 1 of 14
FILED ORDERED PUBLISHED MAR 23 2020 SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT
UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT
In re: BAP No. WW-19-1224-LBG
JESSLYN RENEE ANDERSON, Bk. No. 2:17-bk-15492-MLB
Debtor.
MICHAEL P. KLEIN, Chapter 7 Trustee,
Appellant,
v. OPINION
JESSLYN RENEE ANDERSON,
Appellee.
Argued and Submitted on February 27, 2020 at Pasadena, California
Filed – March 23, 2020
Appeal from the United States Bankruptcy Court for the Western District of Washington
Honorable Marc L. Barreca, Chief Bankruptcy Judge, Presiding 6 IN RE ANDERSON Case: 19-1224, Document: 23, Filed: 03/23/2020 Page 2 of 14
Appearances: Richard Keeton of Bush Kornfeld, LLP, argued for Appellant; Thomas E. Lester of Lester & Associates, P.S., Inc., argued for Appellee.
Before: LAFFERTY, BRAND, and GAN, Bankruptcy Judges.
LAFFERTY, Bankruptcy Judge:
INTRODUCTION
Michael P. Klein, chapter 71 trustee (“Trustee”) of the bankruptcy
estate of Jesslyn Renee Anderson (“Debtor”), appeals the bankruptcy
court’s order overruling his objection to Debtor’s homestead exemption.
Debtor was living in her homestead on the petition date, but she moved
out shortly thereafter and neither re-occupied the property nor filed a
declaration of nonabandonment within six months of moving out. Trustee
contended that, despite the fact that Debtor occupied the homestead on the
petition date, (1) she lacked the intent to reside there, and (2) under
Washington law she had abandoned the property and was thus no longer
entitled to claim the homestead exemption. The bankruptcy court
distinguished the case law cited by Trustee and ruled that the Debtor was
entitled to her homestead exemption despite the fact that she no longer
1 Unless specified otherwise, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532. “RCW” references are to the Revised Code of Washington.
2 IN RE ANDERSON 7 Case: 19-1224, Document: 23, Filed: 03/23/2020 Page 3 of 14
occupied the subject real property.
We AFFIRM.
FACTUAL BACKGROUND
Debtor filed a chapter 7 bankruptcy petition in December 2017. On
her schedules, Debtor listed a 15 percent interest in real property on Brown
Road in Ferndale, Washington (the “Property”), which she co-owns with
her parents. She valued her interest in the Property at $90,000. On Schedule
C, she claimed a homestead exemption of $125,000 under RCW §§ 6.13.010,
6.13.020, and 6.13.030. At her § 341 meeting, Debtor testified that shortly
after filing bankruptcy, she got married and moved out of the Property to
live with her husband.
In February 2018, Trustee filed an objection to Debtor’s homestead
exemption, objecting to the amount of the exemption and noting that
Debtor was no longer living in the Property. He filed an amended objection
in June 20192 in which he argued that Debtor was not entitled to a
homestead exemption in the Property because (1) as of the petition date,
she did not have a present intent to use the Property as her homestead; and
2 Debtor argued in the bankruptcy court that the June 2019 amended objection was untimely, but the bankruptcy court found that the initial objection raised the pertinent issues sufficiently so that the amended objection related back to the timely initial objection. Although Debtor argues in her brief that Trustee waived his objection to the homestead exemption with his delay, she did not cross-appeal the bankruptcy court’s finding that the amended objection was timely. We thus lack jurisdiction to consider the issue. See Leavitt v. Alexander (In re Alexander), 472 B.R. 815, 824-25 (9th Cir. BAP 2012).
3 8 IN RE ANDERSON Case: 19-1224, Document: 23, Filed: 03/23/2020 Page 4 of 14
(2) under Washington law, she had abandoned the Property post-petition
by failing to reside there for six months or to file a declaration of
homestead. Debtor responded to the objection, arguing that, under the
“snapshot rule,” bankruptcy exemptions are fixed as of the petition date
and thus the fact that she had moved out of the Property shortly after filing
was irrelevant.
The bankruptcy court held an initial hearing at which it heard
argument and took the matter under advisement. At the final hearing on
the objection held on August 22, 2019, the bankruptcy court overruled
Trustee’s objection.
Trustee timely appealed.
JURISDICTION
The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and
157(b)(1) and (b)(2)(B). We have jurisdiction under 28 U.S.C. § 158.
ISSUE
Whether the bankruptcy court erred in overruling Trustee’s objection
to Debtor’s homestead exemption.
STANDARD OF REVIEW
The bankruptcy court’s application of state exemption law is a
question of statutory construction that is reviewed de novo. See Cisneros v.
Kim (In re Kim), 257 B.R. 680, 684 (9th Cir. BAP 2000). We also review de
novo the question of whether property is included in a bankruptcy estate.
4 IN RE ANDERSON 9 Case: 19-1224, Document: 23, Filed: 03/23/2020 Page 5 of 14
Id. De novo review is independent, with no deference given to the trial
court’s conclusion. Barclay v. Mackenzie (In re AFI Holding, Inc.), 525 F.3d
700, 702 (9th Cir. 2008).
DISCUSSION
Under § 522(b)(2), each state may “opt out” of the federal exemption
scheme and limit its residents to the state-created exemptions. Washington
has not “opted out.” Therefore, a debtor in Washington may choose either
the exemptions afforded under state law or the federal exemptions under
§ 522(d). Here, Debtor selected the Washington exemption scheme, which
provides, in relevant part, that a “homestead consists of the dwelling house
or the mobile home in which the owner resides or intends to reside, with
appurtenant buildings, and the land on which the same are situated . . . .
Property included in the homestead must be actually intended or used as
the principal home for the owner.” RCW § 6.13.010(1). Washington has two
methods for claiming a homestead. Arkison v. Gitts (In re Gitts), 116 B.R.
174, 178 (9th Cir. BAP 1990), aff’d, 927 F.2d 1109 (9th Cir. 1991). “Property
described in RCW 6.13.010 constitutes a homestead and is automatically
protected by the exemption described in RCW 6.13.0703 from and after the
time the property is occupied as a principal residence by the owner . . . .”
3 RCW § 6.13.070 provides, in relevant part: “[T]he homestead is exempt from attachment and from execution or forced sale for the debts of the owner up to the amount specified in RCW 6.13.030.”
5 10 IN RE ANDERSON Case: 19-1224, Document: 23, Filed: 03/23/2020 Page 6 of 14
RCW § 6.13.040(1). In other words, if the owner resides on the property as
her principal residence, the property is automatically protected by the
homestead exemption. Alternatively, if the owner is not residing in the
property, she may establish a homestead by recording a declaration of
homestead stating that she intends to reside on the premises and, if
applicable, by recording a declaration of abandonment of any automatic
homestead or any existing declared homestead. In re Gitts, 116 B.R. at 178;
RCW § 6.13.040.
Washington law also provides that “[a] homestead is presumed
abandoned if the owner vacates the property for a continuous period of at
least six months.” RCW § 6.13.050. The owner may avoid the presumption
of abandonment by filing a declaration of nonabandonment of homestead
with the appropriate county recorder. Id.
Washington exemption statutes are liberally construed in favor of
protecting family homes. See Jefferies v. Carlson (In re Jefferies), 468 B.R. 373,
380 (9th Cir. BAP 2012) (citing In re Dependency of Schermer, 169 P.3d 452,
465-66 (Wash. 2007); Pinebrook Homeowners Ass’n v. Owen, 739 P.2d 110, 113
(Wash. Ct. App. 1987)).
When the homeowner files bankruptcy, her right to claim an
exemption is fixed as of the petition date; this is often referred to as the
“snapshot rule.” Wolfe v. Jacobson (In re Jacobson), 676 F.3d 1193, 1199 (9th
Cir. 2012) (citing White v. Stump, 266 U.S. 310, 313 (1924)); see also Hopkins v.
6 IN RE ANDERSON 11 Case: 19-1224, Document: 23, Filed: 03/23/2020 Page 7 of 14
Cerchione (In re Cerchione), 414 B.R. 540, 548 (9th Cir. BAP 2009) (“A debtor’s
entitlement to claimed exemptions generally is determined as of the date of
such debtor’s bankruptcy filing.”). Under § 522(b)(3)(A), exemptions are to
be determined in accordance with the state law applicable on the date of
filing. In re Jacobson, 676 F.3d at 1199. The entire state law applicable on the
filing date is determinative of whether an exemption applies. Id. (citing
Zibman v. Tow (In re Zibman), 268 F.3d 298, 304 (5th Cir. 2001)). See also In re
Wieber, 347 P.3d 41, 44 (Wash. 2015) (court must consider the entire
homestead exemption chapter to answer certified question of whether
homestead applies extraterritorially to real property in other states).
In his appellate brief, Trustee did not dispute that, as of the petition
date, Debtor was living in the Property and was thus entitled to the
automatic homestead exemption on that date, and he seemed to have
abandoned any argument that she was required to have an intent to
continue to reside there. At oral argument on appeal, however, counsel for
Trustee argued that because Debtor moved out shortly after the petition
date, she could not have intended to continue living in the Property on that
date. But, as the bankruptcy court aptly noted in its oral ruling, the plain
language of Washington’s homestead statute reflects that Debtor was
entitled to an automatic homestead exemption on the petition date, so long
as she was occupying the Property as her principal residence, regardless of
her future plans: “Property included in the homestead must be actually
7 12 IN RE ANDERSON Case: 19-1224, Document: 23, Filed: 03/23/2020 Page 8 of 14
intended or used as the principal home for the owner.” RCW § 6.13.010(1)
(emphasis added). In other words, if the owner is occupying the homestead
property as of the petition date, the inquiry ordinarily ends there; intent
comes into play only if the owner does not occupy the property. Trustee
has cited no cases to the contrary, nor have we found any.4
But Trustee’s primary argument on appeal is that under Washington
law, Debtor’s right to claim the homestead exemption was conditional
upon her remaining in the Property or filing a declaration of
nonabandonment and, because she did not, she automatically lost the right
to the exemption after six months had passed.
Trustee has not cited any controlling or analogous case law involving
the specific provision of the Washington exemption statute at issue here,
nor have we found any. Trustee relies on Ninth Circuit cases holding that,
although exemption rights are fixed as of the petition date, those rights are
subject to whatever contingencies may be placed upon them by other
applicable provisions of state homestead law. See In re Jacobson, 676 F.3d
1193; In re Gitts, 116 B.R. 174; and England v. Golden (In re Golden), 789 F.2d
4 As discussed below, the Ninth Circuit in In re Jacobson held that a debtor lost her homestead exemption, despite having apparently lived in the homestead on the petition date, when she failed to reinvest the proceeds of a post-petition judicial sale within the six-month period prescribed under California law. But Jacobson appears to be an outlier in holding that post-petition events may impact a debtor’s right to an exemption. In any event, that case is both factually and legally distinguishable from the matter presented here. Importantly, the debtor’s intent (or lack thereof) was not at issue in Jacobson.
8 IN RE ANDERSON 13 Case: 19-1224, Document: 23, Filed: 03/23/2020 Page 9 of 14
698 (9th Cir. 1986).
In Golden, the debtor had sold homestead property pre-petition and
declared the proceeds exempt under California law, but failed to reinvest
the proceeds within six months as required under California exemption
statutes, as interpreted by California courts. 789 F.2d at 700 (citing Thorsby
v. Babcock, 36 Cal. 2d 202 (1950)). After that period expired, the bankruptcy
court granted the chapter 7 trustee’s motion for turnover of the proceeds.
The Ninth Circuit affirmed, citing the California reinvestment requirement,
and holding that “when the debtor fails to reinvest homestead proceeds
within a period of six months in which the debtor has control of those
proceeds, the proceeds should revert to the trustee.” Id. The court noted
that the policy behind requiring reinvestment is to “prevent the debtor
from squandering the proceeds for nonexempt purposes. Acceptance of the
debtor’s position would frustrate the objective of the California homestead
exemption and the bankruptcy act itself, which limits exemptions to that
provided by state or federal law.” Id.
In Jacobson, the Ninth Circuit expanded Golden to the situation where
the homestead was sold post-petition. There, a chapter 7 debtor claimed a
California homestead exemption in property that was her residence on the
petition date. The bankruptcy court lifted the stay for a judgment creditor
to foreclose on the residence, and the debtor received the amount of her
homestead exemption from the proceeds of the sale. As in Golden, the
9 14 IN RE ANDERSON Case: 19-1224, Document: 23, Filed: 03/23/2020 Page 10 of 14
debtor did not reinvest the proceeds within six months, and the chapter 7
trustee sought turnover of the proceeds to the estate. The bankruptcy court
denied the trustee’s motion, reasoning that the exemption was fixed as of
the petition date, and this Panel affirmed. The Ninth Circuit Court of
Appeals reversed. It reasoned that, under Golden, the debtor’s right to a
homestead exemption was contingent on the proceeds being reinvested
within six months of receipt. Because the debtor did not abide by that
condition, the Circuit held that she had forfeited the exemption. In re
Jacobson, 676 F.3d at 1199.
Trustee also cites In re Gitts, a case decided under Washington
exemption law. There, chapter 7 debtors did not reside in their intended
homestead as of the petition date because they were in the process of
renovating it, but they nevertheless claimed an exemption in it and, one
day post-petition, filed a declaration of homestead for that property. The
chapter 7 trustee filed an objection to the exemption, which the bankruptcy
court overruled. This Panel affirmed, reasoning that, as of the petition date,
the debtors had the right to file a declaration of homestead for their
intended residence and
thus create a valid homestead exemption against a judgment creditor up to the date of an execution sale. Under Myers [v. Matley, 318 U.S. 622 (1943)] which looks at the rights of the debtor on the filing date to make and record the necessary declaration of homestead and which holds that the trustee has no greater rights than a state law judgment creditor, the
10 IN RE ANDERSON 15 Case: 19-1224, Document: 23, Filed: 03/23/2020 Page 11 of 14
debtors’ post-petition declarations are sufficient to create a homestead exemption under Washington law which is valid against the trustee.
Id. at 180 (footnotes omitted).
Read together, these cases support Trustee’s position that the right to
a homestead exemption is subject to whatever rights and limitations are
provided by the particular state’s exemption statutes. But that conclusion
does not lead to the result Trustee proposes. He urges us to read RCW
§ 6.13.0505 as expressly conditioned on the owner using the property as a
dwelling, or if an owner cannot show occupancy and use, recordation of a
declaration of nonabandonment. Under Trustee’s interpretation, once
Debtor moved out of the Property and failed to file a declaration of
nonabandonment, her interest in the Property reverted to the estate after
six months passed.
We decline to read the statute so broadly, particularly in light of the
principle that Washington exemption statutes are to be interpreted liberally
5 RCW § 6.13.050 provides, in relevant part:
A homestead is presumed abandoned if the owner vacates the property for a continuous period of at least six months. However, if an owner is going to be absent from the homestead for more than six months but does not intend to abandon the homestead, and has no other principal residence, the owner may execute and acknowledge, in the same manner as a grant of real property is acknowledged, a declaration of nonabandonment of homestead and file the declaration for record in the office of the recording officer of the county in which the property is situated.
11 16 IN RE ANDERSON Case: 19-1224, Document: 23, Filed: 03/23/2020 Page 12 of 14
in favor of protecting family homes. Schermer, 169 P.3d at 465. The
provision does not impose a requirement or condition; it simply creates an
evidentiary presumption, which may be rebutted. See Fed. R. Evid. 301.
Moreover, the cases cited by Trustee are all distinguishable. In Golden and
Gitts, the debtors did not reside in their homesteads as of the petition date,
and in Jacobson, although the debtors resided in their homestead on the
petition date, the sale of the home brought into play the California
reinvestment requirement, which is a “peculiar temporal exemption
statute” that does not mandate the result called for by Trustee under the
facts presented here. See In re Kim, 257 B.R. at 686 (noting that Golden was
decided under the specific California reinvestment requirement and its
holding is thus limited to its facts).
Debtor resided in the Property as her principal residence on the
petition date, and under Washington exemption law, this was sufficient to
confer automatic protection of the homestead. As such, the fact that she
moved out of the Property shortly after filing and failed to return is simply
irrelevant to the determination of whether she is entitled to claim the
homestead exemption in her chapter 7 case. Trustee cites no policy that
would be served by denying Debtor her exemption under these facts.
Unlike the “reinvestment of proceeds” scenario, here there is no danger
that Debtor will squander her homestead funds on nonexempt property.
She cannot access the funds representing the exemption without a sale,
12 IN RE ANDERSON 17 Case: 19-1224, Document: 23, Filed: 03/23/2020 Page 13 of 14
which is made more complicated here by the fact that she co-owns the
Property with her parents, who may or may not have the ability to buy out
her interest. Further, a debtor’s right to a homestead exemption in a
chapter 7 case should not be predicated on the happenstance of how long
the case remains pending. We thus AFFIRM the bankruptcy court’s
conclusion that Debtor is entitled to claim a homestead exemption in the
Property.
As for the amount of the exemption, Trustee requests that if we
affirm the bankruptcy court’s ruling that Debtor is entitled to the
homestead exemption, we should find that the bankruptcy court erred in
not sustaining Trustee’s objection to the amount of Debtor’s exemption.
Trustee contends the exemption should have been limited to $90,000, the
amount of her claimed equity in the Property, citing Wilson v. Rigby, 909
F.3d 306, 312 (9th Cir. 2018), in which the Ninth Circuit held that the value
of the exemption is limited to the value that lawfully may be claimed as of
the petition date. But the bankruptcy court did not make a finding as to the
proper amount of the exemption. In fact, Trustee’s counsel conceded at the
final hearing in the bankruptcy court that although the issue had been
raised in the objection, it had not been properly brought before the court.
As such, the issue is not properly before us. See O’Rourke v. Seaboard Surety
Co. (In re E.R. Fegert, Inc.), 887 F.2d 955, 957 (9th Cir. 1989) (ordinarily,
federal appellate courts will not consider an issue not raised sufficiently for
13 18 IN RE ANDERSON Case: 19-1224, Document: 23, Filed: 03/23/2020 Page 14 of 14
the trial court to rule upon it). In any event, in the bankruptcy court’s
October 31, 2019 order granting a limited stay pending appeal, it explicitly
reserved the issue of the value of the claimed homestead exemption.
CONCLUSION
The bankruptcy court did not err in ruling that Debtor was entitled to
a homestead exemption under Washington law. Accordingly, we AFFIRM.
We leave the question of the appropriate amount of the exemption for
determination by the bankruptcy court.