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In Re: Bankruptcy

March 31, 2011

IN RE: BANKRUPTCY
JACQUELINE M. ANTONIE, DEBTOR.



The opinion of the court was delivered by: Honorable B. Lynn Winmill Chief U. S. District Judge

MEMORANDUM DECISION AND ORDER

INTRODUCTION

Before the Court is Appellant Jacqueline M. Antonie's appeal of the Bankruptcy Court's order upholding an objection to a claim exemption on a manufactured home. The appeal is fully briefed and at issue. Pursuant to Bankruptcy Rule 8012(3), the Court finds that oral argument is not necessary. After reviewing the briefing and the record in the Bankruptcy Court, the Court finds that the Bankruptcy Court's decision denying Antonie's attempt to exempt the mobile home under 11 U.S.C. § 522(b)(3)(B) should be affirmed. This decision is explained below.

BACKGROUND

Antonie filed a Chapter 7 Bankruptcy pro se on June 2, 2009. Jeremy Gugino was appointed to act as the interim trustee in the case. At the time Antonie filed bankruptcy, she and her 86-year old mother, Frances W. Bruckner, jointly owned a house and a mobile home. Antonie resided in the house located in Boise, and her mother resided in the mobile home located in Garden City. For estate planning purposes and upon the advice of an attorney, Ms. Bruckner allowed the title to the mobile home to be in her and her daughter's names as joint tenants.

In her bankruptcy schedules, Antonie listed her joint interest in the house on Schedule A, and listed a partial interest in the mobile home on Schedule B. Antonie claimed that her interests in the house and the mobile home were both exempt on Schedule C. Antonie asserted her homestead exemption on the house listed in Schedule A, and she claimed the mobile home was exempt pursuant to § 522(b)(3)(B).*fn1

Trustee objected to Antonie's claim of exemption on the mobile home, arguing that because Idaho had "opted out" of the federal bankruptcy exemption scheme, Antonie was improperly attempting to invoke a federal exemption, and her exemption claim should be disallowed. In his objection, Trustee included a notice, pursuant to Local Bankruptcy Rule 2002.2(d), that if no response to the objection was filed within 30 days, the Court could assume that there was no opposition to the relief requested, and it could grant such relief without further notice or hearing. Debtor did not respond to the objection, and at Trustee's request, an order disallowing the exemption claimed under § 522(b)(3)(B) was entered on October 7, 2009.

The Trustee also filed an Adversary Complaint against Ms. Bruckner. Adversary Compl., Case No. 09-60604-JDP, Dkt. 3-2. Trustee claimed he was entitled to take and sell Ms. Bruckner's home. Id. Ms. Bruckner filed a Chapter 7 Bankruptcy case of her own on January 6, 2010, Bankruptcy Case No. 10-00022-JDP. On January 8, 2010, trustee amended his Adversary Proceeding Complaint to withdraw Ms. Bruckner as the defendant and name the "Bankruptcy Estate of Frances W. Bruckner, 10-00022-JDP, Richard E. Crawforth, trustee" as the defendant. Am. Adversary Compl., Dkt. 3-4.

Trustee obtained a Default Judgment in his adversary action against the Bankruptcy Estate of Frances W. Bruckner on February 22, 2010 because the trustee, Richard E. Crawforth, did not respond to the Amended Summons and Amended Complaint. Default Judgment, Dkt. 3-5. The Bankruptcy Estate of Frances W. Bruckner, 10-00022-JDP was closed on July 2, 2010. Order Approving Trustee's Report of No Distribution and Closing Estate, Dkt. 3-6.

On January 6, 2010 -- the same day Ms. Bruckner filed for bankruptcy -- Antonie retained counsel, and amended her schedules. Antonie changed the value of her interest in the mobile home and the value of the exemption, but did not change the basis for seeking the exemption, i.e., § 522(b)(3)(B). Trustee again objected to the amended claim of exemption, citing the same reasons as before but adding that Antonie was precluded from amending the claim of exemption because the Bankruptcy Court had sustained his earlier objection.

The Bankruptcy Court upheld the Trustee's objection. It found that: (1) neither issue preclusion nor claim preclusion barred the Court from addressing the exemption issue; (2) although Idaho has "opted out" of the federal bankruptcy exemptions, the exemptions under 11 U.S.C. § 522(b)(3)(B) remained available to Idaho debtors ; and (3) Antonie's joint interest in the mobile home was not "exempt from process" under Idaho law. See In re Antonie, 432 B.R. 843 (Bankr.D.Idaho 2010).

Antonie appeals the Bankruptcy Court's decision. Antonie does not challenge the Bankruptcy Court's first two conclusions, since they were resolved in her favor. Nor were those conclusions challenged in a cross appeal. Therefore, the only issue on appeal is whether the mobile home would be"exempt from process" under Idaho law. The Trustee did not file a response.

STANDARD OF REVIEW

The standard of review of a Bankruptcy Court's ruling on a claimed exemption is the same whether the reviewing court is the district court or the court of appeals. See In re Dak Industries, 66 F.3d 1091, 1094 (9th Cir. 1995). The district court applies a "clearly erroneous standard to the bankruptcy court's findings of fact and review its conclusions of law de novo." See Preblich v. Battley, 181 F.3d 1048 (9th Cir. ...


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