Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

In Re: Jose J. Hernandez, Debtor. v. Jose J. Hernandez


December 14, 2012


Appeal from the United States Bankruptcy Court for the Southern District of California Honorable Margaret M. Mann, Bankruptcy Judge, Presiding Bk. No. 11-15921

The opinion of the court was delivered by: Jury, Bankruptcy Judge:



(consolidated appeals)


Argued and Submitted on November 15, 2012 at Pasadena, California

Filed - December 14, 2012

Before: JURY, MARKELL, and PAPPAS Bankruptcy Judges.

Appellant-creditor, Collect Access LLC (Collect), levied on funds in chapter 7*fn1 debtor's deposit account in the amount of $712.39. Twenty days later, debtor filed his bankruptcy petition and claimed the funds exempt. Debtor sought an ex parte turnover order requiring Collect to surrender the funds. The bankruptcy court found that debtor had an interest in the funds despite the levy and ordered turnover. Collect moved to vacate the turnover order which the bankruptcy court denied.

Collect appeals from that order.*fn2

For the reasons stated, we AFFIRM the bankruptcy court's result, but we rely on different grounds.


On August 30, 2002, the California state court entered a judgment in favor of First Select, Inc. (First Select) and against Jose J. Hernandez, the debtor in this case.

On January 22, 2008, First Select recorded an abstract of judgment for the sum of $2,091.71 in the County of San Diego.

On May 19, 2008, First Select renewed the judgment for the sum of $3,723.19.

On July 12, 2011, apparently as a successor to First Select,*fn3 Collect submitted a writ of execution to the Los Angeles County Sheriff's Department (Sheriff). On August 26, 2011, the writ was served on Wells Fargo Bank (Bank). On September 7, 2011, the Sheriff received from the Bank $712.39 that was in debtor's deposit account.

On September 27, 2011, debtor filed his bankruptcy petition. At the time of his filing, the levied funds were in the Sheriff's possession. Debtor claimed the funds exempt under Cal. Civ. Proc. Code (CCP) § 703.140(b)(5).*fn4

On October 29, 2011, the chapter 7 trustee filed her report of no distribution.

1 On November 3, 2011, debtor filed an ex parte motion for 2 turnover of the funds under § 542, contending they were property 3 of his estate, had been exempted, and therefore belonged to him. 4 The next day the bankruptcy court entered an order requiring the 5 Sheriff to turn over $712.39 to debtor (Turnover Order I). 6 On November 7, 2011, before receiving the order, the 7 Sheriff transferred the funds to Zee Law Group (Zee), the 8 attorney for Collect.

9 On November 11, 2011, debtor sought ex parte a second 10 turnover order, this time directed at Zee. The bankruptcy court 11 granted debtor's request by order entered on November 30, 2011 12 (Turnover Order II).

13 On December 1, 2011, Collect filed an opposition to 14 debtor's turnover request. First, relying on the holding in Del 15 Riccio v. Super. Ct. of L.A. Cnty., 115 Cal.App. 2d 29, 31 (Cal. 16 Ct. App. 1952), Collect argued that the funds were no longer 17 property of debtor or his estate because ownership of the funds 18 passed from debtor to the judgment creditor once the Sheriff 19 received the funds. Second, Collect maintained that the chapter 20 7 trustee neither asserted a preference claim nor sought to 21 recover the levied funds. Third and last, Collect argued that 22 debtor had waived his claim of exemption against the funds 23 because he did not timely assert it. Six days later, Collect 24 filed an ex parte application to quash Turnover Order II (Motion 25 to Vacate).


1 Debtor responded to Collect's opposition, this time 2 alleging that he had the right to recover the funds under 3 § 522(g) and (h) rather than § 542. Debtor maintained that he 4 listed the levied funds in Schedule B and claimed them exempt in 5 Schedule C, the trustee filed a report of no distribution 6 thereby abandoning the asset and, as a result, debtor could seek 7 to recover the funds. Debtor further argued that the levy 8 constituted a preference under § 547. He also maintained that 9 he did not waive his exemption in the funds, because he claimed 10 them exempt under CCP § 703.140(b)(5) when he filed his 11 petition. Finally, debtor alleged that Collect violated the 12 automatic stay by continually refusing to turn over the funds 13 and requested $1,100 in attorneys' fees.

14 On January 17, 2012, the bankruptcy court issued a 15 tentative ruling indicating its reasons for entering the 16 turnover orders. The court explained that under CCP § 697.710, 17 a levy on property under a writ of execution creates a lien on 18 the property from the time of the levy until the expiration of 19 two years after the date of issuance of the writ unless the 20 judgment is sooner satisfied. The court reasoned that because 21 Collect's execution lien was unsatisfied on the date of debtor's 22 bankruptcy filing, the funds remained part of debtor's estate 23 under the holdings in United States v. Whiting Pools, Inc., 462 24 U.S. 198, 207, 76 L.Ed. 2d 515, 103 S.Ct. 2309 (1983) and 25 Ramirez v. Fuselier (In re Ramirez), 183 B.R. 583, 591 (9th Cir. 26 BAP 1995). In the end, the bankruptcy court opined that debtor may be eligible to recover actual fees and costs associated with his two motions seeking a turnover order.

On January 19, 2012, the bankruptcy court heard oral argument from the parties and took the matter under submission.

On March 19, 2012, the bankruptcy court entered a Memorandum of Decision which essentially adopted its earlier tentative ruling. See In re Hernandez, 468 B.R. 396 (Bankr. S.D. Cal. 2012).

On April 3, 2012, the bankruptcy court entered the order denying Collect's Motion to Vacate Turnover Order II. On April 9, 2012, Collect timely appealed.*fn5 Meanwhile, on April 4, 2012, debtor filed a motion for costs, damages and fees. On April 26, 2012, debtor filed a motion to avoid Collect's lien under § 522(f) and a motion for contempt.

On June 14, 2012, the bankruptcy court heard the three motions. The court (1) granted debtor's motion to avoid Collect's lien; (2) denied his motion for contempt because Collect had complied with Turnover Order II by that time, and (3) granted debtor's motion for costs, damages and fees, 1 awarding debtor $3,572.06 in actual damages and $1,000 in 2 punitive damages for Collect's failure to turn the funds over to 3 debtor pursuant to the court's orders.

On June 19, 2012, the bankruptcy court entered the order 5 awarding the fees and damages.

6 On June 20, 2012, debtor filed a motion to dismiss this 7 appeal as moot on the grounds that Collect complied with 8 Turnover Order II and its lien was avoided under § 522(f). On 9 July 25, 2012, the Panel issued an order denying debtor's motion 10 to dismiss the appeal as moot, but authorized the parties to 11 further address the issue in their briefs. We discuss the 12 mootness issue below.


14 The bankruptcy court had jurisdiction over this proceeding 15 under 28 U.S.C. §§ 1334 and 157(b)(2)(A), (B) and (E). We have 16 jurisdiction under 28 U.S.C. § 158.


18 A. Whether this appeal is moot;

19 B. Whether the bankruptcy court erred in finding that the 20 levied funds held by the Sheriff were property of debtor's 21 estate subject to turnover; 22 C. Whether the bankruptcy court erred in denying 23 Collect's Motion to Vacate Turnover Order II; and 24 D. Whether the bankruptcy court erred by granting 25 debtor's ex parte motion for turnover of the funds without an 26 adversary proceeding.


Whether an appeal is moot and whether property is property 3 of the estate are questions of law we review de novo. See Menk 4 v. Lapaglia (In re Menk), 241 B.R. 896, 903 (9th Cir. BAP 1999); 5 Mwangi v. Wells Fargo Bank, N.A. (In re Mwangi), 432 B.R. 812, 6 818 (9th Cir. BAP 2010). We also review de novo the bankruptcy 7 court's conclusions of law, including statutory interpretations. 8 DeMassa v. MacIntyre (In re MacIntyre), 74 F.3d 186, 187 (9th 9 Cir. 1996).

10 A bankruptcy court's denial of a motion for reconsideration 11 is reviewed for abuse of discretion. First Ave. W. Bldg., LLC 12 v. James (In re Onecast Media, Inc.), 439 F.3d 558, 561 (9th 13 Cir. 2006). To determine whether the bankruptcy court abused 14 its discretion, we conduct a two-step inquiry: (1) we review de 15 novo whether the bankruptcy court "identified the correct legal 16 rule to apply to the relief requested" and (2) if it did, 17 whether the bankruptcy court's application of the legal standard 18 was illogical, implausible or "without support in inferences 19 that may be drawn from the facts in the record." United States 20 v. Hinkson, 585 F.3d 1247, 1261-62 (9th Cir. 2009)(en banc). 21 Whether an adversary proceeding was required is an issue 22 that requires us to interpret and apply Rule 7001, which is a 23 matter for de novo review. Ruvacalba v. Munoz (In re Munoz), 24 287 B.R. 546, 550 (9th Cir. BAP 2002).

25 We may affirm on any ground supported by the record. 26 Siriani v. Nw. Nat'l Ins. Co. (In re Siriani), 967 F.2d 302, 304 (9th Cir. 1992).


A. Mootness

4 Before reaching the merits, we consider debtor's mootness 5 argument. An appeal is constitutionally moot when events occur 6 during the pendency of the appeal that make it impossible for 7 the appellate court to grant effective relief. Clear Channel 8 Outdoor, Inc. v. Knupfer (In re PW, LLC), 391 B.R. 25, 33 (9th 9 Cir. BAP 2008). Debtor contends that the following events 10 render this appeal moot: (1) the funds are now in the hands of 11 the debtor; (2) the lien which gave rise to Collect's claim has 12 been avoided; and (3) the underlying debt has been discharged. 13 Under these circumstances, debtor argues, effective relief is no 14 longer available. On the other hand, Collect maintains that if 15 the Panel reverses the bankruptcy court and finds that debtor's 16 interest in the funds was extinguished after the levy, we can 17 order debtor to return the funds to Collect. Collect further 18 argues that it would not have been a violation of the automatic 19 stay for Collect to retain the funds post-petition if, under 20 California law, ownership of the funds passed from debtor to the 21 judgment creditor once the Bank released the funds to the 22 Sheriff. On these grounds, Collect contends effective relief is 23 available.

24 Debtor, as the party arguing for dismissal based on 25 mootness, "has the heavy burden of establishing that there is no 26 effective relief remaining for a court to provide." Suter v. 1 Goedert, 504 F.3d 982, 986 (9th Cir. 2007). Debtor has not met 2 his burden here. Where the order appealed involves the 3 distribution of money and the party who received the funds is a 4 party to the appeal, the appeal is not moot because we have the 5 power to fashion effective relief by ordering the party to 6 return the money. See Spirtos v. Moreno (In re Spirtos), 992 7 F.2d 1004, 1007 (9th Cir. 1993). Under this rule, we can 8 implement effective relief because debtor is a party to the 9 appeal, and we can order him to repay the money to Collect upon 10 reversal of the bankruptcy court's ruling. Debtor's discharge 11 also would not impact the return of the funds to Collect. If 12 debtor had no interest in the funds after the levy, they would 13 have been rightfully in the Sheriff's possession. In addition, 14 under these facts, no stay violation would have occurred.

15 Accordingly, we conclude that the appeal is not moot.

B. Property of the Estate

17 A bankruptcy court may order turnover of property to the 18 debtor's estate if, among other things, such property is 19 considered "property of the estate." See §§ 541(a) (defining 20 property of the estate), 542(a) (authorizing turnover of 21 property that the trustee may use, sell, or lease under section 22 363 of this title, or that the debtor may exempt under section 23 522 of this title). Section 541(a) provides that property of 24 the estate includes all legal or equitable interests of the 25 debtor in property as of the commencement of the case. The 26 primary question on appeal is whether the prepetition levied 1 funds in the hands of the Sheriff on the petition date were in 2 fact property of debtor's bankruptcy estate. We hold that they 3 were.

4 Whether a debtor's interest constitutes "'property of the 5 estate' is a federal question to be decided by federal law." 6 McCarthy, Johnson & Miller v. N. Bay Plumbing, Inc. (In re 7 Pettit), 217 F.3d 1072, 1078 (9th Cir. 2000). However, the 8 nature and extent of the debtor's interest in property must be 9 determined by non-bankruptcy law. Travelers Cas. & Sur. Co. of 10 Am. v. Pac. Gas & Elec. Co., 549 U.S. 443, 451, 127 S.Ct. 1199, 11 167 L.Ed.2d 178 (2007) (citing Butner v. United States, 440 U.S. 12 48, 54-55, 99 S.Ct. 914, 59 L.Ed.2d 136 (1979)). California law 13 applies to this case.

14 California statutory law governs generally the rights and 15 obligations of debtors and creditors with respect to the 16 enforcement of money judgments. In examining the statutory 17 scheme, the bankruptcy court first found that the Sheriff's levy 18 under Collect's writ of execution resulted in an execution lien, 19 rather than a transfer of the ownership of the funds. In re 20 Hernandez, 468 B.R. at 402; see also CCP § 697.710 ("A levy on 21 property under a writ of execution creates an execution lien on 22 the property from the time of levy . . . ."). Next, the court 23 found that before the execution lien could be transformed into 24 ownership of the funds, the Sheriff had to release the funds to 25 the judgment creditor. Id. In reaching this conclusion, the 26 court relied on CCP §§ 697.710 and 724.010(b). Under CCP § 697.710, entitled "Creation and Duration of Execution Lien", an execution lien created by levy "survives for the earlier of two years, or when the judgment is satisfied." Id. Under CCP § 724.010(b),*fn6 the court reasoned, the judgment is not fully satisfied until the creditor receives the levied funds from the levying officer and files an acknowledgment of satisfaction. On this basis, the bankruptcy court concluded that since the Sheriff still held the funds when debtor filed his petition, Collect only held a lien on the funds because the second step of satisfaction had not yet occurred. Id. at 402-03.

The bankruptcy court's analysis relies on the incorrect statutory scheme. The California legislature has enacted a "comprehensive and precisely detailed scheme governing enforcement of money judgments." Ford Motor Credit Co. v. Waters, 166 Cal.App.4th Supp. 1, 7 (Cal. App. Dep't Super. Ct. 2008). In CCP §§ 700.010-700.200, "the judgment creditor is advised of all methods of levy available to enforce a money judgment. Those statutes tell the judgment creditor and levying officer how to levy on assets . . . , as here relevant, bank accounts." Id. CCP § 700.140 entitled "Deposit accounts" provides in relevant part:

1 (a) [T]o levy upon a deposit account, the levying officer shall personally serve a copy of the writ of 2 execution and a notice of levy on the financial institution with which the deposit account is 3 maintained . . . . The execution lien reaches only amounts in the deposit account at the time of service 4 on the financial institution, including any item in the deposit account that is in the process of being 5 collected, unless the item is returned unpaid to the financial institution.

(e) When the amount levied upon pursuant to this 8 section is paid to the levying officer, the execution lien on the deposit account levied upon terminates.

10 Under the plain language of CCP § 700.140, Collect obtained 11 an execution lien on the amounts in the deposit account at the 12 time of the service on the financial institution. These amounts 13 were not available for debtor's use. The lien was terminated 14 under subsection (e) at the time the funds were paid to the 15 levying officer. The termination of Collect's execution lien 16 occurred well before debtor's bankruptcy. Given this statutory 17 framework that applies to deposit accounts, the bankruptcy 18 court's reliance on CCP §§ 697.710 and 724.010(b) for its 19 analysis was misplaced.

Nonetheless, we do not think the plain language of CCP 21 § 700.140 provides an answer to the ownership question Collect 22 raises on appeal. Although the statute suggests that debtor's 23 interest in the funds was transferred when the funds were paid 24 to the levying officer and the lien terminated, the statute does 25 not plainly say so. Compare In re Ramirez, 183 B.R. at 589 26 (noting that although relevant California statute stated when 27 levy was complete, it did not state that a completed levy 28 transferred ownership of the property).

1 Collect relies on Del Ricco, 115 Cal.App.2d 29, to support 2 its position that the transfer of funds to the Sheriff 3 extinguished all rights that debtor had in the property 4 prepetition. Although Collect urges the Panel to rely on Del 5 Ricco to adopt a bright line rule, we decline to read the case 6 so broadly. In Del Riccio, after a judgment was obtained, a 7 writ of execution was issued and levied upon a bank in which the 8 defendant had the sum of $6,426.66. While the sheriff had the 9 money in his possession, defendant applied for and obtained a 10 court order prohibiting the sheriff from paying any money to the 11 plaintiffs. The plaintiffs moved to vacate the order which the 12 court denied. The defendant then moved for an order staying 13 execution upon posting a cash undertaking in the action. After 14 defendant posted a satisfactory bond, the court made a further 15 order staying the execution. Plaintiffs appealed.

16 The California Court of Appeal found that the trial court 17 had the power to impose a stay of execution, but had no power to 18 undo what had already been done so as to deprive the creditor of 19 ownership and use of the money collected under the writ. The 20 appellate court discussed the parties' interest held in money in 21 levy as follows:

22 When the writ has been regularly issued and executed, money collected, while in the hands of the officer, is 23 property of the judgment creditors and not the debtor. Nothing can be done with it other than to turn it over 24 to the creditor. The possession of the officer solely for the use and benefit of the creditor is possession 25 by the latter . . . . Correspondingly, when the debtor's money is taken on a valid execution it ceases 26 to be his and he immediately becomes entitled to partial or full satisfaction of the judgment.

28 Del Ricco has not been overruled, but the rule of law it established is not a complete answer to the bankruptcy issue before us. Although Del Ricco does say that money collected while in the hands of the Sheriff is the property of the judgment creditor, the decision discussed only the trial court's power with respect to a valid execution. The court had no reason to examine the various statutory rights and obligations of the judgment creditor vis-a-vis the debtor after the execution. Therefore, we do not read Del Ricco as stating a per se rule that the levying officer's possession of money after a valid execution accomplishes a complete transfer of ownership of the property, without limitation, and in disregard of other statutes in the enforcement of money judgment scheme.

The bankruptcy court's analysis in In re Caldwell, 111 B.R. 836 (Bankr. C.D. Cal. 1990), sheds further light on the property of the estate analysis. There, the bankruptcy court partially relied on Del Ricco in analyzing the conflicting claims of the debtors and the State Board of Equalization in funds held by a bank. Under Cal. Rev. & Tax Code § 6703, a notice of levy was the equivalent of a levy. The Caldwell court found that "[a] levy transfers ownership in property. This usually takes place when a law enforcement officer seizes the property." Id. at 838. Citing Del Ricco, the bankruptcy court noted that under Cal. Rev. & Tax Code § 6703, the bank in effect became the executing officer for the benefit of the Board.*fn7 Id.

Accordingly, the court concluded that under California law, the Board's notice of levy (which was the equivalent of a levy) extinguished the debtors' property interest in the funds. "In other words, the Notice of Levy transferred ownership of the Funds from debtors to the Board." Id. Finally, because the debtors had no right of redemption under Cal. Rev. & Tax Code § 6703, the court observed that "a levy under [this statute] terminates any and all interests a debtor may have in the property." Id. at n.2.

If anything, Caldwell's analysis instructs us to delve further into whether the effect of the levy was to divest debtor of all interests in the property seized for purposes of a property of the estate analysis.*fn8 Use of the term "ownership" to identify the interests of the parties does not help because the term is not defined. The Bankruptcy Code does not define property, ownership, or owner; however, dictionary definitions provide guidance. Property is defined as "[t]he right to possess, use, and enjoy a determinate thing . . .; the right of ownership . . . . Also termed bundle of rights." Black's Law Dictionary 1335 (9th ed. 2009). Ownership is defined as "[t]he bundle of rights allowing one to use, manage, and enjoy property, including the right to convey it to others. . . ."

Id. at 1215. An owner is "[o]ne who has the right to possess, use, and convey something; a person in whom one or more interests are vested." Id. at 1214. Taken together, these definitions demonstrate that a debtor's "bundle of rights" in property must be identified on a case-by-case basis. It appears from the bankruptcy court's findings of fact that virtually all of the funds in debtor's account on the day of the levy consisted of social security benefits.*fn9 The bankruptcy court found that debtor's only source of income other than $100 of family contributions was $636 in monthly social security benefits. In re Hernandez, 468 B.R. at 404. Collect does not dispute this finding on appeal.*fn10

Under California law, government benefits such as social security are intended exclusively for the benefit and support of qualified recipients. These funds are exempt and cannot be subject to collection. See Kruger v. Wells Fargo Bank, 521 P.2d 441, 458-60 (Cal. 1974).*fn11 Under CCP § 704.080(b), social security benefits in deposit accounts are exempt in the amount of $2,425 and the exemption is automatic. The debtor need not make a claim and thus there could be no transfer of ownership in the funds by waiver or by operation of law. See CCP § 703.030(b).*fn12 "'Some exemptions need not be claimed. They are automatic and are denoted by the statutory terms of art 'exempt without making a claim,' which has the effect of eliminating the applicability of the procedure for enforcing a money judgment.'" In re Hernandez, 468 B.R. at 404 (citing In re Petruzzelli, 139 B.R. 241, 243 (Bankr. E.D. Cal. 1992)). One treatise further explains:

Theoretically, a claim of exemption should never have to be filed for property 'exempt without making a claim.' In practice, however, if such property is levied upon by the judgment creditor, a claim of exemption may have to be filed to obtain its release--unless the creditor can be persuaded to order it released. [CCP § 703.510(b)] (But so long as no sale has occurred, the levying officer should release the property whether or not the exemption filing is timely.).

Hon. Alan M. Ahart, Cal. Prac. Guide: Enforcing Judgments and Debts § 6:870 (2012).

Exemptions under California law are wholly statutory and cannot be enlarged [or diminished] by the courts. Ford Motor Credit Co., 166 Cal. App. 4th Supp. at *8. Furthermore, "the exemption laws are designed to facilitate the debtor's financial rehabilitation and have the effect of shifting social welfare costs from the community to judgment creditors. Consequently, the exemption statutes should be construed, so far as practicable, to the benefit of the judgment debtor." Id. at *9. California's exemption philosophy is echoed in bankruptcy law.

Because debtor had an exempt property interest in the funds, we conclude that Collect's levy did not operate to extinguish those interests. See In re Hernandez, 468 B.R. at 404 (debtor's exemption rights in the funds had not been terminated prepetition). To adopt Collect's argument for a bright line ownership rule under these circumstances would render the automatic exemption for social security benefits meaningless and allow creditors to levy on exempt funds that they are not entitled to under both state and federal law. In short, debtor had grounds to recover the exempt funds and could have challenged the levy in the state court prepetition on that basis.*fn13

As property in which debtor held a legal or equitable interest when his petition was filed, the bankruptcy court's conclusion that the funds in question constituted property of the estate was correct. See In re Varney, 449 B.R. 411 (Bankr. D. Idaho 2011) (even potentially exempt assets nonetheless become property of the estate upon the commencement of the bankruptcy case); In re McAlister, 56 B.R. 164, 166 (Bankr. D. Or. 1985) (even exempt property must initially be regarded as property of the estate and then claimed and distributed as exempt).

Although we conclude that the funds were property of debtor's estate, we note a procedural irregularity with debtor's motion for a turnover order under § 542. Section 542(a) enables the bankruptcy trustee, or the debtor-in-possession in a reorganization case to seek turnover of the debtors' assets, for the benefit of the estate. Indeed, in Whiting Pools, it was the debtor-in-possession in a reorganization case that sought turnover. Under the statute, a chapter 7 debtor is not

mentioned and generally has no standing to bring an action for turnover. See In re Freeman, 331 B.R. 327, 329 (Bankr. N.D. Ohio 2005) (the general provision in the Bankruptcy Code

governing turnover, confers this right upon the trustee); Price v. Gaslowitz (In re Price), 173 B.R. 434, 440 (Bankr. N.D. Ga. 1994) (turnover action is one facet of a chapter 7 trustee's general duties under § 704(1)).

The procedural irregularity was remedied however by debtor's response to Collect's opposition. The ultimate relief that debtor sought was to preserve his exemption in the levied funds by invoking § 522(g) and/or by exercising the trustee's avoiding powers under § 522(h).*fn14 Moreover, as of the commencement of the case, the automatic stay under § 362(a) arises, which enjoins any and all collection efforts against the debtor. As an enforcement mechanism, a debtor is afforded a private right of action to seek redress under § 362(k)(1). "Section 522's right to claim exemptions in property of the estate bestows standing on debtors for purposes of § 362(k)(1)." In re Mwangi, 432 B.R. at 822. Therefore, debtor's statutory standing to seek the return of the funds levied upon was conferred by statutes other than § 542(a). Further, debtor's procedural irregularity did not in any way affect the bankruptcy court's ability to enter an order that required Collect to surrender the funds to debtor. Since this is a protection of exemption case rather than one for turnover, the bankruptcy 1 court had the authority to enter an order requiring Collect to 2 surrender the funds to debtor under § 105(a). See § 105(a) 3 ("The court may issue any order, process, or judgment that is 4 necessary or appropriate to carry out the provisions of this 5 title."). Once the property came into the estate, it revested 6 in debtor when his exemption claim went unchallenged. See In re 7 Mwangi, 432 B.R. at 821 (noting that "[p]roperty claimed as 8 exempt leaves the estate and revests in the debtor.").

9 Finally, debtor's ex parte motion seeking the return of his 10 exempt funds was a contested matter under Rule 9014 requiring 11 reasonable notice and opportunity for a hearing. No adversary 12 proceeding was required under Rule 7001. Here, Collect had 13 ample opportunity to contest Turnover Order II through written 14 opposition and oral argument at the eventual hearing on its 15 Motion to Vacate. That said, Collect does not contend on appeal 16 that it was prejudiced in any way by the procedure used.


18 Accordingly, we AFFIRM the bankruptcy court's order, albeit 19 for different reasons, and hold that the prepetition levied 20 funds in the hands of the Sheriff on the petition date were 21 property of debtor's estate under § 541(a) due to debtor's 22 exemption rights in the funds. Therefore, the bankruptcy court 23 properly ordered Collect to surrender the funds.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.