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Earl v. Lund Cadillac LLC

United States District Court, D. Arizona

August 4, 2016

Rachael Anne Earl, Appellant,
v.
Lund Cadillac LLC, et al., Appellees. BK No. 2:13-BK-18751-EPB

          Rachael Anne Earl, Appellant, represented by Allen D. Butler, Law Office of Allen D Butler PC.

          Lund Cadillac LLC, Appellee, represented by Ryan James Lorenz, Clark Hill PLC.

          Diane Mann, Appellee, represented by Adam Bennett Nach, Lane & Nach PC & Joel Frederic Newell, Lane & Nach PC.

          Wells Fargo Bank NA, Appellee, represented by Andrew Vance Hardenbrook, Snell & Wilmer LLP.

          ORDER

          STEPHEN M. McNAMEE, Senior District Judge.

         Appellant Rachael Anne Earl ("Debtor") appeals an Order from the United States Bankruptcy Court granting Appellees' objection to debtor's claimed homestead exemption. (Docs. 1; 8.) Appellees Lund Cadillac, Diane Mann ("Trustee"), and Wells Fargo Bank ask the Court to affirm the Bankruptcy Court's decision. (Doc. 11.) The appeal is fully briefed. (Docs. 11; 13.) For the reasons set forth below, the Court will affirm the Bankruptcy Court's decision.

         I. BACKGROUND

         On October 28, 2013, Debtor, acting pro se, filed for Chapter 13 bankruptcy relief.[1] (Bk. Doc. 1.)[2] The case was ultimately converted to a Chapter 7 on March 24, 2014, because Debtor's proposed plan was insufficient to compensate creditors. (Bk. Doc. 34.) At this time, Debtor obtained counsel to proceed with the case.

         On her first Schedule A, Debtor listed ownership of two properties: one on Claiborne Avenue and another on Sunnyvale Avenue, both single family residences located in Gilbert, Arizona. (Bk. Doc. 20.) At the time of filing for bankruptcy, Debtor, her husband, and their four children resided in the Claiborne property. On her first Schedule C, Debtor claimed a homestead exemption to the Claiborne property. (Id.) However, Debtor did not have title to the Claiborne property as it had previously been sold in a trustee's sale. Debtor attempted to get the trustee's sale set aside, but ultimately failed. (Bk. Doc. 83.)

         Debtor bought the Sunnyvale property in May 2002 and lived there with her family for a few years until they moved to the Claiborne property. Debtor retained ownership of the Sunnyvale property, and at the time she filed her petition had been renting the Sunnyvale property out to third-party tenants for over four years.

         In August 2014, ten months after filing for bankruptcy, Debtor filed a notice of change of address to the Sunnyvale property. (Bk. Doc. 71.) Subsequently, Trustee filed a Notice of Trustee's Sale on the Sunnyvale property. In December 2014, before the scheduled sale date of the Sunnyvale property, Debtor amended her bankruptcy schedules and changed her homestead exemption to the Sunnyvale property. (Bk. Doc. 81.) In those amended schedules, however, Debtor still indicated that all her exempted personal property was located at the Claiborne property. (Id.) Appellee Lund Cadillac objected to the amendment. (Bk. Doc. 88.) The Bankruptcy Court held an evidentiary hearing on the matter and ultimately sustained the objection. (Bk. Doc. 125). Debtor subsequently filed the present appeal.

         II. STANDARD OF REVIEW

         A party may appeal a Bankruptcy Court's Order to the District Court if the Order is final and binding. 28 U.S.C. § 158(a). An appellant may choose between a Bankruptcy Appellate Panel, if one exists in the Circuit, and a District Court to hear its appeal. 28 U.S.C. § 158(c). Thus, this Court has appellate jurisdiction to review all final and binding Orders issued by the Bankruptcy Court. In ultimately resolving the substance of the appeal, the Court will review the Bankruptcy Court's conclusions of law de novo and its findings of fact under a clearly erroneous standard. See Fed R. Bankr. P. 8013; Wegner v. Murphy (In re Wegner), 839 F.2d 533, 536 (9th Cir. 1988) (citing Pizza of Hawaii, Inc. v. Shakey's, Inc. (In re Pizza of Hawaii, Inc.), 761 F.2d 1374, 1377 (9th Cir. 1985)). In its ...


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