United States District Court, D. Arizona
Rachael Anne Earl, Appellant, represented by Allen D. Butler,
Law Office of Allen D Butler PC.
Cadillac LLC, Appellee, represented by Ryan James Lorenz,
Clark Hill PLC.
Mann, Appellee, represented by Adam Bennett Nach, Lane & Nach
PC & Joel Frederic Newell, Lane & Nach PC.
Fargo Bank NA, Appellee, represented by Andrew Vance
Hardenbrook, Snell & Wilmer LLP.
STEPHEN M. McNAMEE, Senior District Judge.
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
October 28, 2013, Debtor, acting pro se, filed for Chapter 13
bankruptcy relief. (Bk. Doc. 1.) 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.
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.)
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.
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.
STANDARD OF REVIEW
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