Phillips v. Gilman, No. 16-55436 (9th Cir. 2018)
Annotate this CaseGilman filed a voluntary Chapter 7 bankruptcy petition. Phillips was a creditor. Gilman identified properties in Van Nuys and Northridge, describing the Northridge property as “in escrow” and claiming a household exemption for the Van Nuys property, and stating “Debtor has Cancer and has not been able to work.” He did not list any contracts relating to the sale of the Van Nuys property. Gilman would later admit that escrow was open on that property when he filed for bankruptcy. Phillips filed an adversary proceeding, alleging fraud, and objected to Gilman’s homestead exemption. Gilman did not oppose the objection and did not appear at the hearing. The bankruptcy court sustained Phillips’ objections. Gilman filed an amended Schedule C, claiming a reduced exemption and obtained Rule 60(b) relief, based on his counsel’s mistaken failure to oppose Phillips’ objections. The bankruptcy court held that escrow did not eliminate Gilman’s right to a homestead exemption. The Ninth Circuit held that it had jurisdiction to review the district court’s order affirming the grant of the homestead exemption; that the bankruptcy court did not abuse its discretion in granting Rule 60(b) relief from judgment on the ground of excusable neglect; and that the bankruptcy court erred in concluding that the debtor established his claim to a homestead exemption under California law without determining whether the debtor intended to continue to reside in the property.
Court Description: Bankruptcy. The panel affirmed in part and vacated in part the district court’s judgment affirming the bankruptcy court’s orders in an adversary proceeding in which the bankruptcy court ruled that a chapter 7 debtor was entitled to a homestead exemption. The panel held that it had jurisdiction to review the district court’s order affirming the grant of the homestead exemption. The panel concluded that Bullard v. Blue Hills Bank, 135 S. Ct. 1686 (2015) (holding that a bankruptcy court order is only a final, appealable order if it alters the status quo and fixes the rights and obligations of the parties), was not fundamentally inconsistent with Ninth Circuit precedent holding that an order granting or denying an exemption constitutes a final appealable order. Affirming in part, the panel held that the bankruptcy court did not abuse its discretion in granting the debtor’s motion for relief from judgment on the ground of excusable neglect under Federal Rule of Civil Procedure 60(b) and allowing further proceedings even though the debtor did not initially oppose creditors’ objection to the homestead exemption. Vacating in part and remanding, the panel held that the bankruptcy court erred in concluding that the debtor established his claim to a homestead exemption under IN RE GILMAN 3 California law because the bankruptcy court made no determination as to whether the debtor intended to continue to reside in the property.
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