Albert v. Golden, No. 20-60006 (9th Cir. 2021)
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The Ninth Circuit affirmed the Bankruptcy Appellate Panel's decision affirming the bankruptcy court's rejection of debtor's attempt to exempt two assets from her estate. The panel clarified that a bankruptcy court's prior rejection of claimed exemptions carries preclusive weight, even after Law v. Siegel, 571 U.S. 415 (2014). The panel explained that Law does not bar courts from denying exemptions on the judicially created doctrines of issue and claim preclusion where, as here, the debtor is not statutorily entitled to the exemptions.
The panel also held that the bankruptcy court properly deemed debtor's claims precluded. In this case, debtor's initial and amended exemptions are legally identical where her amended schedule sought to exempt the same assets as her earlier one; the bankruptcy court's initial, unappealed orders denying debtor's exemptions were final orders establishing the parties' rights as to the assets in question; and debtor was obviously a party to the proceeding in which her claims had originally been rejected. The panel noted that, regardless of whether the claims remained contingent or had been reduced to a settlement post-petition, debtor's interest in them remained the same.
Court Description: Bankruptcy. The panel affirmed the Bankruptcy Appellate Panel’s decision affirming the bankruptcy court’s rejection of a debtor’s attempt to exempt two assets from her estate. Debtor petitioned for Chapter 13 bankruptcy and sought to exempt from her estate counterclaims she had filed in state court against Ford Motor Credit Company, as well as accounts receivable from former clients. The bankruptcy court sustained the objections of the Chapter 13 trustee and Ford on the grounds that the counterclaims and accounts receivable failed to satisfy California’s exemption laws, and debtor did not timely appeal those rulings. The bankruptcy court converted the Chapter 13 proceeding to Chapter 7 and appointed a new trustee. Debtor amended her exemptions, and the trustee objected that the amended exemptions were identical to those the court had previously rejected and that, as a result, the doctrines of issue and claim preclusion barred their relitigation. The bankruptcy court denied the amended exemptions, and the BAP affirmed. IN RE ALBERT 3 The panel held that bankruptcy courts can deny exemptions simply because they have denied the same exemptions before. The panel held that Law v. Siegel, 571 U.S. 415 (2014) (bankruptcy courts’ equitable powers must yield to the Bankruptcy Code’s more specific mandates), does not bar courts from denying exemptions on the judicially created doctrines of issue and claim preclusion where, as here, the debtor is not statutorily entitled to the exemptions. The panel further held that the bankruptcy court properly disallowed debtor’s exemptions on issue preclusion grounds.
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