611 B.R. 662 (Bkrtcy.C.D.Cal. 2019), ED CV 19-01252-AB, In re Forrest

• Docket Nº: ED CV 19-01252-AB
• Citation: 611 B.R. 662
• Opinion Judge: The Honorable ANDRÉ BIROTTE JR., United States District Judge
• Party Name: IN RE Thomas J. FORREST Bankruptcy No. 6:17-bk-19913
• Attorney: Carla Badirian, Deputy Clerk, Attorney(s) Present for Plaintiff(s): None Appearing N/A, Court Reporter, Attorney(s) Present for Defendant(s): None Appearing Michael Frank Chekian, Chekian Law Office, Inc., Los Angeles, CA, for Appellants. Wesley H. Avery, Law Offices of Wesley H. Avery, APC, Pasa...
• Case Date: December 26, 2019
• Court: United States District Courts, 9th Circuit, Central District of California

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611 B.R. 662 (Bkrtcy.C.D.Cal. 2019)

IN RE Thomas J. FORREST

No. ED CV 19-01252-AB

Bankruptcy No. 6:17-bk-19913

United States District Court, C.D. California

December 26, 2019

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[Copyrighted Material Omitted]

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Carla Badirian, Deputy Clerk, Attorney(s) Present for Plaintiff(s): None Appearing

N/A, Court Reporter, Attorney(s) Present for Defendant(s): None Appearing

Michael Frank Chekian, Chekian Law Office, Inc., Los Angeles, CA, for Appellants.

Wesley H. Avery, Law Offices of Wesley H. Avery, APC, Pasadena, CA, for Larry D. Simons, Chapter 7 Trustee.

Proceedings: [In Chambers] Order AFFIRMING Bankruptcy Court Order

The Honorable ANDRÉ BIROTTE JR., United States District Judge

Before the Court is the appeal of Appellants and Debtors Thomas J. Forrest and Sarah Forrest (collectively, "Appellants" or "Debtors"), husband and wife, from the bankruptcy court’s June 17, 2019 Order (AA EOR¹ Tab 22) denying Appellant Thomas J. Forrest’s Motion for Administrative Claim. ("Motion," AA EOR Tab 17). Appellants filed an opening brief ("AA Br.," Dkt. No. 8) and Appellee Larry D. Simons ("Appellee" or "Trustee"), the Chapter 7 Trustee of Appellant Thomas J. Forrest, also filed an opening brief ("AE Br.," Dkt. No. 10). Appellants replied. ("Reply," Dkt. No. 12). Having reviewed the parties’ briefing and the record before the bankruptcy court, the June 17, 2019 Order is AFFIRMED.

I. BACKGROUND

Debtor and Appellant Thomas J. Forrest ("Mr. Forrest") filed a solo Chapter 7 voluntary bankruptcy petition without his wife Mrs. Sarah Forrest ("Mrs. Forrest") on November 30, 2017. (AA EOR Tab 1). At the time this petition was filed, the Forrests jointly owned their home at 19518 Denair Court, Riverside, California 92508 ("the Home"). (Declaration of Mr. Forrest ("Mr. Forrest Decl."), AA EOR Tab 17 at 8 ¶ 2).

On or about April 12, 2019, Appellant’s duly appointed Chapter 7 Trustee, Appellee Larry Simons, applied to employ a real estate broker to sell the Home. (AA EOR Tab 28). Trustee owned the Home in fee simple for the benefit of the bankruptcy estate via a judgment entered on February 8, 2019 in the adversary proceeding captioned Larry Simons v. Sarah Forrest, et al.

Prior to Trustee’s ultimate sale of the Home, Appellants lived there with their two minor sons. (Mr. Forrest Decl. ¶ 3). Assuming the Home would be sold, Appellants stated that they would need funds to

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relocate to another residence in the same neighborhood so their children could attend the same schools and maintain their relationships with current teachers, coaches, mentors, and friends. (Id. ).

Appellants maintained that, after payment of the senior mortgage and costs of sale, there should be substantial proceeds remaining. (Mr. Forrest Decl. ¶ 4; Declaration of Mrs. Forrest ("Mrs. Forrest Decl.") ¶ 4). The sale price was initially estimated at $515,000, the first mortgage payoff was estimated at $277,000, and the costs of sale were estimated at $40,000, resulting in net proceeds of $198,000. (Id. ). The Home was ultimately sold for $495,000.00 and proceeds from the sale were $157,713.28. (See AE SEOR² Tab 1 (Sale Order for the Home entered on July 31, 2019) and Tab 2 (Report of Sale dated August 13, 2019)).

The Forrests maintain that after Mr. Forrest’s bankruptcy and post-petition, from approximately December 2017 through April 2019 they have spent at least $37,993.98 on Home expenses, covering payments for the mortgage, insurance, property taxes, repairs, and maintenance. (Mr. Forrest Decl. ¶ 6 and Mrs. Forrest Decl. ¶ 5); see also EOR Tab 17 at Ex. A (displaying a chart of expenses). The Forrests claim that these expenses have preserved and improved the value of the Home and reduced the expected payoff amounts in the future sale of the Home on at least a dollar-for-dollar basis. (Mr. Forrest Decl. ¶ 6; Mrs. Forrest Decl. ¶ 5).

On May 1, 2019 Appellant Thomas J. Forrest filed a Motion for an administrative claim, requesting that the $37,993.98 of the post-petition expenses, purportedly incurred to maintain and improve their family home sold by Trustee. (AA EOR Tab 17). On May 28, 2019, Trustee opposed the Motion (AA EOR Tab 20). After a hearing on June 11, 2019 (AA EOR Tab 27, June 11, 2019 Hearing Transcript ("Tr.")), the bankruptcy court denied the Motion on June 17, 2019. ("June 17, 2019 Order," AA EOR Tab 22).

In...