In re Alexander, BAP No. 99-6051-MN.
| Decision Date | 21 October 1999 |
| Docket Number | BAP No. 99-6051-MN. |
| Citation | 239 BR 911 |
| Parties | In re Larry Kenneth ALEXANDER, Debtor. Larry Kenneth Alexander, Debtor — Appellant, v. Mary Jo A. Jensen-Carter, Trustee — Appellee. |
| Court | U.S. Bankruptcy Appellate Panel, Eighth Circuit |
Larry Kenneth Alexander, St.Paul, MN, pro se.
Mary Jo A. Jensen-Carter, St.Paul, MN, for appellee.
Before WILLIAM A. HILL, SCHERMER, and SCOTT, Bankruptcy Judges.
Debtor Larry Kenneth Alexander appeals from the bankruptcy court's1 June 30, 1999, order sustaining the chapter 7 trustee's objection to Alexander's claimed homestead exemption.2 We have jurisdiction over this appeal from the final order of the bankruptcy court. See 28 U.S.C. § 158(b). For the reasons set forth below, we affirm.
On June 18, 1998, debtor Larry Kenneth Alexander filed a chapter 13 bankruptcy petition which listed his address as 175 N. Lexington Parkway, St. Paul, Minnesota. The debtor then filed Schedule C on July 6, 1998, claiming a homestead exemption for property located at 875 Laurel Avenue, St. Paul, Minnesota. The chapter 13 trustee filed a timely objection to the debtor's homestead exemption, asserting that as the debtor was living at the Lexington Parkway residence at the time of petition filing, he could not claim the Laurel Avenue residence for a homestead exemption. On November 30, 1998, an evidentiary hearing was held wherein the debtor admitted that at the time he filed his chapter 13 petition, he was living at the Lexington Parkway residence but that his family was living at the Laurel Avenue residence. By an order dated December 3, 1998, the bankruptcy court sustained the chapter 13 trustee's objection and involuntarily converted the case to chapter 7. At the time of conversion, the debtor was living at the Laurel Avenue residence. The debtor appealed the bankruptcy court's order of December 3, 1998, to the district court, asserting, inter alia, that the bankruptcy court erred in (1) denying confirmation of the debtor's chapter 13 plan; (2) sustaining the chapter 13 trustee's objection to the debtor's homestead exemption; and (3) converting the case to chapter 7. By an order dated August 4, 1999, the district court affirmed the bankruptcy court's order of December 3, 1998, in all respects.
On December 21, 1998, the debtor filed a Schedule C in the converted chapter 7 case, claiming a homestead exemption for his Laurel Avenue residence. The section 341 creditors' meeting in the converted chapter 7 case was held on January 25, 1999. On February 22, 1999, the chapter 7 trustee filed an objection to the debtor's homestead exemption on the same basis that was asserted by the chapter 13 trustee; namely, that the debtor's Laurel Avenue residence did not qualify for a homestead exemption in the converted chapter 7 case because the debtor was living elsewhere at the time he filed his chapter 13 petition. On March 17, 1999, the bankruptcy court conducted a hearing to determine whether the debtor could exempt his Laurel Avenue residence as a homestead in the converted chapter 7 case and thereafter issued the order now on appeal, which sustained the trustee's objection to the debtor's homestead exemption for the Laurel Avenue residence. The debtor now argues, inter alia, that his entitlement to a homestead exemption for the Laurel Avenue residence in the converted chapter 7 case is governed by Armstrong v. Lindberg (In re Lindberg), 735 F.2d 1087 (8th Cir.1984). In addition, the debtor raises various procedural issues for our consideration. We shall first dispose of these issues before moving on to the substantive basis for the appeal.
On appeal, we review the bankruptcy court's findings of fact for clear error and its conclusions of law de novo. Fed. R. Bankr.P. 8013; In re Usery, 123 F.3d 1089, 1093 (8th Cir.1997); O'Neal v. Southwest Mo. Bank (In re Broadview Lumber Co.), 118 F.3d 1246, 1250 (8th Cir.1997).
By a letter dated August 16, 1999, the chapter 7 trustee (the appellee in this case) submitted to this Court a copy of the U.S. District Court's opinion and order of August 4, 1999. The debtor responded by filing a "motion to strike," seeking to bar this Court from taking into consideration the district court's opinion and order of August 4, 1999. The debtor asserts that the district court's opinion should be excluded from our consideration because it is prejudicial and because it was not a part of the record developed before the bankruptcy court when it issued its order of June 30, 1999 — the order from which the present appeal was taken.
"Ordinarily an appellate court should base its decision on the facts as they existed at the time the trial court made its decision." Frankfurth v. Cummins (In re Cummins), 20 B.R. 652, 653 (9th Cir. BAP 1982). In extraordinary circumstances, however, an appellate court may "take judicial notice of developments in a case on appeal which have occurred in the district court after the appeal was filed." Cummins, 20 B.R. at 653 (quoting Samuel v. University of Pittsburgh, 506 F.2d 355, 360 n. 12 (3rd Cir.1974)). "The on-going nature of bankruptcy proceedings, on occasion, creates situations where the reviewing court may take notice of fundamental events occurring after the entry of the judgment from which the appeal was taken." Cummins, 20 B.R. at 653. Moreover, appellate courts regularly take similar judicial notice of post-appeal developments which trigger the mootness doctrine. Id. at 653 (citing Landy v. Federal Deposit Ins. Corp., 486 F.2d 139, 151 (3rd Cir.1973)).
In Cummins, a real estate broker brought an adversary proceeding against the debtors to recover his real estate commission. Cummins, 20 B.R. at 652-53. The bankruptcy court entered judgment in favor of the debtors based on a conclusion that the real estate broker was a professional person who failed to receive court approval of his employment as required by § 327(b) of the Bankruptcy Code. Id. The real estate broker appealed that judgment to the Ninth Circuit Bankruptcy Appellate Panel. Id. Subsequently, while the appeal was pending, the debtors' voluntarily dismissed their bankruptcy petition. Id. The dismissal was brought to the appellate panel's attention during a telephonic hearing and again during oral argument. Id. at 654. The debtors argued that the appellate panel could not consider the dismissal of the debtors' bankruptcy petition because the dismissal had occurred after the bankruptcy court's decision in the adversary proceeding. Id. Nevertheless, the appellate panel took notice of the voluntary dismissal, and that fact formed the basis for the panel's decision to reverse and remand the case. Id. at 653-54.
In the present case, the debtor's argument closely resembles the argument made by the debtors in Cummins, and a similar result is appropriate. The debtor has not demonstrated how his present appeal to this Court would be prejudiced by our taking notice of the district court's opinion and order of August 4, 1999. Accordingly, we take judicial notice of the aforementioned decision, and the debtor's "motion to strike" is denied. Moreover, although our inquiry regarding the homestead exemption issue may be similar to that of the district court, our procedural context is different. The district court was concerned with the chapter 13 trustee's objection to the debtor's homestead exemption. Thus, the district court was not squarely faced with the issue of whether a debtor may claim a homestead exemption in a converted chapter 7 case based on residency at the time of conversion. Because the district court did not address this issue, its opinion need not be given preclusive effect and should not impede this Court's determination of the issue now presented. The present appeal arises in the context of the converted chapter 7 case wherein the debtor has attempted to exempt the homestead where he resided at the time of conversion. Therefore, this Court is in a proper procedural context to address the debtor's argument that homestead exemption eligibility is determined according to the date of conversion. First, however, we will dispose of the debtor's argument that the chapter 7 trustee's objection was untimely filed.
On December 21, 1998, the debtor filed an amended Schedule C, claiming his Laurel Avenue homestead as exempt in the converted chapter 7 case. On January 25, 1999, the creditors' meeting for the converted chapter 7 case was held. On February 22, 1999, the trustee in the converted chapter 7 case filed an objection to the debtor's homestead exemption. The debtor asserts that the chapter 7 trustee's objection was untimely under Rule 4003(b) because it was not filed within 30 days after the debtor filed his amended schedule. The debtor argues that objections to exemptions must be filed within 30 days after an amendment to Schedule C or within 30 days after the original creditors' meeting in the chapter 13 case, citing In re Ferretti, 230 B.R. 883 (Bankr.S.D.Fla. 1999) in support of his position. Apparently interpreting Rule 4003(b) according to its plain meaning, the bankruptcy court concluded that the trustee's objection to the debtor's homestead exemption was timely filed because it occurred within 30 days after the creditors' meeting in the converted chapter 7 case. See In re Alexander, 236 B.R. 679, 681 (Bankr.D.Minn. 1999).
The trustee or any creditor may file objections to a debtor's claimed exemptions within 30 days after the conclusion of the section 341 creditors' meeting, or within 30 days after the filing of any amended schedules. Fed. R. Bankr.P. 4003(b). A trustee who fails to timely file an objection to an exemption pursuant to Rule 4003(b) is precluded from objecting at a later time, and the disputed asset is exempt. Taylor v. Freeland &...
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