In re Tarkanian, Case No.: 13–20495–MKN
| Decision Date | 30 June 2014 |
| Docket Number | Case No.: 13–20495–MKN |
| Court | U.S. Bankruptcy Court — District of Nevada |
| Parties | IN RE: Daniel George John TARKANIAN and Amy Michelle Tarkanian, Debtors. |
Matthew C. Zirzow, Larson & Zirzow, Las Vegas, NV, for Debtors.
On May 20, 2014, the court heard the Objection to Claims of Exemption brought on behalf of Federal Deposit Insurance Corporation as Receiver for La Jolla Bank, FSB ("FDIC"). The appearances of counsel were noted on the record. After oral arguments were presented, the matter was taken under submission.
On December 19, 2013, Daniel Tarkanian and Amy Tarkanian ("Debtors") filed a voluntary Chapter 7 petition. (ECF No. 1). The case was assigned for administration to William A. Leonard ("Trustee") and a meeting of creditors was scheduled to be held on January 22, 2014. (ECF No. 4). On January 3, 2014, Debtors filed their schedules of assets and liabilities and other information required by Section 521(a)(1). (ECF No. 12).
On their real property Schedule "A," Debtors listed a property located at 3008 Campbell Circle in Las Vegas, Nevada ("Residence"). Debtors state that the current value of the Residence is $450,000 and that there is a claim secured by the Residence in the amount of $248,000. On their secured creditor Schedule "D," Debtors identify Bank of America as having a claim in the amount of $248,000 secured by the Residence. On their Schedule "C," Debtors claim a homestead exemption in the Residence in the amount of $202,000 pursuant to NRS 21.090(1)(1) and NRS 115.050. On their non-priority unsecured creditor Schedule "F," Debtors list the Federal Deposit Insurance Corporation ("FDIC") as receiver for La Jolla Bank, FSB, as having a claim of $16,995,005.17, based on a personal guaranty of business debt. On the same schedule, Debtors also list Nevada State Bank ("NSB") as having a claim in the amount of $14,800,000.00, based on a personal guaranty of business debt. Stancorp also is listed as having claim in the amount of $3,076,000 based on a personal guaranty of business debt. On their Schedule "H," Debtors list an entity identified as JAMD, LLC as a co-debtor with respect to both the NSB and the Stancorp obligations.
In Item 4 of their Statement of Financial Affairs ("SOFA"), Debtors disclosed a lawsuit by the FDIC against the Debtors, Jerry Tarkanian, Lois Tarkanian, George Tarkanian, Zafrir Diamant, Josephine Diamant, Douglas R. Johnson, and Debra Johnson, denominated Case No. 10–cv–0980–WQH (KSC), for which a judgment had been entered by the United States District Court for the Southern District of California. Debtors also disclose in Item 18 that they have an interest in or relationship to a variety of entities, including JAMD, LLC, Tark, LLC, Tarkanian Basketball Academy, Inc., Vegas Diamond Properties, LLC, and others.
On January 23, 2014, the Trustee reported that there are assets to administer after having completed the meeting of creditors. (ECF No. 16).2
On February 21, 2014, the Trustee filed an objection to the Debtors' claim of exemption with respect to their interest in JAMD, LLC and Tark, LLC. (ECF No. 38).
Also on February 21, 2014, the FDIC filed the instant objection to the Debtors' claim of an exemption with respect to their Residence ("Homestead Objection"). (ECF No. 40).3 On March 12, 2014, Debtors filed their response ("Debtors' Response") to the Homestead Objection. (ECF No. 69). The response was accompanied by the declarations of Daniel Tarkanian ("Daniel Declaration") (ECF No. 70), Jodie Diamant ("Jodie Declaration") (ECF No. 71), and Lois Tarkanian ("Lois Declaration") (ECF No. 72). On March 19, 2014, the FDIC filed its reply ("Reply"). (ECF No. 75).
On March 20, 2014, Debtors filed an amended Schedule "C" that eliminated any claim of exemption as to their interest in JAMD, LLC and Tark, LLC. (ECF No. 79). As a result, the Trustee withdrew his objection to those claims of exemption. (ECF No. 80).
On March 26, 2014, an initial hearing on the Homestead Objection was conducted. At the initial hearing, the court was advised that separate counsel had been retained by debtor Amy Tarkanian. An evidentiary hearing on the Homestead Objection was scheduled for May 1, 2014.
On April 14, 2014, a notice of appearance of separate counsel for Amy Tarkanian was filed. (ECF No. 113).
On April 28, 2014, the FDIC filed its trial brief ("FDIC Brief") in support of the Homestead Objection (ECF No. 121) accompanied by a request for judicial notice ("RJN"). (ECF No. 122). On the same date, a trial brief in response to the Homestead Objection was filed on behalf of Daniel Tarkanian ("Daniel Brief") (ECF No. 120) as well as a separate trial brief on behalf of Amy Tarkanian ("Amy Brief"). (ECF No. 125).4
On May 1, 2014, the evidentiary hearing on the Homestead Objection commenced. Because additional time was required to complete the witnesses' testimony, the hearing was continued to May 20, 2014. After completion of the testimony, closing arguments were presented and the matter was taken under submission.
Under FRBP 4003(b)(1), a party in interest must object, if at all, to a debtor's claim of exemptions within 30 days after conclusion of the meeting of creditors. Failure to timely object bars any subsequent challenge to the validity of the claimed exemption, see Taylor v. Freeland & Kronz, 503 U.S. 638, 642, 112 S.Ct. 1644, 1648, 118 L.Ed.2d 280 (1992)5 , except to the extent the debtor subsequently seeks relief under Section 522(f). See FED.R.BANKR.P. 4003(d).
Under FRBP 4003(c), the objecting party has the burden of proving that an exemption is not properly claimed. In Diener v. McBeth (In re Diener), 483 B.R. 196 (9th Cir. BAP 2012), the appellate panel explained the allocations of the burdens of production and persuasion on an exemption objection as follows:
A claimed exemption is " 'presumptively valid.' " Tyner v. Nicholson (In re Nicholson), 435 B.R. 622, 630 (9th Cir. BAP 2010) (citing Carter v. Anderson (In re Carter), 182 F.3d 1027, 1029 n. 3 (9th Cir.1999) ). "[I]f a party in interest timely objects, 'the objecting party has the burden of proving that the exemptions are not properly claimed.' " Id.(quoting Rule 4003(c) ). Initially, this means that the objecting party has the burden of production and the burden of persuasion. In re Carter, 182 F.3d at 1029 n. 3. The objecting party must produce evidence to rebut the presumptively valid exemption. Id. Once rebutted, the burden of production then shifts to the debtor to come forward with unequivocal evidence that the exemption is proper. Id. The burden of persuasion, however, always remains with the objecting party. Id.
483 B.R. at 203. The standard of proof is by a preponderance of the evidence. See Leavitt v. Alexander (In re Alexander), 472 B.R. 815, 821 (9th Cir. BAP 2012).
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