O'Neil v. O'Neil, BAP NO. EB 20-023

CourtBankruptcy Appellate Panels. U.S. Bankruptcy Appellate Panel, First Circuit
Writing for the CourtPer Curiam.
PartiesGREGORY ATHERTON O'NEIL, Debtor. ANDREW M. DUDLEY, Chapter 13 Trustee, Appellant, v. GREGORY A. O'NEIL, Appellee.
Docket NumberBankruptcy Case No. 19-10641-MAF,BAP NO. EB 20-023
Decision Date21 May 2021


ANDREW M. DUDLEY, Chapter 13 Trustee, Appellant,
GREGORY A. O'NEIL, Appellee.

BAP NO. EB 20-023
Bankruptcy Case No. 19-10641-MAF


May 21, 2021


Appeal from the United States Bankruptcy Court for the District of Maine
(Hon. Michael A. Fagone, U.S. Bankruptcy Judge)

Before Hoffman, Panos, and Katz, United States Bankruptcy Appellate Panel Judges.

Andrew M. Dudley, Esq., on brief for Appellant.
No brief filed for Appellee.

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Per Curiam.

The chapter 13 trustee, Andrew M. Dudley (the "Trustee"), appeals from the bankruptcy court's order overruling his objection to the debtor's claimed exemption for a vehicle under Maryland law. For the reasons set forth below, we conclude that the Trustee does not have appellate standing and that this appeal has become moot. Therefore, this appeal will be DISMISSED for lack of jurisdiction.


I. The Bankruptcy Proceedings

Gregory O'Neil (the "Debtor") filed a chapter 13 petition in the U.S. Bankruptcy Court for the District of Maine in December 2019. In his bankruptcy filings, he indicated he lived in Maine as of the petition date, but he had lived in Maryland from October 2016 to February 2018 and New Hampshire from February 2018 to August 2019, before moving to Maine in August 2019.

In his bankruptcy schedules, the Debtor claimed exemptions for both real and personal property. The only exemption at issue in this appeal is a $5,000 wildcard exemption claimed in a 2000 Porsche 911 (the "Porsche") under Md. Code Ann., Cts. & Jud. Proc. § 11-504(f)(1)(i)(1).

The Trustee objected to several of the Debtor's claimed exemptions, including the exemption for the Porsche. He asserted that, pursuant to the 730-day look-back period set forth in § 522(b)(3)(A), the Debtor was required to utilize Maryland law when claiming exemptions.1 He maintained, however, that while the Debtor was eligible for some exemptions under Maryland law, he was not entitled to exempt the Porsche under Md. Code Ann. § 11-504(f)(1)(i)(1) because that provision is limited to domiciliaries of Maryland, and the Debtor did

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not live in Maryland on the petition date. He also asserted that because some exemptions under the Maryland exemption scheme were available to the Debtor, he was not eligible to claim federal exemptions under the "hanging paragraph" of § 522(b)(3) which applies only when the effects of the domiciliary requirements of § 522(b)(3) render a debtor ineligible to claim "any" exemptions.

At a hearing on the Trustee's objection, the Debtor countered that because § 522(b)(3)(A) required him to utilize Maryland exemptions, he should be deemed to have been domiciled in Maryland on the petition date for purposes of that state's exemption statute. But he later admitted, in a supplemental brief, that the domiciliary requirement of the Maryland statute "eliminate[d]" his ability to claim an exemption in the Porsche. The Debtor noted, however, that disallowance of his claimed exemption was "unlikely to materially impact" his bankruptcy case as his priority claims greatly exceeded the value of his nonexempt assets.2 He requested that the bankruptcy court either overrule the Trustee's objection or, alternatively, permit him to amend his exemptions.

On June 19, 2020, the bankruptcy court issued an order sustaining the Trustee's objection to several of the Debtor's exemptions in property other than the Porsche and overruling the Trustee's objection to the claimed exemption in the Porsche. The court held that, "as a matter of federal law," the Debtor met the domiciliary requirement of the Maryland statute because § 522(b)(3)(A) "creates a legal fiction that the Debtor was domiciled in Maryland on the petition date" and, therefore, he was entitled to claim exemptions under Md. Code Ann. § 11-504(f)(1)(i)(1). In re O'Neil, No. 19-10641, 2020 WL 3634387, at *3 (Bankr. D. Me. June 19, 2020).

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It also ruled that, even if the Debtor were not deemed to be domiciled in Maryland as a matter of federal bankruptcy law, the Trustee's objection to the exemption in the Porsche "would still fall short," as "[t]he most sensible reading of [§] 522(b)(3)(A) leads to the conclusion that 'Congress made state law exemptions applicable as a matter of federal law[,]' deferring to the states 'with respect to the content of those exemptions, but not as to their applicability.'" Id. (quoting Laura B. Bartell, The Peripatetic Debtor: Choice of Law and Choice of Exemptions, 22 Emory Bankr. Dev. J. 401, 425 (2006)). While the bankruptcy court recognized that numerous courts have interpreted § 522(b)(3) to require a strict application of the specific domiciliary restrictions in state exemption laws, it disagreed with that approach, stating: "[A]pplying the exemption laws of the state specified in [§] 522(b)(3)(A) without regard to any domiciliary restrictions in that state law is consistent with both the text of [§] 522 and with the axiom that exemption laws are to be construed liberally in favor of the debtor." Id.

The Trustee appealed. The Debtor did not file an appellate brief and has not participated in this appeal.


Before addressing the merits of an appeal, we must determine whether we have jurisdiction, even if the question is not raised by the litigants. Formatech, Inc. v. Sovereign Bank (In re Formatech, Inc.), 483 B.R. 363, 367 (B.A.P. 1st Cir. 2012) (citation omitted).

Article III of the United States Constitution limits the jurisdiction of federal courts to actual "cases" and "controversies." U.S. Const. art. III, § 2, cl.1; see also Chafin v. Chafin, 568 U.S. 165, 171 (2013). "Spawning from that limitation, the frequently intertwined doctrines of standing, ripeness, and mootness all probe whether a subsisting controversy warrants judicial intervention." Religious Sisters of Mercy v. Azar, No. 3:16-cv-00386, 2021 WL 191009, at *11

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(D.N.D. Jan. 19, 2021) (citing Warth v. Seldin, 422 U.S. 490, 499 n.10 (1975)). This appeal raises both standing and mootness concerns. We begin with a review of both doctrines.

A. Standing

"One element of the case-or-controversy requirement is that plaintiffs must establish that they have standing to sue." Blum v. Holder, 744 F.3d 790, 795 (1st Cir. 2014) (quoting Clapper v. Amnesty Int'l USA, 568 U.S. 398, 408 (2013)) (internal quotation marks omitted). Accordingly, "[t]hose who seek to invoke the jurisdiction of the federal courts must satisfy Article III's threshold case or controversy requirement by demonstrating that they have 'a personal stake in the outcome of the claim asserted.'" United States v. 434 Main St., Tewksbury, Mass., 862 F. Supp. 2d 24, 32 (D. Mass. 2012) (quoting Pagán v. Calderón, 448 F.3d 16, 27 (1st Cir. 2006)). To satisfy this requirement, there must be: (1) an "injury in fact"; (2) that is "fairly traceable to the challenged action"; and (3) that likely "will be redressed by a favorable decision." Massachusetts v. U.S. Dep't of Health & Human Servs., 923 F.3d 209, 222 (1st Cir. 2019) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)). Significantly, "the injury in fact 'must be concrete and particularized and actual or imminent, not conjectural or hypothetical.'" N.H. Lottery Comm'n v. Rosen, 986 F.3d 38, 50 (1st Cir. 2021) (quoting Reddy v. Foster, 845 F.3d 493, 500 (1st Cir. 2017)). "In addition to these Article III prerequisites, prudential concerns ordinarily require a plaintiff to show that his claim is premised on his own legal rights (as opposed to those of a third party) . . . ." Pagán, 448 F.3d at 27 (citations omitted).

Appellate standing in bankruptcy cases is even more restrictive than Article III standing. Spenlinhauer v. O'Donnell, 261 F.3d 113, 117 (1st Cir. 2001) (citations omitted); see also Travelers Ins. Co. v. H.K. Porter Co., 45 F.3d 737, 741 (3d Cir. 1995) ("[T]he standing requirement in bankruptcy appeals is more restrictive than the 'case or controversy' standing requirement of Article III, which need not be financial and need only be fairly traceable to the

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alleged illegal action.") (citations omitted) (internal quotation marks omitted). In bankruptcy appeals, standing is limited to a "person aggrieved." Spenlinhauer, 261 F.3d at 117 (citation omitted). Standing under the "person aggrieved" standard exists "only where the challenged order directly and adversely affects an appellant's pecuniary interests." Id. at 117-18 (citation omitted); see also Donarumo v. Furlong (In re Furlong), 660 F.3d 81, 86 (1st Cir. 2011); Davis v. Cox, 356 F.3d 76, 92 n.15 (1st Cir. 2004). "The nature of bankruptcy litigation, with its myriad of parties, directly and indirectly involved or affected by each order and decision of the bankruptcy court, mandates that the right of appellate review be limited to those persons whose interests are directly affected." In re El San Juan Hotel, 809 F.2d 151, 154 (1st Cir. 1987) (citations omitted). "A party's pecuniary interests are affected if the order diminishes the appealing party's property, increases its burdens, or detrimentally affects its rights." In re Formatech, Inc., 483 B.R. at 368 (citation omitted). Further, to be directly affected by the order, the appellant's pecuniary interests "cannot be merely contingent or speculative." Encanto Rests., Inc. v. Aquino Vidal (In re Cousins Int'l Food, Corp.), 565 B.R. 450, 459 (B.A.P. 1st...

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