Phillips v. Gilman (In re Gilman), 16-55436

• Citation: 887 F.3d 956
• Decision Date: 13 April 2018
• Docket Number: No. 16-55436,16-55436
• Parties: IN RE Kevan Harry GILMAN, Debtor, Tammy R. Phillips ; Tammy R Phillips, A Prof. Law Corp., Appellants, v. Kevan Harry Gilman, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

887 F.3d 956

IN RE Kevan Harry GILMAN, Debtor,

Tammy R. Phillips ; Tammy R Phillips, A Prof. Law Corp., Appellants,

v.Kevan Harry Gilman, Appellee.

No. 16-55436

United States Court of Appeals, Ninth Circuit.

Argued and Submitted November 15, 2017 Pasadena, California

Filed April 13, 2018

Charles Q. Jakob (argued), Gold River, California, for Appellants.

Mark Ellis (argued), Ellis Law Group LLP, Sacramento, California, for Appellee.

Before: Michael Daly Hawkins, Barrington D. Parker, Jr.,^** and Sandra S. Ikuta, Circuit Judges.

HAWKINS, Circuit Judge:

Creditor-appellants Tammy Phillips and Tammy R. Phillips, a Professional Law Corporation (collectively, "Phillips") appeals the bankruptcy court's determination that debtor-appellee Kevin Gilman ("Gilman") was entitled to a homestead exemption of $100,000. Because the bankruptcy court did not determine whether Gilman had the requisite intent to continue to reside in the property in question, we vacate and remand for further fact finding.

I. FACTS AND PROCEDURAL HISTORY

Gilman filed a voluntary petition for Chapter 7 bankruptcy in the United States Bankruptcy Court for the Central District of California. Gilman listed Phillips and Tammy R. Phillips, a Professional Law Corporation, as creditors.¹ On Gilman's initial Schedule A (Real Property), he listed two pieces of property: (1) 6553 Varna Ave., Van Nuys, California, and (2) 9010 Corbin Ave., Suite 16, Northridge, California. He described the second property as "in escrow." On Gilman's initial Schedule C (property claimed as exempt), he claimed a household exemption for the Varna Avenue property. Under the column, "Specify Law Providing Each Exemption," Gilman cited California Code of Civil Procedure § 704.730 and stated "Debtor has Cancer

and has not been able to work in his business." On Gilman's Schedule G (Executory Contracts and Unexpired Leases), he did not list any contracts relating to the sale of the Varna Avenue property.² Gilman would later admit in an interrogatory that escrow was open on this property on the day he filed for bankruptcy.

Phillips filed an adversary proceeding against Gilman alleging that Gilman's debts to Phillips were non-dischargeable because of various fraudulent actions. Id. Phillips also objected to Gilman's homestead exemption. Gilman did not oppose the objection and did not appear at the hearing. Therefore, the bankruptcy court sustained Phillips' objections.

Shortly thereafter, Gilman filed an amended Schedule C, claiming a reduced exemption on a reduced property value. Like the initial Schedule C, the amended schedule continued to seek an exemption under § 704.730 and stated "Debtor has Cancer

and has not been able to work in his business."

Having already prevailed on the exemption issue, Phillips objected to the amended exemptions. Gilman then moved for relief from the bankruptcy court's order, arguing that his counsel's mistaken failure to oppose Phillips' objections constituted excusable neglect and warranted relief under Federal Rule of Civil Procedure 60(b)(1). Following a hearing, the bankruptcy court granted Gilman's request for relief ("the Rule 60(b) Order").

Phillips renewed the objection to the amended exemption, which the bankruptcy court denied, except for agreeing to hold an evidentiary hearing on Gilman's entitlement to an enhanced homestead exemption based on disability. Phillips moved for reconsideration, pointing out newly discovered evidence that the Varna Avenue property was in escrow at the time of filing, and arguing Gilman was thus not entitled to a homestead exemption. The bankruptcy court denied the motion, concluding that escrow did not eliminate Gilman's right to a homestead exemption (the "Homestead Exemption Order").³

Phillips then appealed the Homestead Exemption Order to the district court. Phillips also purported to appeal all "associated and fairly incorporated interlocutory orders," including the Rule 60(b) Order. The district court eventually affirmed the bankruptcy court on all orders, and Phillips appeals to this court.

II. JURISDICTION

We must first consider whether we have jurisdiction to entertain Phillips' appeal. In re Gugliuzza , 852 F.3d 884, 889 (9th Cir. 2017). We have jurisdiction to determine our own jurisdiction and consider the issue de novo. Id.

The bankruptcy court had jurisdiction because the "allowance or disallowance of claims against the estate or exemptions from property of the estate" constitutes a "core proceeding" under Title 11. 28 U.S.C. § 157. District courts have jurisdiction over bankruptcy appeals "from final judgments, orders, and decrees ... [and] with leave of the court, from interlocutory orders and decrees...." 28 U.S.C. § 158(a).⁴ Appellate courts have jurisdiction to hear appeals in bankruptcy cases under 28 U.S.C. §§ 1291, 1292, and 158(d)(1).

Section 158(d)(1) gives the courts of appeal "jurisdiction of appeals from all final decisions, judgments, orders, and decrees entered under subsections (a) [defining the district courts' jurisdiction] and (b) [defining the jurisdiction of the bankruptcy appellate panels]." Thus, this court may only consider "final decisions, judgments, orders, and decrees" of the district court and BAP. Gugliuzza , 852 F.3d at 891.

We have previously held that an order denying an exemption constitutes a final appealable order. Preblich v. Battley , 181 F.3d 1048, 1056 (9th Cir. 1999). We emphasized that an order "denying a claim of exemption finally determines the discrete matter to which it was addressed, determines and seriously affects substantial rights and can ‘cause irreparable harm if the losing party must wait until bankruptcy proceedings terminate before appealing.’ " Id. (quoting In re Allen , 896 F.2d 416, 418 (9th Cir. 1990) ). In re White similarly held that an order disallowing an exemption was appealable as a final judgment because it "finally determined all issues regarding the claimed exemption." 727 F.2d 884, 886 (9th Cir. 1984). In so holding, In re White noted that our court had "previously held that a [ ] need exists for immediate review of orders granting or denying exemptions." Id. (citing In re Brissette , 561 F.2d 779 (9th Cir. 1977) ) (emphasis added).⁵ Other circuits have agreed. See, e.g. , Matter of England , 975 F.2d 1168, 1172 (5th Cir. 1992) ; In re Brayshaw , 912 F.2d 1255, 1256 (10th Cir. 1990) ; Matter of Barker , 768 F.2d 191, 194 (7th Cir. 1985) ; Sumy v. Schlossberg , 777 F.2d 921, 923 (4th Cir. 1985).

In 2015, the Supreme Court decided Bullard v. Blue Hills Bank , ––– U.S. ––––, 135 S.Ct. 1686, 191 L.Ed.2d 621 (2015), and we must consider whether this case calls into question our existing case law regarding the appealability of orders granting or denying homestead exemptions. In Bullard , the Supreme Court clarified that a bankruptcy court order is only a final, appealable order if it "alters the status quo and fixes the rights and obligations of the parties." Id. at 1692. Bullard involved an appeal from a refusal to confirm a plan, in circumstances where nothing in the denial order prevented the debtor from proposing an alternative plan to the court. The Court explained that an order confirming a plan would be appealable, as would a denial that dismissed the case, but not so for a mere denial with no additional consequences. Id . at 1692–93.

As a three-judge panel, we are bound to follow existing Ninth Circuit precedent and can only reexamine such cases when their "reasoning or theory" is " ‘clearly irreconcilable’ with the reasoning or theory of intervening higher authority." See Rodriguez v. AT&T Mobility Servs. LLC , 728 F.3d 975, 979 (9th Cir. 2013) (quoting Miller v. Gammie , 335 F.3d 889, 893 (9th Cir. 2003) (en banc) ). "This is a high standard." Lair v. Bullock , 697 F.3d 1200, 1207 (9th Cir. 2012) (quoting United States v. Delgado-Ramos , 635 F.3d 1237, 1239 (9th Cir. 2011) ). In order for us to ignore existing Ninth Circuit precedent reasoning that orders granting or denying exemptions are immediately appealable, the reasoning and principles of Bullard would need to be so fundamentally inconsistent with our prior cases that our prior decisions cannot stand.

However, the pre- Bullard test for appealable final orders in our circuit similarly looked to whether the bankruptcy court's decision: "1) resolves and seriously affects substantive rights and 2) finally determines the discrete issue to which it is addressed." In re SK foods LP , 676 F.3d 798, 802 (9th Cir. 2012) (quoting In re AFI Holding, Inc. , 530 F.3d 832, 836 (9th Cir. 2008) ). Post- Bullard , we have even noted that our previous standard is "generally consistent with Bullard ." Gugliuzza , 852 F.3d at 893.⁶ As the Bullard standard is similar to the appealability standard we already apply, and the factual situation present in Bullard (denial of plan confirmation) is also distinguishable, we do not find Bullard to be so fundamentally inconsistent with our existing case law as to require a different result. Accordingly, we will continue to apply In re Preblich and In re White and the reasoning contained therein to hold we have jurisdiction over the district court's order in this case, affirming the grant of the homestead exemption.

III. MERITS

"On appeal from a district court's affirmance of a bankruptcy court decision, we independently review the bankruptcy court's decision, without giving deference to the district court.... We review the bankruptcy court's legal conclusions de novo and its factual findings for clear error." Rosson , 545 F.3d at 770–71 (internal quotations and citations omitted).

A. Whether the bankruptcy court abused its discretion in granting Gilman's Rule 60(b)(1) Motion

Phillips argues that the district court erred in affirming the bankruptcy court's decision granting Gilman's motion for relief from the August 2011 judgment. We "review a bankruptcy court's grant of a motion for relief from an order under Federal Rule of Civil Procedure 60(b) for an abuse of discretion."...