White, In re, 83-3729

• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Writing for the Court: Before WRIGHT, TANG, and ALARCON; ALARCON
• Citation: 727 F.2d 884
• Parties: In re Robert Lee WHITE, dba Aanco Fence Company, Debtor. Cheryl WHITE, Plaintiff-Appellee, v. Robert Lee WHITE, Defendant-Appellant.
• Docket Number: No. 83-3729,83-3729
• Decision Date: 08 March 1984

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727 F.2d 884 In re Robert Lee WHITE, dba Aanco Fence Company, Debtor.
Cheryl WHITE, Plaintiff-Appellee,
v.
Robert Lee WHITE, Defendant-Appellant. No. 83-3729. United States Court of Appeals,
Ninth Circuit. Argued and Submitted Jan. 4, 1984.
Decided March 8, 1984.

George J. Gregores, Day & Prohaska, P.C., Portland, Or., for plaintiff-appellee.

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Daniel F. Vidas, Portland, Or., for defendant-appellant.

Appeal from the United States District Court for the District of Oregon.

Before WRIGHT, TANG, and ALARCON, Circuit Judges.

ALARCON, Circuit Judge:

White appeals from a district court order disallowing his claimed homestead exemption in federal bankruptcy proceedings.

In a divorce decree, an Oregon court awarded White's wife ownership of the family residence and, in return, awarded White a judgment lien against the property in the amount of $13,000. White later filed bankruptcy and claimed a homestead exemption in the value of that lien. The district court held that the lien was not a sufficient ownership interest to constitute a homestead under Or.Rev.Stat. Sec. 23.240.

We conclude that the order disallowing the exemption is appealable as a final judgment, and affirm the holding that the lien was not a sufficient ownership to constitute a homestead. We remand, however, for further consideration whether the lien was entitled to protection as the proceeds of the sale of a homestead.

FACTS

Cheryl and Robert White were divorced by an Oregon court in December 1981. The court's decree provided that Cheryl be given ownership of the family residence. In payment for his interest in the residence, Robert was to be paid $13,000, secured by a judgment lien on the residence. The purchase price was to be paid within five years or upon sale of the residence, whichever happened first.

In mid-1982, Robert filed for bankruptcy. He submitted a chapter 13 plan that provided for less than full payment of his obligations to Cheryl under the property division order, and claimed a homestead exemption in the value of the lien on the residence. Cheryl objected to the homestead exemption.

The bankruptcy court allowed the homestead exemption and confirmed the plan. On appeal, the district court reversed, holding that the judgment lien was not a sufficient ownership interest in the residence to qualify for a homestead exemption under Or.Rev.Stat. Sec. 23.240.

ANALYSIS

I.

Appealability

Before reaching the merits, we must first determine whether the district court order denying the exemption is appealable. Under the Bankruptcy Act of 1978, we have no jurisdiction to hear interlocutory appeals in bankruptcy proceedings. In re Rubin, 693 F.2d 73, 76-77 (9th Cir.1982). An order denying an exemption does not meet the conventional test for a final judgment because it does not terminate the entire bankruptcy case. See In re Brissette, 561 F.2d 779 (9th Cir.1977). Recently, however, we adopted a test that emphasizes the need for immediate review, rather than whether the order is technically interlocutory, in determining what is appealable as a final judgment in bankruptcy proceedings. In re Mason, 709 F.2d 1313 (9th Cir.1983). Under Mason the order in the present case is appealable.

In Mason the debtor appealed the district court's refusal to set aside the order for relief on an involuntary petition for bankruptcy. The order for relief was technically interlocutory because it did not conclude the bankruptcy case. Id. at 1316. The court noted, however, that bankruptcy proceedings are unique and that the rules of finality developed for conventional litigation should not be applied mechanically. Those orders that " 'may determine and seriously affect substantive rights' and 'cause irreparable harm to the losing party if he had to wait to the end of the bankruptcy case' " are immediately appealable. Id. at 1316-17. The court concluded that an order for relief in an involuntary bankruptcy case is appealable under this test.

An order for relief effectively divests the debtor of his assets, creating an estate

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controlled by the bankruptcy court. In a Chapter 7 case the trustee is obligated to gather the assets of the estate, liquidate them, and to the extent possible satisfy creditors' claims.... During the administration of the estate the debtor's rights are limited. On entry of the order for relief he loses control of his assets, which may include a business. See 11 U.S.C. Sec. 303(f). Once property of the estate is liquidated there appears to be no way the debtor can force bona fide purchasers to return the assets. [Citations omitted.] A debtor may possibly attack the propriety of every sale by appeal, but to effectively do so he must seek to stay the sale.

Id. at 1317.

We previously held that a similar need exists for immediate review of orders granting...