52 F.4th 1172
9th Cir.2022Background:
- In 2014 a $256,075.95 judgment lien (Greek Village lien) was recorded against Dejan Boskoski’s Carlsbad, CA home.
- Boskoski filed Chapter 7 bankruptcy in August 2021; the home became part of the bankruptcy estate but he claimed a California homestead exemption.
- California’s homestead exemption statute increased between 2014 and 2021; in 2014 the applicable maximum for a married debtor was $100,000, and by 2021 the statute provided up to $600,000 (Cal. Civ. Proc. Code §704.730).
- Bankruptcy Code §522(f)(1) permits avoidance of a lien to the extent it "impairs an exemption to which the debtor would have been entitled," with impairment measured per §522(f)(2)(A).
- Trustee Barclay argued the 2014 exemption amount controls under Cal. Civ. Proc. Code §703.050(a); Boskoski argued the Bankruptcy Code requires using the exemption he would have had but for the lien at the petition date (2021).
- The bankruptcy court applied the 2021 $600,000 exemption and avoided the entire Greek Village lien; the Ninth Circuit affirmed.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §522(f) requires using the state exemption amount as of the bankruptcy filing (petition date) or as of the lien creation date when determining lien impairment | Boskoski: use exemption debtor "would have been entitled" absent the lien at the filing date (apply 2021 $600,000) | Barclay: apply California law fixing the exemption at the time the judgment lien was created (apply 2014 $100,000) | Court: §522(f) requires computing the exemption the debtor would have had but for the lien; apply state exemption law as of the bankruptcy filing date (2021 $600,000); lien avoided in full |
Key Cases Cited
- Owen v. Owen, 500 U.S. 305 (U.S. 1991) ("would have been entitled" test requires ignoring lien and assessing the hypothetical exemption)
- White v. Stump, 266 U.S. 310 (U.S. 1924) ("snapshot rule": exemptions are fixed as of the petition date)
- In re Jacobson, 676 F.3d 1193 (9th Cir. 2012) (state-law exemptions generally determined by law applicable on filing date)
- Klein v. Anderson (In re Anderson), 988 F.3d 1211 (9th Cir. 2021) (standard of review for bankruptcy court legal conclusions)