David Goodrich v. Rudy Fuentes
687 F. App'x 542
| 9th Cir. | 2017Background
- Debtor Rudy Fuentes lived with his family in real property in Covina, California (the Property) and filed Chapter 7 bankruptcy; he claimed a California automatic homestead exemption for his possessory interest in the Property.
- Appellant David Goodrich (creditor) appealed the district court’s order (which affirmed the bankruptcy court) permitting Fuentes to claim that homestead exemption.
- California law provides two homestead exemptions: a declared homestead (requires recorded declaration) and an automatic homestead (applies without declaration and protects proceeds of forced sale). Fuentes did not record a declaration; the automatic exemption is at issue.
- The parties agree Fuentes satisfied California’s residency and continuous-occupancy requirements and that he holds a recognized possessory interest in the Property.
- The question was whether federal or state law otherwise prevented honoring Fuentes’s claimed automatic homestead exemption (e.g., bankruptcy avoidance or voidable-transfer doctrines). The court considered 11 U.S.C. § 522(g), California’s UVTA, and other federal/state law limits.
Issues
| Issue | Plaintiff's Argument (Goodrich) | Defendant's Argument (Fuentes) | Held |
|---|---|---|---|
| Whether Fuentes may claim California automatic homestead exemption in his possessory interest | Fuentes should be barred from claiming the exemption (based on alleged legal grounds to refuse honoring it) | Fuentes legitimately satisfied residency and holds a possessory interest, so he may claim the automatic homestead exemption | Allowed: Court affirmed that Fuentes may claim the automatic exemption for his possessory interest |
| Whether 11 U.S.C. § 522(g) defeats Fuentes’s exemption claim | §522(g) prevents the exemption because of debtor’s conduct | §522(g) does not apply because Fuentes did not transfer or conceal the Property | Rejected: §522(g) does not bar the exemption |
| Whether California’s Uniform Voidable Transactions Act (UVTA) precludes the exemption | UVTA can void transfers to defeat creditors, barring exemption | UVTA does not apply because Fuentes did not transfer the Property | Rejected: UVTA does not bar the exemption |
| Whether any other federal or state law provides a valid basis to refuse honoring the exemption | Other legal doctrines could prevent exemption | No other valid federal or state law basis exists in the record | Rejected: Court found no other valid ground to deny the exemption |
Key Cases Cited
- Wolfe v. Jacobson (In re Jacobson), 676 F.3d 1193 (9th Cir.) (bankruptcy petition creates estate; California opted out of federal exemptions)
- Redwood Empire Prod. Credit Ass’n v. Anderson (In re Anderson), 824 F.2d 754 (9th Cir.) (distinguishes declared vs. automatic homestead exemptions)
- Schwaber v. Reed (In re Reed), 940 F.2d 1317 (9th Cir.) (automatic homestead protects sale proceeds, not an absolute right to keep the homestead)
- Law v. Siegel, 134 S. Ct. 1188 (U.S.) (courts may not refuse to honor exemptions without valid statutory basis)
- Eden Place, LLC v. Perl (In re Perl), 811 F.3d 1120 (9th Cir.) (other law can extinguish equitable possessory interests)
- Glass v. Hitt (In re Glass), 60 F.3d 565 (9th Cir.) (explains requirements for §522(g) to apply)