468 B.R. 373
9th Cir. BAP2012Background
- Debtor Jack Jefferies filed Chapter 7 on March 22, 2011; Carlson appointed as Chapter 7 Trustee.
- Prepetition, Jefferies and ex-wife owned a Ridgefield, WA residence; dissolution decree awarded ex-wife the residence and Jefferies an equalizing judgment of $40,800 secured by a note and deed of trust on the residence.
- In February 2011 Jefferies conveyed his interest in the residence to his ex-wife by quitclaim deed.
- On Schedule C Jefferies claimed $47,000 as exempt proceeds from sale of a homestead under RCW 6.13.030/6.13.070(1); Trustee objected.
- Bankruptcy court held the Equalizing Judgment constituted proceeds but found transfer was not a voluntary sale, thus no exemption.
- Debtor moved for reconsideration; court denied; Debtor appealed; Ninth Circuit panel affirmed the denial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Jefferies may claim a homestead exemption for the Equalizing Judgment | Jefferies argued the Equalizing Judgment is proceeds of a voluntary sale to acquire a new homestead. | Carlson contended the transfer was not a voluntary sale, constituting a forced sale, thus no exemption. | No; the transfer was a forced sale, so exemption denied. |
Key Cases Cited
- Felton v. Citizens Fed. Sav. & Loan Ass'n of Seattle, 101 Wash.2d 416 (1984) (defines voluntary vs. forced sale under homestead exemptions)
- Vojta v. Buhre, 165 Wash. 384 (1931) (proceeds of sale concept for expropriation under homestead statutes)
- In re Wilson, 341 B.R. 21 (9th Cir. BAP 2006) (debtor not eligible for automatic homestead exemption when not occupying home at filing)
- Foley v. Foley, 84 Wash.App. 839 (1997) (owalty/vendor's lien context affecting homestead rights)