In re: Scott Charles Pomeroy
EC-16-1196-TaBJu
| 9th Cir. BAP | Apr 24, 2017Background
- Debtor Scott Pomeroy filed Chapter 7 and listed a tax‑exempt “Pomeroy Retirement Trust” (the Plan) holding approximately $409,383, including a vacant lot in Truckee valued at $185,000, a Wells Fargo account, and a Scottrade account. He claimed the full amount exempt under Cal. CCP § 703.140(b)(10)(E) and 11 U.S.C. § 522(b)(3)(C).
- Trustee objected to the claimed exemptions, focusing on the Truckee lot and later adding the federal exemption challenge; Trustee also alleged Debtor received unreported quarterly repayments from the Plan into his personal account.
- Debtor submitted declarations about his limited income (casino earnings plus $1,800/month from a girlfriend), age (56), health concerns, anticipated retirement income (Social Security ~ $2,200/month), and possible need to take hardship distributions from the Plan.
- Bankruptcy court concluded the entire Plan (including the Truckee lot) was "reasonably necessary for the debtor’s support" under CCP § 703.140(b)(10)(E) and also ruled in the alternative under § 522(b)(3)(C); court entered order overruling Trustee’s objection.
- Trustee appealed, but limited his challenge on appeal to the Truckee Property and principally to the state exemption; Ninth Circuit BAP reviews exemption rights de novo and factual findings for clear error.
Issues
| Issue | Trustee's Argument | Debtor's Argument | Held |
|---|---|---|---|
| Whether the Truckee lot (as part of the retirement Plan) is exempt under Cal. CCP § 703.140(b)(10)(E) — i.e., whether Plan payments are "reasonably necessary for the debtor's support" | Bankruptcy court applied wrong standard (should focus on present needs), misapplied standard (must analyze each asset separately), and lacked sufficient evidence to find Plan reasonably necessary | Plan pays on account of age; courts should consider anticipated retirement needs and Moffat factors; Debtor’s evidence shows Plan reasonably necessary given age, limited other resources, uncertain continued contributions from girlfriend, and health/work prospects | Affirmed: BAP held the bankruptcy court applied the correct (forward‑looking) standard, did not misapply it, and did not clearly err in finding the Plan (including the lot) reasonably necessary for support under CCP § 703.140(b)(10)(E) |
| Whether the Truckee lot qualifies as "retirement funds" under 11 U.S.C. § 522(b)(3)(C) | Trustee argued "retirement funds" does not encompass real property such as the lot | Debtor argued the Plan is a tax‑favored retirement vehicle and its assets fall within § 522(b)(3)(C) | Not decided: BAP declined to reach § 522(b)(3)(C) because state exemption sufficed to affirm decision |
Key Cases Cited
- Schwab v. Reilly, 560 U.S. 770 (establishes that property is estate property subject to exemptions and that claimed exemptions are presumptively allowed absent timely objection)
- Kelley v. Locke, 300 B.R. 11 (9th Cir. BAP) (exemption entitlement reviewed de novo; factual findings for clear error)
- Moffat v. Habberbush, 119 B.R. 201 (9th Cir. BAP) (lists factors courts consider in assessing whether retirement payments are reasonably necessary for support)
- Hinkson v. U.S., 585 F.3d 1247 (9th Cir.) (standard for clear error review and permissible inferences from the record)
- Anderson v. City of Bessemer City, 470 U.S. 564 (factfinder’s choice between two permissible views is not clearly erroneous)
- Diaz v. Kosmala (In re Diaz), 547 B.R. 329 (9th Cir. BAP) (debtor bears burden to prove exemption entitlement)