Rachael Earl v. Lund Cadillac
705 F. App'x 584
| 9th Cir. | 2017Background
- Debtor Rachael Earl filed for bankruptcy in October 2013, listing two residences: the Claiborne property (her residence at filing) and the Sunnyvale property.
- Debtor originally claimed a homestead exemption in Claiborne; after failing to set aside a foreclosure on Claiborne, she amended schedules to claim the homestead in Sunnyvale.
- Creditor Lund Cadillac objected to the amended exemption; the bankruptcy court sustained the objection and the district court affirmed.
- The controlling legal principle is the federal "snapshot rule": bankruptcy exemptions are fixed as of the petition date.
- Under Arizona law, a homestead requires residency; a prior residence does not preserve a homestead indefinitely absent statutory protection. Debtor did not reside at Sunnyvale on the petition date and waived an intent-to-return argument.
Issues
| Issue | Earl's Argument | Lund Cadillac's Argument | Held |
|---|---|---|---|
| Can Debtor amend post-petition to claim Sunnyvale homestead? | Amendment allowed by Fed. R. Bankr. P. 1009(a); Arizona law permits claiming homestead prior to sale. | Exemption rights are fixed at petition date (snapshot rule); Earl lacked residency at filing, so she had no right to claim Sunnyvale. | Denied — Amendment cannot create an exemption not existent on petition date. |
| Does Arizona's rule allowing post-filing homestead claims overcome the snapshot rule? | State allowance permits asserting exemption post-petition. | Federal snapshot rule controls timing of entitlement; state law cannot expand the federal timing rule. | Snapshot rule governs timing of entitlement; state law cannot override that a right must exist at filing. |
| Does conversion from Chapter 13 to Chapter 7 change the relevant snapshot date? | (Implied) Conversion might alter applicable date. | Earl lived at Claiborne at both filing and conversion; outcome unaffected by which date applies. | Not outcome-determinative here; same result regardless of date used. |
Key Cases Cited
- White v. Stump, 266 U.S. 310 (Sup. Ct.) (exemptions determined as of petition date)
- Myers v. Matley, 318 U.S. 622 (Sup. Ct.) (right to homestead fixed at filing and cannot be enlarged thereafter)
- In re Jacobson, 676 F.3d 1193 (9th Cir.) (reaffirming snapshot rule in Ninth Circuit)
- Law v. Siegel, 134 S. Ct. 1188 (Sup. Ct.) (court cannot strip a legitimate exemption absent statutory basis)
- Schultz v. Mastrangelo, 333 F.2d 278 (9th Cir.) (Arizona law: homestead can be claimed prior to sale)
- In re Gebhart, 621 F.3d 1206 (9th Cir.) (state opt-out means state law defines exemption scope)