Richard Jahn v. Philip Craig Burke
863 F.3d 521
6th Cir.2017Background
- Philip and Nekolia Burke filed Chapter 7 in Feb. 2015 and listed their Chattanooga home with an appraised value of $108,000 and a mortgage balance of $91,581.
- Trustee Jahn moved to evict the Burkes to sell the property, asserting its value was close to $200,000; Burkes moved to compel abandonment under 11 U.S.C. § 554(b) (or convert to Chapter 13).
- Jahn tendered the Burkes their $7,500 Tennessee homestead-exemption amount; the Burkes rejected it and an evidentiary hearing was set.
- At the hearing, the Burkes offered two appraisers who, accounting for repair costs, placed market value near $108,000–$125,000; Jahn offered a realtor, inspector, and his own estimate placing value near $190,000–$204,000.
- The bankruptcy court credited the Burkes’ appraisal (Ramirez) and ordered abandonment as the property was of inconsequential value to unsecured creditors; the district court affirmed.
Issues
| Issue | Burke's Argument | Jahn's Argument | Held |
|---|---|---|---|
| Standing to move to compel abandonment | Debtors are parties in interest and have a practical stake; they benefit if trustee abandons property | Tendering the homestead exemption extinguished their interest; alternatively, debtors lack Article III standing | Burkes had statutory and Article III standing to seek abandonment; tender did not extinguish their interest |
| Eviction upon tender of homestead payment | Not applicable (Burkes sought abandonment, not exemption) | Trustee can pay homestead exemption and evict debtors prior to sale | Trustee may not automatically evict by tendering the exemption; no authority supports that rule |
| Requirement of an evidentiary hearing on abandonment motion | Hearing required under § 554(b) when facts disputed | Hearing unnecessary in some contexts | Bankruptcy court properly held an evidentiary hearing |
| Sufficiency of valuation evidence to order abandonment | Appraisals showing repairs left little or no equity (approx. $108,000) justified abandonment | Trustee’s non-appraiser testimony established higher value; court erred in crediting Burkes’ appraiser | Clear-error standard satisfied; court reasonably credited Burkes’ appraiser and properly ordered abandonment |
Key Cases Cited
- Hoehn v. McIntosh, 110 F.2d 199 (6th Cir. 1940) (trustee should not liquidate property unless fair prospect of sale for substantially more than liens)
- In re Baker & Getty Fin. Servs., Inc., 974 F.2d 712 (6th Cir. 1992) (standard of appellate review for bankruptcy findings)
- Rousey v. Jacoway, 544 U.S. 320 (2005) (purpose of homestead exemption to provide debtor a fresh start)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (Article III standing requirements)
- In re Szekely, 936 F.2d 897 (7th Cir. 1991) (discussion of debtors’ occupancy and homestead exemption, relied on dictum)
- In re DSC, Ltd., 486 F.3d 940 (6th Cir. 2007) (clear-error standard explained for bankruptcy factual findings)