532 B.R. 173
1st Cir. BAP2015Background
- Debtor Paul Garcia filed Chapter 7 on June 25, 2013, listing real property valued at $745,000 on Schedule A and claiming a $500,000 homestead exemption; creditor David Ross held a $4,050,623 judicial lien.
- Debtor moved under 11 U.S.C. § 522(f) to partially avoid Ross’s lien, initially relying on the $745,000 drive-by valuation and calculating a surviving lien of ~$125,677.
- The trustee later obtained a broker market analysis ($625,000–$660,000) and the debtor obtained a formal appraisal valuing the property at $635,000 as of the petition date.
- The debtor moved to amend Schedule A and the lien-avoidance motion to reflect the $635,000 appraisal; the bankruptcy court granted both amendments without an evidentiary hearing.
- Ross opposed, submitted an older $875,000 appraisal (2006), sought reconsideration (filed 22 days after the order), and requested evidentiary hearings; the court denied reconsideration and entered an order avoiding Ross’s lien except for approximately $64,000.
- Ross appealed the denial of reconsideration and the lien-avoidance order; the panel limited review to those two orders and affirmed both.
Issues
| Issue | Ross’s Argument | Garcia’s Argument | Held |
|---|---|---|---|
| Whether Rule 60(b) reconsideration should be granted to vacate amendment to Schedule A | Amendment prejudiced Ross and was made in bad faith, so extraordinary relief under Rule 60(b)(6) is warranted | No exceptional circumstances; Rule 1009 allows postpetition amendments and no extraordinary relief is justified | Denial of reconsideration affirmed; Ross failed to show exceptional circumstances for Rule 60(b)(6) relief |
| Whether bankruptcy court abused discretion by declining an evidentiary hearing on reconsideration and amendment | An evidentiary hearing was required because Ross’s interests were prejudiced and facts were disputed | Court had adequate record (three valuations) and discretion to decide without live testimony | No abuse of discretion; nonevidentiary hearing appropriate given the record |
| Proper valuation date and amount for § 522(f) lien-avoidance calculation | Court should use $745,000 or conduct an evidentiary hearing to refute the $635,000 appraisal | Use $635,000 appraisal (licensed appraiser) and trustee’s broker range supports it; valuation is FMV as of petition date | Valuation of $635,000 affirmed as not clearly erroneous (FMV at petition date governs) |
| Whether bankruptcy court provided sufficient findings to permit appellate review | Lack of detailed written findings requires remand | Bench rulings and hearing transcript supply adequate basis for review | No remand required; record and transcript sufficiently explain decision |
Key Cases Cited
- Boylan v. George E. Bumpus, Jr. Constr. Co., 226 B.R. 724 (1st Cir. BAP 1998) (panel must determine jurisdiction before merits)
- In re Bank of New England Corp., 218 B.R. 643 (1st Cir. BAP 1998) (procedural rules on appellate jurisdiction and finality)
- Ruiz Rivera v. Pfizer Pharm., LLC, 521 F.3d 76 (1st Cir. 2008) (standard of review: manifest abuse for Rule 60(b) denial)
- Wilding v. CitiFinancial Consumer Fin. Servs. (In re Wilding), 475 F.3d 428 (1st Cir. 2007) (value for § 522(f) is fair market value as of petition date)
- United States v. Zannino, 895 F.2d 1 (1st Cir. 1990) (issues perfunctorily briefed or unsupported may be deemed waived)