Tammy Phillips v. Kevan Gilman
887 F.3d 956
| 9th Cir. | 2018Background
- Debtor Kevin Gilman filed Chapter 7 and listed real property at 6553 Varna Ave. as his residence; an escrow sale for that property was open the day he filed.
- Creditors Tammy Phillips and Tammy R. Phillips objected to Gilman’s homestead exemption; Gilman initially failed to oppose and the bankruptcy court sustained the objection.
- Gilman obtained Rule 60(b) relief, vacating the default order; he amended Schedule C to claim the homestead exemption and sought an enhanced disability exemption.
- The bankruptcy court denied an enhanced disability exemption after an evidentiary hearing but ruled that escrow did not defeat Gilman’s automatic California homestead exemption; the district court affirmed.
- On appeal to the Ninth Circuit, the court affirmed the Rule 60(b) relief but vacated the homestead-exemption ruling because the bankruptcy court did not make findings on Gilman’s intent to continue residing in the property and remanded for further factfinding.
Issues
| Issue | Plaintiff's Argument (Phillips) | Defendant's Argument (Gilman) | Held |
|---|---|---|---|
| Whether bankruptcy court abused discretion in granting Rule 60(b) relief | Relief was untimely and undermines appellate rules | Counsel’s calendaring error was excusable neglect; relief within Rule 60(b) and Pioneer supports leniency | Affirmed: no abuse of discretion; Rule 60(b) relief proper under excusable neglect principles |
| Whether Gilman is entitled to California automatic homestead exemption while property was in escrow | Escrow equitably converted title; Gilman lacked sufficient ownership/intent to claim exemption | Physical occupancy at filing and retention of legal title support automatic exemption; California law protects continuous residency even after conveyance | Vacated and remanded: bankruptcy court failed to make required findings on debtor’s intent to reside; must reassess under California law |
| Whether physical occupancy alone suffices to establish residency for homestead purposes | Physical occupancy insufficient if debtor intended to sell and not remain | Occupancy plus cases holding equitable interests suffice argue for exemption | Court: intent to continue residency is a required element; failure to address intent is clear error — remand required |
| Whether appellate jurisdiction exists over exemption order | Phillips implied interlocutory appeals inappropriate | Debtor/creditors argued order final/appealable under Ninth Circuit precedent | Ninth Circuit has jurisdiction; orders granting/denying exemptions are immediately appealable under circuit precedent and are not overruled by Bullard |
Key Cases Cited
- Bullard v. Blue Hills Bank, 135 S. Ct. 1686 (2015) (Supreme Court clarified when bankruptcy orders are final and appealable)
- Preblich v. Battley, 181 F.3d 1048 (9th Cir.) (order denying exemption is final and appealable)
- In re White, 727 F.2d 884 (9th Cir. 1984) (orders granting or denying exemptions warrant immediate appellate review)
- Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380 (1993) (definition and treatment of "excusable neglect" for relief from judgment)
- Tarlesson v. Broadway Foreclosure Invs., LLC, 184 Cal. App. 4th 931 (Cal. Ct. App. 2010) (continuous residency, not continuous ownership, controls California homestead exemption)
- In re Diaz, 547 B.R. 329 (9th Cir. BAP 2016) (debtor’s intent to reside is required; physical occupancy alone insufficient)