Bankr. L. Rep. P 77,861,
In re: Jereld Joe MICHAEL, a/k/a Jerry Michael; In re:
Shirley Kay Michael, Debtors.
Craig T. Martinson, Esq., Appellant,
v.
Jereld Joe Michael; Shirley Kay Michael, Appellees.
No. 97-35552.
United States Court of Appeals,
Ninth Circuit.
Submitted Oct. 8, 1998.*
Decided Dec. 4, 1998.
Craig D. Martinson, Billings, Montana, trustee and appellant.
Floyd A. Brower, Roundup, Montana, for the appellees.
Appeal from the Bankruptcy Appellate Panel for the Ninth Circuit Court of Appeals Jones, Jaroslovksy, and Russell, Judges, Presiding. BAP No. MT-95-01925-JoJaR.
Before: FERGUSON, BOOCHEVER, and REINHARDT, Circuit Judges.
BOOCHEVER, Circuit Judge:
Jereld and Shirley Michael amended their voluntary petition for bankruptcy relief under Chapter 7 to claim a homestead exemption. Upon an earlier remand from this court, the Bankruptcy Appellate Panel reversed the Bankruptcy Court and held that the Michaels could amend their schedule to claim the exemption. We affirm.FACTS
In 1979, Jereld J. and Shirley K. Michael, husband and wife, purchased real property in Yellowstone County, Montana. The Michaels entered into a mortgage as security for a loan. The Michaels have lived on the property and treated it as their home from the date of purchase.
In January 1991, the Michaels filed a voluntary petition for bankruptcy relief under Chapter 7, 11 U.S.C. § 101 et seq. They failed, however, to record a declaration of homestead as required by Montana law. Mont.Code Ann. §§ 70-32-105, 106, 107. They subsequently filed the schedules of property and exhibits required by the Bankruptcy Code, but omitted to set forth their intent to claim the real property as exempt under the homestead exemption on their bankruptcy Schedule B-4. In March 1991, when they realized their error, the Michaels advised the trustee that they intended to claim their property as exempt under the homestead exemption. They had not, however, filed a Declaration of Homestead with the Clerk and Recorder of Yellowstone County as required under Montana law. The bankruptcy court granted the Michaels a discharge in May 1991. Two months later in July 1991, the Michaels filed an executed, acknowledged Declaration of Homestead with the county. In May 1992, the Michaels finally filed an amended Schedule B-4 listing their homestead as exempt property.
In November 1991, the trustee filed a complaint in the bankruptcy court for turnover of the property. The court entered judgment in favor of the trustee, denying the Michaels' claim that the property was exempt as their homestead. The bankruptcy court ruled that the Michaels' failure to file a homestead declaration before they filed their bankruptcy petition was fatal to their later attempt to claim the exemption, because the late declaration would not defeat the trustee's status as bona fide purchaser of the real property. The Michaels appealed to the United States District Court for the District of Nevada, which affirmed the bankruptcy court. The Michaels then appealed to this court.
We held that the trustee could not use any of his "strong arm" powers under 11 U.S.C. § 544(a) to defeat the Michaels' homestead exemption, and that the bankruptcy court erred in ruling that the Michaels could not claim a homestead exemption after the petition date. In re Michael,
The fact remains, however, that the Michaels did not amend their bankruptcy schedules to claim the exemption until more than a year after filing their petition. When they did so, the trustee objected. Because the bankruptcy court ruled-incorrectly-that section 544(a)(3) prevents the Michaels from claiming a homestead exemption after the petition date, it did not reach the separate question whether the Michaels could amend their schedules under the Federal Rules of Bankruptcy Procedure.
Id. at 502. We then vacated the district court's decision and remanded to the bankruptcy court for consideration of the amendment issue.
The bankruptcy court first rejected a proposed settlement as not fair and equitable to the trustee. In re Michael,
As it had predicted, the bankruptcy court ruled against the Michaels shortly thereafter. In re Michael,
The Michaels appealed to the Bankruptcy Appellate Panel ("BAP") of the Ninth Circuit. In an unpublished opinion [ER pp. 129-140], the BAP reversed the bankruptcy court, holding that the Michaels' post-petition amendment to their bankruptcy schedules was proper. The trustee appeals.DISCUSSION
"We are in as good a position as the BAP to review the bankruptcy court's decision, and so we review the decision independently." In re Parker,
I. Claiming homestead exemption after date of petition in bankruptcy
We have already held that the bankruptcy court erred in ruling that the Michaels could not claim a homestead exemption after the date of their bankruptcy petition. The issue was thus decided as the law of the case, and "one panel of an appellate court will not as a general rule reconsider questions which another panel has decided on a prior appeal in the same case." Merritt v. Mackey,
II. Amendment of schedules post-petition
Whether the Michaels could amend their schedules post-petition is separate from the question whether the exemption was allowable. See In re Sandoval,
Bankruptcy Rule 1009(a) provides: "A voluntary petition, list, schedule, or statement may be amended by the debtor as a matter of course at any time before the case is closed." Bankr.R. 1009(a) (emphasis added); In re Kahan,
The trustee does not argue that the case was closed. Bankruptcy Rule 5009 provides that a Chapter 7 case shall be closed when the trustee has filed a final report, and certifies without objection that the estate has been fully administered. A case is not closed simply because a discharge of the debtor has been granted. See In re Myatt,
Nor does the trustee argue that the Michaels acted in bad faith. See In re Magallanes,
We hold that the Michaels' amendment of their schedule was permissible under the Bankruptcy Rules. This "implements the policy of liberally allowing the debtors to amend their exemption claims in order to enhance their fresh start." In re Magallanes,
CONCLUSION
We affirm the BAP's reversal of the bankruptcy court.
Notes
The panel unanimously finds this case suitable for submission without oral argument pursuant to Fed. R.App. P. 34(a) and 9th Cir. R. 34-4