NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JUN 27 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
No. 15-56814
In re: ROSALVA LUA,
D.C. No. 2:15-cv-04026-CJC
Debtor,
__________________________________
MEMORANDUM*
ROSALVA LUA,
Appellant,
v.
ELISSA MILLER, Chapter 7 Trustee,
Appellee.
Appeal from the United States District Court
for the Central District of California,
Cormac J. Carney, District Judge, Presiding
Argued and Submitted April 6, 2017
Pasadena, California
Before: McKEOWN and CALLAHAN, Circuit Judges, and QUIST, Senior
District Judge.…
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
…
The Honorable Gordon J. Quist, Senior District Judge for the United
States Court for the Western District of Michigan, sitting by designation.
Debtor Rosalva Lua appeals the district court’s order affirming the
bankruptcy court’s order sustaining the Chapter 7 Trustee’s objection to Lua’s
claim of a homestead exemption. Lua argues that the bankruptcy court erred in
applying state law to disallow her exemption and, to the extent the bankruptcy
court could properly consider state law, it erred in not limiting the source of law to
state statutory law. Finally, Lua argues that the bankruptcy court erred in applying
the doctrine of equitable estoppel to disallow her exemption.
We have jurisdiction pursuant to 28 U.S.C. § 158(d), and we reverse.
A.
Lua failed to raise below her arguments that the bankruptcy court could not
consider state law or state case law as a basis for disallowing Lua’s claimed
homestead exemption. We generally will not consider arguments raised for the
first time on appeal. Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999). We
conclude that none of the exceptions to this rule applies. See United States v.
Echavarria-Escobar,
270 F.3d 1265, 1267–68 (9th Cir. 2001) (noting exceptions
to the first-time-on-appeal rule). Thus, we limit our review to the bankruptcy
court’s application of equitable estoppel.
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B.
“We apply the same standard of review applied by the district court,
reviewing the bankruptcy court’s legal conclusions de novo and its factual
determinations for clear error.” Neilson v. Chang (In re First T.D. & Inv., Inc.),
253 F.3d 520, 526 (9th Cir. 2001).
A party urging equitable estoppel must demonstrate “(a) a representation or
concealment of material facts (b) made with knowledge, actual or virtual, of the
facts (c) to a party ignorant, actually and permissibly, of the truth (d) with the
intention, actual or virtual, that the ignorant party act on it, and (e) that party was
induced to act on it.” Behnke v. State Farm Gen. Ins. Co., 196 Cal. App. 4th 1443,
1462 (2011) (quoting 13 Witkin Summary of Cal. Law § 191, at 527–28 (10th ed.
2005)). Estoppel will not be found unless all elements are satisfied. Moore v.
State Bd. of Control,
112 Cal. App. 4th 371, 384 (2003).
The bankruptcy court found that Lua’s First Amended Schedules were a
representation, under oath, that she was not claiming a homestead exemption in the
Property. But the First Amended Schedules cannot form the basis of an estoppel
because they set forth all of the existing facts known to Lua. Those same facts
were readily available to the Trustee, and the Trustee was fully aware of them.
“[W]here the person pleading estoppel had knowledge of the facts, there is no
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reliance.” Sidebotham v. Robinson, 216 F.2d 816, 829 (9th Cir. 1954). The
Trustee also knew, or should have known, that in the event circumstances changed,
Lua could amend her exemptions “as a matter of course at any time before the case
[wa]s closed.” Fed. R. Bankr. P. 1009(a); see also Martinson v. Michael (In re
Michael),
163 F.3d 526, 529 (9th Cir. 1998) (“No court approval is required for an
amendment, which is liberally allowed.”), abrogated on other grounds by Law v.
Siegel,
134 S. Ct. 1188 (2014).
The bankruptcy court found that the Trustee had no knowledge or indication
that Lua was going to file her Second Amended Schedules. However, the Trustee
failed to present any evidence that at the time Lua filed her First Amended
Schedules, she had reason to believe that she would amend her schedules again at
some point in the future. Moreover, nothing in Lua’s First Amended Schedules
can be deemed a representation by Lua that she would not amend her exemptions
again if circumstances changed. In fact, circumstances changed almost three years
later when, at the request of the Trustee, the bankruptcy court entered an order
finding that the Property was 100% community property, providing Lua a new
factual basis to claim a homestead exemption.
Accordingly, the bankruptcy court shall allow Lua’s claimed homestead
exemption.
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REVERSED AND REMANDED with directions.
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FILED
Lua v. Miller, No. 15-56814
JUN 27 2017
CALLAHAN, Circuit Judge, dissenting: MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
Based on the applicable standard of review, I respectfully dissent. We
review the application of equitable estoppel for abuse of discretion. See, e.g., Red
Lion Hotels Franchising, Inc. v. MAK, LLC, 663 F.3d 1080, 1087 (9th Cir. 2011).
We may reverse only if “we have a definite and firm conviction that the
[bankruptcy] court committed a clear error of judgment in the conclusion it reached
upon weighing the relevant factors.” S.E.C. v. Coldicutt,
258 F.3d 939, 941 (9th
Cir. 2001). Here, I lack the requisite conviction.
By amending her initial schedules to remove her claim for a homestead
exemption, Lua represented that she would not be seeking such an exemption
during her bankruptcy. Based on this representation, the Trustee spent the next
roughly three years attempting to maximize the value of the bankruptcy estate by
monetizing Lua’s interest in her home. While it is true that Lua did not know her
exact interest in the home at the time she filed her first amended schedules and that
Lua never affirmatively stated she would not change her amended exemption
election at a later time, Lua stood idly by as the Trustee toiled away, failing to give
the Trustee even so much as an indication that she was contemplating claiming the
homestead exemption. In light of these particular facts, I cannot say that the
bankruptcy court abused its discretion in finding that this case’s equities favored
not allowing Lua to amend her first amended schedules. As a result, I would
affirm the bankruptcy court’s application of equitable estoppel.
