RANDALL L. DUNN, U.S. Bankruptcy Judge.
On December 15, 2014, the debtors, John Scott and Jacqueline Mazzuca (collectively, "the Mazzucas"), filed a total of eight motions to avoid judicial liens pursuant to 11 U.S.C. § 522(f) (collectively, "Lien Avoidance Motions").
On January 20, 2015, I held a hearing on the Lien Avoidance Motions. Following the hearing, I again reviewed the Lien Avoidance Motions and all supporting documents. I also have taken judicial notice of all relevant entries on the docket of the Mazzucas' chapter 7 case for the purpose of ascertaining facts not reasonably in dispute. Federal Rule of Evidence 201; In re Butts, 350 B.R. 12, 14 n. 1 (Bankr. E.D.Pa.2006). In addition I have reviewed relevant legal authorities.
Based on that consideration and review, I will grant the Residence Lien Avoidance Motion but deny the Rental Property Lien Avoidance Motions with prejudice for the reasons stated on the record at the hearing and in this Memorandum Opinion. Following are my findings of fact and conclusions of law under Civil Rule 52(a), applicable with respect to this contested matter under Rules 7052 and 9014.
The Mazzucas filed their chapter 7 bankruptcy petition on December 29, 2009.
The Mazzucas also listed in their Schedule A and Schedule D the following rental real properties:
Address FMV Secured claim(s) 5225 SE Hill Road, Milwaukie, $230,000 1) BOA: $211,000 OR 2) GMAC Mortgage: $25,106 3) Clackamas County Tax Assessor: $5,781 15760 SW Division St., $520,000 1) BOA: $395,722 Sherwood, OR 2) BOA: $51,900 3) Thomas Jacobs: $107,800 4) Washington County Tax Assessor: $6,857 14260 SW 164th Ave., Tigard, OR $325,000 1) EMC Mortgage: $327,950 2) EMC Mortgage: $81,929 16157 SW 3rd St., Sherwood, OR $430,000 EMC Mortgage: $503,987 14050 SW 164th Ave., Tigard, OR $325,000 1) Wachovia: $345,000 2) Washington County Tax Assessor: $6,708 9295 SW Klamath Ct., Tualatin, $225,000 1) BOA: $185,000 OR 2) E-Trade: $81,700 3) Washington County Tax Assessor: $3,506 ½ of Tract 34 (land in $200,000 Golf Savings: $275,782 Clackamas County)
They did not claim any exemptions in any of the rental real properties in their original Schedule C.
The Mazzucas received their discharge on April 20, 2010. Their chapter 7 case closed on April 15, 2011.
On December 1, 2014, the Mazzucas filed a motion to reopen their chapter 7 case ("Motion to Reopen") (docket #62) so that they could file the Lien Avoidance Motions. Two days later, an order was
On December 9, 2014, the Mazzucas filed an amended Schedule C (docket #68). In their amended Schedule C, they reasserted their homestead exemption. They also claimed an exemption of $5 under O.R.S. § 18.345(1)(o) as to each of the rental real properties. The Mazzucas did not specify as to whether they claimed the exemption under the 2009 version of O.R.S. § 18.345(1)(o), the year in which they filed for bankruptcy, or the 2013 version of O.R.S. § 18.345(1)(o), the most current version of the statute.
On December 15, 2014, the Mazzucas filed their Lien Avoidance Motions.
In their Residence Lien Avoidance Motion, the Mazzucas asserted that their residence had a FMV of $535,000. They alleged that there was a total of $613,000 owed to the senior lienholders, Bank of America ($463,000) and Chase ($150,000). Based on the FMV of and the senior liens against their residence, the Mazzucas contended that Wells Fargo's judicial lien impaired their homestead exemption.
In all of the Rental Property Lien Avoidance Motions, the Mazzucas provided the FMV of the subject rental real property, as well as the amounts owed to the senior lienholder(s). See supra pp. 3-4. They asserted that the judgment lien(s) against the subject rental real properties impaired the exemptions they claimed under O.R.S. § 18.345(1)(o).
Given these circumstances, I scheduled and held a hearing on the Lien Avoidance Motions on January 20, 2015. At the out-set of the hearing, I advised counsel for the Mazzucas that I would grant the Residence Lien Avoidance Motion on the ground that Wells Fargo's judicial lien impaired their homestead exemption, as there was no equity available in the residence based on its FMV and the amounts owed to the senior lienholders.
I informed counsel for the Mazzucas that I would deny the Rental Property Lien Avoidance Motions with prejudice, however. I pointed out that, in their original Schedule C, the Mazzucas had appropriately claimed exemptions under the 2009 version of O.R.S. § 18.345(1)(o) for certain personal property assets (e.g., accounts receivable). But I noted that, in
Counsel for the Mazzucas explained that, in the past, he had used O.R.S. § 18.345(1)(o) to claim exemptions for rental properties. I stressed to him that the 2009 version of O.R.S. § 18.345(1)(o) cannot be used to exempt real property; by its terms, O.R.S. § 18.345(1)(o) can be used to exempt personal property only. I informed counsel for the Mazzucas that I would issue an opinion to clarify this point — that it was not within the language of the 2009 version of O.R.S. § 18.345(1)(o) to apply the exemption to real property.
At his request, I gave counsel for the Mazzucas the opportunity to submit a supplemental brief in support of the Rental Property Lien Avoidance Motions. Instead, he submitted a letter on January 20, 2015 ("Letter")(docket #79), explaining that he would not file a supplemental brief and that the Mazzucas did not object to an order denying their Rental Property Lien Avoidance Motions. Counsel for the Mazzucas moreover admitted that he had used "what [was] clearly a personal property exemption, on real property" and had "[not] caught the limitation of the Oregon wildcard exemption to personal property."
"When a debtor files a Chapter 7 bankruptcy petition, all of the debtor's assets become property of the bankruptcy estate [under] § 541, subject to the debtor's right to reclaim certain property as `exempt' [under] § 522(1)." Schwab v. Reilly, 560 U.S. 770, 774, 130 S.Ct. 2652, 177 L.Ed.2d 234 (2010). To assert this right, the debtor must file a list of property that he or she claims as exempt. Mwangi v. Wells Fargo Bank, N.A. (In re Mwangi), 764 F.3d 1168, 1173 (9th Cir. 2014). Section 522(b) allows a debtor to exempt property under either federal law or state law, though a state may opt out of the federal system of exemptions. Here, when the Mazzucas filed their chapter 7 bankruptcy petition in December 2009, Oregon had opted out of the federal system of exemptions. See O.R.S. § 18.300 (2009). Consequently, they could claim state law exemptions only.
"It is well-established that the nature and extent of exemptions is determined as of the date that the bankruptcy petition is filed." Culver, LLC v. Chiu (In re Chiu), 266 B.R. 743, 751 (9th Cir. BAP 2001) (citations omitted). Moreover, "because lien avoidance is part and parcel of the exemption scheme, the right to avoid a judicial lien must also be determined as of the petition date." Id. (citations omitted). Because the Mazzucas filed their chapter 7 bankruptcy petition in December 2009, I must look to the 2009 version of O.R.S. § 18.345(1)(o) in my analysis.
Under § 522(f)(1), a debtor may avoid a judicial lien if: "(1) there was a fixing of a lien on an interest of the debtor
Here, the only issue before me is whether the Mazzucas are entitled to claim an exemption under O.R.S. § 18.345(1)(o) for their rental real properties. As I stated on the record at the hearing, given the plain language of O.R.S. § 18.345(1)(o), the Mazzucas cannot exempt the rental real properties under that statute as written.
"Where the statute's language is plain, the sole function of the courts is to enforce it according to its terms, for courts must presume that a legislature says in a statute what it means and means in a statute what it says there." In re Meruelo Maddux Props., Inc., 667 F.3d 1072, 1076 (9th Cir.2012), quoting Int'l Ass'n of Machinists & Aerospace Workers v. BF Goodrich Aerospace Aerostructures Grp., 387 F.3d 1046, 1051 (9th Cir.2004) (internal quotation marks omitted). As quoted earlier, the 2009 version of O.R.S. § 18.345 provides, in relevant part:
The plain language of O.R.S. § 18.345(1)(o) explicitly provides that a debtor may claim an exemption for personal property only. This exemption cannot be applied to any other kinds of property, including rental real property, which the Mazzucas erroneously attempted to do here.
Although it is not applicable here, even the 2013 version of O.R.S. § 18.345(1)(o), i.e., O.R.S. § 18.345(1)(p), does not allow the Mazzucas to claim an exemption in the rental real properties. The 2013 version of Oregon's "wild card" exemption does not expand its exemption coverage.
Because the Mazzucas were not entitled to claim an exemption in the rental real properties under O.R.S. § 18.345(1)(o), they cannot avoid the judicial liens on the rental real properties. Accordingly, I deny their Rental Property Lien Avoidance Motions with prejudice. However, I will grant their Residence Lien Avoidance Motion for the reasons stated earlier. I will enter orders or have entered orders consistent with the conclusions reached in this Memorandum Opinion.
Upon my initial review of the lien avoidance motion concerning this particular rental real property, I was under the impression that the Mazzucas had not included this rental real property in their original and amended schedules. Counsel for the Mazzucas explained the discrepancy in his subsequently filed letter dated January 20, 2015.
The 2013 version of O.R.S. § 18.345 (the most current version) provides, in relevant part:
