Debra Wilson v. James Rigby

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

DEBRA LEA WILSON, No. 17-35716
Appellant,
D.C. No.
v. 2:16-cv-01684-RAJ

JAMES RIGBY; FIRST CITIZENS
BANK, OPINION
Appellees.

Appeal from the United States District Court
for the Western District of Washington
Richard A. Jones, District Judge, Presiding

Argued and Submitted June 8, 2018
Seattle, Washington

Filed November 27, 2018

Before: Jay S. Bybee and N. Randy Smith, Circuit Judges,
and Paul C. Huck,* District Judge.

Opinion by Judge N.R. Smith;
Dissent by Judge Huck

*
The Honorable Paul C. Huck, United States District Judge for the
U.S. District Court for Southern Florida, sitting by designation.
2 WILSON V. RIGBY

SUMMARY**

Bankruptcy

The panel affirmed the district court’s decision affirming
the bankruptcy court’s refusal to permit a Chapter 7 debtor to
amend a bankruptcy schedule to reflect a post-petition
increase in the value of property that was the subject of a
homestead exemption under Washington law.

The panel held that the debtor’s claimed exemption was
limited to the amount to which she was entitled under
Washington law as of the petition date because, whether
claiming federal or state law exemptions, the value of the
exemption is fixed by reference to the date of the filing of the
bankruptcy petition. Declining to decide whether the
definition of the value of exemptions in 11 U.S.C. § 522(a)(2)
applies to state law exemptions as well as to federal ones, the
panel concluded that § 541(a)(1) makes clear that the debtor’s
interests in property transfer to the bankruptcy estate as of the
commencement of the bankruptcy action. Following this
transfer, any appreciation enures to the bankruptcy estate.
Distinguishing cases involving California’s homestead
statute, the panel held that, under Washington law, the
debtor’s exemption was limited to her equity in the property
as of the date of her bankruptcy petition.

Dissenting, District Judge Huck wrote that binding Ninth
Circuit precedent mandated that when a homestead
appreciates in value post-petition, a debtor is entitled to

**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
 WILSON V. RIGBY 3

amend her homestead exemption claim to include a portion
of that appreciation in order to exempt from the bankruptcy
estate the maximum amount permitted by state or federal law
applicable on the petition date. Judge Huck wrote that the
only property subject to exemptions is that which becomes
part of the estate. Because post-petition appreciation is an
estate asset, it is subject to the maximum applicable
homestead exemption irrespective of the amount of the
exemption initially claimed by the debtor.

COUNSEL

Larry B. Feinstein (argued), Vortman & Feinstein, Bellevue,
Washington, for Appellant.

Thomas S. Linde (argued) and Michael M. Sperry, Schweet
Linde & Coulson PLLC, Seattle, Washington; Denice E.
Moewes, Wood & Jones P.C., Seattle, Washington; for
Appellees.

Jon Erik Heath (argued), San Francisco, California, for Amici
Curiae National Association of Consumer Bankruptcy
Attorneys and National Consumer Bankruptcy Rights Center.

OPINION

N.R. SMITH, Circuit Judge:

The filing date of a bankruptcy petition determines the
law governing exemptions and freezes the value of the
exemptions that the debtor may claim. Because Debra
Wilson’s amended bankruptcy schedules sought to claim
4 WILSON V. RIGBY

more than Washington law permitted her to claim as of the
petition date, we affirm the district court’s decision, limiting
her claimed exemption to the amount she was entitled to
under Washington law as of the petition date.

I.

Wilson filed her voluntary Chapter 7 petition for
bankruptcy on December 18, 2013. In her initial Schedule C,
Wilson elected to take the federal exemptions and listed the
“wildcard” exemption. At the time the petition was filed,
Wilson’s one-bedroom condominium was valued at $250,000
and was subject to a $246,440 mortgage. Accordingly,
Wilson listed the value of her exemption as $3,560, equal to
the equity in her home as of the petition date. During the
pendency of the bankruptcy, the value of the property
increased. On July 18, 2016, Wilson amended her Schedule
C, claiming “100% of fair market value, up to any applicable
statutory limit,” listing the value of the property at $412,500.
The amended schedule listed Washington’s homestead
exemption as the basis for the amended exemption. The
Trustee, James Rigby, and the Bank, First-Citizens Bank &
Trust Co., opposed the amendments. After oral argument, the
bankruptcy court held that an amendment to update the value
of an exemption in light of post-petition changes in value was
not permitted. Accordingly, the court held that Wilson could
not claim more than $3,560 in the property. Wilson appealed
to the district court, and the district court affirmed the
bankruptcy court. This appeal timely followed.

II.

We review the scope of bankruptcy exemptions de novo.
See Lieberman v. Hawkins (In re Lieberman), 245 F.3d 1090,
 WILSON V. RIGBY 5

1091 (9th Cir. 2001). Likewise, we independently review the
bankruptcy court’s decision without deference to the district
court’s decision. Rosson v. Fitzgerald (In re Rosson),
545 F.3d 764, 770 (9th Cir. 2008).

III.

A debtor’s exemptions have long been fixed at “the date
of the filing of the [bankruptcy] petition.” White v. Stump,
266 U.S. 310, 313 (1924); Wolfe v. Jacobson (In re
Jacobson), 676 F.3d 1193, 1199 (9th Cir. 2012) (“Under the
so-called ‘snapshot’ rule, bankruptcy exemptions are fixed at
the time of the bankruptcy petition.”). This rule determines
not only what exemptions a debtor may claim, it also fixes the
value that a debtor is entitled to claim in her exemptions.
Gebhart v. Gaughan (In re Gebhart), 621 F.3d 1206, 1211
(9th Cir. 2010) (noting the well-settled holding in this circuit
“that what is frozen as of the date of filing the petition is the
value of the debtor’s exemption, not the fair market value of
the property claimed as exempt”); see also Hyman v. Plotkin
(In re Hyman), 967 F.2d 1316, 1321 (9th Cir. 1992) (“Were
we to accept the Hymans’ argument that they’re entitled to
post-filing appreciation, we would also have to hold that a
debtor is subject to post-filing depreciation, which would give
debtors in falling property markets less than the $45,000
guaranteed them by state law. Nothing in the bankruptcy law
compels (or even suggests) such a drastic interference with
the operation of the state homestead exemption statute. In
fact, our caselaw strongly suggests the opposite result.”
(emphasis in original)).

This rule is rooted not only in our precedent but in the
bankruptcy code itself. It is expressly identified in 11 U.S.C.
§ 522(a)(2), which defines the “value” of exemptions for
6 WILSON V. RIGBY

purposes of § 522 as “fair market value as of the date of the
filing of the petition or, with respect to property that becomes
property of the estate after such date, as of the date such
property becomes property of the estate.” See id. Amici assert
that this definition of value applies only to the federal
exemptions listed in § 522(d) and lien avoidance in § 522(f)
and not to state law exemptions that may be claimed pursuant
to § 522(b)(3)(A), because the term “value” is not used in
§ 522(b)(3)(A). We need not decide whether Amici are
correct on this point, because 11 U.S.C. § 541(a)(1) makes
clear that “all legal or equitable interests of the debtor in
property” transfer to the bankruptcy estate “as of the
commencement of the case.” Id. (emphasis added). This
transfer of interest is subject to the debtor’s exemptions under
§ 522(b)(1), but the reference point for such exemptions is the
commencement of the bankruptcy action. Following this
transfer, all “[p]roceeds, product, offspring, rents, or profits”
enure to the bankruptcy estate. Id. § 541(a)(6). This includes
the appreciation in value of a debtor’s home. E.g., Schwaber
v. Reed (In re Reed), 940 F.2d 1317, 1323 (9th Cir. 1991)
(interpreting 11 U.S.C. § 541(a)(6) “to mean that appreciation
enures to the bankruptcy estate, not the debtor”).
Accordingly, whether claiming federal or state law
exemptions, the value of the exemption is fixed by reference
to the date of the filing of the bankruptcy petition.

IV.

However, Wilson and Amici assert that a closer look at
the facts underlying earlier Ninth Circuit precedent reveals
that we have consistently allowed debtors to benefit from the
 WILSON V. RIGBY 7

post-petition appreciation of their homestead.1 We have not;
let us explain.

The first set of cases cited by Wilson and Amici involved
California’s homestead statute, which differs in material
respects from Washington’s statute. Under California law,
every debtor is entitled to claim an exemption with a fixed
dollar value, based on demographic criteria—
not home equity. See, e.g., Alsberg v. Robertson (In re
Alsberg), 68 F.3d 312, 314 (9th Cir. 1995);
Cal. Civ. Proc. Code § 704.730. 2 By contrast,

1
The dissent makes these same arguments; we again reject them.
2
The full text of California’s current statute, which has only changed
in terms of the value assigned to the various demographic categories since
our decision in Alsberg, reads as follows:

(a) The amount of the homestead exemption is one of
the following:

(1) Seventy-five thousand dollars ($75,000) unless the
judgment debtor or spouse of the judgment debtor who
resides in the homestead is a person described in
paragraph (2) or (3).

(2) One hundred thousand dollars ($100,000) if the
judgment debtor or spouse of the judgment debtor who
resides in the homestead is at the time of the attempted
sale of the homestead a member of a family unit, and
there is at least one member of the family unit who
owns no interest in the homestead or whose only
interest in the homestead is a community property
interest with the judgment debtor.

(3) One hundred seventy-five thousand dollars
($175,000) if the judgment debtor or spouse of the
judgment debtor who resides in the homestead is at the
8 WILSON V. RIGBY

Washington applies a sliding scale in which “the homestead

time of the attempted sale of the homestead any one of
the following:

(A) A person 65 years of age or older.

(B) A person physically or mentally disabled who as a
result of that disability is unable to engage in
substantial gainful employment. There is a rebuttable
presumption affecting the burden of proof that a person
receiving disability insurance benefit payments under
Title II or supplemental security income payments
under Title XVI of the federal Social Security Act
satisfies the requirements of this paragraph as to his or
her inability to engage in substantial gainful
employment.

(C) A person 55 years of age or older with a gross
annual income of not more than twenty-five thousand
dollars ($25,000) or, if the judgment debtor is married,
a gross annual income, including the gross annual
income of the judgment debtor’s spouse, of not more
than thirty-five thousand dollars ($35,000) and the sale
is an involuntary sale.

(b) Notwithstanding any other provision of this section,
the combined homestead exemptions of spouses on the
same judgment shall not exceed the amount specified in
paragraph (2) or (3), whichever is applicable, of
subdivision (a), regardless of whether the spouses are
jointly obligated on the judgment and regardless of
whether the homestead consists of community or
separate property or both. Notwithstanding any other
provision of this article, if both spouses are entitled to
a homestead exemption, the exemption of proceeds of
the homestead shall be apportioned between the
spouses on the basis of their proportionate interests in
the homestead.

Cal. Civ. Proc. Code § 704.730.
 WILSON V. RIGBY 9

exemption amount shall not exceed the lesser of (1) the total
net value of the [homestead] . . . or (2) the sum of one
hundred twenty-five thousand dollars . . . .” Wash. Rev. Code
§ 6.13.030 (emphasis added).

In both California and Washington, the value of the
homestead must be fixed as of the date of the bankruptcy
petition. In California, the value of the homestead is always
a defined statutory figure. See Cal. Civ. Proc. Code
§ 704.730. However, in Washington, the value is tied to the
equity in the debtor’s home as of the date of the filing of the
petition. See Wash. Rev. Code § 6.13.030. Because the value
that can be claimed in California is determined by
demographic criteria, the homestead amount claimed at filing
may exceed home equity on that petition date. See Alsberg,
68 F.3d at 313–14 (noting that under California law “in effect
at the time of filing [the debtor] was entitled to claim a
homestead exemption of $45,000 on the residence” where the
home equity at the time of filing was only $33,875). If the
home subsequently appreciates, it enures to the California
debtor up to the amount she was entitled to claim under
California law on the petition date. See id. at 313–15
(affirming the BAP’s determination that, upon the sale of the
home, the California debtor was entitled to the full $45,000
exemption even though the equity at the time of the filing was
less than this amount). Accordingly, our cases (that appear to
allow California debtors to obtain post-petition appreciation)
have merely allowed the debtors to receive the full value of
the homestead exemption that they were entitled to claim as
of the petition date. See, e.g., id.; Hyman, 967 F.2d at 1321.3

3
Some of the confusion in this area may stem from the language in
our cases noting that the homestead exemption does not come into play
until the time of a sale. Alsberg, 68 F.3d at 315 (citing Hyman, 967 F.2d
10 WILSON V. RIGBY

Applying Washington law, Wilson is again entitled to the
full value of the homestead exemption she could legally claim
as of the petition date. However, Washington, unlike
California, limits a debtor’s exemption to the equity in her
home. Here, there is no dispute that the “net value” of
Wilson’s home at the time she filed bankruptcy was the
$3,560. That amount was all that Washington’s exemption
statute permitted her to exempt. The fact, that some debtors
in our California cases were permitted to exempt more than
the equity in their homes on the date of their bankruptcy
petitions, does not establish Wilson’s entitlement to do the
same in Washington. Each state is entitled to set the
parameters for its homestead exemption, but in all cases a
debtor is limited to the value that may lawfully be claimed on
the petition date.

Wilson and Amici next cite Klein v. Chappell (In re
Chappell), 373 B.R. 73 (B.A.P. 9th Cir. 2007), aff’d sub nom.
In re Gebhart, 621 F.3d 1206. In Chappell, the BAP
identified the rule that we reaffirm here, noting that
“exemptions are determined on the date of the bankruptcy
and without reference to subsequent changes in the character
or value of the exempt property.” Id. at 77 (alterations in
original omitted) (quoting Culver, LLC v. Chiu (In re Chiu),
266 B.R. 743, 751 (B.A.P. 9th Cir. 2001), aff’d, 304 F.3d 905
(9th Cir. 2002)). The issue in Chappell did not involve the

at 1321). Wilson urges that this language means that the value that she is
entitled to claim as exempt is determined by reference to the sale date,
rather than the petition date. Wilson misreads our cases. We have been
clear that, although a debtor only realizes the exempted value at the time
of sale, her exemption is fixed by the petition date. Hyman, 967 F.2d at
1321 (noting that determining value as of the sale date would subject
debtors in a down market to post-petition depreciation and holding that
this would be inconsistent with our precedent).
 WILSON V. RIGBY 11

debtor’s entitlement to post-petition appreciation up to the
statutory maximum, because the trustee had waived that
issue. Id. at 78, 82. The case instead involved whether the
bankruptcy estate retains an interest in the debtor’s home
where the value of the debtor’s homestead exemption equals
or exceeds the equity in the home. See id. at 75–76.
Consistent with our cases, the BAP held that the debtor’s
interest in the home was limited to the dollar value exemption
claimed. See id. at 83. Also, consistent with our cases, the
BAP held that the bankruptcy estate retains an interest in the
debtor’s home such that post-petition appreciation enures to
the bankruptcy estate. See id.

Lastly, Wilson and Amici rely on Woodson v. Fireman’s
Fund Insurance Co. (In re Woodson), 839 F.2d 610 (9th Cir.
1988). Woodson involved an entirely distinct issue from the
one presented here, namely the difference between a debtor’s
right to exempt the ownership interest in a life insurance
policy and the debtor’s exemption rights in life insurance
proceeds. Id. at 617–20. We expressly determined that the
policy and the proceeds were two different assets governed
by two different exemptions. Id. Because the proceeds asset
did not exist at the time the petition was filed, the debtor was
entitled to claim an exemption in the proceeds at the time he
received them. Id. at 621 (permitting the debtor to retain only
that portion of the proceeds, if any, that he was entitled to
exempt under California law). Unlike the two distinct assets
at issue in Woodson, Wilson’s home is the only asset. The
value of that asset may change over time, but it is not
constantly subject to a new round of exemptions as the value
goes up or down.
12 WILSON V. RIGBY

V.

Wilson asserts that our holding will lead to debtors
routinely overvaluing their homes on their bankruptcy
schedules. We remind Wilson that the debtor must act in
good faith, and that nothing about the debtor’s valuation of
the home listed on the schedule is binding on the trustee. Cf.
Schwab v. Reilly, 560 U.S. 770, 782–83 (2010) (Subsection
522(b) “does not define the ‘property claimed as exempt’ by
reference to the estimated market value . . . .” (emphasis
omitted)). If the homestead exemption at issue is tied to the
equity in a home, the trustee will have the burden to examine
the claimed amount to make certain that the trustee need not
object and establish that the claimed exemption is improper.

Here, Wilson is barred from receiving a $125,000
exemption because the trustee timely opposed her amended
exemption. The record is undisputed that the actual equity in
her home on the petition date was $3,560. The date of the
petition is the relevant time frame for valuing the exemption,
and Washington law limits the homestead exemption to a
debtor’s equity.

AFFIRMED.

HUCK, District Judge, dissenting:

The majority’s summation of the relevant facts is accurate
and not in dispute. But the majority’s conclusion that debtor
Wilson’s proposed amended bankruptcy schedules sought to
claim more than Washington’s homestead exemption law
 WILSON V. RIGBY 13

permits is, in my view, an incorrect application of Ninth
Circuit precedent. For this and other reasons, I would reverse.

This case presents two issues. First, may Wilson exempt
a portion of her homestead property’s appreciation which
accrued postpetition by increasing her homestead exemption
claim to the maximum amount authorized by Washington
law? And second, if so, may she amend her existing
homestead exemption claim in order to obtain a portion of
that appreciation? Based upon this court’s binding precedent,
as well as the most fundamental bankruptcy principles
applicable to establishing the extent of a debtor’s homestead
exemption, the answer to both questions is yes.

To begin, this court must analyze these issues through the
prism of three fundamental principles: first, that bankruptcy’s
goal to grant the honest but unfortunate debtor a fresh start is
best served by liberally construing homestead exemptions in
favor of debtors, see Schwab v. Reilly, 560 U.S. 770, 791
(2010); second, that bankruptcy courts lack authority to deny
an exemption for any reason not specified in the Bankruptcy
Code (“Code”), see Law v. Siegel, 134 S. Ct. 1188, 1197
(2014); and third, that amendments to bankruptcy schedules,
including those declaring homestead exemptions, are
permitted as of right, see Martinson v. Michael (In re
Michael), 163 F.3d 526, 529 (9th Cir. 1998), abrogated on
other grounds by Law, 134 S. Ct. at 1188. That these
fundamental principles apply here is beyond dispute.

More importantly, binding and on-point Ninth Circuit
precedent mandates that when a homestead appreciates in
value postpetition, a debtor is entitled to amend her
homestead exemption claim to include a portion of that
appreciation in order to exempt from the bankruptcy estate
14 WILSON V. RIGBY

the maximum amount permitted by state or federal law
applicable on the debtor’s filing date. That precedent controls
here and requires reversal.

I. Binding Precedent

A. Alsberg

Robertson v. Alsberg (In re Alsberg), 161 B.R. 680
(B.A.P. 9th Cir. 1993), affirmed by this court in Alsberg v.
Robertson (In re Alsberg), 68 F.3d 312 (9th Cir. 1995), is
directly on point. In Alsberg, the debtor’s homestead property
was appraised at $259,000 when he filed for bankruptcy,
which amount was less than the deed of trust lien ($225,125)
and tax liens ($86,000) encumbering the property. At the
time, California’s maximum homestead exemption was
$45,000. Apparently because Alsberg believed that there was
no equity in the homestead, he did not claim a homestead
exemption in his schedules. However, postpetition, the
homestead appreciated in value and the trustee sold it, netting
$121,000. After the sale, Alsberg amended his B-4 schedule
to claim the $45,000 maximum California exemption.
Alsberg then argued that the trustee was required to abandon
the full $121,000 because at filing there was no equity in his
homestead property for creditors, and therefore, the estate
never had any interest in the property. Alsberg thus “asserted
that he was entitled to any appreciation in the value of the
Property during the pendency of the case.” In re Alsberg,
161 B.R. at 682. On the other hand, the trustee asserted that
Alsberg could not receive any exemption because there was
no equity in the property when Alsberg filed or, alternatively,
that Alsberg’s exemption was capped at $33,875—less than
the full $45,000 California homestead exemption—because
at filing that was the amount of equity in excess of the deed
 WILSON V. RIGBY 15

of trust.1 The bankruptcy court disagreed with both parties
and found that Alsberg was entitled to a full homestead
exemption of $45,000, which amount included a portion of
the property’s postpetition appreciation, “because the
amount allowable as a homestead is determined when
property is sold.” Id. (emphasis added).

The bankruptcy appellate panel (“BAP”) affirmed. Id.
The BAP specifically framed the issue as “[w]hether the trial
court correctly held that the appreciation in the value of the
Property during the pendency of the bankruptcy case
belonged to the estate, not to Alsberg.” Id. Finding that
postpetition appreciation initially vested in the estate, the
BAP made the logical subsequent finding: to the extent an
applicable exemption exists, postpetition appreciation, an
estate asset, will be exempted back out of the estate. Id. at
683. Rejecting Alsberg’s claim to all of the postpetition
appreciation, the BAP held: “The Property did become
property of Alsberg’s estate. [Debtor’s] claim of an
exemption only allows him to take back out of the estate the
property representing his exemption.” Id. (alteration added).
Then under the heading “Entitlement to Appreciation,” the
BAP discussed who is entitled to appreciation, and in what
proportions, noting that there were three possible options:

[W]e decide only how much of the remaining
[sale] proceeds Alsberg is entitled to receive
versus how much the estate is entitled to
receive . . . . [The options are:]

1
The bankruptcy court did not consider the tax liens in its calculation
of Alsberg’s homestead equity. In re Alsberg, 161 B.R. at 684 (“We are
not deciding whether Alsberg’s homestead exemption takes priority over
either of the tax lien claims. That issue will be determined separately.”).
16 WILSON V. RIGBY

1. Alsberg gets $33,875, the difference
between the value of the Coast Savings lien
and the value of the Property as of the date
Alsberg filed bankruptcy;

2. Alsberg gets $45,000, the full statutory
amount of his homestead exemption; or

3. Alsberg gets the full $121,000 because,
when he filed bankruptcy, the Coast Savings
lien plus his homestead exemption exceeded
the value of the Property.

Not surprisingly, the Trustee argues for option
number 1 and Alsberg argues for option
number 3. The trial court adopted option
number 2 and we affirm.

Id. at 684. In relevant part, the BAP unequivocally held:

We agree with the trial court’s analysis of the
Ninth Circuit’s decisions in In re Hyman,
967 F.2d 1316 (9th Cir. 1992) and In re Reed,
940 F.2d 1317 (9th Cir. 1991), which hold
that the bankruptcy estate, and not the debtor,
is entitled to post-petition appreciation in
estate assets and that the amount of the
debtor’s homestead exemption is determined
when the subject property is sold rather than
being fixed as of the date the debtor files
bankruptcy. See Hyman, 967 F.2d at 1321;
Reed, 940 F.2d at 1323.

Id. (emphasis added) (footnote call numbers omitted).
 WILSON V. RIGBY 17

As shown by the above quote, the BAP, affirmed by this
court, relied on In re Hyman, 967 F.2d 1316 (9th Cir. 1992),
to hold that the homestead exemption amount is determined
at the time of sale. Id. In Hyman, the debtor contended that
his homestead was not an estate asset because its full equity
on his filing date was exempt. In re Hyman, 967 F.2d at 1321.
In rejecting the debtor’s contention, this court stated: “[t]he
California statute gives the Hymans a $45,000 exemption as
of the time of sale, not a $45,000 equity in the property . . . .
The debtor’s right to use the exemption comes into play not
upon the filing of the petition, but only if and when the
trustee attempts to sell the property.”2 In re Alsberg, 68 F.3d
at 314 (quoting In re Hyman, 967 F.2d at 1321) (emphasis
added). Applying this principle, the Alsberg court explained:
“Alsberg’s California homestead exemption can be realized
only from the net proceeds of sale received by the estate . . . .
When Alsberg subsequently filed a claim for a $45,000
homestead exemption after the sale of the property, he
became entitled to $45,000 of the proceeds, and no more.”
Id.

The facts in Alsberg are materially and legally
indistinguishable from the facts here. However, the majority
challenges Alsberg’s authority, asserting that California’s
homestead exemption scheme is materially different from
Washington’s. The majority posits that California’s
exemption entitles every debtor to “claim an exemption with
a fixed dollar value, based on demographic criteria—not
home equity” and “is always the statutory figure.” The

2
And as will be discussed more fully below, the actual amount of a
debtor’s exemption, under California law, as with all capped exemption
laws, will always be determined by the lesser of the exemption cap or the
net proceeds from the sale.
18 WILSON V. RIGBY

majority asserts this is in contrast to Washington’s homestead
exemption, which is materially different because it is “tied to
the equity in the debtor’s home.” This argument fails for at
least three reasons.

First, the distinction which the majority draws between
the Washington and California statutes is illusory because
even though the wording used in each is somewhat different,
that is a difference without legal significance. In fact, the
majority’s attempt to distinguish California’s exemption
because it is “based on demographic criteria—not home
equity” seems to be fashioned from whole cloth. The majority
cites no case, nor have I found any, that has even mentioned,
much less relied on, such a distinction or any other
meaningful distinction.

To the contrary, there is, in my view, no meaningful basis
for treating California’s capped homestead exemption scheme
differently from the federal and other state capped schemes.
More importantly, this court has consistently concurred in
that view. Ninth Circuit caselaw is clear that the legal
principles applicable to the treatment of the homestead’s
postpetition appreciation, which were first established in
cases arising out of California’s exemption statute, are
equally applicable to all other capped exemption statutes.
 WILSON V. RIGBY 19

In In re Gebhart, a consolidated appeal,3 this court made
clear that its precedential principles regarding how exempt
property is defined and treated, including treatment of
postpetition appreciation as an estate asset subject to the full
homestead exemption, are not specific to or limited by any
unique feature of the California exemption statute, as the
majority contends. See In re Gebhart, 621 F.3d 1206, 1211
(9th Cir. 2010). Rather, these principles apply to “all statutes
that limit the value of an exemption to an ‘interest’ in
property capped at a dollar value,” such as Arizona’s,
California’s, Washington’s, and the Code’s. Id. Thus, all
capped homestead exemption statutes do not exempt the
homestead property itself, but rather a capped portion of its
equity value, and are subject to the same homestead
exemption principles and analysis. In full, this court
explained:

A number of our cases have held that, under
the California exemption scheme, the estate is
entitled to postpetition appreciation in the
value of property a portion of which is
otherwise exempt. See Alsberg v. Robertson
(In re Alsberg), 68 F.3d 312, 314–15 (9th
Cir.1995); Hyman, 967 F.2d at 1321;

3
As discussed further below, in Gebhart, this court affirmed the BAP
in one case and the district court in another case. See Klein v. Chappell (In
re Chappell), 373 B.R. 73 (B.A.P. 9th Cir. 2007), aff’d sub nom In re
Gebhart, 621 F.3d 1206 (9th Cir. 2010); see also Gebhart v. Gaughan (In
re Gebhart), No. 07-CV-193-PHX-ROS (D. Ariz. Sept. 17, 2007), aff’d
621 F.3d 1206 (9th Cir. 2010). For purposes of this discussion, the
underlying opinion in Chappell will be referred to as Klein v. Chappell
and the underlying opinion in Gebhart will be referred to as Gebhart v.
Gaughan. This court’s opinion in the consolidated case will be referred to
as Gebhart.
20 WILSON V. RIGBY

Schwaber v. Reed (In re Reed), 940 F.2d
1317, 1323 (9th Cir.1991); see also Viet Vu v.
Kendall (In re Viet Vu), 245 B.R. 644, 647–48
(9th Cir.BAP2000).

The fact that the cases cited above dealt
with exemptions claimed under California's
statutory exemption scheme does not limit
their applicability to the cases at bench,
where exemptions were claimed under
Arizona and federal statutes. Reilly has
reaffirmed certain of the underlying principles
in these cases and clarified that, with respect
to how exempt property is defined, their
reasoning is applicable not just to California's
exemption scheme, but to all statutes that
limit the value of an exemption to an
“interest” in property capped at a dollar value.
Moreover, this court's past position on
postpetition appreciation is based not solely
on the California statute defining exempt
property but also on 11 U.S.C. § 541(a)(6)
(including as property of the estate
“[p]roceeds, product, offspring, rents, or
profits of or from property of the estate ...”),
which is equally applicable to the cases at
issue here. See In re Reed, 940 F.2d at 1323;
In re Viet Vu, 245 B.R. at 649.

Id. (emphasis added). Therefore, it cannot be that Alsberg and
other Ninth Circuit cases involving California’s homestead
exemption scheme are legally distinguishable as the majority
posits because, as acknowledged by Gebhart’s clear
language, all capped homestead exemption schemes,
 WILSON V. RIGBY 21

including Washington’s, are treated the same. See also Klein
v. Chappell (In re Chappell), 373 B.R. 73, 75 (B.A.P. 9th Cir.
2007) (“Under well-settled Ninth Circuit law, any
postpetition appreciation in value in the residence in excess
of the maximum amount permitted by the exemption statute
invoked inures to the benefit of the estate. The use of federal
exemptions does not work to change that result.”). The
federal homestead exemption statute was at issue in Klein v.
Chappell and the Arizona statute in Gebhart v. Gaughan, yet,
on review, this Court relied on Ninth Circuit cases analyzing
California’s homestead exemption scheme to hold that these
non-California debtors were entitled to retain the postpetition
appreciation in their homesteads up to the statutory
exemption caps. See Gebhart, 621 F.3d at 1211 (analyzing
Alsberg, Hyman, Reed, and Vu). Thus, this court does not
make the distinction which the majority posits.4

Indeed, this court, when discussing whether a California
debtor may obtain postpetition appreciation beyond the
statutory exemption cap, noted the obvious similarity among
all capped exemption statutes by placing them in the same
exemption category and without drawing any distinction
among them: “Of the nine states in the Ninth Circuit, seven
limit the dollar amount of the homestead allowance (Alaska,
Arizona, California, Idaho, Montana, Nevada, and
Washington), while two limit both the dollar and the acreage

4
The demographic criteria in California’s homestead exemption,
upon which the majority places much emphasis, is irrelevant here because
it merely sets forth different exemption caps based on the different
characteristics of the individual or individuals claiming the exemption.
Cal. Civ. Proc. Code. § 704.730. For instance, an unmarried California
debtor may claim $75,000, see Cal. Civ. Proc. Code. § 704.730(a)(1), but
an unmarried California debtor who is over 65 years old may claim
$175,000, see Cal. Civ. Proc. Code. § 704.730(a)(3)(A).
22 WILSON V. RIGBY

amounts of the homestead allowance (Hawaii and Oregon).”
In re Hyman, 967 F.2d at 1319 n.3.

The majority grounds its argument for treating
Washington’s exemption differently than California’s on the
ground that Washington exempts the lesser of either the
homestead’s equity or $125,000. Thus, argues the majority,
while Washington’s exemption is tied to the homestead’s
equity, California’s is not. While it is true that the California
statute does not specifically mention an equity limitation, that
is of neither legal nor economical consequence. That is
because in actual practice, and as a matter of basic
economics, bankruptcy courts in California must, as do all
states with a capped exemption, always cap the exemption at
the lesser of the homestead’s net equity or the designated
maximum because the actual exempted amount will always
be limited to, and can only be paid from, the net proceeds
from the sale of the homestead. See In re Bruton, 167 B.R.
923, 926 (Bankr. S.D. Cal. 1994). Thus, California’s
exemption statute actually means, as does Washington’s, that
the debtor’s exemption amount is the lesser of either the
homestead’s net proceeds at sale or the capped maximum
amount.

In its attempt to distinguish Washington’s exemption
from California’s, the majority also relies on dicta from
Hyman stating that California guarantees debtors a specific
homestead exemption amount. In re Hyman, 967 F.2d at
1321. Unlike taxes and death, however, nothing in
California’s homestead exemption scheme, nor in any other
capped exemption scheme for that matter, guarantees any
amount to the debtor. The only exemption guarantee in
California, and again, as with all capped exemptions, is that
debtors may only exempt and receive their homestead’s
 WILSON V. RIGBY 23

equity, if any, up to the maximum statutory exemption
amount. This is obviously the case because regardless of the
maximum exemption the law permits, a debtor may only
receive the exemption amount from the net proceeds
generated by the sale of the homestead. In re Alsberg, 68 F.3d
at 315 (“Alsberg’s California homestead exemption can be
realized only from the net proceeds of sale received by the
estate.”); see also In re Bruton, 167 B.R. at 926 (“The amount
that the debtor may claim as exempt for his homestead is
$50,000 . . . . However, since Bruton has only $16,981 equity
in the property absent HOA’s lien, the available exemption
for purposes of Bankruptcy Code § 522(f) is limited to
$16,981.”). Basic economic reality dictates that if the sale
produces net proceeds in an amount less than the maximum
homestead exemption, the debtor is limited to that lesser
amount. Thus, Hyman’s statement, and the majority’s reliance
on it, that California debtors are guaranteed a $45,000
homestead exemption, aside from being pure dicta, cannot be
accurate in the bankruptcy context.

Second, the majority’s effort to distinguish Washington’s
homestead exemption statute from California’s is also flawed
because it ignores binding precedent involving exemption
statutes other than California’s. This precedent, arising in the
consolidated Gebhart appeals involving federal and Arizona
homestead exemption statutes, permits a debtor to increase
the homestead exemption amount based on postpetition
appreciation—as does California’s statute. Like Washington’s
homestead exemption statute, the federal and Arizona statutes
cap the homestead exemption at a specified maximum
amount. As discussed in detail in the following section, the
courts in both cases which Gebhart affirmed permitted
debtors to claim increased homestead exemptions postpetition
in order to take advantage of their properties’ appreciation
24 WILSON V. RIGBY

under federal and Arizona statutes respectively. See Gebhart,
621 F.3d 1206. The federal homestead exemption statute is,
like Washington’s homestead exemption, clearly a “lesser of
either” capped statute that limits the exemption to “aggregate
interest, not to exceed $23,675 in value . . .” See 11 U.S.C.
§ 522(d)(1) (2018) (emphasis added) (footnote call number
omitted). Arizona’s homestead exemption statute, like
Washington’s, is also clearly a “lesser of either” capped
statute as indicated by the phrase “not exceeding” preceding
the specified cap. See Ariz. Rev. Stat. § 33-1101 (2018)
(“Any person . . . who resides within the state may hold as a
homestead exempt from attachment, execution, and forced
sale, not exceeding one hundred fifty thousand dollars in
value, any of the following . . .”) (emphasis added).

This court is obligated to follow Alsberg, which clearly
establishes that the amount of Wilson’s homestead exemption
is determined at sale, not at filing, and may include a portion
of the homestead’s postpetition appreciation regardless of
what Wilson claimed in her initial schedules.

B. Gebhart

Two other precedential cases adhering to Alsberg were
consolidated in Gebhart, specifically, Klein v. Chappell and
Gebhart v. Gaughan. See Klein v. Chappell, 373 B.R. at 73;
see also Gebhart v. Gaughan, No. 07-CV-193-PHX-ROS.
Although the facts of Klein v. Chappell (involving the federal
exemption statute) and Gebhart v. Gaughan (involving
Arizona’s statute) are somewhat different than here, the
relevant legal principle is not—debtors may exempt
postpetition appreciation from the estate up to the statutory
amount, but no more.
 WILSON V. RIGBY 25

In Gebhart, this court framed the “primary issue” as
“whether the Trustee’s failure to object to the homestead
exemption claim within the period allowed by statute resulted
in the homestead property being withdrawn from the
bankruptcy estate at that point.” 621 F.3d at 1209. The court
noted that the consolidated debtors’ respective schedules at
filing represented that there was no equity in the homestead
properties and that the trustees were entitled to rely on
debtors’ representations. Therefore, this court rejected the
debtors’ contention that because trustees failed to timely
object to their exemptions debtors’ entire homestead
properties, which had subsequently appreciated in value, were
excluded from the estates, as opposed to only the capped
homestead exemption amounts. Id. at 1210. This court instead
held that the applicable homestead exemptions removed a
specific dollar amount from the estate, not the property itself,
leaving each trustee entitled to sell the homestead property
notwithstanding his failure to timely object to the homestead
exemption claim. Id. To put it simply, the principal holding
of Gebhart is that a trustee is not bound by the debtor’s
schedules, including the debtor’s evaluation of the homestead
property, and therefore that the debtor cannot prevent the sale
of appreciated homestead property if it has equity in excess
of the maximum exemption amount. And particularly relevant
here, it is noteworthy that this court affirmed the lower
courts, each of which held that even though the debtor was
not entitled to exempt the homestead property itself, the
debtor was entitled to the full homestead exemption amount,
a portion of which was based on postpetition appreciation of
the property, in line with Alsberg. Id.
26 WILSON V. RIGBY

A closer analysis of the underlying cases in Gebhart is
instructive to the issues presented here. In Klein v. Chappell,5
when the husband and wife debtors filed they claimed that
their homestead’s fair market value was $350,000 subject to
liens of $328,488, leaving $21,512 of equity, which they
claimed as their federal homestead exemption. Thus, debtors’
claimed homestead exemption was lower than $36,900, the
maximum permitted under the Code. See § 522(d)(1). Two
years after debtors received their discharge, but while their
case remained open, the debtors’ mortgagee moved to
foreclose on the homestead property because the debtors had
defaulted. In response, the trustee moved the bankruptcy
court for permission to sell the homestead property because
he felt that its value had substantially appreciated. The
debtors argued that the homestead could not be sold because
they, upon filing their petition, had exempted the entire equity
interest in the property, leaving nothing for creditors. The
debtors contended that by doing so they “withdr[e]w the
entire fee from bankruptcy administration.” Klein v.
Chappell, 373 B.R. at 77. The bankruptcy court found for the
debtors, but the BAP reversed. The BAP held that the debtors
were limited to, but also now entitled to, the maximum
homestead exemption amount ($36,900) from the sale
proceeds, even though at filing they had claimed only their
homestead’s then equity of $21,512 and that the estate
retained the remaining sale proceeds. Id. at 83. In doing so,
the BAP held, in accordance with Alsberg: “Under well-
settled Ninth Circuit law, any postpetition appreciation in
value in the residence in excess of the maximum amount

5
In an effort to avoid the precedential value of Klein v. Chappell, the
majority states that it is a BAP case that is not binding on this court. The
majority fails to take into account that Klein v. Chappell was completely
affirmed by this court in Gebhart. In re Gebhart, 621 F.3d at 1212.
 WILSON V. RIGBY 27

permitted by the exemption statute invoked inures to the
benefit of the estate. The use of federal exemptions does not
work to change that result.” Id. (emphasis added). Moreover,
a footnote emphasizes that very point. As the BAP explained:

In Alsberg, Hyman, Reed and Vu the debtors
claimed the maximum amount allowable by
the California exemption scheme. In our case,
the debtors limited their exemption to the
difference between the value stated and the
consensual liens, which was an amount
substantially less than the maximum
exemption available. While postpetition
appreciation in value of property inures to the
benefit of the estate, the estate’s interest in
the appreciation must be limited by the
ability of the debtors to obtain the maximum
value of their federal exemptions. As was
conceded by the trustee at oral argument, the
debtors are jointly entitled to up to $36,900
(plus any available wildcard amount).

Id. at 81 n.7 (emphasis added). Thus, Klein v. Chappell, an
opinion affirmed by this court, again confirms Wilson’s
position. There should be no doubt that Klein v. Chappell
reaffirmed that in the Ninth Circuit, while the homestead and
any appreciation in the homestead initially becomes estate
property, that property is subject to the debtor’s full
homestead exemption, regardless of the amount of the
debtor’s claimed exemption or the homestead’s equity when
the petition is filed.

The majority contends that Klein v. Chappell is not
precedential in that it does not involve a debtor’s entitlement
28 WILSON V. RIGBY

to postpetition appreciation up to the statutory maximum
because the trustee had “waived” that issue. To the contrary,
the trustee, in accordance with what the BAP accurately
termed “well-settled Ninth Circuit law,” “conceded” that the
debtor was entitled to the maximum exemption permitted by
law. See Klein v. Chappell, 373 B.R. at 78, 82–83 (stating,
“As the trustee concedes, the maximum exemption available
under § 522(d)(1) is $36,900 . . .” and “As was conceded by
the trustee at oral argument, the debtors are jointly entitled to
up to $36,900 . . .”) (emphasis added). There is an obvious
and meaningful difference between an informed concession
and a waiver. A concession involves accepting something as
true or acknowledging defeat. A waiver, by contrast, is a
voluntary relinquishment of a right, claim, or privilege. That
the trustee, in the face of “well-settled Ninth Circuit law,”
conceded that the debtors were entitled to the maximum
federal homestead exemption is significant. Id.

Gebhart v. Gaughan, the other underlying case, involves
an Arizona debtor who on his bankruptcy schedules claimed
that his homestead had a fair market value of $210,000 with
liens totaling $120,297.6 On filing, the debtor claimed a
homestead exemption pursuant to Arizona’s homestead
exemption laws for his property’s then equity of $89,703, less
than the $100,000 maximum exemption permitted by Arizona
law. Thus, as did Wilson here, Gebhart initially claimed less
than the maximum exemption permitted by Arizona law
because at filing there was insufficient equity to provide

6
These facts are taken from the district court’s unpublished opinion,
which was not made a part of the record before this panel. This court may
take judicial notice of the district court’s unpublished opinion. See
McQuillion v. Schwarzenegger, 369 F.3d 1091, 1094 n.2 (9th Cir. 2004)
(taking judicial notice of unpublished district court dismissal order).
 WILSON V. RIGBY 29

revesting of the full allowable amount from the estate’s sale
of the homestead. As in Hyman, because the schedule facially
reflected no equity in the homestead property in excess of the
exemption claim, the trustee did not object to Gebhart’s
claimed exemption.

Three years after filing, the trustee determined that
Gebhart’s homestead had substantially appreciated in value
and sought to appoint a real estate broker to sell it. Gebhart
objected, contending that he was entitled to the entire
property because at filing he claimed as his exemption the
full equity then existing in the property, thereby leaving
nothing for the estate, and the trustee had failed to object. The
bankruptcy court granted the trustee’s request over Gebhart’s
objections, holding that “a chapter 7 trustee is entitled to the
proceeds from the sale of the debtors’ exempt homestead in
excess of the exempt amount” and that “the excess belongs
to the bankruptcy estate for the benefit of creditors.” Gebhart
v. Gaughan, Case No. 07-CV-193-PHX-ROS at 2. The
district court affirmed:

Because appreciation belongs to the estate, the
bankruptcy court did not err in allowing the
Trustee to proceed with the sale of
Appellant’s homestead. Appellant will receive
his homestead exemption upon sale of the
home but the value of the home above that
amount will be administered by the Trustee.
See In re Hyman, 967 F.2d 1316, 1321 (9th
Cir. 1992) (stating debtor entitled to payment
of full homestead exemption upon sale of
home).
30 WILSON V. RIGBY

Id. at 3 (emphasis added). Following its precedent, this court
affirmed. In re Gebhart, 621 F.3d at 1212.

By affirming both lower courts’ holdings, Gebhart
faithfully followed Alsberg’s unambiguous teaching that:

Under Reilly, an exemption claimed under a
dollar-value exemption statute is limited to
the value claimed at filing. At least when the
total fair market value of the property is in
fact greater than the exemption limit at the
time of filing, see note 4, supra, any
additional value in the property remains
the property of the estate, regardless of
whether the extra value was present at the
time of filing or whether the property
increased in value after filing . . . .

A number of our cases have held that, under
the California exemption scheme, the estate is
entitled to postpetition appreciation in the
value of property a portion of which is
otherwise exempt. See Alsberg v. Robertson
(In re Alsberg), 68 F.3d 312, 314–15 (9th
Cir.1995); Hyman, 967 F.2d at 1321;
Schwaber v. Reed (In re Reed), 940 F.2d
1317, 1323 (9th Cir.1991).

Id. at 1211 (emphasis added).

II. Morgan

Another case, Straffi v. Morgan (In re Morgan), No. 14-
36112 (KCF), 2017 WL 436257, at *1 (D.N.J. Feb. 1, 2017),
 WILSON V. RIGBY 31

while obviously not binding precedent, is persuasive not only
because it is so factually similar, but also because it
thoroughly analyzed and, in my view, correctly ruled on both
of the issues presented here: 1) whether a debtor is entitled to
postpetition appreciation to fully fund a homestead
exemption, and 2) whether a debtor has the right to amend her
exemption claim by increasing it to take advantage of that
appreciation. In Morgan, the debtor listed her homestead
value at $125,000 and claimed a $5,601 exemption, the
amount of equity remaining after subtracting a mortgage lien
of $106,898 and estimated sales costs. Later, the trustee
contended that the value of the property was $165,000. In
response, the debtor filed an amended exemption claiming the
maximum of $23,916 and adding another exemption under
section 522(d)(5). The trustee objected to this amendment,
arguing that the debtor may not amend her exemption to take
advantage of the greater homestead value. In response, “[t]he
[d]ebtor explained that, ‘because the Trustee believes my
home is worth more than $125,000.00, I amended my
schedule to claim the maximum available of $23,916.00.’” Id.
at 2. The debtor relied on Law v. Siegel, 134 S. Ct. 1188
(2014), to support her assertion that “she was able to amend
her exemption at any time . . . .” Id. The bankruptcy court
ruled in favor of the debtor, and the district court
affirmed—finding no error in allowing the debtor to amend
her exemption to claim and obtain the full exemption amount.
Id. at *5.

III. Exemption Amount is Not Determined at
Filing

While Gebhart plays a significant role in the resolution of
this case, the majority’s reliance on Gebhart to contend that
exemption amounts are irrevocably fixed on the date of filing
32 WILSON V. RIGBY

is unjustified. To begin, and what is most important to
understand Gebhart, is that in Gebhart this court affirmed the
BAP in Klein v. Chappell and the district court in Gebhart v.
Gaughan, both of which permitted each debtor to,
postpetition, assert an amended maximum homestead
exemption claim in an amount greater than the amount
claimed in the initial schedules, which greater amount
resulted from postpetition appreciation—precisely what
Wilson seeks to do. See In re Gebhart, 621 F.3d at 1212.

The majority’s contention that exemption amounts are
irrevocably fixed on the filing date stems from this partial,
out-of-context statement: “what is frozen as of the date of
filing the petition is the value of the debtor’s exemption, not
the fair market value of the property claimed as exempt.” Id.
at 1211. However, the full statement, in context, reveals a
different meaning:

Under Reilly, an exemption claimed under a
dollar-value exemption statute is limited to
the value claimed at filing. At least when the
total fair market value of the property is in
fact greater than the exemption limit at the
time of filing, see note 4, supra, any
additional value in the property remains the
property of the estate, regardless of whether
the extra value was present at the time of
filing or whether the property increased in
value after filing.

The debtors argue that this conclusion is
inconsistent with the Bankruptcy Code’s
scheme for valuing exempt property. Under
11 U.S.C. § 522(a)(2), “‘value’ [of property
 WILSON V. RIGBY 33

sought to be exempt] means fair market value
as of the date of the filing of the petition or,
with respect to property that becomes property
of the estate after such date, as of the date
such property becomes property of the estate.”
The debtors argue that this provision
effectively freezes the value of property
claimed as exempt as of the date of
bankruptcy filing. This argument does not
accord, however, with past holdings of this
court, which establish that what is frozen as of
the date of filing the petition is the value of
the debtor’s exemption, not the fair market
value of the property claimed as exempt. See
Hyman v. Plotkin (In re Hyman), 967 F.2d
1316, 1320 n. 9 (9th Cir. 1992).

Id. (alteration and emphasis added).

The majority interprets the final partial sentence to
support its conclusion that, under Washington’s exemption
scheme, a debtor’s homestead exemption cannot exceed the
amount that a debtor claimed on the filing date, based on the
property’s then-existing equity, even if the homestead
appreciates in value. But the majority’s posited interpretation
cannot be correct for a number of reasons. First and most
obvious, that interpretation stands in sharp contrast to, and is
irreconcilable with, what the Gebhart court actually did.
Rather than freeze the debtors’ exemption amount to the
properties’ equity claimed upon filing, the court permitted the
debtors to postpetition increase their exemption claims up to
the statutory capped amounts and to use a portion of the
properties’ postpetition appreciation to fund those amounts.
The majority’s interpretation is also irreconcilable with
34 WILSON V. RIGBY

Alsberg, precedent upon which the Gebhart court relied in
determining how postpetition appreciation is treated. Id.

Tellingly, the majority’s interpretation of that partial
statement ignores the court’s full discussion indicating, in
conformance with precedent, that when a homestead
appreciates postpetition, the appreciation inures to the estate,
but “a portion is otherwise exempt.” Id. For example, the
discussion preceding that partial statement informs as to its
true meaning. There, the court observes that a dollar value
exemption is limited to the exemption that debtor claimed at
filing, but only “when the total fair market value of the
property is in fact greater than the exemption limit at the time
of filing . . . any additional value in the property remains the
property of the estate regardless of whether the extra value
was present at the time of filing.” Id. In other words, when a
debtor claims the maximum allowed exemption and at filing
there is sufficient value to cover that amount, the debtor’s
exemption is frozen and he is not entitled to any of the
property’s appreciation. Conversely, it follows that if at filing
there is insufficient value to meet the maximum exemption,
the debtor is entitled to a portion of any appreciation up to the
maximum exemption. This interpretation not only takes into
account the Gebhart court’s full discussion and what it
actually did, but is also the only interpretation consistent with
Alsberg and the other precedent which the Gebhart court
cited with approval.

Moreover, the statement that exemptions are frozen on the
filing date must be analyzed in the factual context in which it
was made. Thus, it is important to note that the determinative
issues in Wilson’s case are different than those in Gebhart,
keeping in mind that the court was discussing and ultimately
rejecting the debtors’ contention that section 522(a)(2)
 WILSON V. RIGBY 35

“freezes the value of property claimed as exempt as of the
date of the bankruptcy filing” so that the estate was not
entitled to any postpetition appreciation. Id. (emphasis
added). In both of Gebhart’s two consolidated cases, the
debtors contended that the trustees had effectively abandoned
the homestead properties because the trustees did not object
to debtors’ homestead exemption claims which claimed all of
the properties’ purported equities at filing, which amounts
were less than the maximum allowed homestead exemptions.
Thereafter, the debtors claimed the appreciated properties
themselves, the values of which had substantially increased
to amounts greater than the statutory exemption cap. The
ultimate issue in Gebhart was whether the trustees were
entitled to the postpetition appreciation which exceeded the
statutory cap such that they could sell the homestead
properties or whether, instead, the debtors were entitled to all
of the appreciation such that the trustees would have no
interest in the homestead properties. In that different context,
Gebhart held in both cases that the trustee did not have to
object to the debtor’s schedules which represented no value
in the homestead property above the exemption claim, that
the property was still estate property, and “the estate [was]
entitled to postpetition appreciation in the value of property
a portion of which [was] otherwise exempt.” Id. at 1211
(citing In re Alsberg, 86 F.3d at 314–15). The court must read
the full context of Gebhart together with pre-existing
precedent and what the Gebhart court actually did in order to
fully understand what the Gebhart court meant by the isolated
statement, “what is frozen as of the date of filing the petition
is the value of the debtor’s exemption.” In re Gebhart,
621 F.3d at 1211.

It is also noteworthy that the Gebhart court credits its
statement to Hyman, where husband and wife debtors claimed
36 WILSON V. RIGBY

the maximum statutory exemption amount when initially
asserting their homestead exemption and then postpetition
claimed the appreciated property itself. In re Hyman,
967 F.2d at 1318. The court found for the trustee, holding that
the debtors’ interest was limited to their monetary interest
permitted by the homestead exemption. Id. at 1321. Because
the Hyman debtors had already claimed the maximum
$45,000 homestead exemption, debtors were not entitled to
exempt any more. Id. at 1318. That is, debtors’ exemption
was frozen at the statutory cap upon filing. As the court
explained:

The Hymans only claimed a $45,000
homestead exemption. See page 1318 supra.
That figure is fixed “as of the date of the
filing the petition.” 11 U.S.C. § 522(a)(2).
However, nothing in section 522, or anywhere
else in the Bankruptcy Code for that matter,
requires that non-exempt assets have their
values frozen on the petition date.

Id. at 1320 n.9 (emphasis added). It is this language from
Hyman to which Gebhart refers. The full context in which it
was made clearly does not support the majority’s view that
Wilson may not benefit from postpetition appreciation in
order to obtain her full exemption. To the contrary, context
explains how the “fixed at filing” language is fully
compatible with Wilson’s position here. The estate is entitled
to the homestead’s appreciation that is not otherwise exempt,
in line with this court’s precedent, including Alsberg and
Gebhart.

It is also significant that Washington’s homestead
exemption law, consistent with Ninth Circuit precedent,
 WILSON V. RIGBY 37

provides that the relevant time to determine and disburse a
debtor’s homestead exemption amount is when the property
is sold. Sweet v. O’Leary, 88 Wash. App. 199, 200 (1997)
(“The homestead exemption creates an interest in property
that attaches to the surplus proceeds from a nonjudicial
foreclosure sale under a deed of trust such that a judgment
creditor’s claim is limited to funds in excess of the
homestead, if any.”). Washington’s homestead exemption is
capped at the lesser of “the total net value of the lands . . . or
(2) the sum of one hundred twenty-five thousand dollars . . .”
Wash. Rev. Code § 6.13.030 (emphasis added). Washington
defines “net value” as “market value less all liens and
encumbrances senior to the judgment being executed upon
and not including the judgment being executed upon.” Wash.
Rev. Code § 6.13.010. Thus, Washington contemplates that
the value of its homestead exemption is determined upon
execution of a judgment against homestead property, or in the
bankruptcy context upon trustee’s sale, and is limited to the
lesser of the net proceeds from the sale or $125,000. Id.;
Wash. Rev. Code § 6.13.030. According to Washington law,
then, the proper value of the exemption amount is determined
at sale, not at filing. 7 Washington’s approach is wholly
consistent with this court’s adoption of the general principle
that exemption amounts are determined at sale rather than at
filing. In re Hyman, 967 F.2d at 1318 (explaining that under
California’s homestead exemption scheme, “[i]f the sale price

7
Washington’s homestead exemption law exempts, upon sale, a
maximum of $125,000 in homestead equity from judgment creditors’
reach, and per Hyman, the same treatment applies in the bankruptcy
context. In re Hyman, 967 F.2d at 1319 (concluding that pursuant to
section 522(b)(3)(a)’s deference to state law homestead exemptions,
bankruptcy petitioners under federal law are treated as judgment debtors
and are entitled to exempt any “property qualifying under California’s
homestead exemption statute.”).
38 WILSON V. RIGBY

does exceed [the total of the homestead exemption and
encumbrances on the property] the homestead may be sold
and the judgment debtor is entitled to a sum equal to his
homestead exemption from the proceeds of the sale.”)
(alteration added). Thus,

In the normal situation where section 704.800
is called into play—a sale of property to
satisfy a judgment lien—the concept of an
interest that fluctuates in value makes no
sense because all the relevant events occur on
the date of sale. Only in the bankruptcy
context, where an appreciable period of time
usually passes between filing of the petition
and sale of the property, can the property rise
or fall in value. Yet, we see no basis for
treating a sale by a trustee in bankruptcy any
different from a sale by a judgment
lienholder. The debtor’s right to use the
exemption comes into play not upon the filing
of the petition, but only if and when the
trustee attempts to sell the property.

Id. at 1321. Consistent with Hyman, the Alsberg court held:

Alsberg’s California homestead exemption
can be realized only from the net proceeds of
sale received by the estate. The estate held an
interest in the residence at all times after the
petition was filed. Therefore, when the
residence was sold, the proceeds of the sale
vested in the estate. When Alsberg
subsequently filed a claim for a $45,000
homestead exemption after the sale of the
 WILSON V. RIGBY 39

property, he became entitled to $45,000 of the
proceeds, and no more.

In re Alsberg, 68 F.3d at 315; see also In re Bruton, 167 B.R.
at 926.

In view of all this, the majority’s overly literal
interpretation of that out-of-context statement from Gebhart
regarding freezing exemptions cannot be justified.

Further, here, unlike the Gebhart debtors, Wilson does
not contend that the value of her homestead property was
frozen upon filing or that she is entitled to all postpetition
appreciation. Rather, Wilson agrees that the property’s value
has appreciated, and she seeks only the amount of her capped
homestead exemption, not her homestead property nor its
appreciated equity in excess of the exemption cap.

In the final analysis, section 522(b)(3)(A), which allows
debtors to use state exemption statutes, must be construed
liberally in favor of Wilson. See Culver, LLC v. Chiu (In re
Chiu), 266 B.R. 743, 747 (B.A.P. 9th Cir. 2001), aff’d,
304 F.3d 905 (9th Cir. 2002) (“It is well-established that
§ 522 is to be interpreted liberally in favor of debtors in order
to facilitate their ‘fresh start.’”). A liberal construction of
section 522(b)(3)(A) and Washington’s homestead exemption
statute requires that Wilson’s exemption amount be fixed at
sale, not at filing.

IV. Postpetition Appreciation Inures to the Estate

The majority also relies on the rather unremarkable
principle that postpetition appreciation in estate property
inures to the estate as support for not allowing Wilson to
40 WILSON V. RIGBY

amend her exemption schedule to claim a portion of that
appreciation. Certainly, the principle that postpetition
appreciation inures to the estate is well-established. See
Schwaber v. Reed (In re Reed), 940 F.2d 1317, 1323 (1991)
(“We interpret [§ 541(a)(6)] to mean that appreciation inures
to the bankruptcy estate, not the debtor.”); In re Alsberg,
68 F.3d at 314–15; In re Viet Vu, 245 B.R. 644, 648 (B.A.P.
9th Cir. 2000) (“[T]he estate is entitled to postpetition
appreciation”). In fact, a trustee’s ability to sell appreciated
homestead property stems from the concept that postpetition
appreciation initially inures to the estate. See In re Gebhart,
621 F.3d at 1210. However, the majority draws a faulty
conclusion from this limited principle.

The majority is correct that section 541(a)(1) defines one
category of estate property to include, “all legal or equitable
interests of the debtor in property as of the commencement of
the case.” However, the majority treats the estate’s
postpetition category of property defined in section 541(a)(6)
differently by classifying it as property that may never be
exempted from the bankruptcy estate, notwithstanding that
section 541(a)(6) is part of the list of all properties which
section 541(a) includes as “property of the estate.” Section
541(a) states: “The commencement of a case under . . . this
title creates an estate. Such estate is comprised of all of the
following property, wherever located and by whomever
held.” Section 541(a)(6), the sixth category of that estate
property, includes: “proceeds, product, offspring, rents, or
profits of or from property of the estate . . .” The majority
acknowledges that “proceeds, product, offspring, rents, or
 WILSON V. RIGBY 41

profits,” which without question includes appreciation,8 are
part of the bankruptcy estate, but curiously concludes that
only the debtor’s property that transfers to the estate at filing,
rather than the debtor’s property which transfers postpetition,
is subject to exemptions under section 522.

The majority’s position is not supported by statute or
caselaw. To the contrary, as discussed above, prohibiting a
debtor from exempting postpetition appreciation from the
estate contravenes binding precedent.

To say that debtor’s property, including its appreciation,
vests in the estate, says nothing about the debtor’s right to
revestment of a portion of the net proceeds from the sale of
that property pursuant to debtor’s homestead exemption. This
is because all of debtor’s property, including appreciation,
must initially inure to the estate before the proceeds from the
sale of such property may ultimately be distributed to those
claiming an interest in the estate property, e.g., creditors, and,
of course, debtors, by virtue of exemption or abandonment.
It is axiomatic that the only property subject to exemptions is
that which becomes part of the estate, but no statute or
caselaw limits a debtor’s right to exempt only that property
which entered the estate at the commencement of the
bankruptcy proceeding. See 11 U.S.C. § 522(b)(1). Thus,

8
Gebhart makes clear that postpetition appreciation becomes an
estate asset pursuant to section 541(a)(6). In re Gebhart, 621 F.3d at 1211
(“[T]his court’s past position on postpetition appreciation is based not
solely on the California statute defining exempt property but also on
11 U.S.C. § 541(a)(6) (including as property of the estate ‘[p]roceeds,
product, offspring, rents, or profits of or from property of the estate ...’),
which is equally applicable to the [non-California] cases at issue here.”).
Thus, postpetition appreciation comes into the estate by virtue of section
541(a)(6).
42 WILSON V. RIGBY

“[t]he effect of an exemption is that the debtor’s interest in
the property is ‘withdrawn from the estate (and hence from
the creditors) for the benefit of the debtor.’” In re Gebhart,
621 F.3d at 1210 (quoting Owen v. Owen, 500 U.S. 305, 308
(1991)); see also In re Morgan, 2017 WL 436257 at *4 (“The
Orton and Gebhart courts both held that postpetition
appreciation was property of the estate and, therefore, may
properly be exempted by a debtor.”). Nothing in section 522
limits a debtor from exempting an interest in estate property
acquired postpetition if an applicable exemption exists. See
§ 522.

It follows that because postpetition appreciation is an
estate asset, it is then subject to the maximum applicable
homestead exemption irrespective of the amount of the
exemption initially claimed by debtor. Gebhart, in affirming
both the lower courts, applies this principle, recognized by
this court in Alsberg, when holding that: “the estate is entitled
to postpetition appreciation in the value of property a portion
of which is otherwise exempt.” In re Gebhart, 621 F.3d at
1211 (emphasis added).

Applying these concepts here, Wilson’s homestead
property, with its postpetition appreciation, is unquestionably
property of the estate, $125,000 of which should be revested
to her by virtue of her allowable homestead exemption.

Because estate property, including its appreciation, is
subject to exemptions, even though Wilson had not initially
claimed Washington’s maximum exemption amount, she may
now claim the full exemption nonetheless. Thus, permitting
Wilson to amend her schedules to assert Washington’s full
homestead exemption is required by the Code’s text and this
court’s binding precedent. Moreover, permitting Wilson to
 WILSON V. RIGBY 43

assert her full exemption on estate property, including its
postpetition appreciation, fairly promotes the bankruptcy
fresh start policy.

V. The “Snapshot” Rule

In what has been labeled the “snapshot rule” through
caselaw, section 522(b)(3)(A) states that “exemptions must be
determined in accordance with the state law ‘applicable on
the date of filing.’” In re Jacobson, 676 F.3d 1193, 1199 (9th
Cir. 2012) (quoting § 522(b)(3)(A) (exempting from property
of the estate “any property that is exempt under . . . State or
local law that is applicable on the date of the filing . . .”)
(emphasis added)). The majority contends that the “snapshot
rule” directly supports its position that the claimed amount of
the exemption, as opposed to only the right to assert a specific
exemption claim, is indelibly fixed at filing. The majority’s
interpretation of the snapshot rule is an unjustified extension
of that rule as applied by the caselaw on which the majority
relies. Moreover, that interpretation runs counter to the three
basic principles applicable to exemption statutes:
1) exemption statutes must be liberally interpreted in favor of
debtors; 2) an exemption may not be denied in the absence of
an explicit provision to do so; and 3) courts must permit
debtors to amend their bankruptcy schedules as a matter of
course.

While it is accurate that the court in Jacobson stated that
“[u]nder the so-called snapshot rule, bankruptcy exemptions
are fixed at the time of the bankruptcy petition,” 676 F.3d at
1199, Jacobson and White v. Stump, 266 U.S. 310 (1924), the
other case upon which the majority relies, do not support the
majority’s extension of the snapshot rule. This is because in
those cases the courts did not discuss, much less decide,
44 WILSON V. RIGBY

whether the amount of the debtor’s exemption is fixed at
filing, but rather only whether the debtor qualified for a
particular homestead exemption in effect at filing.

As made abundantly clear in discussing the snapshot rule,
this court, relying on section 522(b)(3)(A)’s specific mandate,
explained that state homestead exemptions “must be
determined in accordance with the state law ‘applicable on
the date of filing’” and that courts must look to that law to
determine “whether an exemption applies.” In re Jacobson,
676 F.3d at 1199 (quoting § 522(b)(3)(A)). In Jacobson, the
debtors did not qualify for the exemption because they did not
reinvest the proceeds from the sale of their homestead
property within six months, as required by California law. Id.
Because the debtors failed to comply with state law as it
existed on the date of filing, the court found that they
forfeited the exemption. Id. As with Jacobson, the majority
overstates the actual, limited holding in White. There, the
Supreme Court simply held that a debtor could not assert a
homestead exemption when the property did not qualify for
exemption at the time of filing. White, 266 U.S. at 314. White
did not mention, much less rule on, whether the amount of an
exemption is fixed at filing or whether a debtor could
postpetition increase the dollar amount of a homestead
exemption claim based on appreciation. Id.

Neither of the majority’s cases speaks to the issues
presented here. Tellingly, the majority cites no case, and I
have found none, which has extended the snapshot rule to
freeze the amount of an exemption at filing. And in my view,
any such extension would be inconsistent with a liberal
interpretation of section 522(b)(3)(A) in favor of the debtor.
More to the point, the extension of the snapshot rule as
posited by the majority—that the amount of debtor’s
 WILSON V. RIGBY 45

exemption claim at filing may not be amended to reflect
postpetition appreciation—ignores this court’s precedent to
the contrary.

This court has explained that in applying a state
homestead exemption statute, courts should look to “clearly
defined rights with respect to” the statute. Id. With respect to
Washington’s exemption statute, it does not, nor does the
Code for that matter, provide that a homestead exemption is
limited to the amount claimed at filing or set a deadline for
asserting the full exemption. To the contrary, as discussed
above, Washington’s homestead exemption is determined by
and is applied to the “surplus proceeds from a . . . sale . . .
such that a judgment creditor’s claim is limited to funds in
excess of the homestead, if any.” Sweet, 88 Wash. App. at
200. The snapshot rule, as properly construed, is not relevant
here because at the time Wilson filed her petition, the
exemption for which she qualified read the same as it does
today: “the homestead is exempt from attachment and from
execution or forced sale for the debts of the owner up to the
amount specified in RCW 6.13.030.” Wash. Rev. Code
§ 6.13.070. Moreover, nothing in Washington’s homestead
exemption statute tethers the homestead exemption amount
to the bankruptcy filing date. See Wash. Rev. Code
§ 6.13.030. Consequently, the majority’s position that
Wilson’s homestead exemption was limited to $3,560
because exemption amounts are fixed at filing is flawed.

VI. Guiding Bankruptcy Principles

As indicated above, there are three undisputed
fundamental principles which must guide the court’s analysis
here, none of which have been discussed, much less taken
into account, by the majority or the courts below.
46 WILSON V. RIGBY

First, the overarching and well-established purpose of the
bankruptcy scheme is to “grant a fresh start to the honest but
unfortunate debtor.” Marrama v. Citizens Bank of Mass.,
549 U.S. 365, 367 (2007) (internal quotations omitted). To
that end, exemptions play a critical role. “[E]xemptions in
bankruptcy cases are part and parcel of the fundamental
bankruptcy concept of a ‘fresh start.’” Schwab, 560 U.S. at
791 (citations omitted). This court dutifully recognizes the
significance of exemptions and, consequently, adheres to a
strong policy of interpreting exemptions “liberally in favor of
debtors.” See In re Chiu, 266 B.R. at 747 (“It is well-
established that § 522 is to be interpreted liberally in favor of
debtors in order to facilitate their ‘fresh start.’”); see also In
re Arrol, 170 F.3d 934, 937 (9th Cir. 1999) (“[W]e are
mindful of the strong policy underlying both California law
and federal bankruptcy law to interpret exemption statutes
liberally in favor of the debtor.”) (alteration added).

An analysis of the permissibility of Wilson’s proposed
postpetition amendment must be guided by the well-
established fresh start and liberal-construction-of-exemptions
mandates. How better to assist an honest but unfortunate
debtor’s fresh start than to permit her to claim the maximum
applicable statutory homestead exemption amount? It is
noteworthy that Wilson, unlike the debtors in Hyman,
Alsberg, Klein v. Chappell, and Gebhart v. Gaughan, seeks
to obtain no more than the full exemption amount which the
homestead exemption statute permitted when she filed.

Second, bankruptcy courts may not deny a debtor’s
exemption on a ground not specified in the Code. Law, 134 S.
Ct. at 1197. In Law, the Supreme Court, in finding that the
bankruptcy court lacked authority to sanction a debtor by
surcharging, and thus reducing, his homestead exemption
 WILSON V. RIGBY 47

amount after the debtor committed overt fraud on the
bankruptcy court, explained that: “A debtor need not invoke
an exemption to which the statute entitles him; but if he does,
the court may not refuse to honor the exemption absent a
valid statutory basis for doing so.” Id. at 1196. As discussed
elsewhere, there is no valid statutory basis for not honoring
Wilson’s right to her full exemption.

Third, Federal Rule of Bankruptcy Procedure 1009 grants
debtors the right to freely amend their bankruptcy petitions,
including their exemption schedules. The rule states: “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.” Fed. R. Bankr. P. 1009. “This right
to amend includes the right to amend the debtor’s list of
property claimed exempt.” In re Goswami, 304 B.R. 386, 393
(B.A.P. 9th Cir. 2003) (“The approach we adopt in this case
is consistent with the Ninth Circuit’s policy of liberally
allowing debtors to amend their exemption schedules so as to
enhance their fresh start.”) (citing In re Michael, 163 F.3d at
529). “The bankruptcy court has no discretion to disallow
amended exemptions, unless the amendment has been made
in bad faith or prejudices third parties.” In re Arnold,
252 B.R. 778, 784 (B.A.P. 9th Cir. 2000). As the Supreme
Court noted, “[T]o disallow an exemption [] or to bar a debtor
from amending his schedules to claim an exemption . . . is
much the same thing . . .” Law, 134 S. Ct. at 1196.
Importantly, in Michael, this court expressly held that,
pursuant to a debtor’s right to freely amend under Bankruptcy
Rule 1009(a), a debtor may amend her bankruptcy schedules
to claim a homestead exemption for the first time
postpetition. In re Michael, 163 F.3d at 528 (permitting
debtors to amend bankruptcy schedules to claim homestead
exemption more than one year after the date of filing).
48 WILSON V. RIGBY

The denial of Wilson’s right to amend her exemption
claim in order to obtain Washington’s maximum homestead
exemption to which she is entitled is an impermissible denial
of a substantial portion of Wilson’s homestead exemption.
Nothing in the Code limits the amount of a debtor’s state law
homestead exemption to the amount of equity claimed in the
property on the filing date. Moreover, denying Wilson’s right
to amend is inconsistent with Michael and Bankruptcy Rule
1009(a). In contrast to the majority’s position that a debtor’s
exemption amount is always limited to the amount claimed at
filing, this court in Michael was intent on “implement[ing]
the policy of liberally allowing the debtors to amend their
exemption claims in order to enhance their fresh start.” In re
Michael, 163 F.3d at 529. It is counterintuitive and an
illiberal interpretation of the exemption laws to hold that a
debtor may amend her bankruptcy schedules to claim a
homestead exemption for the first time postpetition, as
permitted in Michael, but to deny a debtor the right to amend
her bankruptcy schedules to postpetition increase her
homestead exemption claim. Both scenarios allow a
postpetition amendment and a greater exemption for the
debtor.

In an attempt to justify denying Wilson’s full exemption,
the majority relies on section 522(a)(2)’s term-of-art
definition of “value” to support fixing the exemption amount
to the equity amount claimed on the filing date. Such reliance
is ill advised for a number of reasons, not the least of which
is the section’s clear language. While section 522(a)(2)
provides that “in this section, ‘value’ means fair market
value as of the date of the filing of the petition,” the word
“value” is noticeably absent from, and thus inapplicable to,
section 522(b)(3)(A), which authorizes debtors to utilize state
law exemptions rather than federal exemptions. § 522(a)(2)
 WILSON V. RIGBY 49

(emphasis added). In contrast, section 522 includes the word
“value” in several other irrelevant federal exemption sections,
such as within section 522(d)(2), which federally exempts a
“debtor’s interest, not to exceed $3,775 in value, in one motor
vehicle.” § 522(d)(2). That the defined term “value” is
present in some sections but not section 522(b)(3)(A), the
only section relevant here, clearly indicates that the defined
term “value” plays no role in Wilson’s homestead exemption
analysis. See Conn. Nat’l Bank v. Germain, 503 U.S. 249,
253–54 (1992) (“We have stated time and again that courts
must presume that a legislature says in a statute what it means
and means in a statute what it says there.”). In fact, the only
limitation in the Code on a debtor’s right to exempt property
under state law is that the exemption statute must be
“applicable on the date of the filing of the petition to the
place in which the debtor’s domicile has been located” for a
period of time prior to filing. § 522(b)(3)(A). Moreover,
nothing in section 522 limits exemptions to property that
entered the estate on the filing date, as opposed to property
that entered the estate postpetition. See gen. § 522. Thus,
nothing in section 522, or anywhere else in the Code, limits
Wilson’s right to amend her schedules to claim and receive
her full homestead exemption amount, which may include
some postpetition appreciation.

For all of these reasons, I would reverse to allow Wilson
to amend her homestead exemption claim in order for her to
obtain the full exemption to which she is entitled.