NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS FEB 25 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: ALELI A. HERNANDEZ, No. 17-60044
Debtor, BAP No. 16-1228
______________________________
ASSET MANAGEMENT HOLDINGS, MEMORANDUM*
LLC,
Appellant,
v.
ALELI A. HERNANDEZ,
Appellee.
Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Kurtz, Faris, and Lafferty III, Bankruptcy Judges, Presiding
Argued and Submitted February 7, 2019
Pasadena, California
Before: WARDLAW and BEA, Circuit Judges, and MURPHY,** District Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Stephen Joseph Murphy III, United States District
Judge for the Eastern District of Michigan, sitting by designation.
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Asset Management Holdings (AMH) appeals the decision of the Bankruptcy
Appellate Panel (BAP) affirming the bankruptcy court’s denial of AMH’s motion
to dismiss Debtor’s Chapter 13 petition on eligibility grounds. We have
jurisdiction pursuant to 28 U.S.C. § 158(d). We affirm.
1. AMH argues that the bankruptcy court erred by not counting AMH’s lien
against Debtor for the purposes of determining eligibility under 11 U.S.C.
§ 109(e). AMH is mistaken.
In In re Scovis, the plaintiffs listed a $100,000 homestead exemption on their
filing schedules. 249 F.3d 975, 979 (9th Cir. 2001). Although that exemption
enabled them to avoid a portion of their creditor’s lien at some time in the future—
i.e., after filing for Chapter 13 proceedings—the court held that the bankruptcy
court could consider it, because the effect of the exemption was “readily
ascertainable.” Id. at 984. Here, Debtor valued AMH’s unsecured junior lien at $0
in her schedules and stated that she planned on filing a motion to avoid it. The
parties do not contest that the value of Debtor’s property was eclipsed by the first
priority lien, nor do they contest that AMH’s lien could be modified pursuant to 11
U.S.C. § 1322(b)(2). See In re Zimmer, 313 F.3d 1220, 1222 (9th Cir. 2002).
Therefore, the bankruptcy court was correct to conclude that Debtor was eligible
for Chapter 13 bankruptcy because lien avoidance was “readily ascertainable.” See
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also In re Groh, 405 B.R. 674, 678 (Bankr. S.D. Cal. 2009) (“Scovis makes very
clear that events like obvious lien avoidance should be considered in determining a
debtor’s eligibility.”).
AMH’s arguments to the contrary are unpersuasive. AMH’s assertion that
the plain language of 11 U.S.C. § 109(e) counsels otherwise is, at bottom, a plea to
overrule Scovis. AMH’s claim that this case is controlled by Johnson v. Home
State Bank, 501 U.S. 78 (1991), ignores that Johnson had nothing to do with
eligibility. See also In re Sandrin, 536 B.R. 309, 318 (Bankr. D. Colo. 2015)
(“[T]he Johnson holding . . . gives no guidance as to proper valuation of the
allowed claim . . . for purposes of 11 U.S.C. § 109(e) eligibility . . . .”). And
AMH’s attempt to analogize this case to In re Quintana (Quintana II), 915 F.2d
513 (9th Cir. 1990), and In re Davis (Davis II), 778 F.3d 809 (9th Cir. 2015),
ignores that those cases arose from Chapter 12 bankruptcy proceedings, not
Chapter 13.
2. AMH also argues that the bankruptcy court erred in concluding that
Debtor filed her petition in good faith. AMH is wrong.
The relevant factors for determining bad faith are:
(1) whether the debtor misrepresented facts in his petition or plan,
unfairly manipulated the Bankruptcy Code, or otherwise filed his
Chapter 13 petition or plan in an inequitable manner;
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(2) the debtor’s history of filings and dismissals;
(3) whether the debtor [intended only] to defeat state court litigation;
and
(4) whether egregious behavior is present.
In re Blendheim, 803 F.3d 477, 499 (9th Cir. 2015) (internal citations and
quotation and alteration marks omitted). To determine bad faith, “a bankruptcy
judge must review” these factors according to the “totality of the circumstances.”
In re Eisen, 14 F.3d 469, 470 (9th Cir. 1994) (citation omitted).
None of the relevant factors are present here. There is no evidence in the
record of misrepresentation, serial bankruptcy filings, filings to defeat state court
litigation, or egregious behavior. And while AMH urges the court to find that filing
for Chapter 13 bankruptcy after a prior Chapter 7 discharge is bad faith per se, that
conclusion is unsupported by the Bankruptcy Code and the case law. As the
Supreme Court said in Johnson, “Congress has expressly prohibited various forms
of serial filings.” 501 U.S. at 87. The “absence of a like prohibition on serial filings
of Chapter 7 and Chapter 13 petitions, combined with the evident care with which
Congress fashioned these express prohibitions, convinces us that Congress did not
intend categorically to foreclose the benefit of Chapter 13 reorganization to a
debtor who previously has filed for Chapter 7 relief.” Id.
AFFIRMED.
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