Hull v. Rockwell

United States Court of Appeals
For the First Circuit

No. 19-2074

IN RE JEFFREY J. ROCKWELL,

Debtor.

JEFFREY J. ROCKWELL,

Appellee,

v.

NATHANIEL RICHARD HULL,

Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE

[Hon. John A. Woodcock, Jr., U.S. District Judge]

Before

Thompson, Lipez, and Kayatta,
Circuit Judges.

Nathaniel R. Hull and Verrill Dana LLP on brief for the
appellant.
Christopher J. Keach and Molleur Law Office on brief for the
appellee.

July 30, 2020
 THOMPSON, Circuit Judge. Jeffrey J. Rockwell filed for

Chapter 13 bankruptcy and exempted his home from the bankruptcy

estate under Maine's homestead law. Later, while the bankruptcy

was still proceeding, Rockwell sold that home, and, despite Maine's

law, did not reinvest the proceeds of the sale in another homestead

within six months. When he converted his bankruptcy to a Chapter

7 proceeding, Chapter 7 Trustee Nathaniel Richard Hull objected to

Rockwell's homestead exemption. The bankruptcy court denied

Hull's objection and the district court affirmed. Hull then

appealed to us. Holding that the Bankruptcy Code dictates that

Rockwell's homestead exemption maintains the status it held on the

day Rockwell filed his bankruptcy petition, we affirm.

BACKGROUND

In 2001, Rockwell purchased property on B Street in South

Portland, Maine. He still owned that property and was living there

on August 19, 2015, when he filed for Chapter 13 bankruptcy. As

he was entitled to under Maine law, 14 M.R.S. § 4422(1), Rockwell

claimed a homestead exemption for $47,500 of equity for the B

Street property.1 As part of his Chapter 13 reorganization plan,

1 A "homestead" is "[t]he house, outbuildings, and adjoining
land owned and occupied by a person or family as a residence."
Homestead, Black's Law Dictionary (11th ed. 2019). A "homestead
exemption" is a tool a debtor can use to protect his homestead
(or, depending on the state, a portion of the proceeds from the
sale of it) from creditors. See Homestead Law, Black's Law
Dictionary (11th ed. 2019).

- 2 -
Rockwell proposed to pay the owner of the B street mortgage (i.e.,

one of his creditors) directly from his other assets and retain

ownership and possession of the property. The bankruptcy court

confirmed Rockwell's Chapter 13 plan in November 2015.

By December 2016, Rockwell's plans to retain the B Street

Property had changed. Specifically, he sought the bankruptcy

court's permission to sell the property for $160,000. Rockwell

proposed that he would retain the $47,500 allowed by Maine's

homestead exemption and contribute the remaining, non-exempt

proceeds to his Chapter 13 reorganization plan. At the hearing on

Rockwell's motion to sell the property, the Chapter 13 trustee

expressed concern about Rockwell's proposed sale price, but

nonetheless expected the court to grant the motion.

The bankruptcy court granted Rockwell's motion and

ordered him to use the money from the sale to pay the closing costs

and the mortgage. Rockwell was to pay any remaining, non-exempt

funds from the sale to the Chapter 13 trustee to pay down

Rockwell's debt.

On March 6, 2017, Rockwell finalized the sale of the B

Street property. After paying the closing costs and the lender,

$51,682.87 was left. He kept $47,500 (his homestead exemption as

allowed by Maine law) and paid the remaining $4,182.87 to the

Chapter 13 trustee. The Chapter 13 trustee did not object.

- 3 -
 After the sale, Rockwell still lived at the B Street

property, but he planned to move into a home on Bancroft Court, in

Portland. Though Rockwell did not own the Bancroft Court property,

in the months after the sale and prior to his move, he contributed

to its upkeep. Specifically, Rockwell spent $18,806.23 of his

homestead exemption on paint, tile, fuel oil, carpet, plumbing,

tree-cutting services, and other miscellaneous repairs and

supplies, all for the Bancroft Court property, and on moving

expenses to move his own belongings from the B Street property to

the Bancroft Court property. Then, on August 7, 2017, Rockwell

converted his Chapter 13 case to a Chapter 7 case. Rockwell moved

into the Bancroft Court property in September 2017 and continued

to spend the money from his homestead exemption on repairs and

improvements to the Bancroft Court property.

A few months later, the Chapter 7 trustee, Hull, objected

to Rockwell's use of the homestead exemption. Hull argued that

Rockwell was no longer using the exemption to protect his interest

in a homestead because he had not reinvested the proceeds of the

sale as required by Maine law. Therefore, from Hull's perspective,

the previously protected money -- specifically, the $28,693.77

that Rockwell had not yet spent when he converted his case to a

- 4 -
Chapter 7 case -- should become part of the bankruptcy estate and

be used to pay off Rockwell's creditors.2

From Rockwell's point of view, he could take a homestead

exemption of up to $47,500 when he first filed for bankruptcy in

2015 because he owned his residence at the time. Rockwell argued

that the Bankruptcy Code and First Circuit precedent require that

the bankruptcy court apply the "complete snapshot" rule, meaning

the court evaluates Rockwell's affairs on the day he files for

bankruptcy without considering any developments after that date

(as if someone took a snapshot of the situation, leaving it frozen

in time) to determine if assets are properly exempted from the

bankruptcy estate.

The bankruptcy judge held a bench trial to resolve Hull's

objection. The judge denied Hull's objection, explaining that

"the complete snapshot view [of Rockwell's finances on the day he

filed for bankruptcy] more faithfully adhere[d] to the Code, First

Circuit authority, and the practicalities of administering a

chapter 7 case."

On September 4, 2018, Hull appealed to the United States

District Court for the District of Maine, which affirmed the

2 Pursuant to 11 U.S.C. § 348(f), the trustee could only seek
the $28,693.77 remaining at the time of conversion because there
were no allegations of bad faith in the conversion.

- 5 -
bankruptcy court's decision. Hull filed a timely appeal to this

court on October 22, 2019.

For the reasons that follow, we now affirm.

OUR TAKE

Before turning to the merits of Hull's appeal, we will

give the reader some context on the Bankruptcy Code and law

relevant to the instant litigation. When we review a district

court's decision affirming a bankruptcy court's decision, as we do

here, we review the bankruptcy court's decision directly. In re

Sheedy, 801 F.3d 12, 18 (1st Cir. 2015). We review the bankruptcy

judge's legal conclusions de novo and factual conclusions for clear

error. In re Goguen, 691 F.3d 62, 68 (1st Cir 2012).

A. The Bankruptcy Code Framework

When a debtor files for bankruptcy, his interests in

property are either compiled into the bankruptcy "estate" from

which (to the extent the estate can afford) his creditors will be

paid, or those interests are exempted from the estate for the

debtor to keep. See 11 U.S.C. § 541. When the estate is created,

a combination of federal and state law determines which of the

debtor's assets are exempted (and will remain safe from creditor

collection) and which belong to the estate (and will be lost to

the debtor). See id. § 522(b); Owen v. Owen, 500 U.S. 305, 306

(1991). "[F]ederal law provides no authority for bankruptcy courts

- 6 -
to deny an exemption on a ground not specified in the Code." Law

v. Siegel, 571 U.S. 415, 425 (2014) (emphasis omitted).

Pursuant to 11 U.S.C. § 522(b)(3)(A), a debtor can

exempt from the bankruptcy estate any property permitted by his

state of residence. Among those exemptions is an exemption

commonly called a "homestead exemption" which protects, to varying

extents, a debtor's interest in their home. See Homestead Law,

Black's Law Dictionary (11th ed. 2019). Maine, Rockwell's state

of residence, permits debtors to protect their "aggregate

interest, not to exceed $47,500 in value, in real or personal

property that the debtor . . . uses as a residence." 14 M.R.S.

§ 4422(1)(A).

Exemptions are determined at the time the debtor files

for bankruptcy. White v. Stump, 266 U.S. 310, 313 (1924); Myers

v. Matley, 318 U.S. 622, 628 (1943) ("[T]he bankrupt's right to a

homestead exemption becomes fixed at the date of the filing of the

petition in bankruptcy . . . ."); In re Cunningham, 513 F.3d 318,

318 (1st Cir. 2008). This maxim is called the "snapshot" rule

because the debtor's financial situation is frozen in time, as if

someone had taken a snapshot of it.3 In re Awayda, 574 B.R. 692,

3Though we have rarely used the term "snapshot" in this
circuit, see In re Rudler, 576 F.3d 37, 50 (1st Cir. 2009), we
have regularly recognized the concept. See, e.g., In re
Cunningham, 513 F.3d 318, 324 (1st Cir. 2008) ("[I]t is a basic

- 7 -
697 (Bankr. C.D. Ill. 2017) (noting the "snapshot rule [] controls

the moment in time upon which a debtor's right to claim exemptions

is based"). When the snapshot rule applies to an asset and the

snapshot is "complete," the asset will retain whatever status

(i.e., exempt or part of the estate) it had when the debtor filed

for bankruptcy and cannot be altered by circumstances that change

later. See In re Williams, 515 B.R. 395, 401 (Bankr. D. Mass.

2014) (explaining that the snapsnot rule "focus[es] on the facts

and law as they exist on the petition date"); see also In re

Cunningham, 513 F.3d at 318. Other times, the snapshot is

"incomplete," meaning that the right circumstances could later

alter the status of that asset relative to the bankruptcy estate,

much like one can edit a snapshot after it has been taken. See,

e.g., 11 U.S.C. § 541(a)(5) (requiring that up to 180 days after

filing of the bankruptcy petition, property that the debtor

acquires by bequest, devise, inheritance, divorce, life insurance,

or death benefit becomes part of the estate).

B. Chapter 13 and Chapter 7 Bankruptcy

Chapter 13 bankruptcy, the type of bankruptcy Rockwell

entered when he first filed in August of 2015, is an entirely

voluntary process. Harris v. Viegelahn, 135 S. Ct. 1829, 1835

principle of bankruptcy law that exemptions are determined when a
petition is filed.").

- 8 -
(2015). During a Chapter 13 bankruptcy, a debtor contributes some

of the income he earns after filing to the estate. 11 U.S.C.

§ 1306. A Chapter 13 debtor retains control of his property and

works out a plan with the court to use the money from the estate

to pay back his debt over three to five years. Id. § 1322.

If a debtor proceeds under Chapter 7, the chapter to

which Rockwell converted his bankruptcy in 2017, all of his assets,

other than the ones exempted from the estate per § 522, become a

part of the estate. Id. § 541. The Chapter 7 trustee then sells

or otherwise disposes of the debtor's property and pays off

creditors from the estate. Id. §§ 704, 726. "Crucially, however,

a Chapter 7 estate does not include the wages a debtor earns or

the assets he acquires after the bankruptcy filing." Harris, 135

S. Ct. at 1835 (emphasis in original).

A debtor may convert his bankruptcy from a Chapter 13 to

a Chapter 7 proceeding at any time. 11 U.S.C. § 348. "Absent a

bad-faith conversion, § 348(f) limits a converted Chapter 7 estate

to property belonging to the debtor 'as of the date' the original

Chapter 13 petition was filed." Harris, 135 S. Ct. at 1837.

C. Analysis of the Present Case

1. The Code Controls this Analysis

Having erected the applicable legal framework, we now

turn to the issue before us. No one disputes that on the day

Rockwell filed for bankruptcy, he properly protected $47,500 of

- 9 -
his property from the bankruptcy estate by claiming Maine's

homestead exemption, 14 M.R.S. § 4422(1). No one disputes that

Rockwell sold the property and pocketed the $47,500 without

spending it on a new Maine homestead within six months of the sale,

which Maine law requires.4 The sole dispute is whether that $47,500

(or what Rockwell didn't spend of it) lost its protection when

Rockwell failed to reinvest in a homestead within the six-month

limitation and should be available to pay creditors.

At the outset, we recognize that the Supreme Court

instructs that the rules of the Bankruptcy Code have the first and

final say, even where equity might demand a different result. In

Law v. Siegel, the Supreme Court held that the bankruptcy court

had improperly awarded the value of the debtor's homestead

exemption to pay for the Chapter 7 trustee's administrative

expenses, even though the trustee generated those expenses solely

when responding to the debtor's deliberate fraud. 571 U.S. at

422. The Court explained that the Bankruptcy Code permits debtors

4
As detailed above, Rockwell continued to live at the B
Street property until September 2017, when he moved into the
Bancroft Court residence. No one disputes that he has no ownership
interest in this property or that Rockwell spent his B Street
proceeds on repairs and other care for the Bancroft Court property.
Rockwell argued to the bankruptcy court that this qualifies as
investing in a homestead under Maine law, so that money is still
exempt from the estate. The bankruptcy court did not resolve this
argument because it determined that the B Street proceeds were
exempt, regardless of how Rockwell later spent them. For the same
reason, we do not address that argument here.

- 10 -
to claim a homestead exemption and for the value of that exemption

to be protected from paying, among other things, the administrative

expenses of the estate. Id. The debtor in that case properly

claimed the homestead exemption and no one filed a timely

objection. Id. at 423. Despite the debtor's post-petition

conduct, which included submitting fraudulent documents to the

bankruptcy court in an effort to wrest a share of the estate back

to himself, and despite the fact that this fraud directly caused

the trustee to incur approximately half a million dollars in legal

fees, the Code did not permit the bankruptcy court to make the

debtor's homestead exemption available to defray those legal fees.

Id. at 418-22, 427-28 (explaining that the bankruptcy court "may

not contravene express provisions of the Bankruptcy Code by

ordering that the debtor's exempt property be used to pay debts

and expenses for which that property is not liable under the

Code"). The bankruptcy court's mandate, therefore, is to

"reach . . . an end result required by the Code." Id. at 426.

2. Exemptions are Analyzed on the date the Debtor Files for
Bankruptcy

With this framing in mind, we recognize that the Code

(which we know is supreme here) instructs that the estate does not

begin anew when a debtor converts a Chapter 13 bankruptcy

proceeding into a Chapter 7 proceeding. 11 U.S.C. § 348(a)

(conversion from Chapter 13 to Chapter 7 "does not effect a change

- 11 -
in the date of the filing of the petition, the commencement of the

case, or the order for relief"). "[N]othing in the Code den[ies]

debtors funds that would have been theirs had the case proceeded

under Chapter 7 from the start." Harris, 135 S. Ct. at 1838. So,

without a doubt, we examine Rockwell's claim of a homestead

exemption on the date he filed for his Chapter 13 bankruptcy. As

previously noted, no one disputes that Rockwell properly claimed

Maine's homestead exemption on that date.

3. The Complete Snapshot Rule Applies

Therefore, the final concept we must wrestle with is

whether to apply the partial or complete snapshot rule: that is,

we consider whether to examine Rockwell's claimed homestead

exemption as unchanging, in accordance with the complete snapshot

rule, or apply the partial snapshot rule and afford Rockwell the

homestead exemption only so far as he maintains his homestead.

Again, the Code answers this question for us. "Property that is

properly exempted under § 522 is immunized against liability for

prebankruptcy debts, subject only to a few exceptions." In re

Cunningham, 513 F.3d at 323; accord 11 U.S.C. § 522(c)(1)-(3).

The Code enumerates those exceptions, where property that is

properly exempt on the day of filing (here, the day the snapshot

is taken) can be later incorporated into the estate (because the

snapshot was only partial and can therefore be edited). See 11

U.S.C. § 522(c). "Those exceptions include: (1) debt from certain

- 12 -
taxes and customs duties, (2) debt related to domestic support

obligations, (3) liens that cannot be avoided or voided, including

tax liens, and (4) debts for a breach of fiduciary duty to a

federal depository institution." In re Cunningham, 513 F.3d at

323. Therefore, we must conclude that the complete snapshot rule

applies to homestead exemptions taken pursuant to § 522, where

none of the statute's enumerated exceptions applies. None of these

explicit exceptions applies to Rockwell's case, nor does Hull

contend that one does, so Rockwell's homestead exemption taken on

the day he filed for bankruptcy must be viewed as unchanging, even

in the face of his later sale of the property.

This result lines up with the Code's priority of

providing a "fresh start" for debtors. "[W]hile a Chapter 7 debtor

must forfeit virtually all his prepetition property, he is able to

make a 'fresh start' by shielding from creditors his postpetition

earnings and acquisitions." Harris, 135 S. Ct. at 1835. Debtors

can best make a fresh start where they can make healthy financial

choices moving forward, knowing what property is out of the reach

of the pre-petition creditors. Indeed, "exemptions in bankruptcy

cases are part and parcel of the fundamental bankruptcy concept of

a fresh start." Schwab v. Reilly, 560 U.S. 770, 791 (2010)

(internal quotation marks and citations omitted); accord In re

Cunningham, 513 F.3d at 324 ("The efficacy of the fresh start

policy requires finality that allows a debtor to rebuild his life

- 13 -
without fear of lingering creditors."). "[A] central purpose of

the [Bankruptcy Code] is to provide a procedure by which certain

insolvent debtors can reorder their affairs, make peace with their

creditors, and enjoy 'a new opportunity in life with a clear field

for future effort, unhampered by the pressure and discouragement

of preexisting debt.'" Grogan v. Garner, 498 U.S. 279, 286 (1991)

(quoting Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934)). By

protecting Rockwell's exempt property, which was properly exempted

on the day of filing, from later being made available to creditors,

the bankruptcy court in this case supported Rockwell in achieving

the "fresh start" that the Code prizes.

We addressed this aspect of the Code before in In re

Cunningham, involving a Chapter 7 filing, where we considered

"whether the post-petition sale of the debtor's home, for which he

had obtained a homestead exemption under the law of Massachusetts

protecting it from creditors, cause[d] the proceeds of the sale to

lose their exempt status under the Bankruptcy Code and become

subject to pre-petition, nondischargeable debt." In re

Cunningham, 513 F.3d at 320. Cunningham, the debtor in that case,

had properly claimed a homestead exemption under Massachusetts

law. Later, he sold his home, made approximately $150,000 from

- 14 -
the sale, and moved to Florida.5 Id. at 322. One of Cunningham's

creditors moved to have the proceeds from the sale used to satisfy

Cunningham's debt. Id. at 321-22. The creditor argued, similar

to Hull's argument here, that the once-exempt interest in the

homestead was proper at the time Cunningham filed for bankruptcy,

but once he sold the property, it no longer enjoyed the protection

of Massachusetts' homestead exemption and therefore could be

collected to satisfy Cunningham's debts. Id. at 322. When

analyzing that case, we noted that § 522(c) has an "immunizing

effect" on any exempt assets, other than those explicitly excepted,

and those exempt assets are therefore exempt from pre-petition

debt collection during and after the bankruptcy. Id. at 323-24.

Though we did not address the rule by name, our approach in In re

Cunningham was compatible with the complete snapshot rule, when we

held that because the exemption was proper on the day Cunningham

filed for bankruptcy, Cunningham's interest in that asset was

"permanently immuniz[ed]" from pre-petition debt collection, even

if he later sold that homestead. Id. at 322-325. Our analysis

does not differ here.

5The Massachusetts homestead exemption in place at the time
did not exempt proceeds recovered from a sale of the homestead.
See In re Cunningham, 513 F.3d at 321.

- 15 -
 4. Hull's Concerns

Trying to distinguish our Cunningham holding, Hull urges

us to view this as a distinct Chapter 13 issue because Rockwell

sold his home while proceeding in that type of bankruptcy. He

tells us that "[t]he differences between a [C]hapter 7 case and a

[C]hapter 13 case bear on the outcome of this appeal." According

to Hull, our analysis of the homestead exemption should include

changes based on post-petition activity because after Rockwell

filed his petition, "he retained, exclusive of the [C]hapter 13

trustee, possession of the house and the attendant decision-making

authority over what to do with it and the proceeds arising from

its sale."6 Essentially, the complete snapshot rule does not apply

to a Chapter 13 proceeding because under Chapter 13, the debtor

maintains control of his property.

The Code continues to inform our approach and we find

this argument unavailing. The Code considers the transition from

6 Though not dispositive, we disagree with Hull's
characterization of Rockwell's control. While it is true that a
hallmark of Chapter 13 proceedings is that the debtor retains
possession of his property, see 11 U.S.C. §§ 1322, 1327, the
bankruptcy court still exercises control over the debtor. Once
the court confirms the debtor's plan, the debtor is bound by the
plan's provisions, id. § 1327(a), and the debtor must obtain the
court's approval for any modification of the confirmed plan. Id.
§ 1329. In order to discharge his debt (a debtor's goal in
bankruptcy), absent approval by the court under special
circumstances, the debtor must "complet[e] . . . all payments under
the [Chapter 13] plan." Id. § 1328(a).

- 16 -
a Chapter 13 to a Chapter 7 case and specifies how to examine these

cases: we look to the date the petition was filed when evaluating

exemptions. 11 U.S.C. § 348(f). The bankruptcy court looks at

the debtor's assets on the conversion date (as Hull urges us to do

here), rather than the petition date only when the debtor converts

in bad faith. Id. § 348(f)(2); see Harris, 135 S. Ct. 1837-38.

Hull does not allege Rockwell converted to a Chapter 7 bankruptcy

in bad faith and the bankruptcy court made no such finding. The

Code does not contain any other provisions (and Hull does not cite

any) that instruct the bankruptcy court to treat a Chapter 7 debtor

differently if he converted his case from Chapter 13. See Law,

571 U.S. at 425 ("[f]ederal law provides no authority for

bankruptcy courts to deny an exemption on a ground not specified

in the Code." (emphasis omitted)). Rather, the Code values the

right of Chapter 13 debtors to convert to Chapter 7 proceedings

and specifies that the conversion right cannot be waived. 11

U.S.C. § 1307(a).

We are unpersuaded by Hull's implication that we should

ignore the connection between Chapter 13 and Chapter 7 proceedings.

"Many debtors . . . fail to complete a Chapter 13 plan

successfully." Harris, 135 S. Ct. at 1835 (citing Katherine

Porter, The Pretend Solution: An Empirical Study of Bankruptcy

Outcomes, 90 Tex. L. Rev. 103, 107–111 (2011) for the proposition

that only one third of Chapter 13 cases results in the debtor

- 17 -
successfully discharging debt). The simple fact of this case is

that Rockwell did convert his case to a Chapter 7 bankruptcy, as

many Chapter 13 debtors ultimately do.7 See id. As a result, we

must view this as what it is: a Chapter 7 case.

Hull further argues that our holding will effectively

read the six-month limitation out of the Maine statute in

bankruptcy proceedings. Where, as here, the debtor exempts their

homestead under Maine law and then later sells the homestead,

Maine's six-month period for protecting the value of that homestead

would not apply. From our perspective, that is what the Code

requires. "To interpret § 522(c) as conferring merely an ephemeral

exemption, subject to post-termination events, would undermine

that basic principle and its relationship to the fresh start policy

of the Bankruptcy Code." In re Cunningham, 513 F.3d at 324; see

Myers, 318 U.S. at 628 ("[A debtor's] right to a homestead

exemption becomes fixed at the date of the filing of the petition

in bankruptcy and cannot thereafter be enlarged or altered by

anything the [debtor] may do."). As one bankruptcy court aptly

put it: "[a] debtor is not required to maintain exempt property

in its exempt state indefinitely after filing in order to avoid a

7
We do not decide whether sale proceeds continue to be
exempted under the Maine homestead exemption if the six-month
period expires after the petition date in a Chapter 13 case where
there is no conversion to Chapter 7.

- 18 -
retroactive loss of the exemption." In re Hageman, 388 B.R. 896,

900 (Bankr. C. D. Ill. 2008).

Finally, Hull reminds us that other circuits that have

addressed similar questions have reached a result that is (or

seems) at odds with the result we reach here. Hull points us to

the Ninth Circuit's approach in In re Jacobson where a Chapter 7

debtor claimed a homestead exemption under California law, a

creditor forced the sale of the homestead during the bankruptcy,

and the debtor did not reinvest the proceeds of the sale during

the six-month period, as required by California's homestead

statute. In re Jacobson, 676 F.3d 1193, 1197 (9th Cir. 2012).

The Ninth Circuit held that the sale's proceeds belonged to the

estate, once the six-month reinvestment period had passed. Id.

The Ninth Circuit purported to apply the snapshot rule, explaining

that the snapshot rule, in its view, incorporates "the entire state

law[,] includ[ing] a reinvestment requirement for the debtor's

share of the homestead sale proceeds." Id. at 1199. Hull also

relies upon the Fifth Circuit's approach in In re Frost, where a

Chapter 13 debtor exempted his homestead pursuant to Texas's

vanishing homestead law and then did not reinvest the proceeds

within the required time limit. In re Frost, 744 F.3d 384, 385

(5th Cir. 2014). The Fifth Circuit held that the debtor lost the

protection of the homestead exemption, declining to apply the

complete snapshot rule. Id. at 388 ("[O]nce a new homestead has

- 19 -
been purchased, the funds become proceeds from the sale of a former

homestead, which fall outside the protection of the Texas statute."

(emphasis in original)).

We find these cases unpersuasive. Neither of these cases

addresses the Code's valued "fresh start" principles as

articulated in Harris, 135 S. Ct. 1829, or the Supreme Court's

admonishments in Law, 571 U.S. 415, that courts reach the result

required by the text of the Bankruptcy Code. The Ninth Circuit

issued its opinion in In re Jacobson in 2012, approximately two

years before having the benefit of the Supreme Court's guidance in

Law and three years before Harris. See In re Jacobson, 676 F.3d

at 1193. The Fifth Circuit issued its opinion in In re Frost one

day after the Supreme Court's decision in Law, but does not mention

that case, and approximately one year before the Supreme Court's

decision in Harris. See In re Frost, 744 F.3d at 384. We are, of

course, bound by Supreme Court precedent, not that of our sister

circuits, and reach our decision here in accordance with the

Supreme Court's guidance.

The outcome is also not altered by our own decision in

Howison v. Hanley, 141 F.3d 384 (1st Cir. 1998). In that case,

more than two years before filing for bankruptcy, the debtor

conveyed his interest in his homestead to his wife for no

consideration "with the admitted purpose of putting it beyond the

reach of his creditors." Howison, 141 F.3d at 385. The district

- 20 -
court found that this was a fraudulent transfer and we affirmed.

Id. When analyzing that case, we summarized Maine's homestead

exemption statute, 14 M.R.S. § 4422, (the same statute at issue

here), and commented that if the debtor sells his homestead, he

retains the value of the homestead exemption, but only if he

reinvests in a new homestead in six months, as prescribed by the

statute. Id. at 386.

Howison is not on point. It does observe that under

Maine law proceeds received in the sale of an exempt homestead

lose the protection of the exemption, and thus become available to

creditors, if not reinvested in a residence within six months.

Id. We agree. Howison said nothing at all, though, about the

issue before us: what to do if the debtor files for bankruptcy

protection while the asset (whether home or proceeds of selling

the home) is still exempt under Maine law? Howison had no need to

say anything about that issue because the debtor in that case had

conveyed his interest in his residence well more than six months

before he petitioned for bankruptcy. See id. at 385. If there

had been any proceeds from that conveyance, the six-month homestead

exemption protection would have expired long before the debtor's

bankruptcy filing. So, it would have made no difference to the

debtor in Howison whether one takes a "snapshot" at the time of

petitioning because, by that time, the proceeds had already become

nonexempt and available to creditors. For that reason, this

- 21 -
court's summary of Maine's homestead statute in Howison has no

bearing on the outcome of this case.

In some circumstances, perhaps even in this

circumstance, the result of this ruling will not prioritize the

debt owed to creditors. Yet, "Congress balanced the difficult

choices that exemption limits impose on debtors with the economic

harm that exemptions visit on creditors[,]" Schwab, 560 U.S. at

791, and "it is not for courts to alter the balance struck by the

statute." Law, 571 U.S. at 427.

WRAP UP

For the foregoing reasons, the district court's order is

affirmed. Costs awarded to Rockwell.

- 22 -