United States District Court, N.D. California, San Jose Division
ORDER AFFIRMING BANKRUPCY COURT'S ORDER ON DEBTOR'S MOTION TO VALUE Re: Dkt. No. 1
BETH LABSON FREEMAN, District Judge.
Before the Court is Plaintiff-Appellant's appeal from the bankruptcy court's Order on Debtor's Motion to Value Real Property. The question before the bankruptcy court was whether, at the time Debtor (who is also the Defendant) filed for bankruptcy, her primary residence was a home at Skyview Drive in Seaside, California. This determination had been requested by Defendant-Debtor as a prerequisite to submitting a reorganization plan under Chapter 11 of the Bankruptcy Code which would include a re-valuation of the Skyview Drive property in order to reduce her secured indebtedness. Under the Code, such a course of action would only be proper if the Skyview Drive property was not Defendant's primary residence at the date she filed the bankruptcy petition.
After reviewing the evidence, including testimony from the Defendant and two witnesses, the bankruptcy court granted Debtor's Motion, finding that Defendant's primary residence was not the Skyview Drive property, but instead was a residence she shared with her boyfriend, Ted Thorsted, on Rolling Meadows Drive in Salinas, California. Plaintiff-Appellant timely brings this appeal, the sole issue of which is whether the bankruptcy court erred in granting Appellee's Motion to Value. After reviewing the briefing and record, the Court AFFIRMS the bankruptcy court's Order.
I. Procedural History
The record in this case establishes that Defendant-Appellee filed for relief under Chapter 13 of the Bankruptcy Code on November 16, 2012. Thereafter, on March 5, 2013, Defendant's bankruptcy was converted to a Chapter 11 when Defendant determined that she had exceeded the debt ceiling limits for filing under Chapter 13 as established under Bankruptcy Code § 109(e).
On April 4, 2013, Defendant filed the Motion to Value Real Property at issue in this appeal. Defendant sought to "cram down" Appellant's lien on the Skyview Drive property. In the Motion to Value, Defendant stated that Skyview Drive was not her primary residence, and that instead she resided at the Rolling Meadows property in Salinas, California. However, in prior papers submitted to the bankruptcy court in this action which defendant executed under penalty of perjury, including her 2011 tax returns, Defendant had listed the Skyview Drive property as her "residence" or "home." (ECF 3, Attachment 2, DR 3-2 at 11). The task of the bankruptcy court below was to weigh this evidence and the corresponding (and occasionally conflicting) testimony in order to make a determination as to whether Defendant, on November 16, 2012, the date on which she filed her original petition for relief,  maintained her primary residence at Skyview Drive.
Based on the evidence submitted at the hearing, the bankruptcy court found "with some difficulty" that Skyview Drive was not the Defendant's primary residence. (Order After Hearing, ECF 3, DR 3-3 at 74) The bankruptcy court placed great weight on the testimony of Defendant Campbell and her two witnesses, each of whom testified that the Defendant did not reside at Skyview Drive on November 16, 2012. ( Id. at 72-73) The bankruptcy court found that the oral testimony offered at the hearing was more persuasive than the written documentation stating that Defendant "resided" at Skyview Drive.
The bankruptcy court accepted as true Defendant's testimony that although she did claim Skyview Drive as her residence on several documents, including her bankruptcy petition, the reason she did not disclose her actual primary residence on those documents was "because of her reluctance to publicize her live-in relationship with Thorsted, " who in addition to being her boyfriend was also her boss. ( Id. at 73)
Ultimately, the bankruptcy court found that Campbell and her supporting witnesses, Thorsted and Hedberg, were all "credible witnesses, " (Order After Hearing, DR 3-3 at 74-75), though it recognized "the reasons why the witnesses would testify as they did - Campbell gets, perhaps, to retain her long-time property, Thorsted supports his girlfriend, and Hedberg retains his own rental residence." ( Id. at 75) The bankruptcy court recognized that "Campbell's false statements may have significant consequences at some future date, " ( id. ), but found that, even if it discounted Campbell's testimony completely, "it still ha[d] the credible testimony of two other witnesses." ( Id. ) Further, the bankruptcy court explained some of Campbell's prior statements that the Skyview Drive property was her "home" or "address" on the fact that she owned the property and resided there for a number of years. These terminology differences, coupled with Campbell's denials that the Skyview Drive property was her "residence" in discovery responses, convinced the bankruptcy court that Defendant had met her burden to prove the Skyview Drive property was not her principal residence, and instead that she had resided at the Rolling Meadows property on the date on which she filed her bankruptcy petition. The bankruptcy court then granted the Motion to Value.
Appellant filed a timely notice of appeal on October 18, 2013. This Court has jurisdiction to hear this appeal pursuant to 28 U.S.C. § 1334 and 28 U.S.C. § 157(b). Under Federal Rule of Bankruptcy Procedure 8001(e), the Appellant elected to have its appeal heard by the district court, rather than consenting to the jurisdiction of the Bankruptcy Appellate Panel (BAP) of the Northern District of California. The sole question before this Court is whether the bankruptcy court erred in determining that the Defendant-Appellee's principal residence was the Skyview Drive property.
III. Standard of Review
District courts employ the same standard of review of bankruptcy court decisions as do circuit courts in reviewing the decisions of the district court. See, e.g., Ford v. Baroff (In re Baroff), 105 F.3d 439, 441 (9th Cir. 1997). Findings of fact are reviewed for clear error. See, e.g., Diamant v. Kasparian (In re Southern Cal Plastics, Inc.), 165 F.3d 1243, 1245 (9th Cir. 1999), see also In re Jan Weilert RV, Inc., 315 F.3d 1192, 1196 (9th Cir. 2003) ("This court must accept the bankruptcy court's findings of fact unless upon review we are left with the definite and firm conviction that a mistake has been committed."). Conclusions of law are reviewed de novo. Id., see also Montco, Inc. v. Glatzer (In re Emergency Beacon Corp.), 665 F.2d 36, 40 (2d Cir. 1981) ("While this court is obliged to accept the bankruptcy court's findings of fact unless clearly erroneous, it is not required to accept its conclusions as to the legal effect of those findings.").
The parties disagree as to the standard of review this Court should employ in this case. Appellant insists that the bankruptcy court's order is subject to de novo review, because "the trial court improperly applied the facts to the law and granted the Motion to Value...." (Appellant's Opening Brief ("Brief") at 22) Defendant states that Appellant takes issue only with the factual findings and credibility determinations made by the bankruptcy court during the evidentiary hearing, and that Appellant fails to identify any ...