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In re Brady

United States District Court, N.D. Texas, Fort Worth Division

July 30, 2019

IN RE MISTY CHANEY BRADY, Debtor,
v.
MAXUS HEALTHCARE PARTNERS, LLC, ET AL., Appellees. MISTY CHANEY BRADY, Appellant,

         Chapter No. 7

          MEMORANDUM OPINION AND ORDER

          JOHN MCBRYDE, UNITED STATES DISTRICT JUDGE.

         Came on for consideration the appeal of Misty Chaney Brady, appellant, from an order signed March 15, 2019, by the United States Bankruptcy Court for the Northern District of Texas, Fort Worth Division, sustaining objections to claim of exemption in the above-referenced Chapter 7 case. Doc.[1] 6 at 4-7. The court, having considered the brief of appellant, the briefs of appellees, Maxus Healthcare Partners, LLC, (``Maxus"), and John Dee Spicer, Chapter 7 Trustee ("Trustee"), the reply brief, the record, and applicable authorities, finds that the order from which appeal is taken should be affirmed.

         I. Background

         On March 20, 2017, appellant filed a voluntary petition under Chapter 13 of the United States Bankruptcy Code. Doc. 6 at 22. On April 27, 2017, the case was converted to Chapter 11. Id. at 25. On October 24, 2017, appellant amended her Schedule C exemptions to add exemptions of her equity interests in Zera, Inc., Ricky Chaney Plumbing, LLC, BP Chaney, LLC, and Texas RHH, LLC ("closely held entities"). Id. 37, 146. No. objections were made within the thirty-day period set by Bankr. R. 4003(b).

         On December 12, 2018, appellant's case was again converted, this time to Chapter 7. Doc. 6 at 78, 171-72. Notice was given that the § 341 meeting of creditors was to be held January 8, 2019.[2] Id. at 78. On February 7, 2019, Maxus filed its objection to appellant's claim of exemptions. Id. at 86, 176-79. And, on February 8, 2019, the Trustee filed his objection to appellant's claim of exemptions. Id. at 86, 180-83. Appellant filed responses to the objections. Id. at 88, 184-95. Maxus and the Trustee filed replies. Id. at 89, 263-71.

         The bankruptcy court heard the objections on March 6, 2019. Doc. 6 at 89, 209-52. By order signed March 15, 2019, the bankruptcy court sustained the objections. Id., at 89. On March 29, 2019, appellant filed her notice of appeal. Id. at 90.

         II. Issue on Appeal

         The sole issue on appeal is whether the bankruptcy court erred in sustaining the objections to appellant's claimed exemptions to her interest in the closely held entities. Appellant maintains that because there were no timely objections to her claimed exemptions while her case was pending under Chapter 11, her interest in the closely held entities was no longer part of the bankruptcy estate and the conversion to Chapter 7 could not restart the clock for filing objections thereto.

         III. Standard of Review

         The district court reviews a bankruptcy court's decisions as an appellate court, applying the same standards of review. Webb v. Reserve Life Ins. Co. (In re Webb), 954 F.2d 1102, 1103-04 (5th Cir. 1992). To the extent the appeal presents questions of law, the bankruptcy court's order is subject to de novo review. Pierson & Gaylen v. Creel & Atwood (In re Consolidated Bancshares, Inc.), 785 F.2d 1249, 1252 (5th Cir. 1986). Findings of fact, however, will not be set aside unless clearly erroneous. Memphis-Shelby County Airport Auth. v. Braniff Airways, Inc. (In re Braniff Airways, Inc.), 783 F.2d 1283, 1287 (5th Cir. 1986) .

         IV. Analysis

         Section 522 of the Bankruptcy Code provides, in pertinent part:

The debtor shall file a list of property that the debtor claims as exempt . . . Unless a party in interest objects, the property ...

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