Locke v. MacLean et al

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re
JONATHAN and SHELLY MACLEAN, No. 04-12764
Debtor(s).
______________________________________/
JEFFRY LOCKE, Trustee,
Plaintiff(s),
v. A.P. No. 05-1031
DOUGLAS and JUDITH MACLEAN,
Defendant(s).
_______________________________________/
Memorandum on Motions for Summary Judgment
_________________
This adversary proceeding relates to the real property at 59 Mercury Drive, Tiburon, California.
Debtors Jonathan and Shelly MacLean scheduled the property as theirs and claimed it as exempt even
though title was in the name of John’s parents, defendants Douglas and Judith MacLean. A creditor and
the Chapter 7 trustee, plaintiff Jeffry Locke, objected to the exemption.
Responding to the objection, Jonathan MacLean filed a declaration stating that he placed the
property in his parents’ name knowingly for the purposes of obtaining refinancing. Based on his
Entered on Docket
January 06, 2006
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 05-01031 Doc# 25 Filed: 01/06/06 Entered: 01/06/06 15:03:29 Page 1 of 3

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admission, the court found that the transfer was voluntary and the exemption would not be allowed if the
property was restored to the estate by action of the trustee. In this adversary proceeding, the trustee
seeks to recover the property. No order has as yet been entered on the exemption issue.
Defendants now seek summary judgment based on the vaguest of asserted facts as to what
happened. Speaking cryptically in the passive voice, Jean MacLean declares only that the deed “was
recorded” without saying who recorded it or why. She and her husband further argue that the Trustee is
“judicially estopped” from denying that the deed was an accident because they argued that the transfer
was voluntary when objecting to the debtors’ exemption.
First of all, the court did not “determine” anything as to the exemption; there has been no order.
Its finding that the transfer was voluntary was based on the admissions of Jon MacLean, not the
arguments of the parties.
Second, the equitable doctrine of judicial estoppel is only properly invoked if the court finds that
a party with full knowledge of the facts is playing “fast and loose” with the court. It is not a mechanical
“gotcha” to be imposed on a trustee who comes into a case with no factual background and whose legal
positions may properly change as more facts are discovered. Defendants have shown no basis for
equitably applying the doctrine to the Trustee here.
It appears to the court that resolution of this adversary proceeding depends on a factual
determination as to exactly who recorded the deed and why. While both sides now seem to agree that
the property is property of the bankruptcy estate, a specific finding as to exactly what happened appears
necessary to determine defendants’ right to revival of their lien pursuant to § 548(c) of the Bankruptcy
Code.
The court admits to complete frustration with defendants’ motion. They argue the deed is a
nullity so they are entitled to all the proceeds of sale. The court has no idea, even after reviewing their
memorandum at least half a dozen times, how they get from their argument to their conclusion. Plaintiff
has failed to shed light on the situation, except to note that factual issues remain as to his claims for
damages for violation of the automatic stay so that he is not entitled to a ruling on his motion because it
Case: 05-01031 Doc# 25 Filed: 01/06/06 Entered: 01/06/06 15:03:29 Page 2 of 3

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does not entirely dispose of the case.
Both motions will accordingly be denied. The court insists on an evidentiary hearing to
determine how the deed got recorded and will call Jon MacLean as a witness if the parties fail to do so.
The court will make a final determination as to exemption rights at the same time if the parties wish it.
Dated: January 6, 2006
SAlan Jaroslovsky
U.S. Bankruptcy Judge
Case: 05-01031 Doc# 25 Filed: 01/06/06 Entered: 01/06/06 15:03:29 Page 3 of 3