Jonathan MacLean and Shelly Hokulani Stewart MacLean

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re
JOHN and SHELLY MACLEAN, No. 04-12764
Debtor(s).
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Second Memorandum on Objections to Homestead Exemption
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Chapter 7 debtors John and Shelly MacLean have claimed their home at 59 Mercury Drive,
Tiburon, California, as exempt pursuant to California Code of Civil Procedure § 704.730. Creditor
Elaine Sichel, joined by the Chapter 7 trustee, objects.
Although the property was duly scheduled, the MacLeans were not the record title holders when
they filed their bankruptcy petition. The MacLeans had deeded the property to John’s parents before
filing their bankruptcy petition, although the MacLeans continued to live in the property and make the
monthly payments. The sole purpose of the transfer was to facilitate refinance of the property, as the
debtors’ credit rating was too poor to allow them to refinance.
The MacLeans were not successful in refinancing, but did not ask John’s parents to reconvey
title. After bankruptcy, the parents listed the property for sale and attempted to sell it. The Trustee
recovered the property for the estate pursuant to a compromise he reached with the parents which
allowed him to sell the property free and clear of their claims.
The MacLeans argue that the transfer to John’s parents was all a big mistake, but there is no
evidence of this. This story is belied by John’s own declaration, dated January 18, 2005, in which he
stated unequivocally that “for purposes of refinancing we placed my parents on title.” In it, he made no
mention of any mistake. Also, his parents attempted to sell the property, resisted the Trustee’s attempts
Entered on Docket
May 05, 2006
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 04-12764 Doc# 113 Filed: 05/05/06 Entered: 05/05/06 14:01:19 Page 1 of
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1The court struck a later declaration of John MacLean because he failed to appear for cross-
examination.
2The MacLeans argue that Sichel and the Trustee are judicially estopped from denying that the
deed to the parents was recorded by mistake because the Trustee had not contested this assertion in a
prior adversary proceeding (No. 05-1031) by him against the MacLeans. The court rejects this argument
for several reasons. First, Sichel was not a party to that adversary proceeding and it is unfair to bind her
to the Trustee’s position in that case, notwithstanding her agreement to allow the Trustee a surcharge of
her lien. Second, for judicial estoppel to apply the party being charged must have benefitted from
having taken the initial position. See In re Cheng, 308 B.R. 448, 452-53 (9th Cir. BAP 2004). In the
prior case, the Trustee made concessions which weakened his case, in essence waiving the argument
that the parents’ deed of trust had merged with record title.
The court feels in no way victimized by the conduct of the Trustee, and court victimization is at
the core of judicial estoppel. See Klein et al., “Principles of Preclusion and Estoppel in Bankruptcy
Cases,” 79 Am.Bankr.L.J. 839, 865 (2005). The court also notes that the trial in the adversary
proceeding went forward after the court balked at the terms of a settlement of the case and that the court
treated the matter of the “big mistake” deed as a tacit stipulation, not a true fact.
Through misplaced cleverness, counsel for the MacLeans has been trying to manipulate the court
into a situation where issue preclusion, claim preclusion or estoppel prevents the court from finding the
true fact that his clients voluntarily transferred their home to John’s parents. The court declines to be so
manipulated, and finds that none of these doctrines prevents it from adjudicating this matter on the merits.
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to recover it for the estate and never recorded a Notice of Nonacceptance as provided by California
Civil Code § 1058.5.1
The transfer to John’s parents was a voluntary fraudulent transfer. The property was recovered
for the estate by the actions of the Trustee. Accordingly, the MacLeans are barred by § 522(g) of the
Bankruptcy Code from exempting the property. The objections to their homestead exemption must
accordingly be sustained. Counsel for Sichel shall submit an appropriate form of order.2
Dated: May 5, 2006
SAlan Jaroslovsky
U.S. Bankruptcy Judge
Case: 04-12764 Doc# 113 Filed: 05/05/06 Entered: 05/05/06 14:01:19 Page 2 of
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