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In Re Reri Nanilei Septimo v. David C. Farmer

March 5, 2012

IN RE RERI NANILEI SEPTIMO, DEBTOR.
RERI NANILEI SEPTIMO, APPELLANT,
v.
DAVID C. FARMER, APPELLEE.



BK. NO. 09-02506 RJF

The opinion of the court was delivered by: David Alan Ezra United States District Judge

ORDER AFFIRMING BANKRUPTCY COURT'S DECISION

Pursuant to Local Rule 7.2(d), the Court finds this matter suitable for disposition without a hearing. After reviewing Appellant Reri Nanilei Septimo's appeal and the supporting and opposing memoranda, the Court AFFIRMS the Bankruptcy Court's decision.

BACKGROUND

I. Procedural History

On October 27, 2009, Appellant Reri Nanilei Septimo ("Appellant") filed a voluntary petition for bankruptcy under Chapter 7. (Bk. No. 09-02506, Doc. # 1.) On her schedule of assets, Appellant listed an interest in real property located at 21 Oopu Way in Wailuku. (Id., Schedule A.) The property is leased from the State of Hawaii Department of Hawaiian Home Lands, pursuant to the Hawaiian Homes Commission Act of 1920 ("HHCA").*fn1 (Doc. # 6 at 4.) In her petition, Appellant claimed that her residence was exempt under "42 Statute 108 Chapter 42 Section 205," an apparent reference to the HHCA. (Bk. No. 09-02506, Doc. # 1., Schedule C.)

On January 9, 2010, Bankruptcy Trustee David C. Farmer ("Appellee" or "Trustee") filed an objection to Appellant's claims of exemption. (Bk. No. 09-02506, Doc. # 11.) The objection asserted, inter alia, that the HHCA provides no exemption to the property and that the Trustee may sell leasehold land with any attached structures to any qualified Hawaiian Homes beneficiary. (Id. at 4.)

On February 3, 2010, Appellant filed an opposition to the Trustee's objection. (Bk. No. 09-02506, Doc. # 15.) On February 4, 2010, Appellant filed an amended opposition asserting, inter alia, that the Trustee should be equitably estopped from "backtracking on an exemption that has long been honored in this district." (Bk. No. 09-02506, Doc. # 17 at 3.) On February 10, 2010, the Trustee filed a Reply. (Bk. No. 09-02506, Doc. # 20.) On February 12, 2010, Appellant filed Debtor's Submission of Additional Argument and Evidence in opposition to the objection. (Bk. No. 09-02506, Doc. # 22.) Appellant argued, inter alia, that the lease cannot be transferred without DHHL first declaring that she has forfeited the lease. (Id. at 5.) Appellant further argued that because she has not violated the lease conditions, DHHL cannot order her to vacate the property. (Id.)

On February 22, 2010, the Bankruptcy Court issued an Order overruling the Trustee's objection as to Appellant's motor vehicle, but sustaining the objection as to Appellant's interest in "her residence, a Hawaiian Homes property located at 21 Oopu Way Wailuku, Maui, Hawaii." (Bk. No. 09-02506, Doc. # 26, at 2.) Appellant did not appeal this order.

On April 13, 2010, Appellant was discharged. (Bk. No. 09-02506, Doc. # 31.)

On March 18, 2011, Appellee filed a Motion to Compel Debtor to Cooperate with Trustee ("Motion to Compel"). (Bk. No. 09-02506, Doc. # 35.) The Trustee asserted that Appellant had not allowed him access to the property to permit the inspection by a potential purchaser despite his repeated requests. (Bk. No. 09-02506, Doc. # 35-1 at 6.) The Trustee further asserted that he has the "right and the duty to administer DHHL property so long as it complies [with] the requirements of the Hawaiian Homes Commission Act that requires that the property be used solely for the benefit of a qualified beneficiary." (Id. at 7.)

On April 6, 2011, Appellant filed an opposition to the Trustee's Motion to Compel. (Bk. No. 09-02506, Doc. # 39.) Appellant asserted that under the HHCA, her leasehold rights to the Subject Property can only be taken away if she is in violation of the terms of the lease, which she was not. (Id. at 4.) Appellant further contended that to eject her and cancel the leasehold rights, DHHL must declare her leasehold interest null after a hearing, and an ejectment action in court must occur. (Id. at 4--5.) Appellant also argued that Appellee had not demonstrated how the Bankruptcy Court may "overcome[] the Department of Hawaiian Homelands' over the land it administers." (Id. at 5--6.)

On April 19, 2011, Appellant filed an amended Schedule C and listed her interest in the leasehold property, claiming an exemption of $10,976.00. ...


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