Sulphur Mountain Land & Livestock v. Redmond
Plaintiff Sulphur Mountain Land & Livestock Co. LLC sued defendants John and Maureen Redmond in Ventura County Superior Court, and obtained a sizable judgment against them. When plaintiff attempted to enforce its judgment, defendants sought bankruptcy protection. During the bankruptcy, defendants claimed the California homestead exemption to protect a portion of the equity in their Los Angeles home from the bankruptcy estate, and therefore, to make fewer funds available to pay plaintiff’s judgment. Defendants’ debts were not discharged by the bankruptcy court, and ultimately, plaintiff sought to execute its judgment on defendants’ home by filing this action for the sale of their home, contending defendants could not again avail themselves of the homestead exemption. The trial court agreed, finding “there is no homeowners exemption because it was used by the judgment debtor†in bankruptcy. The trial court also concluded that plaintiff’s lien attached in 2002, giving it priority over all but the mortgage lien.
Defendants appeal the order approving the sale of their home, contending the sale order deprived them of their homestead exemption. We agree, finding no merit to plaintiff’s contention that the homestead exemption evaporates after it has been claimed in bankruptcy. Plaintiff’s novel theory that the homestead exemption may be claimed only once has no support in the homestead law. The California homestead exemption protects defendants’ equity up to the amount of the exemption even if the home is sold. The homestead exemption is not like a retail discount coupon that can only be used once. We also find that plaintiff’s lien was effective as of October 2002. We reverse the sale order and remand the case for further proceedings consistent with this opinion.
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