                                                               FILED
                                                               APR 07 2015
 1                         NOT FOR PUBLICATION
                                                          SUSAN M. SPRAUL, CLERK
 2                                                          U.S. BKCY. APP. PANEL
                                                            OF THE NINTH CIRCUIT
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )        BAP No. NV-14-1255-JuKuD
                                   )        BAP No. NV-14-1280-JuKuD
 6   BRENDA B. TODD,               )        (Cross-Appeals)
                                   )
 7                   Debtor.       )        Bk. No. 09-14362
     ______________________________)
 8                                 )
     BRENDA B. TODD,               )
 9                                 )
          Appellant/Cross-Appellee,)
10                                 )
     v.                            )        M E M O R A N D U M*
11                                 )
     LOWELL E. ROTHSCHILD, Chapter )
12   11 Trustee for Fort Defiance )
     Housing Corp., Inc.,          )
13                                 )
          Appellee/Cross-Appellant,)
14                                 )
     VICTORIA L. NELSON, Chapter 7 )
15   Trustee,                      )
                                   )
16                   Appellee.     )
     ______________________________)
17
                     Argued and Submitted on March 19, 2015
18                            at Las Vegas, Nevada
19                           Filed - April 7, 2015
20               Appeal from the United States Bankruptcy Court
                           for the District of Nevada
21
             Honorable Linda B. Riegle, Bankruptcy Judge, Presiding
22                          _________________________
23   Appearances:     Brenda Todd argued pro se; Frederick J. Peterson
                      of Mesch, Clark & Rothschild, P.C. argued for
24                    Lowell E. Rothschild, Chapter 11 Trustee for Fort
25
26       *
          This disposition is not appropriate for publication.
27 Although it may be cited for whatever persuasive value it may
   have (see Fed. R. App. P. 32.1), it has no precedential value.
28 See 9th Cir. BAP Rule 8024-1.

                                      -1-
 1                     Defiance Housing Corp., Inc.**
                            _________________________
 2
 3   Before:     JURY, KURTZ, and DUNN, Bankruptcy Judges.
 4        Chapter 71 debtor, Brenda Todd (Debtor), was in a car
 5   accident and suffered significant injuries.        Debtor filed a
 6   state court action against the driver and his employer seeking
 7   general and special damages, punitive damages, and attorneys’
 8   fees and costs.     The litigation ended in the settlement and
 9   release of Debtor’s claims for $2.5 million (Personal Injury
10   Settlement).     The settlement agreement did not allocate the
11   lump-sum amount to any damage theory.
12            Subsequently, in the chapter 11 bankruptcy case of Fort
13   Defiance Housing Corporation (FDHC), the Arizona bankruptcy
14   court entered a judgment for $18,500,883.59 in favor of the
15   chapter 11 trustee, Brenda Moody Whinery (Whinery), and against
16   Debtor, Lodgebuilder Inc. (Lodgebuilder), and others, jointly
17   and severally (Arizona Judgment).      The court also issued a
18   permanent injunction, enjoining Debtor from, among other things,
19   accessing her Solomon Smith Barney account (SSB Account), which
20   contained monies from her Personal Injury Settlement.        In
21   February 2013, appellee and cross appellant, Lowell E.
22
23
         **
           Appellee Victoria L. Nelson is the successor chapter 7
24 trustee to James Lisowski. Nelson has not filed a brief or
   otherwise participated in this appeal.
25
        1
26        Unless otherwise indicated, all chapter and section
   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.
27 “Rule” references are to the Federal Rules of Bankruptcy
   Procedure and “Civil Rule” references are to the Federal Rules of
28 Civil Procedure.

                                      -2-
 1   Rothschild, was appointed the successor trustee (Creditor
 2   Trustee) in the FDHC case.
 3          Soon after the Arizona Judgment was entered against her,
 4   Debtor filed a chapter 11 petition in the Nevada bankruptcy
 5   court, which was later converted to chapter 7.    Months after her
 6   filing, in an amended and corrected Schedule C attached to a
 7   pleading, Debtor claimed as exempt more than $1 million from the
 8   Personal Injury Settlement proceeds as compensation for loss of
 9   future earnings under Nev. R. Stat. (N.R.S.) § 21.090(1)(w).
10   Debtor did not file or docket the amended Schedule C, but
11   e-mailed it to the chapter 7 case trustee and Creditor Trustee’s
12   attorney.
13          Meanwhile, Creditor Trustee and the chapter 7 trustee
14   entered into a settlement agreement to avoid litigation over the
15   ownership of Debtor’s assets, which were subject to the Arizona
16   Judgment and injunction (Rule 9019 Settlement).    The parties
17   agreed, among other things, that the SSB Account belonged to
18   FDHC’s estate.    Debtor objected to the settlement by asserting
19   her exemption rights in various assets, including the Personal
20   Injury Settlement proceeds that were deposited into the SSB
21   Account.    The bankruptcy court overruled Debtor’s objection and
22   entered an order approving the settlement (Rule 9019 Settlement
23   Order).    Debtor attempted to appeal the order by filing a notice
24   of appeal (NOA) in Lodgebuilder’s bankruptcy case and not her
25   own.    She also did not seek a stay pending appeal.   The Nevada
26   district court dismissed the appeal based on Debtor’s lack of
27   standing.
28          Creditor Trustee then filed a motion for summary judgment

                                     -3-
 1   (MSJ) on the issue of whether Debtor was entitled to an
 2   exemption on any portion of the Personal Injury Settlement
 3   proceeds for loss of future earnings.   The bankruptcy court
 4   granted Creditor Trustee’s MSJ.   Debtor filed an appeal to the
 5   district court.   Since there was no stay pending appeal,
 6   Creditor Trustee withdrew monies from the SSB Account and made
 7   distributions pursuant to the terms of the Rule 9019 Settlement
 8   and the confirmed FDHC chapter 11 plan.   Meanwhile, the district
 9   court reversed the bankruptcy court’s order granting Creditor
10   Trustee’s MSJ, finding there was a genuine issue of material
11   fact as to whether Debtor was entitled to exempt any portion of
12   the Personal Injury Settlement proceeds as loss of future
13   earnings.
14        Subsequently, the bankruptcy court conducted a trial on the
15   proper allocation of the loss of future earnings damages in the
16   Personal Injury Settlement award to determine the amount of
17   Debtor’s exemption.   The court entered its findings of fact and
18   conclusions of law (FFCL) and a judgment, finding Debtor was
19   entitled to exempt $461,608.02 for loss of future earnings.
20   Creditor Trustee filed a motion for additional findings,
21   reconsideration, or to alter or amend the judgment (Motion to
22   Alter or Amend), which the bankruptcy court denied.
23        Debtor appealed from the judgment and Creditor Trustee
24   filed a cross appeal.   Both parties assign error to the
25   bankruptcy court’s decision on the amount of the exemption.
26   Debtor claims that the exemption for loss of future earnings
27   should be $1,081,540.00.   Creditor Trustee contends the amount
28   should be no more than $108,008.13 or, alternatively, that the

                                    -4-
 1   exemption should be disallowed in its entirety based on the
 2   doctrines of res judicata and judicial estoppel.
 3        We conclude that Debtor’s exemption rights in the SSB
 4   Account are determined by the Rule 9019 Settlement Order and the
 5   Bankruptcy Code.    The plain language in the Rule 9019 Settlement
 6   Order stated that the FDHC estate owned the funds in the SSB
 7   Account, the account was transferred to Creditor Trustee, and
 8   there was no carve-out for Debtor’s exemption.    As a result, the
 9   bankruptcy court no longer had jurisdiction over the SSB Account
10   since it was neither property of Debtor’s estate nor property of
11   the Debtor.   See 28 U.S.C. § 1334(e)(1).   Further, under
12   § 522(b), the debtor may exempt certain property “from property
13   of the estate.”    “[O]bviously, then, an interest that is not
14   possessed by the estate cannot be exempted.”    See Owen v. Owen,
15   500 U.S. 305, 308 (1991).    Accordingly, the issue of Debtor’s
16   exemption in the funds in the SSB Account became moot once the
17   funds were no longer property of Debtor’s estate or the Debtor.
18   For these reasons, we VACATE the judgment and DISMISS this
19   appeal.
20                                I.   FACTS
21        The facts are mostly taken from the parties’ Joint Pre-
22   Trial Statement in which they stipulated to certain facts and
23   the bankruptcy court’s FFCL entered on May 6, 2014.
24   A.   Prepetition Events
25        1.   Debtor’s Employment
26        Debtor was employed by Lodgebuilder, a building contractor
27   which did business with FDHC and other entities.    FDHC is a
28   nonprofit Navajo corporation, incorporated for the sole purpose

                                       -5-
 1   of building and leasing low income housing on the Navajo
 2   reservation.    FDHC operations were funded by federal grants and
 3   federally supported loans.     Debtor owned a 20% stake in
 4   Lodgebuilder, and William Aubrey (Aubrey) owned 80%.      Debtor
 5   received a $10,000 monthly salary from Lodgebuilder prior to and
 6   after her car accident.
 7        In addition to her interest in Lodgebuilder, Debtor owned
 8   and managed a restaurant called Blondie’s in Glacier, Montana.
 9   Blondie’s had a gaming license and provided customers with slot
10   machines, food and drinks.
11        2.     The Car Accident
12        On May 25, 2003, Debtor was injured in a serious car
13   accident.    She filed a state court action against Aaron Wade
14   Melancon and Casablanca Resorts, LLC, alleging causes of action
15   for negligence, negligence per se, respondeat superior, and
16   negligent hiring and supervision.      Debtor sought general
17   damages, special damages, property damages, punitive damages,
18   and attorneys’ fees and costs.
19        After some time, the parties settled the matter.      In
20   exchange for a lump-sum cash payment of $2.5 million, Debtor
21   released all claims, demands, and causes of action and damages
22   of any kind arising out of the incident.      The settlement
23   agreement did not allocate the lump-sum amount to any specific
24   damage claim.    After paying her attorney $634,339.42, Debtor
25   received $1,865,660.58 (Settlement Proceeds) and deposited that
26   amount into her checking account at Mountain America Credit
27   Union (MACU).
28        In May 2006, Debtor transferred $1.5 million of the

                                      -6-
 1   Settlement Proceeds from her MACU account to her pre-existing
 2   SSB Account which had a balance of $535,640.86.     Debtor
 3   purchased six mutual funds with the $1.5 million and some
 4   additional cash.     On May 31, 2005, the account balance was
 5   $2,037,991.86, consisting of stocks and cash.
 6           After the car accident, Lodgebuilder paid Debtor’s medical
 7   expenses and continued to pay her salary.     Debtor used $130,000
 8   of the Settlement Proceeds, plus money from other accounts and
 9   payments from Allstate insurance, to repay Lodgebuilder for the
10   medical expenses.
11           3.   The FDHC Bankruptcy Case
12           In 2005, FDHC filed a chapter 11 petition in the Arizona
13   bankruptcy court.     Whinery was appointed the chapter 11 trustee.
14   In October 2006, Whinery filed an adversary complaint against
15   Lodgebuilder, Debtor, Aubrey, and Everett Ross, alleging breach
16   of contract, conversion, misrepresentation, negligence, breach
17   of fiduciary duty, civil conspiracy/aiding and abetting,
18   fraudulent conveyance, and unjust enrichment, and seeking
19   general and punitive damages.     At the same time, she requested a
20   temporary restraining order and preliminary injunction freezing
21   the defendants’ assets and bank accounts.
22           In March 2009, the Arizona bankruptcy court entered a
23   judgment in favor of Whinery and against Lodgebuilder, Aubrey,
24   and Debtor, in the amount of $18,500,883.59.2    The court also
25   enjoined the transfer of assets that were traceable proceeds of
26
         2
27        The Arizona bankruptcy court found that Debtor and Aubrey
   converted over $16 million of FDHC’s money by transferring it to
28 various Las Vegas casinos.

                                      -7-
 1   FDHC’s assets and which were in the name of Debtor and the
 2   others, including funds in Debtor’s SSB Account.        Although the
 3   Arizona bankruptcy court froze Debtor’s SSB Account, the court
 4   allowed her to withdraw $206,158.00 from the account for legal
 5   fees and living expenses.        Debtor withdrew this amount from the
 6   cash portion of the monies contained in the account.
 7            In February 2013, Rothschild became the successor trustee
 8   in the FDHC case.
 9   B.       Bankruptcy Events
10            Shortly after the Arizona Judgment was entered against her,
11   Debtor filed a chapter 11 petition in the Nevada bankruptcy
12   court.3
13            Prior to her filing, the balance in the SSB Account
14   decreased due to withdrawals authorized by the Arizona
15   bankruptcy court and stock market losses in 2008.        On March 26,
16   2009 — the date she filed her petition — the SSB Account had a
17   balance of $1,340,719.00.        After Debtor filed her bankruptcy
18   petition, the funds in the SSB Account remained largely
19   untouched, with the exception of withdrawals authorized by the
20   Arizona bankruptcy court.
21            On April 10, 2009, Debtor filed her schedules and statement
22   of financial affairs.        In Schedule B, under “Description and
23   Location of Property,” Debtor listed “Smith Barney” with a value
24   of $1,340,719.00.      In Schedule C, Debtor did not list an
25   exemption for loss of future earnings under N.R.S.
26
27
          3
          Aubrey and Lodgebuilder also filed bankruptcy petitions.
28 Those cases were jointly administered with Debtor’s case.

                                         -8-
 1   § 21.090(1)(w).
 2        On April 30, 2009, Debtor filed amended Schedules B and C,
 3   listing her property claimed as exempt.    Again, in Schedule B
 4   under “Description and Location of Property,” Debtor put “Smith
 5   Barney” with a value of $1,340,719.00, but she did not list an
 6   exemption for loss of future earnings in her amended Schedule C.
 7        In early September 2009, the bankruptcy court converted
 8   Debtor’s chapter 11 case to chapter 7.    James Lisowski was
 9   appointed the chapter 7 trustee.
10        On November 25, 2009, Creditor Trustee filed an objection
11   to Debtor’s claimed exemptions, none of which were based on the
12   loss of future earnings under N.R.S. § 21.090(1)(w).      On
13   December 31, 2009, Creditor Trustee filed an amended objection.
14        On January 5, 2010, Debtor filed a response to Creditor
15   Trustee’s amended objection.    Attached to the response as
16   “Exhibit 1" was a “Corrected & Amended” Schedule C which, for
17   the first time, claimed an exemption under N.R.S. § 21.090(1)(w)
18   in the amount of $1,122,384.00 and another exemption for
19   compensation for personal injury - pain and suffering - in the
20   amount of $377,616.00.   The certificate of service showed that
21   Debtor e-mailed her response to Creditor Trustee’s attorney,
22   Fred Petersen, and to the chapter 7 case trustee.    Debtor did
23   not separately file and docket the “Corrected & Amended”
24   Schedule C attached as “Exhibit 1" to her response.
25        In July 2011, Creditor Trustee filed a motion to approve a
26   settlement agreement between himself and the chapter 7 trustee
27   the purpose of which was to avoid litigation relating to the
28   ownership of Debtor’s assets.    Paragraph 2.5 entitled

                                     -9-
 1   “Accounts” provided:
 2        Lisowski acknowledges and agrees that all funds held
          in the following accounts: (1) Solomon Smith Barney
 3        Account #5240043413532 . . . , all in the name of
          Todd, which accounts are subject to the Injunction,
 4        are properly owned by, and the assets of, FDHC and
          subject to the provisions of the FDHC Plan. Lisowski
 5        agrees that such funds will be turned over to Whinery
          on the Effective Date and that he will cooperate in
 6        such turnover, including executing any documents
          necessary to effectuate such turnover.
 7
 8   (Emphasis added).
 9        Debtor objected to the settlement, arguing that it ignored
10   her exemption rights in various assets, including, but not
11   limited to, her homestead, her car, and for loss for future
12   earnings.   Debtor argued that any settlement agreement
13   liquidating her estate should first include and identify her
14   exemptions permitted by law.
15        Relying on the properly filed Schedule C, Creditor Trustee
16   responded by pointing out that the bankruptcy court could
17   determine the limited issue of whether Debtor’s homestead
18   assertion trumped Creditor Trustee’s consensual lien on Debtor’s
19   residence and that Debtor had never claimed an exemption for her
20   car, which was also subject to a consensual lien by Creditor
21   Trustee.
22        At the August 10, 2011 hearing on the matter, the
23   bankruptcy court stated:
24        With respect to Ms. Todd’s complaints, any issue as to
          what exemption she may have are not resolved in this
25        settlement. . . .the point is all you’re doing is
          settlement inter se. If, for example, she titled
26        [sic] to the exemptions she claims, the estate doesn’t
          get it. Is that -- everybody agrees that’s the correct
27        -- analysis.
28   Counsel for Creditor Trustee responded “Yes.”   Liskowki stated:

                                    -10-
 1   “I agree completely.        I don’t think this resolve [sic] any
 2   issues with the exemptions.”        The bankruptcy court then said:
 3              Everybody agrees. All right. So to the extent there
                are exemptions, those exemption issues are preserved.
 4              If you have outstanding objections to exemptions, you
                better bring them back on calendar. Otherwise, the
 5              exemptions stand.
 6              Neither the Rule 9019 Settlement nor the Rule 9019
 7   Settlement Order contained any provision regarding Debtor’s
 8   exemption rights nor did it provide for the carve-out of any
 9   funds in the SSB Account pending the determination of those
10   rights.        The order provided that Solomon Smith Barney accept any
11   and all instructions concerning transactions in the SSB Account
12   from Whinery, “as Creditor Trustee, who is the owner of the
13   accounts as of the date of this Order.”        Finally, although the
14   funds in the SSB Account were no longer property of Debtor’s
15   estate per the settlement’s plain terms, the bankruptcy court
16   did not expressly retain jurisdiction to decide Debtor’s
17   exemption rights in those funds.        Debtor and Aubrey appealed the
18   Rule 9019 Settlement Order to the Nevada district court by
19   filing a NOA in Lodgebuilder’s bankruptcy case and not their
20   own.        Lodgebuilder did not file a NOA of the order.   The Nevada
21   district court dismissed the appeal in May 2012, finding that
22   neither Debtor nor Aubrey had standing.4
23              Relying on the Rule 9019 Settlement Order, Creditor Trustee
24   withdrew funds from the SSB Account and disbursed those funds to
25
26          4
          We take judicial notice of the dismissal which was
27 docketed and imaged in Bankr. Case No. NV-09-14103 at Dkt.
   No. 289. Atwood v. Chase Manhattan Mortg. Co. (In re Atwood),
28 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).

                                         -11-
 1   the chapter 7 trustee and others pursuant to the terms of the
 2   settlement and FDHC’s confirmed chapter 11 plan.
 3        In late November 2011, Creditor Trustee filed a renewed
 4   objection to Debtor’s homestead exemption.    Debtor responded,
 5   arguing that her claims of exemption were contained in the
 6   Schedule C that she filed on April 30, 2009.
 7        Debtor then filed an emergency motion for turnover of funds
 8   based on the exemptions claimed in her “Corrected & Amended”
 9   Schedule C.   Debtor asserted that the Settlement Proceeds were
10   exempt under N.R.S. § 21.090(1)(w), and argued that the entire
11   amount was reasonably necessary for her support.
12        Creditor Trustee responded, arguing that Debtor had failed
13   to preserve her exemption for loss of future earnings because,
14   among other things, the “Corrected & Amended” Schedule C had not
15   been docketed as an amendment.    Creditor Trustee further
16   submitted that under the Rule 9019 Settlement with the chapter 7
17   trustee, the funds in the SSB Account belonged to the FDHC
18   estate.   Creditor Trustee maintained that Debtor could not now
19   claim an exemption since the funds had already been transferred
20   to FDHC and administered per the terms of the settlement
21   agreement.    Based on these arguments, Creditor Trustee asserted
22   that the doctrines of res judicata, judicial estoppel, and
23   mootness barred Debtor’s motion.    Finally, Creditor Trustee
24   contended that creditors of Debtor’s estate and FDHC’s estate
25   would be prejudiced due to Debtor’s late amendment of her
26   Schedule C.
27        In April 2012, the bankruptcy court held a hearing
28   regarding Debtor’s exemptions.    In responding to the prejudice

                                      -12-
 1   concerns raised by Creditor Trustee, the court held that,
 2   although Debtor’s attached January amendment was not filed in
 3   compliance with the Rules, it was sufficient to give Creditor
 4   Trustee notice of her intent to claim the exemptions.    The
 5   bankruptcy court ordered Debtor to properly file the exemptions.
 6   Despite the court’s directive, Debtor did not file a separately
 7   docketed Amended Schedule C listing an exemption for loss of
 8   future earnings.
 9        On May 8, 2012, at a status hearing, the court again told
10   Debtor to file an official amendment to the claim of exemption
11   and gave her a deadline to do so.     About two weeks later, Debtor
12   filed a “Debtor’s Resubmission of Amended Exemptions” with an
13   attached Schedule C listing “Payments for comp. for future
14   earnings” in the amount of $1,122,384.00.    Debtor did not file a
15   separately docketed amended Schedule C.
16        Creditor Trustee then filed a “Notice of Creditor Trustee’s
17   Objection To Debtor’s Alleged Exemptions” in which he objected
18   to Debtor’s loss of future earnings exemption and others as
19   well.
20        Subsequently, Creditor Trustee filed a Motion for Summary
21   Judgment (MSJ) on the issue of whether Debtor was entitled to an
22   exemption on any portion of the Settlement Proceeds for loss of
23   future earnings.   Creditor Trustee argued that the Personal
24   Injury Settlement agreement did not allocate the funds to any
25   damage theory and did not mention “loss of future earnings.”
26   Creditor Trustee further argued that Debtor continued to receive
27   substantial wages and other payments from Lodgebuilder after her
28   accident.   The bankruptcy court granted Creditor Trustee’s MSJ

                                    -13-
 1   finding that none of the Settlement Proceeds were exempt as
 2   payment for compensation for loss of future earnings.    Debtor
 3   appealed the MSJ ruling to the Nevada district court.    There was
 4   no stay pending appeal.    The district court reversed the
 5   bankruptcy court’s decision, finding that there was a genuine
 6   issue of material fact whether the settlement was for lost wages
 7   or some other purpose.
 8        The bankruptcy court then scheduled a trial on the matter.
 9   Both parties submitted trial briefs and the joint pre-trial
10   statement in which they stipulated to certain facts for purposes
11   of the trial.    Debtor again claimed she was entitled to an
12   exemption for loss of future earnings in the amount of
13   $1,122,384.00.    Creditor Trustee asserted that Debtor’s claim
14   for loss of future earnings should be zero and certainly no
15   greater than $108,008.13.    After the trial, the bankruptcy court
16   took the matter under submission.
17        On May 6, 2014, the bankruptcy court issued its FFCL.
18   After tracing the Settlement Proceeds which were commingled in
19   the SSB Account with Debtor’s pre-existing balance, and
20   deducting amounts attributed to future medical expenses and
21   bodily injury, the court concluded that Debtor was entitled to
22   exempt $461,608.02 for loss of future earnings and that the
23   entire amount was reasonably necessary for her support.
24        The bankruptcy court also found that although Debtor had
25   never filed an amended Schedule C, Creditor Trustee’s objection
26   to her exemption for loss of future earnings was timely.     The
27   bankruptcy court opined that the matter should be determined on
28   its merits, not prejudicing either party for any apparent

                                     -14-
 1   failure to abide by the Bankruptcy Code and Rules.
 2        Finally, the bankruptcy court found that the permanent
 3   injunction imposed by the Arizona bankruptcy court did not
 4   preclude Debtor from litigating her entitlement to exempt the
 5   Settlement Proceeds in the SSB Account.           The court did not
 6   address the impact of the Rule 9019 Settlement on Debtor’s
 7   exemption rights apparently because it thought those rights were
 8   properly reserved by virtue of the parties’ consent to preserve
 9   them at the August 10, 2011 hearing.           The bankruptcy court
10   entered the judgment on the same day it issued the FFCL.
11        Debtor filed a timely appeal and Creditor Trustee filed a
12   timely cross-appeal.    Creditor Trustee filed a Motion to Alter
13   or Amend which the bankruptcy court denied on September 29,
14   2014.   Creditor Trustee then filed an amended notice of cross
15   appeal.
16        Debtor has since filed a motion for collection on the
17   judgment regarding her exemption.          Creditor Trustee filed a
18   motion for a stay pending appeal in response.           The bankruptcy
19   court denied both motions.
20                                II.   JURISDICTION
21        We address the bankruptcy court’s jurisdiction and our own
22   jurisdiction to decide the merits of the appeal below.
23                                   III.   ISSUE
24        Did the bankruptcy court have subject matter jurisdiction
25   to decide Debtor’s exemption claim for loss of future earnings
26   after it entered the Rule 9019 Settlement Order?
27                          IV.    STANDARD OF REVIEW
28        We review de novo questions of subject matter jurisdiction.

                                         -15-
 1   Montana v. Goldin (In re Pegasus Gold Corp.), 394 F.3d 1189,
 2   1193 (9th Cir. 2005).
 3                              V.   DISCUSSION
 4        We are required to consider the presence or absence of
 5   subject matter jurisdiction sua sponte.      Cannon v. Haw. Corp.
 6   (In re Haw. Corp.), 796 F.2d 1139, 1141 (9th Cir. 1986).      The
 7   bankruptcy court’s jurisdiction is grounded in, and limited by,
 8   statute.   Kirton v. Valley Health Sys. (In re Valley Health
 9   Sys.), 471 B.R. 555, 563 (9th Cir. BAP 2012).      Under 28 U.S.C.
10   § 1334(e)(1), the bankruptcy court has exclusive jurisdiction
11   “of all the property, wherever located, of the debtor as of the
12   commencement of such case, and of property of the estate.”
13        The parties do not dispute that the SSB Account contained
14   the Settlement Proceeds.   The Rule 9019 Settlement entered into
15   between Creditor Trustee and the chapter 7 trustee placed
16   ownership of the SSB Account in FDHC’s estate.      When property is
17   no longer property of the estate the court’s jurisdiction ends.
18   See In re Hall’s Motor Transit Co., 889 F.2d 520, 522 (3d Cir.
19   1989) (“The bankruptcy court’s jurisdiction does not follow the
20   property, but rather, it lapses when the property leaves the
21   debtor’s estate.”); Elscint, Inc. v. First Wis. Fin. Corp.
22   (Matter of Xonics, Inc.), 813 F.2d 127, 131 (7th Cir. 1987)
23   (once property of the estate is sold, the bankruptcy court must
24   obtain a new source of federal jurisdiction); see also Gardner
25   v. United States (In re Gardner), 913 F.2d 1515, 1518 (10th Cir.
26   1990) (“A bankruptcy court has jurisdiction over disputes
27   regarding alleged property of the bankruptcy estate at the
28   outset of the case.   When property leaves the bankruptcy estate,

                                      -16-
 1   however, the bankruptcy court’s jurisdiction typically lapses,
 2   and the property’s relationship to the bankruptcy proceeding
 3   comes to an end.”).   Accordingly, once the bankruptcy court
 4   entered the Rule 9019 Settlement Order, the court’s jurisdiction
 5   over the SSB Account lapsed since it was no longer property of
 6   the estate nor was it property of the Debtor.    See 28 U.S.C.
 7   § 1334(e)(1); see also 28 U.S.C. § 157(b)(2)(B) (recognizing
 8   proceedings relating to “exemptions from property of the estate”
 9   as core proceedings over which the bankruptcy court has
10   jurisdiction).
11        The Rule 9019 Settlement Order did not provide for the
12   bankruptcy court’s retention of jurisdiction over the SSB
13   Account for purposes of determining Debtor’s exemption rights.
14   Further, although the bankruptcy court orally confirmed with
15   Creditor Trustee and the chapter 7 trustee that Debtor’s
16   exemption rights in the SSB Account were preserved, that
17   colloquy did not preserve such rights, nor did it cure the
18   jurisdictional defect that confronts us.   The parties cannot
19   create subject matter jurisdiction by consent.    Arbaugh v. Y & H
20   Corp., 546 U.S. 500, 514 (2006).   Subject matter jurisdiction,
21   which involves a court’s power to hear a case, “can never be
22   forfeited or waived.”   Id.   A court which lacks subject matter
23   jurisdiction cannot hear the matter at all and must dismiss it.
24        The plain language of § 522(b) also demonstrates why the
25   preservation of Debtor’s exemption rights was ineffective.
26   Section “522(b) provides that the debtor may exempt certain
27   property ‘from property of the estate’; obviously, then, an
28   interest that is not possessed by the estate cannot be

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 1   exempted.”    See Owen, 500 U.S. at 308.   Once the SSB Account was
 2   transferred out of Debtor’s bankruptcy estate, there was nothing
 3   to exempt per the plain language of § 522(b).
 4        Finally, we considered whether the bankruptcy court’s
 5   jurisdiction to determine Debtor’s exemption rights could
 6   survive under a “related to” jurisdictional analysis.      “Related
 7   to” jurisdiction exists when “the outcome of the proceeding
 8   could conceivably have any effect on the estate being
 9   administered in bankruptcy.”    Fietz v. Great W. Sav.
10   (In re Fietz), 852 F.2d 455, 457 (9th Cir. 1988) (adopting the
11   test in Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir.
12   1984)).   The United States Supreme Court endorsed Pacor’s
13   conceivability standard with the caveats that “related to”
14   jurisdiction “cannot be limitless,” and that the critical
15   component of the Pacor test is that “bankruptcy courts have no
16   jurisdiction over proceedings that have no effect on the estate
17   of the debtor.”    Celotex Corp. v. Edwards, 514 U.S. 300, 308 &
18   n.6 (1995).
19        “Related to” jurisdiction does not exist for essentially
20   the same reason as noted above.    Because the Rule 9019
21   Settlement transferred 100% ownership of the SSB Account to
22   FDHC’s estate, the chapter 7 trustee gave up any rights to the
23   funds.    Thus, the outcome of Debtor’s claim to exemption rights
24   in those funds could not impact creditor recoveries or impact or
25   involve the chapter 7 trustee in her estate.
26        In sum, the bankruptcy court did not have subject matter
27   jurisdiction to decide Debtor’s exemption rights in the SSB
28   Account which was no longer property of her estate.      This

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 1   unexpected jurisdictional defect resulting from the Rule 9019
 2   Settlement Order leaves us without authority to consider the
 3   merits of Debtor’s exemption claim for loss of future earnings
 4   and the alleged allocation errors raised in this appeal.   We
 5   express no opinion whether Debtor could successfully move to
 6   modify the Rule 9019 Settlement Order under Civil Rule 60(b)(6).
 7                           VI.   CONCLUSION
 8        For the reasons stated, we VACATE the judgment and DISMISS
 9   this appeal.
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