                                                             FILED
                                                              AUG 02 2012
 1
                                                          SUSAN M SPRAUL, CLERK
                                                            U.S. BKCY. APP. PANEL
 2                                                          OF THE NINTH CIRCUIT
                    UNITED STATES BANKRUPTCY APPELLATE PANEL
 3
                                OF THE NINTH CIRCUIT
 4
 5   In re:                            )    BAP No.    ID-11-1304-MkHJu
                                       )
 6   STEVEN A. STEPHENS,               )    Bk. No.    10-41450-JDP
                                       )
 7                    Debtor.          )
                                       )
 8                                     )
     STEVEN A. STEPHENS,               )
 9                                     )
                      Appellant,       )
10                                     )
     v.                                )    MEMORANDUM*
11                                     )
     R. SAM HOPKINS, Chapter 7         )
12   Trustee,                          )
                                       )
13                    Appellee.        )
                                       )
14
                     Argued and Submitted on June 14, 2012
15                              at Boise, Idaho
16                           Filed – August 2, 2012
17               Appeal From The United States Bankruptcy Court
                            for the District of Idaho
18
              Honorable Jim D. Pappas, Bankruptcy Judge, Presiding
19
20   Appearances:     Dustin W. Manwaring of the Milestone Law Firm
                      argued on behalf of Appellant Steven A. Stephens;
21                    Brett Cahoon of Racine, Olson, Nye, Budge &
                      Bailey, Chartered, argued on behalf of Appellee R.
22                    Sam Hopkins, Chapter 7 trustee.
23
     Before:    MARKELL, HOLLOWELL and JURY, Bankruptcy Judges.
24
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 8013-1.
 1                              INTRODUCTION
 2        Debtor Steven A. Stephens (“Stephens”) claimed a homestead
 3   exemption under Idaho law in real property he owned in Alaska.
 4   R. Sam Hopkins, his chapter 71 trustee (“Trustee”), objected to
 5   Stephens’ homestead exemption claim.   The bankruptcy court
 6   sustained the Trustee’s objection, and Stephens appealed.     We
 7   AFFIRM.
 8                                 FACTS2
 9        When Stephens, an Idaho native, filed his bankruptcy case,
10   he owned two parcels of real property.    One was in Idaho Falls,
11   Bonneville County, Idaho (“Idaho Property”) and the other was in
12   Kenai Peninsula Borough, Sterling, Alaska (“Alaska Property”).
13        Stephens purchased the Alaska Property in 2006.    At the time
14   he purchased the Alaska Property, it was vacant land.   However,
15   over the course of several years, he worked on building a home on
16   the property with the intent to eventually reside there
17   permanently.   Between 2007 and 2010, Stephens periodically would
18   travel to Alaska, for several days or weeks at a time, to work on
19   the construction of his Alaska home.   While he made his permanent
20   move to the Alaska Property in December 2010, Stephens never
21   actually completed the home’s construction.   The Alaska home
22   still lacks running water, a sewage system, cabinetry, carpeting
23
24
          1
           Unless specified otherwise, all chapter and section
25   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
     all Rule references are to the Federal Rules of Bankruptcy
26   Procedure, Rules 1001-9037. All Civil Rule references are to the
27   Federal Rules of Civil Procedure.
          2
28         The parties stipulated to all of the relevant facts.

                                      2
 1   and flooring.3
 2        Stephens commenced his chapter 7 bankruptcy case in the
 3   United States Bankruptcy Court for the District of Idaho in
 4   August 2010, before his move to Alaska.   Stephens had generally
 5   been planning to relocate to Alaska as early as 2006 and had been
 6   making firm plans to relocate there since early 2010.   These firm
 7   plans included obtaining professional licensing from the State of
 8   Alaska to practice as a psychologist and seeking employment in
 9   Alaska as a psychologist.4
10        In his bankruptcy schedules, Stephens listed both his Idaho
11   Property and his Alaska Property as assets.   The bankruptcy
12   schedules indicated that the Idaho property was worth $130,000
13   but also was fully encumbered.   As set forth in the schedules,
14   the Alaska Property was worth $54,000, with no encumberances.
15   Accordingly, citing Idaho Code § 55-1003,5 Stephens’ Schedule C
16   claimed the full value of the Alaska Property as exempt.
17        The Trustee timely objected to Stephens’ homestead exemption
18
          3
19         While the stipulated facts do not specify why Stephens
     halted work on the home, we assume that he lacked sufficient
20   funds to continue the work, or that he wanted to make sure that
     he prevailed in his exemption claim dispute with the Trustee
21   before continuing the work, or both.
22        4
           The parties do not dispute that Stephens was a domiciliary
23   of Idaho for bankruptcy venue purposes under 28 U.S.C. § 1408 and
     for choice of law purposes under § 522(b)(3).
24        5
           Idaho Code § 55-1003 provides:
25
          A homestead exemption amount shall not exceed the
26        lesser of (i) the total net value of the lands, mobile
          home, and improvements as described in section 55-1001,
27
          Idaho Code; or (ii) the sum of one hundred thousand
28        dollars ($100,000).

                                      3
 1   claim, arguing that Idaho’s homestead exemption law, Idaho Code
 2   §§ 55-1001, et seq., did not cover real property located outside
 3   the State of Idaho.   After the parties briefed the issue and
 4   submitted their stipulated facts, the bankruptcy court decided
 5   the matter without a hearing.   In a memorandum decision, the
 6   bankruptcy court relied on its own prior decisions in concluding
 7   as a matter of law that Idaho’s homestead exemption law does not
 8   apply to out-of-state real property.6
 9        The bankruptcy court entered its order sustaining the
10   Trustee’s objection on May 10, 2011, and Stephens timely appealed
11   on May 27, 2011.7
12                               JURISDICTION
13        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
14   §§ 1334 and 157(b)(2)(B).   We have jurisdiction under 28 U.S.C.
15   § 158.
16                                   ISSUE
17        Does Idaho’s homestead exemption law cover real property
18   located outside the State of Idaho?
19
          6
20         The bankruptcy court’s prior decisions are: In re Capps,
     438 B.R. 668 (Bankr. D. Idaho 2010); In re Harris, 2010 WL
21   2595294 (Bankr. D. Idaho 2010); In re Kline, 350 B.R. 497 (Bankr.
     D. Idaho 2005); In re Halpin,1994 WL 594199 (Bankr. D. Idaho
22   1994). In In re Kline, the bankruptcy court ruled, among other
23   things, that: (1) Utah law explicitly did not permit debtors to
     claim a homestead in Idaho property, and (2) either Idaho or Utah
24   law would permit the debtors to claim a homestead in their mobile
     home. 350 B.R. at 502, 504 nn. 6 & 9. We express no opinion on
25   the extraterritoriality of either Idaho’s or Utah’s exemptions
     laws as they apply to mobile homes.
26
          7
           Pursuant to Rule 8002(c), the bankruptcy court entered an
27
     order on July 28, 2011, granting Stephens an extension of time to
28   file his notice of appeal through May 27, 2011.

                                       4
 1                            STANDARDS OF REVIEW
 2        Questions of statutory interpretation, including the
 3   interpretation of exemption laws, are questions of law we review
 4   de novo.   See Mullen v. Hamlin (In re Hamlin), 465 B.R. 863, 869
 5   (9th Cir. BAP 2012).   “Under de novo review, ‘we consider a
 6   matter anew, as if it had not been heard before, and as if no
 7   decision had been previously rendered.’”      Wells Fargo Bank, N.A.
 8   v. Loop 76, LLC (In re Loop 76, LLC), 465 B.R. 525, 536 (9th Cir.
 9   BAP 2012) (quoting See B-Real, LLC v. Chaussee (In re Chaussee),
10   399 B.R. 225, 229 (9th Cir. BAP 2008)).
11                                DISCUSSION
12        The commencement of Stephens’ bankruptcy case created a
13   bankruptcy estate consisting of all of Stephens’ legal or
14   equitable interests in property.       § 541(a)(1); Schwab v. Reilly,
15     U.S.     , 130 S.Ct. 2652, 2657 (2010).     However, a debtor may
16   claim certain property as exempt from the bankruptcy estate.
17   § 522(b)(1).   While the Bankruptcy Code provides its own schedule
18   of exemptions, § 522(d), each state is permitted to decide
19   whether its wants to “opt out” of the federal schedule of
20   bankruptcy exemptions.   § 522(b)(2).     Idaho explicitly has opted
21   out, Idaho Code § 11-609, so the only exemptions available to
22   Idaho residents are those provided by Idaho law, or by non-
23   bankruptcy federal law. § 522(b)(3).8
24
          8
25         Both parties conceded in the bankruptcy court and in their
     opening appeal briefs that Stephens was domiciled in Idaho within
26   the meaning of § 523(b)(3)(A) and hence Idaho exemption law must
     be applied. Notwithstanding his earlier concessions, Stephens
27
     attempted to back away from these concessions in his reply brief
28                                                      (continued...)

                                        5
 1            The focus of this appeal is Idaho’s homestead exemption
 2   law, Idaho Code §§ 55-1001, et seq.    In particular, Stephens
 3   contends that he was entitled to exempt his interest in the
 4   Alaska Property under Idaho’s homestead exemption law.9
 5   Unfortunately for Stephens, Idaho’s homestead exemption law does
 6   not explicitly state that the law applies to out-of-state real
 7   property.    Nor does it state that it does not apply to out-of-
 8   state real property.    The statute simply doesn’t mention or
 9   contemplate extraterritorial effect.
10        Stephens argues that we should construe this silence as
11   meaning that there is no bar to applying Idaho’s homestead
12   exemption law to out-of-state real property.    He claims that the
13   “plain meaning” of the statutory lacuna is that there is no bar
14   to giving the statute extraterritorial effect.    In short, he
15   contends that the Idaho legislature’s silence should be
16   interpreted as intent to extend the coverage of Idaho’s homestead
17   exemption law beyond the state’s geographical boundaries.
18
19        8
           (...continued)
20   on appeal. All of the arguments Stephens attempted to make for
     the first time in his reply brief are deemed waived. See Golden
21   v. Chicago Title Ins. Co. (In re Choo), 273 B.R. 608, 613 (9th
     Cir. BAP 2002); Branam v. Crowder (In re Branam), 226 B.R. 45, 55
22   (9th Cir. BAP 1998), aff’d, 205 F.3d 1350 (table) (9th Cir.
23   1999).
          9
24         Specifically, Idaho Code § 55–1008 exempts from attachment,
     execution or forced sale qualifying homesteads (as defined in
25   Idaho Code § 55–1001), and the proceeds of qualifying homesteads,
     up to the maximum amount specified in Idaho Code § 55–1003. The
26   parties do not dispute that the value of the Alaska Property does
     not exceed the maximum exemption amount permitted under Idaho
27
     Code § 55–1003 (the lesser of $100,000 or the value of the
28   homestead).

                                        6
 1        Alternately, he claims that this Panel should construe
 2   Idaho’s homestead exemption law liberally, in the same manner as
 3   the Ninth Circuit construed California’s homestead exemption law
 4   in Arrol v. Broach (In re Arrol), 170 F.3d 934, 936–37 (9th Cir.
 5   1999).    According to Stephens, if we employ the same type of
 6   liberal construction as the Ninth Circuit employed in Arrol, we
 7   necessarily will conclude that Idaho’s homestead exemption law
 8   covers real property located outside the State of Idaho.10
 9        As a threshold matter we note that, whenever this Panel is
10   called upon to interpret state law, it is bound by the decisions
11   of that state’s supreme court.   Kekauoha-Alisa v. Ameriquest
12   Mortg. Co. (In re Kekauoha-Alisa), 674 F.3d 1083, 1087 (9th Cir.
13   2012) (citing Sec. Pac. Nat’l Bank v. Kirkland (In re Kirkland),
14   915 F.2d 1236, 1238 (9th Cir. 1990)).   And when there is no
15   controlling state court decision, we must do our best to predict
16   how the state supreme court would decide the issue.   In re
17   Kekauoha-Alisa, 674 F.3d at 1087-88.
18        To the best of our knowledge, no Idaho appellate court has
19   addressed the issue of whether Idaho’s homestead exemption law
20   applies to real property located outside of Idaho.    Thus,
21   Stephens in essence urges this Panel to predict that, if the
22   Idaho Supreme Court were to consider this issue, it would
23   conclude that Idaho’s homestead exemption law applies to out-of-
24   state property.
25
26        10
            For an overview of how other jurisdictions have dealt with
     the issue of the extraterritoriality of their homestead exemption
27
     laws, see In re Capps, 438 B.R. 668, 671-72 (Bankr. D. Idaho
28   2010).

                                       7
 1        But we cannot make the prediction Stephens desires.     To the
 2   contrary, based on our reading of Idaho Supreme Court precedent,
 3   we predict that the Idaho Supreme Court would limit the
 4   applicability of Idaho’s homestead exemption law to real property
 5   located within Idaho.   In making this prediction, we particularly
 6   rely upon a line of Idaho Supreme Court cases holding that, “[i]n
 7   the absence of any extraterritorial phraseology contained in the
 8   [statute in question], it cannot be construed to have an
 9   extraterritorial effect, on the theory that the legislature so
10   intended.”   Ore–Ida Potato Prods., Inc., v. United Pac. Ins.
11   Co., 87 Idaho 185, 194, 392 P.2d 191, 1996 (1964) (concluding
12   that bond issued under Idaho law to a farm produce dealer did not
13   cover a sales transaction consummated entirely outside the
14   state).   Accord, Phillips v. Consol. Supply Co., 126 Idaho 973,
15   976, 895 P.2d 574, 577 (1995) (concluding that Idaho magistrate
16   had no authority under Idaho Vital Statistics Act to order
17   amendment of Missouri birth certificate); Walbridge v. Robinson,
18   22 Idaho 236, 125 P. 812, (1912) (concluding that Idaho statutory
19   water permit did not confer right to divert water from Idaho
20   stream for irrigation use in Montana).
21        We also rely on Idaho Supreme Court decisions acknowledging
22   that exemption statutes must be interpreted liberally, but
23   nonetheless declining to extend the exemption statutes beyond
24   what they reasonably could be construed to cover.   See, e.g.,
25   Young v. Wright, 77 Idaho 244, 246, 290 P.2d 1086, 1087 (1955);11
26
          11
           As Young put it, “‘[w]hile the [exemption] statute should
27
     be liberally construed, it has been held that construction should
28                                                      (continued...)

                                      8
 1   Wright v. Westheimer, 2 Idaho 962, 28 P. 430, 433 (1891).
 2        Westheimer is particularly instructive.   At the time
 3   Westheimer was decided, Idaho’s homestead exemption law required
 4   the filing of a homestead declaration as a prerequisite to the
 5   effectiveness of any homestead exemption.   Westheimer, 2 Idaho
 6   962, 28 P. at 432-33.   The appellant in Westheimer argued that
 7   the Idaho Supreme Court nonetheless should liberally construe
 8   Idaho homestead exemption law to cover the proceeds from the sale
 9   of his prior homestead, which he had reinvested in his new
10   residence, even though he did not file the requisite homestead
11   declaration covering his new residence until after the creditor
12   had levied his first writ of attachment against the appellant’s
13   new residence.   Id. at 432.
14        In rejecting appellant’s argument, Westheimer particularly
15   noted that Idaho’s homestead exemption law “contain[s] no
16   provisions for an exchange of one homestead for another, nor the
17   purchase of another with the proceeds of the sale of the one
18   exempt, nor for the exemption of the new homestead so purchased.”
19   Id. at 433.   In other words, as Westheimer put it, “[o]ur
20   statutes are silent upon the question under consideration.”    Id.
21   Notwithstanding its acknowledgment that the homestead exemption
22   law had to be liberally construed, and its recognition that the
23
24        11
           (...continued)
25   not be indulged in to the extent of conferring privileges and
     benefits by construction which were not intended to be conferred
26   by the Legislature, or to the extent of doing violence to the
     terms of the statute.’” Young, 77 Idaho at 246, 290 P.2d at 1087
27
     (quoting Conlin v. Traeger, 84 Cal.App. 730, 734-35, 258 P. 433,
28   434 (1927)).

                                      9
 1   law furthered the humane and reasonable purpose of providing “the
 2   unfortunate debtor a place of refuge and a gleam of hope,”
 3   Westheimer refused to expand the homestead exemption law beyond
 4   its explicit scope:
 5        . . . we can hardly conceive the necessity or propriety
          of strictly construing a statute of mercy or
 6        benevolence. But, as our statutes are silent upon the
          question under consideration, this court will not
 7        undertake to supply omissions made by the law-making
          power. This court must distinguish between enacting
 8        laws and construing them. . . . We are of the opinion
          that an amendment of our homestead laws, exempting the
 9        proceeds from a voluntary sale for a reasonable time,
          would be in the interest of humanity. For, however
10        much such an amendment may be desired, this court will
          not assume the power to amend the statutes, and thus
11        usurp the legislative functions of a co-ordinate branch
          of our state government.
12
13   Id. (Emphasis Added.)
14        Whatever benefit Stephens may be entitled to as a result of
15   the liberal construction of Idaho’s homestead exemption law, the
16   Idaho Supreme Court has indicated that this benefit does not
17   permit courts to engage in “judicial legislation” to fill in gaps
18   in the protections afforded to debtors under Idaho’s exemption
19   laws. See id.; see also Young, 77 Idaho at 246, 290 P.2d at 1087.
20        In sum, in light of the Idaho Supreme Court’s presumption
21   against implied extraterritoriality of its statutes, and its
22   refusal to judicially expand exemption entitlements beyond the
23   explicit terms of the exemption statutes, we feel compelled to
24   construe Idaho’s homestead exemption law as not applying to real
25   property located outside the State of Idaho.
26        Nothing in In re Arrol, 170 F.3d 934, requires us to hold
27   otherwise.   After reviewing California’s homestead exemption law,
28   its legislative history, and the decisions of California’s

                                     10
 1   appellate courts interpreting the law, In re Arrol held that it
 2   found “nothing” that would justify limiting the scope of
 3   California’s homestead exemption law to real property located in
 4   California.   Id. at 937.   In contrast, as set forth above, we
 5   have found plenty of support in Idaho law for our holding that
 6   Idaho’s homestead exemption law does not apply to out-of-state
 7   real property.   In short, the divergent results reached here and
 8   in In re Arrol can be attributed to the distinctive bodies of
 9   state law that control each decision.12
10        Stephens has made a handful of other legal and policy
11   arguments in support of his assertion that Idaho’s homestead
12   exemption law applies to out-of-state real property.   However, in
13   light of the above-cited Idaho Supreme Court precedent, none of
14   Stephens’ other arguments persuade us that the Idaho Supreme
15   Court would give Idaho’s homestead exemption law extraterritorial
16   effect.
17                                CONCLUSION
18        While we do not doubt that our views are a correct reading
19   of the statutes involved, we acknowledge that the result in this
20   case could be viewed as harsh and serendipitous.    But it is not
21   our role to attempt to “fix” either federal or state exemption
22   law by strained or unsupportable interpretations.   Either
23   Congress or the state legislators, not the courts, must act if
24   they don’t like how the laws they enacted actually work.     See
25
          12
26         While In re   Arrol did not explicitly reference its duty to
     follow or predict   how the California Supreme Court would decide
27   the issue, see In   re Kekauoha-Alisa, 674 F.3d at 1087-88, In re
     Arrol’s adherence   to that duty is implicit in the manner of its
28
     analysis.

                                      11
 1   Lamie v. U.S. Trustee, 540 U.S. 526, 542 (2004); Young, 77 Idaho
 2   at 246, 290 P.2d at 1087.
 3        For the reasons set forth above, we AFFIRM the bankruptcy
 4   court’s order sustaining the Trustee’s objection to Stephens’
 5   homestead exemption claim.
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