                                                           FILED
 1                        ORDERED PUBLISHED                  MAR 08 2013
                                                        SUSAN M SPRAUL, CLERK
 2                                                        U .S . B K CY. A P P . P A NE L
                                                          O F T H E N IN T H C IR C U IT
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL

 4                            OF THE NINTH CIRCUIT

 5

 6   In re:                        )     BAP No.     AZ-12-1241-KlPaMk
                                   )
 7   MARSHALL L. RADER and BARBARA )     Bk. No.     10-14477-RTB
     J. RADER,                     )
 8                                 )
                      Debtors.     )
 9   ______________________________)
                                   )
10   WILLIAM E. PIERCE, Chapter 7 )
     Trustee,                      )
11                                 )
               Appellant,          )
12                                 )
     v.                            )     O P I N I O N
13                                 )
     ROBERT G. CARSON, Trustee of )
14   the R & S Carson Family Trust;)
     SANDRA J. CARSON, Trustee of )
15   the R & S Carson Family Trust,)
                                   )
16                  Appellees.     )
     ______________________________)
17
                    Argued and submitted on January 25, 2013
18                             at Phoenix, Arizona

19                           Filed - March 8, 2013

20              Appeal from the United States Bankruptcy Court
                         for the District of Arizona
21
        Honorable Redfield T. Baum Sr., Bankruptcy Judge, Presiding
22                     ____________________________

23   Appearances:    Terry A. Dake, Esq., of Terry A. Dake, Ltd., argued
                     for Appellant; Brian Y. Furuya, Esq., of Aspey
24                   Watkins & Diesel, PLLC, argued for Appellees.
                         ____________________________
25
     Before:   KLEIN, * PAPPAS, and MARKELL, Bankruptcy Judges.
26

27

28        *
            Hon. Sandra R. Klein, United States Bankruptcy Judge for
     the Central District of California, sitting by designation.
 1   KLEIN, Bankruptcy Judge:

 2

 3                               INTRODUCTION

 4        Chapter 7 1 trustee, William E. Pierce (“Trustee”), appeals

 5   from an order overruling his objection to a claim filed by Robert

 6   G. Carson and Sandra J. Carson on behalf of The R & S Carson

 7   Family Trust (“Carsons”).    We AFFIRM.

 8                                   FACTS

 9        Marshall and Barbara Rader (“Debtors”) filed a chapter 13

10   bankruptcy petition on May 12, 2010.      A few months later, the case

11   was converted to a chapter 7, and Trustee was appointed as the

12   chapter 7 trustee.

13        On August 12, 2010, the Carsons filed a “Motion for Order

14   Approving Stipulation of Parties Regarding Relief from Automatic

15   Stay” (“Motion”).    The Motion indicated that the Carsons, Debtors,

16   and Trustee agreed that the automatic stay should be terminated

17   regarding a parcel of real property located in Valle-Williams,

18   Coconino County, Arizona (“Property”).     Attached to the Motion was

19   a stipulation (“Stipulation”), which stated that the Carsons had a

20   security interest in the Property and that Debtors were in default

21   under their obligations to the Carsons.      On September 9, 2010, the

22   bankruptcy court entered an “Order Approving Stipulation Regarding

23   Relief from Automatic Stay” (“Order”).

24        On November 1, 2010, the Carsons timely filed a $739,100.61

25   proof of claim (“Claim”), which indicated that the debt was

26

27        1
            Unless otherwise indicated, all chapter, section, and rule
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
28   to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.

                                      -2-
 1   secured by a trust deed on the Property.     The Claim stated that

 2   the value of the Property was $370,000.     This valuation was

 3   supported by an appraisal, and was not challenged in the

 4   bankruptcy court nor is it challenged in this appeal.     The Claim

 5   was bifurcated into a secured claim of $370,000 and an unsecured

 6   claim of $369,100.61.

 7        On December 16, 2010, the Carsons purchased the Property for

 8   $370,000 at a non-judicial foreclosure sale.     Debtors received a

 9   discharge on January 11, 2011.

10        On March 2, 2012, Trustee filed an objection to the Claim

11   (“Claim Objection”), which stated, in its entirety, that: “Said

12   claimant asserts a lien on certain property of the debtor’s [sic]

13   estate and said claimant has or should have looked to said

14   property for payment of the debt thereby secured.     The trustee

15   recommends that said claim be treated as: DISALLOWED.”        The

16   Carsons filed a response to the Claim Objection on March 16, 2012.

17   On April 20, 2012, the bankruptcy court heard and overruled the

18   Claim Objection, reasoning that the Carsons could not have filed a

19   state court deficiency action or an adversary proceeding without

20   violating the discharge injunction.     On May 1, 2012, the

21   bankruptcy court entered an order overruling the Claim Objection

22   and allowing the Carsons’ $369,100.61 unsecured claim.        Trustee

23   timely filed a notice of appeal on May 4, 2012.

24                              JURISDICTION

25        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.

26   §§ 1334(b) and 157(b)(2)(B).     We have jurisdiction pursuant to 28

27   U.S.C. § 158(b).

28

                                       -3-
 1                                   ISSUE

 2        Whether the bankruptcy court erred when it overruled

 3   Trustee’s Claim Objection.

 4                             STANDARD OF REVIEW

 5        “An order overruling a claim objection can raise legal issues

 6   (such as the proper construction of statutes and rules) which we

 7   review de novo, as well as factual issues (such as whether the

 8   facts establish compliance with particular statutes or rules),

 9   which we review for clear error.”      Veal v. Am. Home Mortg. Serv.,

10   Inc. (In re Veal), 450 B.R. 897, 918 (9th Cir. BAP 2011).      “De

11   novo review is independent, with no deference given to the trial

12   court’s conclusion.”    Allen v. U.S. Bank, N.A. (In re Allen), 472

13   B.R. 559, 564 (9th Cir. BAP 2012).      Review under the clearly

14   erroneous standard is “significantly deferential,” with reversal

15   requiring “a definite and firm conviction that a mistake has been

16   committed.”   Id.   Put another way, “[a] court’s factual

17   determination is clearly erroneous if it is illogical,

18   implausible, or without support in the record.”      Retz v. Samson

19   (In re Retz), 606 F.3d 1189, 1196 (9th Cir. 2010) (citing United

20   States v. Hinkson, 585 F.3d 1247, 1261-62 & n.21 (9th Cir. 2009)

21   (en banc)).

22                                 DISCUSSION

23        Trustee asserts that the bankruptcy court should have

24   disallowed the unsecured portion of the Carsons’ Claim because

25   they did not comply with Arizona Revised Statute (“A.R.S.”)

26   § 33-814, which establishes procedures for obtaining deficiency

27   judgments after non-judicial foreclosure sales.      According to

28   Trustee, the automatic stay was not a bar to the Carsons pursuing

                                      -4-
 1   a deficiency judgment because the Order was sufficiently broad to

 2   allow the Carsons to file a state court action or an adversary

 3   proceeding.

 4        Trustee also argues that the discharge injunction did not

 5   prohibit the Carsons from pursuing a deficiency action because:

 6   1) Debtors would not have to be parties to any such action;

 7   2) proceedings can be filed post-discharge that name Debtors as

 8   nominal parties without violating the discharge injunction; and

 9   3) the Carsons could have filed a motion with the bankruptcy court

10   to obtain leave to proceed.

11        The Carsons counter that pursuant to §§ 101(5) and 506, the

12   bankruptcy court properly allowed their unsecured claim.

13   According to the Carsons, requiring creditors to file separate

14   actions to obtain deficiencies would be contrary to the law,

15   burdensome, and a waste of judicial resources because: 1) the

16   automatic stay prevented them from filing a deficiency action as

17   required by state law; 2) the Order did not allow them to file a

18   separate deficiency action; and 3) the discharge injunction

19   prohibited them from pursuing any action against Debtors.

20   A.   Arizona Revised Statute § 33-814

21        A.R.S. § 33-814 sets forth procedures pursuant to which a

22   creditor can obtain a deficiency judgment after a non-judicial

23   foreclosure sale.   A.R.S. § 33-814(A) provides, in relevant part,

24   that “within ninety days after the date of sale of trust property

25   under a trust deed pursuant to § 33-807, 2 an action may be

26
          2
27         A.R.S. § 33-807 outlines a trustee’s authority under a
     deed of trust. “[I]n Arizona, non-judicial foreclosure sales,
28                                                       (continued...)

                                     -5-
 1   maintained to recover a deficiency judgment against any person

 2   directly, indirectly or contingently liable on the contract for

 3   which the trust deed was given as security . . . .”     If no

 4   deficiency action is filed within the ninety-day period, “the

 5   proceeds of the sale, regardless of amount, shall be deemed to be

 6   in full satisfaction of the obligation and no right to recover a

 7   deficiency in any action shall exist.”     A.R.S. § 33-814(D).

 8   B.   Preemption

 9        Based on the facts of this case, we find that A.R.S. § 33-814

10   is preempted by the Bankruptcy Code.     The preemption doctrine,

11   which implements the Supremacy Clause of the Constitution, 3

12   “invalidate[s] state statutes to the extent they are inconsistent

13   with, or contrary to, the purposes or objectives of federal law.”

14   Sticka v. Applebaum (In re Applebaum), 422 B.R. 684, 688 (9th Cir.

15   BAP 2009) (citing Perez v. Campbell, 402 U.S. 637, 652 (1971)).

16   Congress may preempt state law “either expressly–through clear

17   statutory language–or implicitly.”     Whistler Invs., Inc. v.

18   Depository Trust & Clearing Corp., 539 F.3d 1159, 1164 (9th Cir.

19   2008).   Nothing in the Bankruptcy Code explicitly preempts

20

21

22
     (...continued)
23   or trustees’ sales,” are governed by A.R.S. §§ 33-801 to 33-
     821. Hogan v. Wash. Mut. Bank, N.A., 277 P.3d 781, 782-83
24   (Ariz. 2012). “When parties execute a deed of trust and the
     debtor thereafter defaults, A.R.S. § 33-807 empowers the
25   trustee to sell the real property securing the underlying note
     through a non-judicial sale.” Id.
26
          3
            The Supremacy Clause provides that the "Constitution, and
27   the Laws of the United States . . . shall be the supreme Law of
     the Land . . . any Thing in the Constitution or Laws of any State
28   to the Contrary notwithstanding." U.S. Const. art. VI, cl. 2.

                                     -6-
 1   statutes such as A.R.S. § 33-814.         Thus, the issue is whether

 2   A.R.S. § 33-814 is implicitly preempted.

 3        “There are two types of implied preemption: field preemption

 4   and conflict preemption.”     Id.   Field preemption is present when

 5   federal law “so thoroughly occupies a legislative field as to make

 6   reasonable the inference that Congress left no room for the States

 7   to supplement it.”     Cipollone v. Liggett Group, Inc., 505 U.S.

 8   504, 516 (1992).     Conflict preemption is present “to the extent

 9   that federal law actually conflicts with any state law.”         Whistler

10   Invs., 539 F.3d at 1164.

11        Field preemption is inapplicable in this case.         Section

12   502(b)(1) states that a court “shall allow” a claim unless the

13   claim is “unenforceable against the debtor and property of the

14   debtor, under any agreement or applicable law.”         By explicitly

15   incorporating other “applicable law,” § 502(b)(1) demonstrates

16   that Congress did not intend the Bankruptcy Code thoroughly to

17   occupy the field related to the claims allowance process.         Cf.

18   Hillsborough Cnty., Fla. v. Automated Med. Labs., Inc., 471 U.S.

19   707, 713 (1985) (stating that preemption is inferred if “Congress

20   ‘left no room’ for supplementary state regulation” (quoting Rice

21   v. Sante Fe Elevator Corp., 331 U.S. 218, 230 (1947))).

22        “Conflict preemption analysis examines the federal statute as

23   a whole to determine whether a party’s compliance with both

24   federal and state requirements is impossible or whether, in light

25   of the federal statute’s purpose and intended effects, state law

26   poses an obstacle to the accomplishment of Congress’s objectives.”

27   Whistler Invs., 539 F.3d at 1164.         As analyzed below, we find that

28   both types of conflict preemption are present in this case.

                                         -7-
 1   First, the automatic stay and the discharge injunction—two

 2   cornerstones of federal bankruptcy law—made it impossible for the

 3   Carsons to comply with A.R.S. § 33-814.     Second, A.R.S. § 33-814’s

 4   requirement that the Carsons file an action as a prerequisite to

 5   recovering a deficiency poses an obstacle to Congress’ objectives

 6   in creating the Bankruptcy Code’s comprehensive, centralized

 7   claims resolution process and its framework for determining the

 8   validity and secured status of claims.

 9
          1.    It was Impossible for the Carsons to Comply with Federal
10              and State Law

11              a.   Automatic Stay

12        When Debtors filed bankruptcy on May 12, 2010, an automatic

13   stay immediately went into effect that prohibited, among other

14   actions, “the commencement or continuation, including the issuance

15   or employment of process, of a judicial, administrative or other

16   action or proceeding against the debtor . . . to recover a claim

17   against the debtor that arose before the commencement of the

18   case.”    § 362(a)(1); Dunbar v. Contractors’ State License Bd. of

19   Cal. (In re Dunbar), 235 B.R. 465, 470 (9th Cir. BAP 1999) (“[The

20   automatic stay] is designed to immediately maintain the status quo

21   by precluding and nullifying postpetition actions, whether

22   judicial or nonjudicial, in nonbankruptcy forums against the

23   debtor and property of the estate.”).     “The scope of protections

24   embodied in the automatic stay is quite broad, and serves as one

25   of the most important protections in bankruptcy law.”     Eskanos &

26   Adler, P.C. v. Leetien, 309 F.3d 1210, 1214 (9th Cir. 2002).

27        It is undisputed that the automatic stay was in effect

28   between December 16, 2010 (the date of the foreclosure sale) and

                                      -8-
 1   January 11, 2011 (the date Debtors received a discharge).      The

 2   Carsons would have violated the automatic stay if they had filed a

 3   deficiency action during that period of time, unless the Order

 4   modified the stay not only to allow the Carsons to proceed with

 5   the foreclosure sale, but also to initiate a deficiency action.

 6        The Order was silent regarding whether the Carsons could

 7   pursue a deficiency judgment.     The Order could be interpreted as

 8   authorizing the Carsons to file a deficiency action because it

 9   provided that they could take “any and all steps pursuant to their

10   loan and security agreements” to realize and recover on the

11   indebtedness owed by Debtors.     The Order could also be interpreted

12   as only authorizing the Carsons to pursue recovery by way of a

13   foreclosure sale, because it provided that the Carsons could

14   schedule and conduct “a non-judicial foreclosure sale of the real

15   property under the deed of trust,” but did not mention filing a

16   deficiency action.

17        Because the Order is subject to more than one reasonable

18   interpretation, it is ambiguous.     See Kester v. Campbell, 652 F.2d

19   13, 16 (9th Cir. 1981) (“The language of the [executive] order is

20   sufficiently ambiguous to permit several reasonable

21   interpretations . . . .”); Univ. Realty & Dev. Co. v. Omid-Gaf,

22   Inc., 508 P.2d 747, 750 (Ariz. Ct. App. 1973) (“Language is

23   ambiguous when it can reasonably be construed in more than one

24   sense . . . .”).     Therefore, we can refer to the “entire record

25   for determining what was decided.”      Colonial Auto Ctr. v. Tomlin

26   (In re Tomlin), 105 F.3d 933, 936 (4th Cir. 1997) (internal

27   quotation marks omitted); see also In re Wachovia Preferred Sec. &

28   Bond/Notes Litig., No. 09 Civ. 6351 RJS, 2012 WL 2589230, at *1

                                       -9-
 1   (S.D.N.Y. Jan. 3, 2012) (slip opinion) (incorporating by reference

 2   definitions in a stipulation into an order); Solutia, Inc. v.

 3   McWane, Inc., 726 F. Supp. 2d 1316, 1329 (N.D. Ala. 2010)

 4   (considering a stipulation, briefs, and a declaration to interpret

 5   an ambiguous order).

 6        As the Carsons argue persuasively, the Stipulation, on which

 7   the Order is based, states that the Carsons would “seek

 8   foreclosure and liquidation of the . . . Real Property,” while the

 9   Arizona statute at issue provides that deficiency actions are

10   against persons.   A.R.S. § 33-814(A) (“[A]n action may be

11   maintained to recover a deficiency judgment against any person

12   directly, indirectly or contingently liable on the contract for

13   which the trust deed was given as security . . . .”).

14        Trustee’s assertion that any ambiguity must be construed

15   against the Carsons is meritless for two reasons.     First, Trustee

16   was represented by counsel and the Order was based on the

17   Stipulation, which Trustee signed.     Thus, the general rule that

18   ambiguities are interpreted against the drafter is limited in this

19   case “by the degree of sophistication of the contracting parties

20   [and] the degree to which the contract was negotiated.”      New

21   Jersey v. Merrill Lynch & Co., Inc., 640 F.3d 545, 550 (3d Cir.

22   2011); see also Terra Int’l., Inc. v. Miss. Chem. Corp., 119 F.3d

23   688, 692 (8th Cir. 1997) (declining to construe an ambiguous

24   clause in a contract against the drafter “due to the relatively

25   equal bargaining strengths” of the parties and the fact that the

26   non-drafting party was represented by “sophisticated legal

27   counsel” during the formation of the agreement).

28

                                     -10-
 1        Second, “the terms of an order lifting the automatic stay are

 2   strictly construed.”   Griffin v. Wardrobe (In re Wardrobe), 559

 3   F.3d 932, 935 (9th Cir. 2009) (internal quotation marks omitted);

 4   InterBusiness Bank, N.A. v. First Nat’l Bank of Mifflintown, 328

 5   F. Supp. 2d 522, 528-29 (M.D. Pa. 2004) (“It is axiomatic that,

 6   due to the presumptively expansive scope of the automatic stay,

 7   relief from the stay must be narrowly construed.”); Bank of Am.

 8   Nat’l Trust & Sav. Ass’n v. Va. Hill Partners I (In re Va. Hill

 9   Partners I), 110 B.R. 84, 87 (Bankr. N.D. Ga. 1989) (“[U]nless the

10   stay relief order clearly provides otherwise, the determination

11   and allowance of claims, deficiency or otherwise, against the

12   debtor or its estate in the pending bankruptcy case remain within

13   the exclusive jurisdiction of the bankruptcy court.”).

14        Trustee’s reliance on In re Tyler, 166 B.R. 21 (Bankr.

15   W.D.N.Y 1994) and InterBusiness, 328 F. Supp. 2d 522, to support

16   his position that the Carsons were required to file a state court

17   action to obtain a deficiency judgment is unavailing.    Both Tyler

18   and InterBusiness involved judicial foreclosure statutes that

19   required creditors to file state court actions before foreclosing

20   on real property.   Any deficiency actions in those cases would

21   have necessarily been part of the state court foreclosure

22   proceeding.   InterBusiness, 328 F. Supp. 2d at 527 (“Petitions to

23   fix value are filed as part of the foreclosure action itself, as a

24   simple, supplemental proceeding in the existing case.”); In re

25   Tyler, 166 B.R. at 25 (stating that a party seeking a deficiency

26   judgment in New York must file a motion within the mortgage

27   foreclosure proceeding).

28

                                     -11-
 1        The courts in Tyler and InterBusiness considered the

 2   interrelationship between the foreclosure and deficiency actions

 3   to be an important factor in interpreting the relief from stay

 4   orders.    InterBusiness, 328 F. Supp. 2d at 527; In re Tyler, 166

 5   B.R. at 25 (stating that when it grants relief from stay to allow

 6   a party to proceed with foreclosure proceedings, “it is the

 7   Court’s expectation that it has modified or terminated the stay

 8   for the completion of all related state court mortgage foreclosure

 9   proceedings, including the establishment of any deficiency

10   judgment”).    In contrast, the non-judicial foreclosure procedure

11   authorized by A.R.S. § 33-814 did not require the Carsons to file

12   a state court action before foreclosing on the Property.     If the

13   Carsons had pursued a deficiency judgment, they would have been

14   required to initiate a separate state court lawsuit.

15        Trustee contends that even if the Order did not authorize the

16   Carsons to file a deficiency action in state court, they could

17   have filed an adversary proceeding to establish a deficiency.

18   Trustee’s argument is baseless.     Neither the Bankruptcy Code, the

19   Federal Rules of Bankruptcy Procedure, nor any other relevant

20   authority requires a creditor to file an adversary proceeding to

21   have an allowed claim.

22        A proof of claim “is deemed allowed” unless a party in

23   interest objects.    § 502(a).   Upon objection, the dispute is

24   considered a “contested matter,” and “relief shall be requested by

25   motion.”    Rule 9014(a); Garner v. Shier (In re Garner), 246 B.R.

26   617, 623 (9th Cir. BAP 2000) (“What matters about the procedural

27   status of an objection to claim as a ‘contested matter’ is that

28   Rule 9014 classifies the objection as a ‘motion’ for purposes of

                                       -12-
 1   Federal Rule of Civil Procedure 43(e).”).         Further, Rule 7001,

 2   which defines matters that are adversary proceedings, does not

 3   mention claims allowance proceedings.         Thus, contrary to Trustee’s

 4   assertion, the Carsons did not need to file an adversary

 5   proceeding to have an allowed unsecured claim.

 6                b.      Discharge Injunction

 7        Debtors received a discharge less than one month after the

 8   Carsons foreclosed on the Property.         Thus, the discharge

 9   injunction was in effect during most of the ninety-day period when

10   Trustee asserts the Carsons should have complied with A.R.S.

11   § 33-814.

12        Section 524(a)(2) provides that a discharge “operates as an

13   injunction against the commencement or continuation of an action,

14   the employment of process, or an act, to collect, recover or

15   offset any such debt as a personal liability of the debtor.”            “The

16   § 524(a)(2) discharge injunction casts a wide shadow, with a large

17   penumbra.”        Ruvacalba v. Munoz (In re Munoz), 287 B.R. 546, 553

18   (9th Cir. BAP 2002).        It applies “permanently with respect to

19   every debt that is discharged,”        Garske v. Arcadia Fin., Ltd. (In

20   re Garske), 287 B.R. 537, 542 (9th Cir. BAP 2002), and “enjoins

21   any creditor's effort to collect a discharged debt as a personal

22   liability of the debtor.”        Heilman v. Heilman (In re Heilman), 430

23   B.R. 213, 218 (9th Cir. BAP 2010).

24        Trustee argues that the discharge injunction did not prevent

25   the Carsons from filing an action pursuant to A.R.S. § 33-814

26   because Debtors would not have to be parties to any deficiency

27   action.     Trustee cites In re Sun Ok Kim, 89 B.R. 116 (D. Haw.

28

                                          -13-
 1   1987) for the proposition that the bankruptcy estate, rather than

 2   Debtors, would have been the real party in interest.

 3        In Sun Ok Kim the court was confronted with deciding which

 4   parties have standing to object to proofs of claims.    Id. at 118.

 5   The court stated that usually only the trustee has such standing,

 6   but if the “trustee is formally notified and refuses to make an

 7   objection, either the debtor or the creditor may then ask the

 8   bankruptcy court to disallow the claim.”   Id.   The fact that a

 9   trustee is normally the only party with standing to object to

10   claims does not mean that the trustee is the only party who can be

11   named as a defendant in a state court action or an adversary

12   proceeding involving a claim.   Trustee conflates standing to

13   object to a claim with real party in interest with regard to the

14   determination of claims.   The former concept is, by its terms,

15   narrower than Trustee contends and does not preclude a debtor’s

16   involvement in the “determination” of claims.

17        Additionally, Trustee’s argument is undercut by the express

18   language of A.R.S. § 33-814, which states that a deficiency action

19   may be maintained “against any person” liable on the contract.       It

20   is undisputed that Debtors were the parties liable on the contract

21   and that their liability was discharged on January 11, 2011.       Any

22   action filed by the Carsons after that date would have violated

23   the discharge injunction because it would have been against

24   Debtors personally on account of a discharged debt.    In re Garske,

25   287 B.R. at 542 (“[A]n unsecured creditor has no right to any of

26   the debtor’s property post-discharge to satisfy a discharged

27   debt.”).

28

                                     -14-
 1        Alternatively, Trustee cites Ruvacalba v. Munoz (In re

 2   Munoz), 287 B.R. 546 (9th Cir. BAP 2002) for the proposition that

 3   Debtors could have been named to a post-discharge lawsuit as

 4   “nominal parties” without violating the discharge injunction.           In

 5   Munoz, the court was faced with determining whether the discharge

 6   injunction would be violated if a party sought to establish

 7   liability against a debtor solely for the purpose of pursuing

 8   payment from a third party.      Id. at 549.    The court in Munoz

 9   decided it would not, and stated that “[w]here the purpose of the

10   action is to collect from a collateral source, such as insurance

11   or the UEF [Uninsured Employers Fund], and the plaintiff makes it

12   clear that it is not naming the debtor as a party for anything

13   other than formal reasons, no bankruptcy court order is

14   necessary.”   Id. at 550.     Here, there is no “collateral source”

15   from which the Carsons could collect.        If the Carsons had named

16   Debtors in a post-discharge deficiency action, they would have

17   been seeking to hold Debtors personally liable and therefore would

18   not have named Debtors for “formal reasons” only.

19        Trustee also contends that the Carsons could have “done

20   exactly what the creditor in Munoz did” and “filed a motion with

21   the bankruptcy court to obtain leave to proceed.”        The court in

22   Munoz distinguished between “construing” and “modifying” the

23   discharge injunction.   Id. at 553.       The former is permissible

24   because a court would merely be defining the parameters of the

25   discharge injunction.   Id.    The latter, however, is not because

26   the “discharge injunction is set in statutory concrete,” which

27   “constitutes a clear and valid legislative command that leaves no

28   discretion in the court to modify the discharge injunction.”          Id.

                                        -15-
 1   at 550, 553.   In Munoz, the court construed the discharge

 2   injunction and determined that a creditor seeking to collect from

 3   a collateral source would not violate it.   Id. at 555.   In

 4   contrast, if the Carsons had filed a motion for authorization to

 5   proceed with a deficiency action, they would have been

 6   impermissibly seeking to modify the discharge injunction to

 7   collect debt that was Debtors’ personal liability.

 8        In this case, compliance with the Bankruptcy Code and A.R.S.

 9   § 33-814 was impossible because the latter required the Carsons to

10   file an action within ninety days of the foreclosure sale, but the

11   automatic stay and the discharge injunction prevented them from

12   doing so.   See In re Perry, 425 B.R. 323, 397 (Bankr. S.D. Tex.

13   2010) (excusing compliance with state law deficiency action

14   statute because compliance would violate the automatic stay);

15   Integra Bank v. Sixta (In re Smith), 192 B.R. 397, 401 (Bankr.

16   W.D. Pa. 1996) (finding creditor was not required to comply with

17   state law, which required judgments to be satisfied within six

18   months, because there was never an uninterrupted six-month period

19   of time due to the debtor’s many bankruptcy filings).

20        Stated differently, the automatic stay and the discharge

21   injunction acted as a legal bar to the Carsons doing what A.R.S.

22   § 33-814 required them to do.   Thus, the Bankruptcy Code and

23   A.R.S. § 33-814 are in conflict and the state law must yield.

24   Perez, 402 U.S. at 652 (stating that a state law that is in

25   conflict with federal law is invalid); B-Real, LLC v. Chaussee (In

26   re Chaussee), 399 B.R. 225, 230 (9th Cir. BAP 2008) (“[S]tate laws

27   interfering with, or contrary to, federal law are preempted.”).

28

                                     -16-
 1   As a result, the Carsons were not required to comply with A.R.S.

 2   § 33-814.

 3
          2.     Compliance with A.R.S. § 33-814 Was an Obstacle to
 4               Accomplishing the Bankruptcy Code’s Objectives

 5        Requiring the Carsons to comply with A.R.S. § 33-814 would be

 6   contrary to the Bankruptcy Code’s policy of providing a

 7   comprehensive, centralized forum for adjudication of claims.      It

 8   would also interfere with the Bankruptcy Code’s framework for

 9   determining the secured and unsecured status of claims.

10
                 a.   The Bankruptcy Code Provides a Comprehensive,
11                    Centralized Process for Adjudication of Claims

12        The “centralized resolution of bankruptcy claims” and “the

13   avoidance of piecemeal litigation” are fundamental purposes of the

14   Bankruptcy Code.    Erie Power Techs., Inc. v. Ref-Chem, L.P. (In re

15   Erie Power Techs., Inc.), 315 B.R. 41, 45 (Bankr. W.D. Pa. 2004);

16   see also In re Tammarine, 405 B.R. 465, 467 (Bankr. N.D. Ohio

17   2009) (“The determination of claims against the bankruptcy estate

18   is a central function of the bankruptcy courts.”); In re Bargdill,

19   238 B.R. 711, 716 (Bankr. N.D. Ohio 1999) (noting that the claims

20   allowance process facilitates the orderly distribution of the

21   bankruptcy estate, which is one of the fundamental tenets of

22   bankruptcy law).

23        “[T]he complex, detailed, and comprehensive provisions of the

24   lengthy Bankruptcy Code, 11 U.S.C. §§ 101 et. seq., demonstrates

25   Congress’s intent to create a whole system under federal control

26   which is designed to bring together and adjust all of the rights

27   and duties” of creditors and debtors.    MSR Exploration, Ltd. v.

28   Meridian Oil, Inc., 74 F.3d 910, 914 (9th Cir. 1996).     A

                                      -17-
 1   bankruptcy court has “great authority over the allowance and

 2   disallowance of claims.”   Id. at 914 n.2.

 3        The Bankruptcy Code defines a “claim” broadly as a “right to

 4   payment, whether or not such right is reduced to judgment,

 5   liquidated, unliquidated, fixed, contingent, matured, unmatured,

 6   disputed, undisputed, legal, equitable, secured or unsecured.”

 7   § 101(5).   The breadth of this definition “is designed to ensure

 8   that all legal obligations of the debtor, no matter how remote or

 9   contingent, will be able to be dealt with in the bankruptcy case.”

10   Siegel v. Fed. Home Loan Mortg. Corp., 143 F.3d 525, 532 (9th Cir.

11   1998) (emphasis and internal quotation marks omitted).

12        A proof of claim that is executed and filed in accordance

13   with the Rules “shall constitute prima facie evidence of the

14   validity and amount of the claim.”     Rule 3001(f); see also Garner

15   v. Shier (In re Garner), 246 B.R. 617, 620 (9th Cir. BAP 2000)

16   (“There is an evidentiary presumption that a correctly prepared

17   proof of claim is valid as to liability and amount.”).     A claim

18   “is deemed allowed, unless a party in interest . . . objects.”

19   § 502(a).   Upon objection, a bankruptcy court

20        shall determine the amount of such claim . . . as of the
          date of the filing of the petition, and shall allow such
21        claim in such amount except to the extent that— (1) such
          claim is unenforceable against the debtor and property
22        of the debtor, under any agreement or applicable law for
          a reason other than because such claim is contingent or
23        unmatured.

24   § 502(b)(1).

25        A.R.S. § 33-814(A) provides that a judgment debtor may file

26   an “application for determination of the fair market value of the

27   real property.”   The court then determines the amount of the

28   deficiency owed based on the sale price or what the court

                                     -18-
 1   determines the fair market value to be, whichever is greater.

 2   A.R.S. § 33-814(A).    This procedure protects judgment debtors from

 3   unfairly high deficiency judgments based on trustee sales that

 4   garner inadequate amounts.    MidFirst Bank v. Chase, 284 P.3d 877,

 5   879 (Ariz. Ct. App. 2012) (“[The] primary purpose of [A.R.S. § 33-

 6   814(A)] is to prohibit a creditor from seeking a windfall by

 7   buying property at a trustee’s sale for less than fair market

 8   value.”).    This same valuation evidence can and should be

 9   submitted to the bankruptcy court as part of the claims objection

10   process.    McCartney v. Integra Nat’l Bank N., 106 F.3d 506, 512

11   (3d Cir. 1997) (finding that a valuation hearing in connection

12   with a proof of claim was “precisely the same opportunity to be

13   heard” that was available in a state court deficiency action and

14   that “debtors should not be burdened by state court litigation

15   when deficiency judgment actions impacting upon the debtor’s

16   estate can be settled in the bankruptcy forum”).

17        Additionally, filing a deficiency action in state court would

18   have been unnecessary and inefficient because it would have

19   required another court’s involvement in the adjudication of a core

20   bankruptcy matter.    28 U.S.C. § 157(b)(2)(B) (“[A]llowance or

21   disallowance of claims against the estate” is a “core

22   proceeding.”); Durkin v. Benedor Corp., (In re G.I. Indus., Inc.),

23   204 F.3d 1276, 1279-80 (9th Cir. 2000) (“The filing of a proof of

24   claim is the prototypical situation involving the ‘allowance or

25   disallowance of claims against the estate,’ a core proceeding

26   under 28 U.S.C. § 157(b)(2).”).

27

28

                                       -19-
 1              b.   The Bankruptcy Code Has a Framework for Determining
                     the Secured and Unsecured Status of Claims
 2

 3        Requiring the Carsons to file a deficiency action pursuant to

 4   A.R.S. § 33-814 would also be contrary to the Bankruptcy Code’s

 5   framework for determining the secured and unsecured status of

 6   claims.   Section 506 provides that

 7        an allowed claim of a creditor secured by a lien on
          property in which the estate has an interest . . . is a
 8        secured claim to the extent of the value of such
          creditor’s interest in the estate’s interest in such
 9        property . . . and is an unsecured claim to the extent
          that the value of such creditor’s interest . . . is less
10        than the amount of such allowed claim.

11   § 506(a)(1).

12        The Supreme Court has noted that pursuant to § 506(a),

13   creditors can divide their claims into “secured and unsecured

14   portions, with the secured portion of the claim limited to the

15   value of the collateral.”   Assocs. Commercial Corp. v. Rash, 520

16   U.S. 953, 961 (1997); see also Enewally v. Wash. Mut. Bank (In re

17   Enewally), 368 F.3d 1165, 1168-69 (9th Cir. 2004) (“Under the

18   Bankruptcy Code, a secured loan may be separated into two distinct

19   claims: a secured claim for an amount equal to the value of the

20   security, and an unsecured claim for the difference, if any,

21   between the amount of the loan and the value of the security.”).

22        Although the unsecured portion of the Carsons’ Claim was

23   unliquidated and contingent before the foreclosure sale, that

24   portion of their Claim was still valid.     See § 101(5)(A) (defining

25   a “claim” as a “right to payment, whether or not such right” is,

26   among other things, unliquidated or contingent).     After the

27   foreclosure sale, the character of the Carsons’ unsecured claim

28   changed to liquidated and non-contingent.     This change did not

                                     -20-
 1   affect the unsecured claim’s validity.     See In re Sneijder, 407

 2   B.R. 46, 48 (Bankr. S.D.N.Y. 2009) (“The amount of [an] unsecured

 3   deficiency claim ordinarily is fixed when the collateral is sold

 4   at a foreclosure sale . . . .”).     Nothing in § 101(5) or any other

 5   section of the Bankruptcy Code specifies or even implies that when

 6   the character of a claim changes—from unliquidated and contingent

 7   to liquidated and non-contingent—it affects the claim’s validity.

 8   To the extent that A.R.S. § 33-814 mandates a different

 9   conclusion, it is at odds with the Bankruptcy Code and is,

10   therefore, preempted.   Elliott v. Bumb, 356 F.2d 749, 755 (9th

11   Cir. 1966) (finding that a state law that would “thwart or

12   obstruct the scheme of federal bankruptcy” was preempted by the

13   bankruptcy law).

14        Contrary to Trustee’s position, “[t]here is no requirement

15   that the creditor first obtain a deficiency judgment in the non-

16   bankruptcy forum as a prerequisite for bifurcating a claim into a

17   secured and an unsecured part.”    In re Costello, 184 B.R. 166, 171

18   (Bankr. M.D. Fla. 1995).   As partially secured, partially

19   unsecured creditors, the Carsons timely “submit[ted] to the court

20   . . . a proof of claim enumerating” the unsecured amount of their

21   Claim.   In re Bargdill, 238 B.R. 711, 716 (Bankr. N.D. Ohio 1999);

22   see also In re VanDuyn, 374 B.R. 896, 897-98 (Bankr. M.D. Fla.

23   2007) (noting that creditor filed bifurcated proof of claim, and

24   then determining whether the deficiency claim should be allowed

25   under substantive bankruptcy law).

26        Trustee contends that the Carsons should have amended their

27   Claim after the foreclosure sale, because “[c]reditors have a duty

28   to amend their claims when they are aware of facts which render

                                       -21-
 1   their previously filed claims inaccurate.”     The Carsons could have

 2   amended their Claim to reflect that the secured portion was

 3   satisfied, but that portion of the Claim is not in dispute.      There

 4   was also no reason for the Carsons to amend the unsecured portion

 5   of their Claim because they do not assert that they are entitled

 6   to more than the unsecured amount listed in their Claim.      See In

 7   re Five Boroughs Mortg. Co., Inc., 176 B.R. 708, 713 (Bankr.

 8   E.D.N.Y. 1995) (noting that after a foreclosure sale, a secured

 9   creditor may return to the bankruptcy court to pursue that portion

10   of its debt that was not satisfied by foreclosure of its

11   collateral “by filing a claim against the bankruptcy estate.      It

12   may be the lender’s original proof of claim.     Or the lender may

13   simply amend the proof of claim already filed to reflect the

14   debt’s correct amount, which is the debt less the foreclosure sale

15   proceeds received by the lender.”).

16                                CONCLUSION

17        Trustee’s Claim Objection was based solely on the Carsons’

18   failure to obtain a deficiency judgment pursuant to A.R.S.

19   § 33-814.   In this case, state law is preempted by federal law

20   because the automatic stay and the discharge injunction made it

21   impossible for the Carsons to comply with A.R.S. § 33-814.      A.R.S.

22   § 33-814 is also preempted because requiring the Carsons to pursue

23   a separate deficiency action, either in state court or in an

24   adversary proceeding, would have been contrary to the Bankruptcy

25   Code’s orderly, efficient, and comprehensive claims administration

26   process and its framework for determining the validity and secured

27   status of claims.   Therefore, the bankruptcy court’s order

28   overruling Trustee’s Claim Objection is AFFIRMED.

                                     -22-
