Mr. and Mrs. Masingale filed for bankruptcy and said they were claiming a statutory exemption for 100% of the value of their house. That's too much -- the statute only lets you keep $45,950. But no one objected to their petition, and the Supreme Court has expressly held that if a debtor uses the exact words that Mr. and Mrs. Masingale used on their form, they get to keep the excess -- even the amount about the statutory cap. The Masingale's house had appreciated a ton by the time the bankruptcy petition was finally resolved, so the Bankruptcy Appellate Panel relied on the Supreme Court precedent to hold that they were entitled to retain the full $200,000+ above-statute homestead exemption since no one objected in time.
The Ninth Circuit reverses. It distinguishes the prior Supreme Court case on the grounds that, here, there were other statements in the Masingales' petition that suggested that they were not, in fact, claiming an amount in excess of the statutory limit. So they're limited to the usual amount.
Motivated in part, I'm confident, to disincentivize bankruptcy petitioners from attempting to pull a similar trick in the future.
Seems fine to me. They've changed the relevant bankruptcy form in the interim to reduce any similar potential manipulation in the future. But I don't feel too bad for the Masingales. They got a discharge. There's no need to give 'em the extra couple of hundred grand. That can go to their creditors, and if there's anything left, great, they get that anyway.
I also noticed one last thing about the opinion that made me smile.
In Property class, professors often talk (as you may know) about "Blackacre" and -- sometimes (especially in the modern era) -- "Greenacre". Mr. and Mrs. Masingale's home is in Washington state. In a tiny little community on the eastern border of the state of around 5,000 residents called Greenacres. So the Ninth Circuit repeatedly calls their home the "Greenacres property".
And in this fashion, a law school hypothetical comes to life.
