Eloy T Martinez and Rosina T Martinez

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re: 	ELOY MARTINEZ and 	No. 7-10-11101 JA
ROSINA T. MARTINEZ,
Debtors.
MEMORANDUM OPINION ON CROSS-MOTIONS FOR SUMMARY JUDGMENT
The Debtors1 unsuccessfully sought to avoid Mr. Gould’s judicial lien while the Debtors’
case was pending under Chapter 13. See Memorandum Opinion and Order – Docket Nos. 101
and 102. Now, more than four years after the Debtors filed their voluntary petition, and after
converting the case to Chapter 7, the Debtors again seek to avoid Walter Gould’s judicial lien
under 11 U.S.C. § 522(f) as impairing Rosina Martinez’s homestead exemption.
On cross-motions for summary judgment, 2 the Court is asked to determine whether the
Debtors’ conversion of her bankruptcy case from Chapter 13 to Chapter 7 requires the re-
valuation of their residential real property for purposes of applying the lien avoidance provisions
of 11 U.S.C. § 522(f). The Debtor contends that the property has significantly depreciated in
value since the filing of the bankruptcy case in 2010, that the plain language of 11 U.S.C. §
348(f)(1)(B) negates all valuations made while the case was pending under Chapter 13 upon
conversion of the case to Chapter 7, and that the property must be re-valued as of the conversion
date to determine whether the creditor’s lien impairs the Debtor’s homestead exemption.
Creditor Walter Gould asserts that the Debtors are bound by the stipulation of value that the
1 Use of the term “Debtors” in this Memorandum Opinion refers to both Eloy Martinez and Rosina Martinez. Use of
the term “Debtor” in this Memorandum Opinion refers to Rosina Martinez.
2See Debtor’s Motion for Summary Judgment Allowing her to Avoid Judgment Lien (“Debtor’s Motion for
Summary Judgment”) (Docket No. 198) and Creditor Walter Gould’s Motion and Memorandum in Support of
Motion for Summary Judgment Denying Debtors’ Motion to Avoid Liens Pursuant to § 522(f) (“Gould’s Motion for
Summary Judgment”) (Docket No. 199). The Debtor filed a response to Gould’s Summary Judgment, and Walter
Gould filed a response to the Debtor’s Motion for Summary Judgment. See Docket Nos. 202 and 203. Walter
Gould also filed a reply. See Docket No. 207.
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parties entered into to resolve the Debtors’ objection to Mr. Gould’s claim while the case was
proceeding under Chapter 13, and that 11 U.S.C. § 348(f)(1)(B) is in applicable.
After considering the relevant Bankruptcy Code sections and the applicable case law in
light of the parties’ arguments, the Court will deny both motions for summary judgment. 	The
language of 11 U.S.C. § 348(f)(1)(B) plainly provides that “valuations of property . . . in the
chapter 13 case” do not apply “in a case converted to a case under chapter 7.” 11 U.S.C. §
348(f)(1)(B). Even though the parties stipulated to the property’s value “for all purposes in the
bankruptcy case,”3 the Court finds that the parties’ stipulation is not specific enough to except it
from the application of 11 U.S.C. § 348(f)(1)(B), absent extrinsic evidence of the parties’ intent.
As for the Debtor’s request for summary judgment, the Debtor has failed to establish the value of
the property as of the petition date as required for lien avoidance under 11 U.S.C. § 522(f).
SUMMARY JUDGMENT STANDARDS
Summary judgment will be granted when the movant demonstrates that there is no
genuine dispute as to a material fact and that the movant is entitled to judgment as a matter of
law. See Fed.R.Civ.P. 56(a), made applicable to adversary proceedings by Fed.R.Bankr.P. 7056
(“The court shall grant summary judgment if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.”). “[A] party
seeking summary judgment always bears the initial responsibility of informing the ... court of the
basis for its motion, and ... [must] demonstrate the absence of a genuine issue of material fact.”
Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In
considering a motion for summary judgment, the Court must “examine the factual record and
reasonable inferences therefrom in the light most favorable to the party opposing summary
3 See Stipulated Order Resolving Debtors’ Objection to the Claim of Creditor Gould, Gould’s Motion for Summary
Judgment, Debtors’ Motion for Additional time Regarding Summary Judgment, and Value of Espanola Property
(“Stipulated Order”) – Docket No. 91.
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judgment.” Wolf v. Prudential Ins. Co. of America, 50 F.3d 793, 796 (10th Cir. 1995) (quoting
Applied Genetics Int’l, Inc. v. First Affiliated Sec., Inc., 912 F2d 1238, 1241 (10th Cir. 1990)).
“[A] party opposing a properly supported motion for summary judgment may not rest on mere
allegations or denials of his pleading, but must set forth specific facts showing that there is a
genuine issue for trial” through affidavits or other supporting evidence. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
Despite the filing of the cross-motions for summary judgment, which suggests that the
material facts are not in genuine dispute, the Court must nevertheless determine whether a
genuine issue of material fact prevents the entry of summary judgment. See Renfro v. City of
Emporia, 948 F.2d 1529, 1534 (10 th Cir. 1991)(stating that “the filing of cross-motions for
summary judgment does not necessarily concede the absence of a material issue of fact[,]” but
that “cross-motions for summary judgment do authorize the court to assume that there is no
evidence which needs to be considered other than that which has been filed by the
parties.”)(additional internal quotation marks and citations omitted); Harris v. Beneficial
Oklahoma, Inc., (In re Harris), 209 B.R. 990, 998 (10th Cir. BAP 1997)(a party’s “cross-motion
[for summary judgment] must independently satisfy the requirements of Rule 56(c).”)(citing
Renfo, 948 F.2d at 1534 and SEC v. American Commodity Exch., Inc., 546 F.2d 1361, 1365 (10th
Cir. 1976)); In re Rodriguez, 456 B.R. 532, 536 (Bankr. D.N.M. 2010)(“Cross motions for
summary judgment raise an inference that summary judgment may be appropriate[,]” but the
court must nevertheless satisfy itself that the movant has satisfied the requirements of Rule 56
before granting summary judgment)(citations omitted).
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FACTS NOT IN GENUINE DISPUTE
1. 	The Debtors filed a voluntary petition under Chapter 13 of the Bankruptcy Code
on March 8, 2010.
2. 	The Debtors live at 501 Roman Drive, Espanola, New Mexico, which includes a
residence and an adjacent lot used as the backyard for the residence (the “Property”).
3. 	The Property is Rosina Martinez’s sole and separate property.
4. 	The Debtors scheduled the Property in their original Schedule A with a value of
$90,000. 	See Docket No. 15.
5. 	The Debtors elected to take New Mexico exemptions, and claimed a $60,000
homestead exemption in the Property on Schedule C filed on April 2, 2010. See Docket No. 15.
6. 	Mr. Gould holds a judicial lien against the Property.
7. 	There are no contractual liens against the Property.
8. 	The Property was appraised as of September 30, 2010 with a value of $168,000,
of which $130,000 is attributable to the residence, and $38,000 is attributable to the adjacent lot.
9. 	On April 14, 2011, the Debtors and Mr. Gould approved a Stipulated Order
reflecting stipulations of the parties, including a stipulated value for the Property. See Docket
No. 91.
10. 	The Stipulated Order includes the following stipulations:
a) 	Gould shall have an allowed claim of $85,000.00, secured by the Property,
and that claim shall bear interest at the rate of 8.75% from the date of entry
of the Stipulated Order. Gould’s allowed claim is a secured claim to the
extent of the value of the Property remaining after any allowed homestead
exemption of the Debtors. See Stipulated Order, ¶ 4.
b) 	[T]he value of the residence at 501 Roman Drive Espanola, NM is
$130,000.00. Debtors, Gould and the [Chapter 13] Trustee agree that the
lot behind the residence owned by Debtor Rosina Martinez has a value of
$38,000.00. Both the residence and the lot behind the residence are
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referred to as the Espanola Property, and together have a value of
$168,000.00. This value is the agreed value for all purposes in this
bankruptcy case and is binding on the Debtors, Gould, and the [Chapter
13] Trustee. See Stipulated Order, ¶ 6. See also, Stipulated Order, ¶ F
(“the Espanola Property has described herein has a value of $168,000 for
all purposes in this bankruptcy case.”).
c) 	Rosina Martinez is entitled to a homestead exemption in the Property in
the amount of $60,000. See Stipulated Order, ¶ 2.
11. 	On January 24, 2012, the Court entered a Memorandum Opinion on: 1) Mr.
Gould’s objection to the Debtors’ claim of exemptions; 2) the Chapter 13 Trustee’s objection to
the Debtors amended claim of exemptions; and 3) the Debtors’ motion to avoid judicial liens.
See Docket No. 101. The Court determined, based on the parties’ stipulations of fact, that Eloy
Martinez is not entitled to claim a homestead exemption in the Property; that Mr. Gould’s
judicial lien had a value of $85,000.00 as of April 14, 2011, plus interest at the rate of 8.75%;
that the Property was worth $168,000.00; and that Mr. Gould’s judicial lien did not impair the
Debtors’ homestead exemption. Id.
12. 	Consistent with its Memorandum Opinion, the Court entered an order denying the
Debtors’ motion to avoid Mr. Gould’s judicial lien. See Docket No. 102.
13. 	The Debtors confirmed their Chapter 13 plan on August 13, 2012. See Order
Confirming Chapter 13 Plan (“Confirmation Order” – Docket No. 129).
14. 	The Confirmation Order included the following findings: 1) Walter Gould has an
allowed $85,000.00 claim against the Debtors, plus interest at 8.75% from April 14, 2011 until
the claim is paid in full, secured by the Property; 2) the Property has a value of $168,000.00; and
3) if the Debtors’ Chapter 13 case is dismissed or converted without completion of the Plan, Mr.
Gould’s lien will be retained to the extent recognized under applicable nonbankruptcy law. See
Confirmation Order, ¶¶ 4, 5, and 6.
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15. 	The Debtors converted their case from one pending under Chapter 13 to a case
under Chapter 7 on June 25, 2014. See Motion to Convert Chapter 13 Case to Chapter 7 (Docket
No. 173) and Notice of Chapter 7 Bankruptcy Case, Meeting of Creditors & Deadlines (Docket
No. 177).
16. 	Following the conversion of the Debtors’ bankruptcy case to Chapter 7, the
Debtor filed an amended motion to avoid lien and a second amended motion to avoid lien
seeking to avoid Mr. Gould’s lien as impairing the Debtor’s homestead exemption. See Docket
Nos. 182 and 193.
17. 	The Debtors filed an Amended Schedule A on August 5, 2014. The Debtors
scheduled the Property listed on their Amended Schedule A with a value of $75,000.00.
18. 	The Debtors had the Property appraised as of December 20, 2014 with a value of
$75,000.00.
DISCUSSION
The cross motions for summary judgment raise three issues. First, what is the relevant
date for valuing property for purposes of determining whether a judicial lien against the property
should be avoided under 11 U.S.C. § 522(f)? Second, does 11 U.S.C. § 348(f)(1)(B), which
provides that valuations of property in a Chapter 13 case do not apply in a case converted from
Chapter 13 to Chapter 7, negate the type of valuation contained in the Stipulated Order? Third,
if 11 U.S.C. § 348(f)(1)(B) applies to values made by stipulated order, did the Debtors waive that
provision?
1. 	The relevant valuation date is the date the Debtors commenced their case under
Chapter 13
Pursuant to 11 U.S.C. § 522(f), a debtor may avoid a judicial lien to the extent it impairs
an exemption to which the debtor is entitled. It provides:
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[A] lien shall be considered to impair an exemption to the extent that the sum of—
(i) 	the lien;
(ii) 	all other liens on the property; and
(iii) 	the amount of the exemption that the debtor could claim if there were no
liens on the property;
exceeds the value that the debtor’s interest in the property would have in the
absence of any liens.
11 U.S.C. § 522(f)(2)(A).
The parties agree that Ms. Martinez is entitled to a $60,000.00 homestead exemption in the
Property, that Mr. Gould holds a judicial lien in the amount of $85,000.00, and that there are no
other consensual liens against the Property. The dispute is over the value of the Property,
including the relevant valuation date.
“Value” is defined for purposes of 11 U.S.C. § 522 as the “fair market value as of the
date of the filing of the petition, or with respect to property that becomes property of the estate
after such date, as of the date such property becomes property of the estate.” 11 U.S.C. §
522(a)(2)(emphasis added).4 The Debtor’s contention that the current value of the Property, or
the value as of the date of conversation, should be used to determine lien avoidance is contrary to
the requirements of the lien avoidance statute and is inconsistent with other provisions of the
Bankruptcy Code.
Conversion from one chapter to another does not generally “effect a change in the date of
the filing of the petition, the commencement of the case, or the order for relief.” 11 U.S.C. §
348(a). Retention of the original petition date upon conversion from one chapter to another
“means that, aside from the exceptions listed in subsections (b) and (c),5 the sections of the Code
4 See also, In re Pacheco, 342 B.R. 352, 357 (Bankr.D.N.M. 2006)(“[T]he value of the liens, the value of the
property, and the amount of the exemption are all measured as of the date of the filing of the petition.”)(citations
omitted); In re Levinson, 372 B.R. 582, 586-87 (Bankr.E.D.N.Y. 2007), aff’d, 395 B.R. 554 (E.D.N.Y. 2008)(stating
that “the petition date as has been held to be the operative date for all § 522(f) determinations, including
determinations regarding the value of the debtor’s property . . .”)(citations omitted).
5 The exceptions found in subsections (b) and (c) of 11 U.S.C. § 348 pertain to the “order for relief” and are not
applicable here.
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that are keyed to the dates of the filing of the petition, the commencement of the case or the entry
of the order for relief are unaffected by conversion.” 3 Collier on Bankruptcy ¶ 348.02 (Alan N.
Resnick and Henry J. Sommer, eds., 16 th ed. 2012). Because the date of the filing of the petition
is the operative date to make lien avoidance determinations under 11 U.S.C. § 522(f), including
the amount of the liens and the value of the exempt property,6 the Debtor cannot rely on the
depreciated, current value of the Property as of the date of conversion to a case under Chapter 7
to establish her right to avoid Mr. Gould’s lien. 7 See 11 U.S.C. § 348(f)(1)(B).
2. 	Absent an effective waiver, Section 348(f)(1)(B) applies to the valuation contained
in the Stipulated Order
Mr. Gould asserts that 11 U.S.C. § 348(f)(1)(B) does not apply to the valuation contained
in the Stipulated Order for three reasons: 1) 11 U.S.C. § 348(f)(1)(B) is limited to valuations
under 11 U.S.C. § 506(a); 2) 11 U.S.C. § 348(f)(1)(B) applies only to implicit valuations, not
explicit valuations of the kind contained in the Stipulation Order; and 3) the language of 11
U.S.C. § 348(f)(1)(B) is ambiguous. The Court disagrees.
Mr. Gould cites In re Winitzky, 2009 WL 9139891 (Bankr.C.D.Ca. May 7, 2009) in
support of his argument that 11 U.S.C. § 348(f) is limited to valuations made under 11 U.S.C. §
506(a). Debtor correctly points out that Winitzky does not hold that 11 U.S.C. § 348(f)(1)(B)
avoids only valuations under 11 U.S.C. § 506(a), but merely acknowledges that 11 U.S.C. §
348(f)(1)(B) voids a valuation under 11 U.S.C. § 506(a) when a case converts from Chapter 13
6 See In re Martinez, 469 B.R. 74, 83 (Bankr. D.N.M. 2012)(“The petition date is the operative date to make
determinations under 11 U.S.C. § 522(f)(20(A), including determinations of lien amounts and the value of the
exempt property. To avoid a judicial lien under 11 U.S.C. § 522(f)(2)(A) against property that was property of the
estate on the petition date, the lien must impair the exemption as of the petition date.”).
7 The Debtor also argues that the depreciated value of the Property is not “property of the estate” under 348(f)(1)(A)
because such lesser value is no longer in the Debtor’s “possession and control.” See In re Lang, 437 B.R. 70, 72
(Bankr.W.D.N.Y. 2010)(lost depreciation value of car is no longer an asset of the bankruptcy estate following
conversion from Chapter 13 to Chapter 7). Regardless of whether that is so, the effect of 11 U.S.C. § 348(f)(1)(A)
on what constitutes property of the converted Chapter 7 bankruptcy estate does not change the relevant valuation
date for purposes of determining lien avoidance under 11 U.S.C. § 522(f).
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to Chapter 7. Winitzky, 2009 WL 9139891 at *3. 	The fact that the Stipulated Order valued the
Property for purposes of 11 U.S.C. § 522(f)(1)(A), not 11 U.S.C. § 506(a), does not, therefore,
automatically except the stipulated value from the operation of 11 U.S.C. § 348(f)(1)(B).
Courts have used the phrase “implicit valuation” to refer to uncontested property
valuations contained in Chapter 13 confirmation orders. See In re Lynch, 363 B.R. 101, 104 (9th
Cir. BAP 2007)(explaining that, under the majority view, a Chapter 13 plan confirmation order
incorporates an implicit valuation of property when there has been no contested valuation
proceeding, but ultimately rejecting the implicit valuation approach).8 Mr. Gould attempts to
distinguish the “implicit valuation” cases by arguing that the stipulated value of the Property was
an “explicit” valuation based on a professional appraisal. Because, as the Court determines
below, 11 U.S.C. § 348(f)(B)(1) unambiguously provides that valuations in Chapter 13 do not
apply to cases converted to Chapter 7, it makes no difference whether the valuation is an
“implicit” valuation in a confirmation order or an “explicit” valuation based on an appraisal.
Section 348, which governs the effect of conversion from one chapter of Title 11 to
another, provides, in relevant part:
[W]hen a case under chapter 13 of this title is converted to a case under another chapter
under this title—
(B) valuations of property and of allowed secured claims in the chapter 13 case
shall apply only in a case converted to a case under chapter 11 or 12, but not in a
case converted to a case under chapter 7 . . .
11 U.S.C. § 348(f)(1)(B).
When faced with interpreting the meaning of a statute, the Court begins with the language of the
statute itself. United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 241, 109 S.Ct. 1026,
8 See also, Warren v. Peterson, 298 B.R. 322, 325 (N.D.Ill. 2003)(“an order confirming a chapter 13 bankruptcy
plan is an implicit valuation of the scheduled property.”). But see, In re Jackson, 317 B.R. 511 (Bankr.N.D.Ill.
2004)(rejecting the idea that a confirmation order constitutes an “implicit valuation” of property).
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1030, 103 L.Ed.2d 290 (1989). If the language is clear, the Court’s inquiry ends, and the Court
will enforce the statute according to its terms. See Ron Pair, 489 U.S. at 241, 109 S.Ct. at 1030
(“where . . . the statute’s language is plain, ‘the sole function of the courts is to enforce it
according to its terms.’”)(quoting Caminetti v. United States, 242 U.S. 470, 485, 37 S.Ct. 192,
194, 61 L.Ed. 442 (1917)). 	The language of the statute plainly provides that property valuations
made in a Chapter 13 case apply only to cases converted to Chapter 11 or 12 but not to cases
converted to Chapter 7. 11 U.S.C. § 348(f)(1)(B). Under the plain meaning of 11 U.S.C. §
348(f)(1)(B), all property valuations made in the Chapter 13 case do not apply following
conversion to Chapter 7. See In re Airhart, 473 B.R. 178, 182 (Bankr.S.D.Tex. 2012)(Ҥ
348(f)(1)(B) unambiguously requires that Chapter 13 valuations should only be applied when
valuing allowed secured claims in cases converted to Chapters 11 and 12.”).
Courts have applied this plain meaning to conclude that property valuations made while
the case was pending under Chapter 13 cannot be used for purposes of redemption under 11
U.S.C. § 722 following conversion to Chapter 7. See, e.g., In re Nance, 2013 WL 2897527, *2
(Bankr.M.D.N.C. 2013)(“The Court is not permitted to use the valuation determined during the
chapter 13 case [for redemption purposes].”)(citing 11 U.S.C. § 348(f)(1)(B)); Airhart, 473 B.R.
at 185 (Under the plain meaning of 11 U.S.C. § 348(f)(1)(B), the court is not bound by property
valuations established in a Chapter 13 plan once the case converts to Chapter 7 and the debtor
seeks to redeem that property: “once the case is converted, valuation begins anew.”). See also,
In re Auernheimer, 437 B.R. 405, 409 (Bankr.D.Kan. 2010)(noting that “[v]aluations of property
in Chapter 13 do not survive conversion to Chapter 7.”).
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Thus, 11 U.S.C. § 348(f)(1)(B) does apply to the type of valuation contained in the
Stipulated Order, even though it is an “explicit” valuation applied to a purpose other than
determining the amount of a secured claim under 11 U.S.C. § 506(a).
3. 	The language in the Stipulated Order is insufficient to establish a waiver of the
Debtor’s right to invoke Section 348(f)(1)(B)
Notwithstanding 11 U.S.C. § 348(f)(1)(B), Mr. Gould argues that the language in the
Stipulated Order that the value of the Property is $168,000 “for all purposes in this bankruptcy
case” constitutes a waiver by Debtor of her right to invoke Section 348(f)(1)(B). See Stipulated
Order. Mr. Gould reasons that this stipulation applies to the converted Chapter 7 case because
after conversion the same bankruptcy case continues but under a different chapter. While the
Court agrees that conversion does not commence a new bankruptcy case, the Court disagrees that
the language “for all purposes in this bankruptcy case” necessarily demonstrates an effective
waiver of the Debtor’s right to invoke Section 348(f)(1)(B).
There is no question that conversion does not commence a new bankruptcy case. See
Harris v. Viegelahn, __ U.S. __, 135 S.Ct. 1829, 1836 (2015) (“Conversion from Chapter 13 to
Chapter 7 does not commence a new bankruptcy case”). A “case” is commenced upon the filing
of a voluntary petition for relief. See 11 U.S.C. § 303(a) (“A voluntary case under a chapter of
this title is commenced by the filing with the bankruptcy court of a petition under such chapter
by an entity that may be a debtor under such chapter.”). Upon conversion, the original case
simply continues under a different chapter. See 11 U.S.C. § 348(a) (“Conversion . . . does not
effect a change in the date of the filing of the petition, the commencement of the case, or the
order for relief.”). Because there is only one bankruptcy case, the stipulation of value “for all
purposes in this bankruptcy case” could mean that the parties intended for the stipulated value to
apply even if the case later converted to Chapter 7.
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A waiver generally requires “an intentional relinquishment or abandonment of a known
right or privilege.” Johnson v. Zerbst,304 U.S. 458, 464, 58 S.Ct. 1019, 1023, 82 L.Ed. 1461
(1938)(considering whether a party waived a constitutional right). See also Yates v. American
Republics Corp., 163 F.2d 178, 179 (10 th Cir. 1947)(stating that “[w]aiver is the voluntary
relinquishment or surrender of some known right[,]” and applying the definition to a contract
right). While a waiver may be implied or express, “to constitute implied waiver, there must be
unequivocal and decisive acts or conduct of the party clearly evincing an intent to waive, or acts
or conduct amounting to an estoppel on his part.” Yates, 163 F.2d at 180 (citations omitted).
Proof of an intentional relinquishment a known right granted by a section of the Bankruptcy
Code requires a showing of a knowing and purposeful waiver of that right. See, In re Benafel,
2010 WL 5373127, at *2 (Bankr. D.Or. Dec. 22, 2010)(stating that, to operate as a waiver of a
lender’s protections under a particular Bankruptcy Code section, the language must be “explicit
to that effect, and reflect[ ] a knowing and purposeful waiver of . . . rights under the Bankruptcy
Code.”)(citation omitted), rev’d on other grounds, 461 B.R. 581 (9th Cir. BAP 2011); In re
Furley’s Transport, Inc., 272 B.R. 161, 167-168 (Bankr.D.Md. 2001)(finding no express or
implied waiver of trustee’s right to pursue avoidance actions under the Bankruptcy Code), aff’d,
306 B.R. 514 (D.Md. 2002).
Upon conversion of a case from Chapter 13 to Chapter 7, 11 U.S.C. § 348(f)(1)(B) places
the parties in the same position regarding the valuation of property pledged to a creditor as if the
debtor initially filed a Chapter 7 case in which no valuation had yet occurred. Among other
things, this provision gives parties the freedom to negotiate valuations in Chapter 13 cases to
which they would not have agreed in a Chapter 7 case. For example, a debtor may stipulate to a
higher value for personal property in a Chapter 13 case, where payment can be made over a
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period of years, than in Chapter 7 under the redemption provision found in 11 U.S.C. § 722
where payment in full is required at the time of redemption. Likewise, a creditor may stipulate
to a higher value in Chapter 13 in exchange for greater periodic payments than for purposes of
prosecuting a stay relief motion in Chapter 7. To satisfy the waiver standard in connection with
a value negotiated while the case was pending in Chapter 13 – i.e. the intentional relinquishment
of a known right – a party must establish that the parties intended to waive the right to a fresh
valuation in a converted Chapter 7 case.
When considering whether a party has waived by court-approved stipulation a right
otherwise provided for under the Bankruptcy Code, courts often look to the specificity of the
language used in the stipulation. See, e.g., In re Bradlees Stores, Inc., 2001 WL 1112308, at *13
n. 6 (S.D.N.Y. Sept. 20, 2011)(acknowledging that “courts have enforced earlier, court-approved
settlement agreements waiving a debtor’s right to the automatic stay or other rights under the
Bankruptcy Code” when “the court-ordered agreement contained an explicit waiver of a specific
section of the Bankruptcy Code.”)(citing, In re Springpark Assocs., 623 F.2d 1377, 1379 (9th Cir.
1990) and In re Atrium High Point Ltd. P’ship, 189 B.R. 599, 603 (Bankr.M.D.N.C. 1995)). See
also, InteliQuest Media Corp., 326 B.R. 825, 831 (10th Cir. BAP 2005)(observing that a court-
approved waiver expressly embodied in an order is enforceable, and finding that the parties were
bound by their previously-approved waiver of surcharge rights under 11 U.S.C. § 506(c) under
principles of res judicata).
Here, the Stipulated Order does not explicitly state that 11 U.S.C. § 348(f)(1)(B) was
inapplicable to the stipulated value in the event of conversion, nor does it expressly contemplate
the stipulated value would continue to apply after conversion of the Debtors’ Chapter 13 case to
Chapter 7. Whatever the parties’ intentions, the Court cannot find from the language of the
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Stipulated Order itself that Debtors have knowingly and intentionally waived their right to rely
on 11 U.S.C. § 348(f)(1)(B) in the converted case. The language “for all purposes in this
bankruptcy case” contained in the Stipulated Order is ambiguous. Although conversion does not
commence a new bankruptcy case, it is common to refer to a bankruptcy case by the chapter
under which the case is pending, such as a Chapter 7 bankruptcy case, a Chapter 11 bankruptcy
case, or a Chapter 13 bankruptcy case. It is not clear whether the reference in the Stipulated
Order to “all purposes in this bankruptcy case” was intended to refer to “this Chapter 13
bankruptcy case” or, to negate the effect of 11 U.S.C. § 348(f)(1)(B) in the event of conversion.
Having found an ambiguity in such language, Mr. Gould is not entitled to summary
judgment based on the stipulation of value contained in the Stipulated Order. Either party may
present extrinsic evidence of the intended meaning of the language, “for all purposes in this
bankruptcy case,” contained in the Stipulated Order at a final hearing. 	See In re Texas General
Petroleum Corp., 52 F.3d 1330, 1335-1336 (5th Cir. 1995)(stating that the rules of contract
interpretation apply to the interpretation of a reorganization plan and affirming the bankruptcy
court’s use of parol evidence to determine the intent of the parties and resolve an ambiguity
contained in the plan); City of Sunland Park v. Harris News, Inc., 138 N.M. 588, 593, 124 P.3d
566, 571 (Ct.App. 2005)(under New Mexico law, “if the district court decides that a term is
ambiguous, it may admit extrinsic evidence to explain what the parties meant the term to
mean.”)(citing C.R. Anthony Co. v. Loretto Mall Partners, 112 N.M. 504, 508, 817 P.2d 238,
242 (1991)).
CONCLUSION
Because the language of the Stipulated Order is ambiguous, the parties’ stipulation of
value contained in the Stipulated Order is by itself insufficient to waive the application of 11
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U.S.C. § 348(f). Absent a knowing and intentional waiver of the application of 11 U.S.C. §
348(f)(1)(B), the value of the Property to which the parties stipulated while the case was
proceeding under Chapter 13 no longer applies upon the conversion of the Debtors’ case to
Chapter 7 by operation of the plain language of 11 U.S.C. § 348(f)(1)(B). The alleged change in
the current value of the Property is irrelevant to the Debtor’s motion to avoid Mr. Gould’s
judicial lien because the applicable valuation date for purposes of lien avoidance is the date of
filing of the Chapter 13 case. In fact, there has never been a determination of the Property’s
value as of the date of commencement of the Chapter 13 case.9
The Debtor has the burden of establishing all elements under 11 U.S.C. § 522, including
the value of the Property. See In re Thompson, 263 B.R. 134, 138 (Bankr. W.D.Okla.
2001)(“Debtors bear the burden of proof on all lien avoidance issues.”)(citation omitted); In re
Kelly, 311 B.R. 341, 345 (Bankr. W.D.N.Y. 2004)(the debtor had the burden of proving the
value of his homestead property as of the petition date for purposes of lien avoidance under 11
U.S.C. § 522(f) and could not rely on the valuation of the property used for purposes of plan
confirmation). Because the Stipulated Order fails to establish a waiver of the application of 11
U.S.C. § 348(f)(1)(B), and because the Debtor has not established the value of the Property as of
the petition date, both motions for summary judgment must be denied. 	The Court will enter a
separate order consistent with this Memorandum Opinion that denies the cross-motions for
summary judgment and sets a scheduling conference on the Debtor’s amended motion to avoid
judicial lien.
___________________________________
ROBERT H. JACOBVITZ
United States Bankruptcy Judge
9 The stipulated value was based on an appraisal of the Property as of a date different from the petition date. See
Facts Not in Genuine Dispute, ¶ 8.
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Date entered on docket: June 18, 2015
COPY TO:
Jennie Deden Behles 	Denise Trujillo
Attorney for Debtors 	Attorney for Walter Gould
PO Box 7070 	10400 Academy NE, Suite 350
Albuquerque, NM 87194 	Albuquerque, NM 87111
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