1 UNITED STATES BANKRUPTCY COURT

2 EASTERN DISTRICT OF CALIFORNIA

3 FRESNO DIVISION

4

5 In re ) Case No. 25-10499-B-7 ) 6 JEFFREY REICH, ) Docket Control No. SR-5 ) 7 ) Debtor. ) 8 ) ) 9

10 MEMORANDUM RULING ON OBJECTION TO DEBTOR’S CLAIM OF EXEMPTIONS AND MOTION TO CLAIM EXEMPTIONS BY NON-DEBTOR SPOUSE 11 ————————————————————————————— 12 Peter B. Bunting, ATTORNEY AT LAW, for Jeffrey Reich, Debtor. 13 Richard Ryan McMath, MCMATH LAW OFFICE, for Pamela Reich, 14 Creditor.

15 —————————————————————————————

16 RENÉ LASTRETO II, Bankruptcy Judge: 17 18 This matter comes before the court on the Objection of 19 Pamela Reich (“Pamela”), the non-debtor spouse in the above- 20 styled Chapter 7 case filed by debtor Jeffrey Reich (“Debtor” or 21 “Jeffrey”), to Debtor’s Claim of Exemptions and Pamela’s Motion 22 to Claim Exemptions. Doc. #164. 23 The following facts gleaned from the record are undisputed. 24 Jeffrey is a Chapter 7 debtor in the main case and the Defendant 25 in an Adversary Proceeding in which Pamela is the Plaintiff 26 challenging the dischargeability of certain debts. Pamela is 27 Jeffrey’s estranged wife with whom Jeffrey is undergoing 28 extremely protracted divorce proceedings lasting about ten years 1 so far. The dissolution proceedings are pending in the Fresno 2 County Superior Court. 3 On September 23, 2025, after hearing oral arguments, the 4 took this matter under submission. Doc. #186. After review of the 5 arguments, declarations and exhibits, the court is prepared to 6 rule. 7 8 JURISDICTION 9 This court has jurisdiction of this matter by reference from 10 the District Court under

(a). The District Court 11 has jurisdiction under

(b). This is a matter the 12 Bankruptcy Court may hear and finally determine.

13 (b)(2) (A)[administration of the estate] and (B)[exemptions]. 14 15 BACKGROUND 16 1. Procedural History. 17 Jeffrey filed for Chapter 7 bankruptcy on February 21, 2025, 18 and filed his first Schedule C on March 7, 2025. Docs. #1, #17. 19 On March 14, 2025, Jeffrey filed his First Amended Schedule C. 20 Doc. #25. On April 7, 2025, Pamela filed her First Objection to 21 Debtor’s Claim of Exemptions (“the First Objection” DCN SR-1). 22 Doc. #38. Jeffrey filed a Second Amended Schedule C on May 1, 23 2025, and the court later overruled the First Objection as moot. 24 Docs. #55, #59. 25 Pamela filed her Second Objection to Debtor’s Claim of 26 Exemptions (“the Second Objection” DCN SR-3) on June 2, 2025. 27 Doc. #82 et seq. On that same day, Pamela filed an Amended 28 Objection, still under DCN SR-3, to add a request that Jeffrey 1 exempt an appropriate amount in Pamela’s IRA account (which 2 Pamela claims Jeffrey undervalued) and to add an additional 3 exhibit. Doc. #87. 4 On June 10, 2025, before the Objection to the Second Amended 5 Schedule C could be heard, Jeffrey filed a Third Amended Schedule 6 C. Doc. #91. On July 10, 2025, Pamela duly filed an Objection 7 (“the Third Objection” DCN SR-4) to that one as well. Doc. #133. 8 On July 15, 2025, Jeffrey filed his Fourth Amended Schedule 9 C as well as an Opposition to the Second Objection. Docs. #139- 10 140. On August 13, 2025, Pamela again objected (“the Fourth 11 Objection” DCN SR-5). Doc. #164. Notably for purposes of this 12 matter, the Fourth Objection incorporated by reference all the 13 arguments made in the Second and Third Objections.

14 The court overruled the Second and Third Objections as moot 15 on September 23, 2025. Docs. #188-189. That same day, the court 16 heard oral arguments on the Fourth Objection and took that matter 17 under submission. Doc. #186. 18 The filings in this case are somewhat extensive because 19 Pamela’s Fourth Objection specifically incorporated by reference 20 her arguments presented in her Second and Third Objections. 21 Consequently, in deciding the Fourth Objection, the court must 22 also consider Pamela’s previous two Objections and also any 23 counterarguments thereto in Jeffrey’s responses. Thus, the 24 documents considered in ruling on the Fourth Objection include 25 the following: 26 1. Pamela’s Second Objection (SR-3) and the attached 27 supporting documents, which include: 28 /// 1 a. Pamela’s Declaration (Doc. #84) 2 b. The Declaration of Shane Reich (“Shane”), the son of 3 Pamela and Jeffrey who represented Pamela in this 4 matter until his recent disqualification. (Doc. #85). 5 See also Doc. #175 (Order granting motion to 6 disqualify Shane). 7 c. The Amended Objection (Doc. #87). 8 d. Shane’s Second Declaration in support of the Amended 9 Objection (Doc. #88). 10 e. Exhibits consisting of excerpts from Jeffrey’s Second 11 Amended Schedules dated 5/1/25 (Doc. #89). 12 2. Jeffrey’s Opposition to Pamela’s Second Objection and the 13 attached supporting documents: 14 a. Jeffrey’s Declaration (Doc. #141). 15 b. A Memorandum of Points and Authorities (Doc. #142). 16 c. Exhibits (Doc. #143) consisting of: 17 i. A status statement filed in the state court 18 divorce proceedings between Jeffrey and Pamela; 19 ii. An email from Attorney Laura Boyd to Jeffrey’s 20 counsel Peter Bunting; 21 iii. A copy of the Complaint to Determine 22 Dischargeability of Debt filed by Pamela against 23 Jeffrey (Case No. 25-01022 or “the AP,” which is 24 still ongoing before this court); and 25 iv. A copy of Jeffrey’s Fourth Amended Schedule C 26 filed July 15, 2025. 27 3. Pamela’s Reply to Jeffrey’s Opposition to the Second 28 Objection (Doc. #153). 1 4. Pamela’s Third Objection (Doc. #133 DNC SR-4), which is 2 accompanied by: 3 a. Pamela’s Second Declaration (Doc. #135). 4 b. Shane’s Second Declaration (Doc. #136). 5 c. Exhibits consisting entirely of Jeffrey’s Third 6 Amended Schedule C (Doc. #137). 7 5. Pamela’s Fourth Objection (Doc. #164), which incorporates 8 by reference the Second and Third Objection and which is 9 accompanied by: 10 a. Shane’s Third Declaration (Doc #166). 11 b. Pamela’s Third Declaration (Doc. #167). 12 c. Exhibits consisting entirely of Jeffrey’s Fourth 13 Amended Schedule C dated July 15, 2025 (Doc. #168). 14 2. The Relevant Facts. 15 The basis for the instant Objection and its predecessors 16 lies in Jeffrey’s Fourth Amended Schedule C, dated July 15, 2025 17 (hereinafter “the July 15 Schedule C”), in which Jeffrey asserts 18 to specific exemptions to which Pamela objects: 19 1. The Campagna Property: Jeffrey claims an exemption in real 20 property at 11520 N. Via Campagna Drive, Fresno, California 21 (“the Campagna Property”). In the entry, Jeffrey states: 22 “Separated Spouse claims Debtor has ownership interest in 23 this property. Debtor at one time paid $2,000 rent and now 24 provides free housesitting services for Sona Vartanian.” 25 Jeffrey claims that the value of the portion he owns is 26 $0.00 and the amount of exemption he claims is $189,050.00. 27 Jeffrey claims this exemption under C.C.P. § 704.730 and 28 adds “This exemption is claimed in the event the court 1 determines the debtor owns an interest in the property 2 which serves as his residence.” 3 2. The Toyota: Jeffrey claims an exemption in a 2017 Toyota 4 Camry (“the Toyota”) and states “Vehicle is owned by ‘JS 5 Paradise Investments or Sona Vartanian’ but driven by 6 Debtor.” Jeffrey claims that the value of portion he owns 7 is $0.00 and the amount of exemption he claims is 8 $7,500.00. Jeffrey claims this exemption under C.C.P. 9 § 704.710 and adds “This exemption is claimed in the event 10 the court determines the debtor owns an interest in the 11 vehicle.” 12 Doc. #139. 13 Debtor did not list either the Campagna Property or the 14 Toyota as exempt assets until the filing of Debtor’s Second 15 Amended Schedule C, dated May 1, 2025, with Debtor claiming 16 exemptions of $348,000.00 and $7,500.00, respectively. Doc. #55. 17 In Debtor’s Third Amended Schedule C, dated June 6, 2025, Jeffrey 18 reduced the exemption for the Campagna Property to $189,050.00, 19 but the amended schedule was otherwise unchanged. Doc. #91. The 20 July 15 Schedule C does not make any changes to the entries for 21 the Campagna Property or the Toyota. Doc. #139. 22 23 LEGAL ANALYSIS 24 1. Exemptions. 25 The court begins with an overview of the relevant law 26 governing exemptions in bankruptcy.

27 Congress authorized states to opt out of the federal bankruptcy exemptions created by Bankruptcy Code 28 1 the § 522(b)(2) option to opt out by making the federal bankruptcy exemptions inapplicable in the state. Cal. 2 Code Civ. P. § 703.130. Since the federal exemptions created by § 522(d) do not apply in California, basic 3 exemption questions in California bankruptcies entail the application only of California law. When California 4 opted out of the federal bankruptcy exemptions prescribed at § 522(d), it simultaneously enacted as 5 state law a veritable clone of § 522(d) that could, in lieu of the basic judgment enforcement exemptions, be 6 utilized in bankruptcy cases. Cal. Code Civ. Pro. § 703.140; In re Petruzzelli,

(1992). 7 8 In re Tallerico,

(Bankr. E.D. Cal. 2015). 9 In the July 15 Schedule C, Debtor claimed exemptions under 10

(b)(3) and exempted both the Campagna Property and 11 the Toyota pursuant to California’s state exemptions. Doc. #139. 12 Specifically, the Campagna Property was exempted under C.C.P. 13 § 704.730, and the Toyota was exempted under C.C.P. § 704.010. 14 Id. In both cases, Debtor stated that the relevant exemption was 15 claimed “in the event the court determines the debtor owns an 16 interest” in the Campagna Property and/or the Toyota. Id. 17 In her Objection(s), Pamela seeks to have Debtor’s claimed 18 exemptions in the Campagna Property and the Toyota disallowed. 19 Doc. #164. She also moves that Debtor be compelled to claim 20 exemptions in certain community property, either through the 21 court ordering that these exemptions be deemed filed or by the 22 court ordering Debtor to file amended exemptions claiming them. 23 Id. Pamela argues that Jeffrey owes her a fiduciary duty pursuant 24 to

(b) and 1100(e) that requires him to 25 exempt this community property.

The assets relevant to 26 Pamela’s motion are: 27 /// 28 /// 1 1. The property located at 1731 Robinwood, Clovis, CA (“the 2 Robinwood Property”). This is the community property home 3 of Jeffrey and Pamela. Pamela asks that the Robinwood 4 Property be exempted pursuant to C.C.P. 704.730 in the 5 amount of $361,110.00. 6 2. A 2010 Mazda driven by Pamela (“the Mazda”) to be exempted 7 pursuant to C.C.P. § 704.010 in the amount of $7,500.00. 8 3. An exemption of $30,000.00 in Pamela’s IRA. 9 Id. 10 The court begins with an examination of whether Jeffrey’s 11 claimed exemptions in the Campagna Property and the Toyota should 12 be disallowed, as a finding in favor of Jeffrey on this point may 13 moot some or all of Pamela’s remaining objections. 14 15 2. Should Jeffrey’s Exemptions Be Disallowed? 16 The gravamen of Pamela’s arguments for striking Debtor’s 17 exemptions in the Campagna Property and the Toyota lie in the 18 fact that Jeffrey affirmatively claims that he does not own 19 either asset and holds no ownership interest in them. Therefore, 20 he cannot claim an exemption in either asset. Docs. #133, #164. 21 The court agrees with this argument. A debtor may not claim 22 an § 522 exemption on assets which he does not own and which are 23 not property of the estate. “[W]hat debtor could exempt property 24 that he or she does not own or have an interest in?” In re 25 Guevarra, Nos. 18-25306-B-7, BHS-4,

, at 26 *11 (Bankr. E.D. Cal. June 7, 2021), rev’d on other grounds by 27 Guevarra v. Whatley (In re Guevarra),

(B.A.P. 9th 28 Cir. 2022); see also See In re Scotti,

(Bankr. 1 D.S.C. 2011) ("[I]n order to exempt property, not only must the 2 property be part of the bankruptcy estate under § 541, the debtor 3 claiming the exemption must own the property, or have an interest 4 in the property.") 5 Jeffrey states unambiguously that he “housesits” the 6 Campagna Property, which is owned by Sona Vartanian, and that he 7 drives the Toyota which is owned by “JS Paradise Investments or 8 Sona Vartanian.” Doc. #139. “[S]omething held in trust by a 9 debtor for another is neither property of the estate under 10 section 541(d), nor property of the debtor for purposes of 11 section 547(b).” In re Guevarra, 638 B.R. at 132 (quoting Mitsui 12 Mfrs. Bank v. Unicom Comput. Corp. (In re Unicom Comput. Corp.), 13

(9th Cir. 1994)). 14 Debtor seems to concede this in the July 15 Schedule C, 15 stating that the two assets are exempted “in the event the court 16 determines” that he has an interest in them that could make them 17 subject to exemptions. Doc. #139. This is entirely speculative 18 and unnecessary. Debtors in bankruptcy have a general right to 19 amend their schedules, including their exemptions, at any time 20 before the case is closed. Fed. R. of Bankr. P. 1009(a). Indeed, 21 under appropriate circumstances, a debtor can amend his 22 exemptions after the case has been closed and later reopened. 23 Goswami v. MTC Distrib. (In re Goswami),

, 392-93 24 (B.A.P. 9th Cir. 2003); see also In re Boyd,

, 766 25 (N.D. Cal. 2000)("For the purposes of filing amendments, there is 26 no difference between an open case and a reopened case”). 27 Thus, if either the Campagna Property or the Toyota are 28 shown in the future to be assets in which Jeffrey has an 1 ownership interest, Debtor is free to amend his Schedule C once 2 again to exempt them. Granted, Pamela herself has argued in other 3 forums that Jeffrey does hold an interest in both assets, and, in 4 fact, he purchased them on behalf of Sona Vartanian and concealed 5 that fact in his bankruptcy filings. Doc. #164. If circumstances 6 change to give Jeffrey an exemptible interest in the two assets, 7 he will have the opportunity to further amend his schedules to 8 claim any applicable exemptions at that time, and Pamela will 9 have her chance to respond. 10 The objection will be SUSTAINED to the extent of disallowing 11 the exemptions claimed by Debtor for the Campagna Property and 12 the Toyota. 13 14 3. Should Jeffrey Be Forced to Claim Pamela’s Proposed 15 Exemptions? 16 Having determined that Jeffrey cannot claim exemptions in 17 the Campagna Property or the Toyota, the court moves on to 18 Pamela’s novel theory regarding Jeffrey’s alleged fiduciary 19 duties owed to her which compel him to claim those exemptions 20 against his wishes. 21 Pamela argues the court should order that “the exemptions 22 she has requested be deemed filed or, alternatively, that Debtor 23 be ordered to file amended exemptions” to claim the Robinwood 24 Property and the Mazda as exempt. Doc. #164. Specifically, Pamela 25 asks the court to effectively impose the following exemptions 26 without Jeffrey’s consent: a $361,110.00 exemption in the 27 Robinwood Property pursuant to CCP 704.730, a $7,500.00 exemption 28 /// 1 in the Mazda pursuant to CC 704.010, and an exemption of $30,000 2 in Pamela’s own IRA.

3 The court notes that Pamela does not present arguments that 4 she has the power to file the requested exemptions herself 5 pursuant to

(l) and/or Fed. R. Bankr. P. 4003(a), 6 both of which permit a “dependent” of the debtor to file a list 7 of property claimed as exempt if the debtor fails to file a 8 Schedule C. Both § 522(l) and Rule 4003(a) are silent as to the 9 mechanism by which any such dependent may file such a list, and 10 Pamela does not address those two provisions. 11 In any event, while precedent interpreting § 522(l)’s 12 language regarding the right of a dependent to file a Schedule C 13 on behalf of a debtor is quite sparse, the court is persuaded 14 that a dependent can only do so when the debtor has filed no 15 Schedule C at all rather than simply one with which the dependent 16 disagrees. See e.g. In re Taylor, No. 15-10689,

3562, at *4-5 (Bankr. N.D. Cal. Oct. 20, 2015)(“The court rejects 18 as contrary to the language of the statute [dependent’s] 19 unsupported argument that a defective or objectionable list of 20 exemptions is the same thing as no list at all, as the debtor 21 always has the ability to amend the list.”) 22 According to Pamela, Jeffrey is obligated to exempt the 23 aforementioned community property because of fiduciary duties 24 placed upon him by the California Family Code (C.F.C.).

25 Pamela cites numerous C.F.C. provisions to support the existence 26 of a fiduciary duty owed by Jeffrey to his estranged wife while 27 their divorce proceedings are ongoing.

Strikingly absent from 28 her filings, however, is citation to any provisions of the 1 Bankruptcy Code providing a basis for the court to grant the 2 relief she seeks, or at least through the medium she has 3 requested it.

4 "Actions for breach of fiduciary duty, historically speaking, are almost uniformly actions in equity -- 5 carrying with them no right to trial by jury." The characterization of actions for breach of fiduciary 6 duties as primarily equitable has been upheld in a number of contexts, including the bankruptcy context. 7 8 McGranahan v. Christian (In re Cent. Valley Processing), No. CV F 9 05-1153 AWI LJO,

, at *9 (E.D. Cal. 10 June 8, 2006)(citations omitted); see also Dunoco Corp. v. Dunoco 11 Dev. Corp.,

(C.D. Cal. 1985)(bankruptcy 12 trustee's action for breach of fiduciary duty was equitable in 13 nature). 14 McGranahan and Dunoco focused on the question of whether 15 breach of fiduciary duty represented an equitable claim because 16 the adversary proceedings in those cases raised questions about 17 the Seventh Amendment guarantee of a jury trial in the context of 18 an equitable claim, as implicated by Granfinanciera, S.A. v. 19 Nordberg,

,

,

(1989). 20 But the question is relevant here because, if Pamela wants 21 the court compel Jeffrey to comply with his fiduciary duties to 22 her, her request necessarily becomes a demand for equitable 23 relief which cannot be heard through a contested matter.

24 "Contested matter" in the bankruptcy context is a term of art. There is a distinction among "contested 25 matters," "adversary proceedings," and "administrative matters." See 10 Collier on Bankruptcy ¶ 9014.01 (Alan 26 N. Resnick & Henry J. Sommer eds., 15th ed. rev. 2007). Administrative matters are those issues that are not 27 contested, such as unopposed motions.

Adversary proceedings are a species of contested matters governed 28 1 qualifies as an "adversary proceeding," as opposed to a "contested matter," if it is included in the list given 2 in Bankruptcy Rule 7001. Id.; see Fed. R. Bankr. P. 7001. Otherwise, it is a "contested matter." See Fed. 3 R. Bankr. P. 9014(a). 4 Barrientos v. Wells Fargo Bank, N.A.,

(9th 5 Cir. 2011). 6 11 U.S.C. 7001(g) lists “a proceeding to obtain an 7 injunction or other equitable relief—except when the relief is 8 provided in a Chapter 9, 11, 12, or 13 plan” among the matters 9 which qualify for an adversary proceeding. Consequently, it was 10 improper for Pamela to incorporate into this Objection what is 11 essentially a demand for equitable relief in the form of the 12 court either directing Jeffrey to amend his exemptions according 13 to her preferences or to simply deem her preferred exemptions as 14 having been filed. Accordingly, to the extent that the Objection 15 seeks such equitable relief, it will be OVERRULED. 16 17 CONCLUSION 18 For the forgoing reasons, the Objection is SUSTAINED IN PART 19 AND OVERRULED IN PART. The Objection is SUSTAINED to the extent 20 of striking the Debtor’s claimed exemptions in the Campagna 21 Property and the Toyota. The Objection is OVERRULED regarding 22 Pamela’s request that the court direct Debtor to amend his 23 filings in order to claim an exemption in the Robinwood Property, 24 the Mazda, and Pamela’s IRA on the grounds that the requested 25 /// 26 /// 27 /// 28 /// 1 relief represents equitable relief which must be raised in an 2 adversary proceeding rather than in a contested matter. 3 A separate order shall issue. 4 5 Dated: Nov 25, 2025 By the Court

a“ 7 Cra ené Lastreto II, Judge □□ 8 United States Bankruptcy Court 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

1 Instructions to Clerk of Court Service List - Not Part of Order/Judgment 2

3 The Clerk of Court is instructed to send the Order/Judgment or other court generated document transmitted herewith to the 4 parties below. The Clerk of Court will send the Order via the BNC or, if checked , via the U.S. mail. 5

6 Jeffrey Kane Reich 11520 N. Via Campagna Dr. 7 Fresno, CA 93730

8 Irma Edmonds 2501 West Shaw Avenue, Ste. 124 9 Fresno, CA 93711

10 Anthony D. Johnston 1600 G Street, Ste. 103 11 Modesto, CA 95354

12 Megan Zavieh 12460 Crabapple Road 13 Ste 202-272 Alpharetta, GA 30004 14 Peter B. Bunting 15 2304 W. Shaw Ave. Ste. 103 Fresno, CA 93711 16 Richard Ryan McMath 17 2100 Garden Road Bldg. B, Suite J 18 Monterey, CA 93940

19 20 21 22 23 24 25 26 27 28