The prolific Judge Leif Clark, who has written many memorable footnotes, including one quoted here yesterday, has written another one which is both quotable and addresses an important point. In In re Rendon, No. 06-52501 (Bankr. W.D. Tex. 3/15/07), a party who claimed to be purchasing a home from the debtors filed a Motion to Create Equitable Lien/Motion for Expedited or Emergency Hearing. The court found that the motion requested three forms of relief: an order quieting title, an injunction and an objection to the debtors’ claim of exemption. The court found that the first two forms of relief must be brought in an adversary proceeding and dismissed the motion without prejudice. The court found that the objection to exemptions was untimely and must be denied. Even though the purchasers were not listed as creditors in the bankruptcy, they admitted that they had actual knowledge of the bankruptcy case prior to the 341 meeting.
The court noted that the mere fact that the debtors had successfully claimed the property as exempt did not establish their ownership of the property. In a footnote, the court added the following comment:
"Just in case there is any confusion, let’s suppose I claim an exemption on the Brooklyn Bridge, and you fail to timely object to my exemption claim. Is the sainted bridge thus exempt? Technically, section 522(l) says it is. But of course, what difference does my exemption claim make if Hizzoner, Mayor Bloomberg, comes to court and successfully establishes that, in fact, the Brooklyn Bridge is not my bridge to claim, but is safely still the property of the City of New York, safely untarnished by my exercise in hubris? None at all you correctly reply, none whatsoever.”
It is important to note that an exemption merely determines whether property is excluded from the estate. However, it does not operate to grant title to the property. Mayor Bloomberg will no doubt sleep more soundly.