Casper

MEMORANDUM ***

Creditor-appellee Paul Cadd had judgment liens on a residence and a rental house owned by debtor-appellant Beverly Casper. In December 1999, debtor’s attorney negotiated a deal with creditor’s attorney whereby creditor would release his hen on the rental house in exchange for partial payment of the debtor’s liability out of the proceeds from the sale of the rental house. Before consenting to this deal, creditor’s attorney obtained a letter from debtor’s counsel indicating that the tax-assessed value of debtor’s residence was $90,700, that debtor believed the residence had a market value of $110,000, and that based on this market value and the balance of debtor’s mortgage, debtor had equity in the residence that exceeded Oregon’s $25,000 homestead exemption by $13,000. Five weeks later, debtor declared bankruptcy. She then sought to avoid creditor’s hen on her residence on the grounds that the residence was worth only $90,290, such that the hen impaired her homestead exemption in violation of Oregon law. The bankruptcy court found that debtor was estopped by her previous representation to assert a residence value less than $110,000, and thus denied debtor’s motion…

dissenting.

I respectfully dissent, and would affirm the Bankruptcy Appellate Panel for the reasons it stated.

Ordinarily, equitable estoppel only applies to prevent individuals with actual factual knowledge from changing a previously made representation. However, individuals deemed to have special knowledge may be equitably estopped where they should have known their representations were false. 1 Casper was a real estate agent with experience in the local real estate market in question. To induce Cadd to drop his hen against another property, Casper represented that her residence was valued at $110,000. Casper’s special experience gave Cadd every reason to believe her reasoned valuation, so he dropped his hen. His lawyer, Linkhous, even cited Casper’s special knowledge.

Because of Casper’s experience in real estate and knowledge of the local market, it is entirely appropriate that Casper now be equitably estopped from changing her representation. This is one of those rare instances where the person make a representation had enough knowledge and experience for the special knowledge exception to apply. As the Bankruptcy Appellate Panel noted, remand is unnecessary, under the…