In re Aubry

MEMORANDUM DECISION AFTER TRIAL ON CONTESTED MATTER OF TRUSTEE’S MOTION FOR ORDER: (1) DISALLOWING DEBTOR’S AMENDED EXEMPTION IN STRUCTURED SETTLEMENT ANNUITY AND PROCEEDS THEREOF; OR (2) IN THE ALTERNATIVE, IF THE COURT DECIDES TO ALLOW SUCH AMENDED EXEMPTION, CONDITIONING ALLOWANCE OF AMENDED EXEMPTION ON PAYMENTS OF FEES OF TRUSTEE AND HIS GENERAL COUNSEL Robert Ewan, United States Bankruptcy Judge Pending before the court is the Motion of the Chapter 7 Trustee Jason M. Rund — 335 — (“Trustee”) for Order: (1) Disallowing Debtor’s Amended Exemption In Structured Settlement Annuity and Proceeds Thereof; or (2) In the Alternative, if the Court Decides to Allow Such Amended Exemption, Conditioning Allowance of Amended Exemption On Payments of Fees of Trustee and His General Counsel (“Motion”). ECF (Electronic Case Filing or Docket Number) 45. Debtor Divine M. Aubry (“Debtor”) filed an opposition to the Motion, ECF 47, and Trustee filed a reply thereto, ECF 48. Trustee then filed evi-dentiary objections to Debtor’s declaration, which was attached to Debtor’s opposition, ECF 49, and a supplemental reply to Debtor’s opposition, ECF 50. The Motion initially came on for hearing before the undersigned United States Bankruptcy Judge on June 30, 2015. At this hearing, the court determined that because the Motion raised disputed factual and legal issues regarding Debtor’s good or bad faith to warrant application of equitable estoppel, the Motion would be treated as a contested matter under Rule 9014 of the Federal Rules of Bankruptcy Procedure. Thereupon, the court set a pre-trial conference for September 8, 2015, and at the pre-trial conference, the court set trial dates for November 12 and 13, 2015, which were then continued by stipulation and order to January 7 and 8, 2016. ECF 55 and 57. On November 17, 2015, the parties filed and lodged a joint pretrial stipulation, ECF 69 and 74, which the court approved by order entered on January 6, 2016, ECF 75. The court then vacated the January 7, 2016 trial date, ECF 70, and conducted the trial of this contested matter on January 8, 2016. At trial, Matthew F. Kennedy of the law firm of Robert A. Hessling, APC, appeared on behalf of Trustee, and Michael F. Che-kian, Attorney at Law, appeared on behalf of Debtor. Following trial, the court directed the parties to lodge proposed findings of fact and conclusions of law. On February 17, 2016, Trustee lodged his proposed findings of fact and conclusions of law, ECF 77, and on March 18, 2016, Debtor lodged her proposed findings of fact and conclusions of law, ECF 78. On March 31, 2016, Trustee filed objections to Debtor’s proposed findings of fact and conclusions of law. ECF 79. Thereafter, the court took the matter under submission. Having considered the moving and opposing papers, the exhibits and declarations attached therein, the undisputed facts set forth in their joint pretrial stipulation, ECF 69, approved by order entered on January 6, 2016, ECF 75, the evidence admitted at trial, the oral and written arguments of the parties, and the record before the court, the court makes the following findings of fact and conclusions of law pursuant to Rules 7052 and 9014 of the Federal Rules of Bankruptcy Procedure and Rule 52 of the Federal Rules of Civil Procedure. The court adopts as its findings of fact the Admitted Facts Nos. 1-55 at pages 1 through 8 of the Pretrial Stipulation, ECF 69, filed on November 17, 2015, as approved by order of this court on January 6, 2016, ECF 75, which are otherwise incorporated by reference herein to the extent not otherwise expressly referred to below. Any finding of fact that should be properly characterized ás a conclusion of law should be considered as such, and any conclusion of law that should be properly characterized as a finding of fact should be considered as such. I. BACKGROUND A. Debtor’s Background, Pre-Bankrupt-cy Dealings with Zwerdling, and Debtor’s Annuity Debtor has a high school diploma and three and one-half years of college where she studied business administration with — 336 — an emphasis in accounting but did not receive a degree. Trial Testimony of Divine Meda Aubry, January 8, 2016 at 11:28 a.m. Debtor worked in accounting for many years, as an office manager for an. insurance agency, and later became a pharmaceutical sales representative. Id., January 8, 2016 at 11:29 a.m. In about 2007, Debtor started a small business, Divine Blessings, a yoga-inspired clothing line. Id. In or about late 2011. or early 2012, Debtor befriended creditor Helene Barbara Zwerdling (“Zwerdling”) at the Agape International Spiritual Center in Culver City, California, where they both attended services. Pretrial Stipulation, ECF 69, at 3, ¶ 9. Debtor often conducted trade shows at the Agape International Spiritual Center where she displayed and sold Divine Blessings’s clothing products. Id. at 3, ¶ 10. During 2012, Zwerdling’s relationship with Debtor grew to the point where they talked on nearly a daily basis, and in or about September 2012, Debtor requested that Zwerdling loan Debtor the sum of $1,356 to pay for the fees associated with a trade show at the Long Beach Convention and Entertainment Center. Pretrial Stipulation at 3, ¶¶ 11 and 13. Pursuant to an oral agreement, Zwer-dling loaned Debtor the requested $1,356 for the Long Beach trade show, which Debtor repaid several weeks later. Pretrial Stipulation at 4, ¶ 14. Pursuant to a separate written loan agreement, Zwer-dling loaned Debtor an additional $2,500. Id. at 4, ¶ 15. In connection with the written loan agreement, Debtor told Zwerdling that Debtor had an annuity (the “Annuity”), that the annual Annuity payment would become due and payable to Debtor in mid-December 2012, and that Debtor would repay the loan out of the Annuity proceeds in late December 2012, which Debtor subsequently did. Id. at 4, 1Í1Í16 and 18. The Annuity was payable in 31 annual payments of $8,381, beginning December 19, 2008 and continuing through and including December 19, 2038. Id. at 6, ¶39. Thus, Debtor was aware that she owned an interest in the Annuity at least as of December 2012 and before she met with and retained Lisa F. Collins-Williams as her bankruptcy attorney to file her bankruptcy petition in this case in June 2013 as discussed below. In December 2012, Zwerdling loaned Debtor an additional $36,000 pursuant to a separate, written loan agreement, which required that Debtor make minimum payments of $8,000 per year with the payments to commence on January 10, 2013 and continue on the tenth day of each successive month. Pretrial Stipulation at 4, ¶ 19; Trustee’s Trial Exhibit D, Loan Agreement between Debtor and Helene Barbara Zwerdling. The total minimum loan payment of $8,000 per year approximated the annual Annuity payment collected by Debtor each December. Pretrial Stipulation at 4, ¶ 20. B. Debtor’s Dealings with Her Bankruptcy Counsel, Lisa F. Collins-Williams, Initial Petition Documents and 341(a) Meeting of Creditors Fearing that a creditor, Debtor’s landlord, might levy one of her bank accounts, on June 3, 2013, Debtor went to the Law Offices of Lisa F. Collins-Williams to obtain legal assistance. See Pretrial Stipulation at 5, ¶¶ 29 and 30; Trial Testimony of Divine Meda Aubry, January 8, 2016 at 11. While there, Debtor completed a bankruptcy questionnaire, Debtor’s Trial Exhibit 2, Bankruptcy Questionnaire, and met with Attorney Lisa F. Collins-Williams (“Collins-Williams”) for about 30 minutes to discuss Debtor’s financial situation and eligibility for relief under the — 337 — Bankruptcy Code. Trial Testimony of Divine Meda Aubry, January 8, 2016 at 11:36-11:37 a.m. On June 11, 2013, Debtor filed her petition for relief under Chapter 7 of the United States Bankruptcy Code, 11 U.S.C. Trustee’s Trial Exhibit U, Voluntary Chapter 7 Petition, ECF 1, filed on June 11, 2013. Jason M. Rund was duly appointed as the Chapter 7 Trustee of Debtor’s bankruptcy estate. See Notice of Chapter 7 Bankruptcy Case, Meeting of Creditors, & Deadlines, ECF 4, filed on June 11, 2013. Debtor’s bankruptcy schedules as part of her initial bankruptcy petition documents did not disclose any interest in the Annuity. Trustee’s Trial Exhibit V, Schedules and Statement of Financial Affairs, ECF 8, filed on June 25, 2013. Specifically, Item 10 on Schedule B-Personal Property, requested the Debtor to disclose any annuities (“10. Annuities. Itemize and name each issuer.”), but “None” was checked off on this item. Id., ECF 8 at 5. According to Debtor, when she met with Collins-Williams in preparing to file for bankruptcy, she filled out a bankruptcy questionnaire from Collins-Williams, which had no written inquiries about annuities or worker’s compensation awards, Collins-Williams did not review each line of the questionnaire, Collins-Williams did not ask her “if she had any retirement,” and Collins-Williams did not ask her any questions about her assets, except her clothing line. Debtor’s Proposed Findings of Fact and Conclusions of Law, ECF 78, filed on March 18, 2016, at 2, citing, Trial Testimony of Divine Meda Aubry, January 8, 2016, at 11:37-11:40 a.m. and Trial Testimony of Lisa F. Collins-Williams, January 8, 2016, at 1:02-1:03 p.m. and 1:30 p.m. In other words, Debtor’s excuse for not listing the Annuity as either an asset or an income item on her petition and original bankruptcy schedules is that she did not tell her lawyer about the Annuity because her lawyer did not ask. The court does not find that Debtor’s excuse to be satisfactory because the bankruptcy questionnaire, Debtor’s Trial Exhibit 2, Bankruptcy Questionnaire, asks for disclosure by Debt- or of assets and income items, which the Annuity was both, that is, an asset and an income item, and Debtor and her counsel met for 30 minutes to go over the bankruptcy questionnaire which clearly elicited information from Debtor about her assets and income items. Debtor’s explanation that the bankruptcy questionnaire did not specifically ask about annuities or only asked for “monthly” items of income as opposed to annual items of income like the Annuity is hyper-technical and does not excuse her lack of disclosure to her bankruptcy attorney about the existence of the Annuity asset and income. Debtor knew that she was hiring a bankruptcy attorney, Collins-Williams, to help her file a bankruptcy petition and start a bankruptcy case, that she was being asked information about her assets and income to disclose in her bankruptcy case, that she had an interest in the Annuity, a prepetition asset, and that she had received income from the Annuity, a prepetition income item, and that she did not disclose this information to her attorney, Collins-Williams, so that the information would not be on her bankruptcy petition and schedules as originally filed. At Debtor’s meeting of creditors under 11 U.S.C. § 341(a) on July 30, 2013, Trustee examined Debtor under oath, and Debtor testified, among other things, as follows: TRUSTEE RUND: Did you read and sign your bankruptcy petition, schedules, and statements? MS. AUBRY: Yes. TRUSTEE RUND: Are you personally familiar with everything contained in — 338 — your bankruptcy petition, schedules, and statements? MS. AUBRY: Yes. TRUSTEE RUND: To the best of your knowledge, is all that information true, correct, and complete? MS. AUBRY: Yes. TRUSTEE RUND: Any errors or omissions that you need to bring to my attention or the court’s attention? MS. AUBRY: No. TRUSTEE RUND: All of your assets are identified in. your bankruptcy schedules? MS. AUBRY: Yes. Pretrial Stipulation at 2-3, ¶6, quoting, Transcript of Section 341(a) Meeting of Creditors at [page:line(s) ] 5:13-6:7, Trustee’s Trial Exhibit F, Transcript of Section 341(a) Meeting of Creditors at 5:13-6:7. Debtor knew that she was testifying under penalty of perjury at the meeting of creditors. Trial Testimony of Divine Meda Aubry, January 8, 2016 at 11:36-11:37 a.m. Trustee filed a report of no distribution on July 31, 2013, Trustee’s Trial Exhibit W, Chapter 7 Trustee’s Report of No Distribution, ECF 10, Debtor received her discharge on September 16, 2013, ECF 14, and Debtor’s bankruptcy case was closed on September 20, 2013, Trustee’s Trial Exhibit X, Document re Close of Case, ECF 16. Pretrial Stipulation at 3, ¶¶ 7-8. C. The Reopening of Debtor’s Bankruptcy Case On December 28, 2013, Debtor, by her bankruptcy attorney, Collins-Williams, filed a motion to reopen Debtor’s bankruptcy case for the purpose of amending her Schedule F listing general unsecured creditors so that the debts owed to these creditors would be discharged. Debtor’s Motion to Reopen Case, ECF 17, filed on December 28, 2013. Specifically, Debtor meant to amend her Schedule F to add Zwerdling as a creditor because Debtor felt her friend Zwerdling was becoming “unbearable” and “disruptive” in trying to help Debtor with her business and in wanting Debtor to repay the loan, and thus, to make sure her debt to Zwerdling would also be discharged in bankruptcy. Trial Testimony of Divine Meda Aubry, January 8, 2016 at 11:58 a.m.-12:00 p.m. Debt- or’s bankruptcy schedules as part of her initial bankruptcy petition documents did not list Zwerdling as a creditor or her creditor’s claim. Trustee’s Trial Exhibit V, Schedules and Statement of Financial Affairs, ECF 8, filed on June 25, 2013. According to Debtor, she did not list Zwerdling as a creditor on her original bankruptcy schedules because she just obtained the loan from Zwerdling, she intended to pay Zwerdling back, she did not file her bankruptcy case to “wipe out” (i.e., discharge) her debt to Zwerdling and a staff member at the Law Office of Lisa F. Collins-Williams told her that it was “allowable” not to list all creditors on her bankruptcy petition. Debtor’s Proposed Findings of Fact and Conclusions of Law, ECF 78, filed on March 18, 2016, at 2, citing, Trial Testimony of Divine Meda Aubry, January 8, 2016, at 11:43 and 11:53-11:54 a,m. To some extent, the court finds Debtor’s trial testimony on these points to be credible that she did not list Zwerdling as a creditor because she intended to pay Zwerdling back and originally did not want to discharge her debt to Zwerdling with her bankruptcy case, which is corroborated by the list of creditors that Debtor prepared for her consultation with the Law Office of Lisa F. Collins-Williams with Zwerdling’s name and address crossed out. Id.; Debtor’s Trial Exhibit 3, Divine Au-bry Creditors [List] at 1. Collins-Williams testified at trial that she never told Debtor that Debtor had the option of listing all — 339 — creditors rather than it being a requirement and that as a matter of practice, she would never tell debtors that they had the option to list all creditors. Trial Testimony of Lisa F. Collins-Williams, January 8, 2016 at 1:07 p.m. On this point, the court finds that Collins-Williams is credible, and that if Debtor heard something to the contrary from someone on Collins-Williams’s staff as opposed to Collins-Williams, Debt- or could not have reasonably relied on staffs advice as opposed to the advice of the lawyer, Collins-Williams, and Debtor failed to take reasonable steps to clarify any purported guidance from staff. Debtor should have listed Zwerdling as a creditor on her bankruptcy schedules, which appears to have been a strategic choice that Debtor made on her own without her lawyer’s involvement. On December 28, 2013, Zwerdling spoke with Debtor about the non-payment of the $36,000 loan and thereafter corresponded with Debtor on various occasions regarding the non-payment of the loan. Pretrial Stipulation at 4, ¶ 22. Zwerdling’s concern grew inasmuch as Debtor had informed Zwerdling that Debtor had received her annual Annuity payment in December 2013, yet Debtor had not used any of those proceeds to pay Zwerdling because Debtor was having financial difficulties at the end of 2013. Id. at 4, ¶ 23; Trial Testimony of Helene Barbara Zwerdling, January 8, 2016 at 10:46-10:57 a.m.; Trial Testimony of Divine Meda Aubry, January 8, 2016 at 12:03 p.m. As a result of Debtor’s default on Zwer-dling’s loan, Zwerdling filed a small claims complaint against Debtor in the Los Ange-les County Superior Court, Southwest District — Zwerdling v. Aubry, Case No. ING 14S00939 (“Small Claims Action”) — seeking to collect the amount of $6,240 that was due and owing under the loan through April 2014. Pretrial Stipulation at 4-5, If 24. Thereafter, in or about mid-March 2014, Zwerdling received a letter from Collins-Williams from which Zwerdling first learned about Debtor’s bankruptcy case. Id. at 5, ¶ 25; Trustee’s Trial Exhibit J, Letter from Lisa F. Collins-Williams to Helene Barbara Zwerdling and Enclosures (Order Denying Debtor’s Motion to Reopen Case and Discharge of Debtor), Enclosed with Collins-Williams’s letter were copies of a Discharge of Debtor order and an Order Denying Debtor’s Motion to Reopen Case, which indicated that Debtor had filed a motion on December 28, 2013 to reopen the bankruptcy case to add a certain creditor to her bankruptcy schedules. Pretrial Stipulation at 5, ¶ 26. Zwerdling had not known of Debtor’s bankruptcy case until she received Collins-Williams’s letter. Trial Testimony of Helene Barbara Zwerdling, January 8, 2016 at 11:06-11:07 a.m. In or about late March 2014 and April 2014, Zwerdling corresponded by mail and email with Collins-Williams regarding Debtor’s bankruptcy filing. Pretrial Stipulation at 5, ¶ 27. In Zwerdling’s responsive email correspondence dated April 1, 2014, Zwerdling reminded Collins-Williams that, among other things, Collins-Williams had filed the motion to reopen the bankruptcy case on December 28, 2013 to add Zwer-dling as a creditor and therefore knew about Zwerdling and the loan agreement with Debtor for about two months before Zwerdling filed the Small Claims Action. Id. at 5, ¶ 28; Trustee’s Trial Exhibit L, EMail Correspondence (1) between Helene Barbara Zwerdling and Debtor and EMail Correspondence (5) between Helene Barbara Zwerdlin and Lisa F. Collins-Williams. Zwerdling subsequently notified the United States Trustee about Debtor’s unscheduled assets including the Annuity. Pretrial Stipulation at 5, ¶ 31; Trial Testi340 many of Helene Barbara Zwerdling, January 8, 2016 at 11:16 a.m. On April 14, 2014, as a result of the information provided by Zwerdling, the United States Trustee filed an ex parte motion to reopen the case to administer unscheduled assets consisting of the interest in Divine Blessings, the Divine Blessings Account and any other possible unscheduled assets. Id. at 5-6, ¶¶ 31-32; Trustee’s Trial Exhibit Y, U.S. Trustee’s Ex Parte Motion to Reopen Bankruptcy Case under 11 U.S.C. § 350(b) for the Purpose of Appointing Chapter 7 Trustee to Administer Assets, ECF 21. By an order entered on April 16, 2014, the ex parte motion was granted and the case was reopened. Trustee’s Trial Exhibit Z, Order on U.S. Trustee’s Motion to Reopen Case, ECF 22. Trustee was re-appointed as the Chapter 7 Trustee and withdrew his prior no distribution report. Notice of Appointment of Trustee as Interim Trustee in a Reopened Case, ECF 24, filed on April 23, 2014, and Notice Withdrawing Trustee’s Report of No Distribution, ECF 25, filed on April 24, 2014. D. Debtor’s First Amended Bankruptcy Schedules On April 28, 2014, over ten months after Debtor filed her initial petition documents, Debtor filed her first amended Schedules B, F, I and J (“First Amended Schedules”) and Statement of Financial Affairs. Trustee’s Trial Exhibit AA, Amended Schedules B, F, I and J and Statement of Financial Affairs, ECF 26. On her First Amended Schedule B, Personal Property, Debtor listed, among other personal property, the Divine Blessings Account, four other bank accounts, clothing inventory with an aggregate scheduled value of $5,700, and the Annuity with a value of $0.00, which she described as follows: HARTFORD LIFE INDURANCE [sic] COMPANIES ANNUITY Location: In debtor’s possession YEARLY PAYMENT $8,381 Id. at 4-6. This was the first time in the bankruptcy case that Debtor disclosed any interest in the Annuity as a prepetition asset or item of income. On her First Amended Schedule F, Creditors Holding Unsecured Nonpriority Claims, Debtor also added listings of several unsecured nonpriority claims of creditors including Zwerdling’s $36,000 claim. Trustee’s Trial Exhibit AA, Amended Schedules B, F, I and J and Statement of Financial Affairs, ECF 26, filed on April 28, 2014, at 10. On her First Amended Schedule I, Your Income, and, in addition to her monthly pension or retirement income of $1,150, Debtor listed her monthly Annuity income of $698 and her monthly income of $900 from her business. Id. at 15. At this time, Debtor did not file an amended Schedule C, Property Claimed as Exempt, and therefore did not claim an exemption in the Annuity. Id. at 1-27. E. Trustee’s Post-Reopening Acts Trustee’s preliminary investigation revealed, among other things, that: (a) the Annuity was payable in 31 annual payments of $8,381, beginning December 19, 2008 and continuing through and including December 19, 2038; and (b) Hartford Ce-besco purchased the Annuity from the Hartford Life Insurance Company (“Hartford”) in connection with a structured settlement with Debtor. Pretrial Stipulation at 6, ¶ 39. Trustee retained the law firm of Robert A. Hessling, APC, as his general counsel in this bankruptcy case to assist him with, among other matters, collecting the Annuity payments and liquidating Trustee’s right, title and interest in the Annuity. Pretrial Stipulation at 7, ¶ 40; Trustee’s Trial Exhibit BB, Application of Trustee — 341 — to Employ Robert A. Hessling, APC, as General Counsel for Trustee-, and Declarations of Jason M. Rund and Robert A. Hessling. On July 9, 2014, Trustee filed a Notification of Asset Case and a Notice of Possible Dividend and Order Fixing Time to File Claims, which scheduled a claims bar date of October 14, 2014. Trustee’s Trial Exhibit CC, Notification of Asset Case and Notice of Possible Dividend and Order Fixing Time to File Claims, ECF 29. By an order entered on August 1, 2014, the court authorized the employment of Robert A. Hessling, APC, as Trustee’s general counsel, with an effective employment date of June 19,2014. Trustee’s Trial Exhibit EE, Order Authorizing Employment of Robert A. Hessling, APC, as General Counsel for Trustee, ECF 34. Robert A. Hessling, APC, assisted Trustee with, among other matters, collecting the Annuity payments and seeking to liquidate Trustee’s right, title and interest in the Annuity by, among other things: a. communicating with Collins-Williams regarding the turnover of the Annuity payments to Trustee; b. seeking to locate prospective purchasers; c. communicating with representatives of JG Wentworth regarding the purchase and sale of Trustee’s right, title and interest in the Annuity; d. after negotiations, reaching a tentative agreement on Trustee’s behalf with JG Wentworth regarding such purchase and sale; e. reviewing drafts of sale documents from JG Wentworth, and preparing an addendum to such documents; and f. demanding on Trustee’s behalf that Hartford turn over the future annual Annuity payments. Trustee’s Trial Exhibit BB, Application of Trustee to Employ Robert A. Hessling, APC, as General Counsel for Trustee; and Declarations of Jason M. Rund and Robert A. Hessling, ECF 27, filed on July 7, 2014; Pretrial Stipulation at 7, ¶ 43. Further exchanges of documents and extensive negotiations between Robert A. Hessling, APC, and another party, JG Wentworth, a prospective purchaser, ensued, but JG Wentworth decided not to purchase the Annuity. Pretrial Stipulation at 7, ¶44. Moreover, Hartford initially failed to respond to Trustee’s request for turnover of the Annuity payments, but ultimately complied and remitted the December 2014 Annuity payment of $8,381 to Trustee. Id. at 8, ¶ 46. On September 10, 2014, the United States Trustee filed an ádversary proceeding against Debtor, United States Trustee for the Central District of California, Region 16, v. Divine Meda Aubry, Adv. No. 2:14-ap-01595-RK, seeking the revocation of Debtor’s discharge based upon, among other things, Debtor’s alleged knowing and intentional omissions of her interests in assets, income and debts in her bankruptcy petition and bankruptcy schedules (i.e., Trustee’s Trial Exhibits U and V, Voluntary Chapter 7 Petition and Schedules and Statement of Financial Affairs, ECF 1 and 8). F. Debtor’s Second Amended Bankruptcy Schedules On May 6, 2015, nearly two years after Debtor’s first bankruptcy petition and schedules were filed in this bankruptcy case and over one year since Debtor’s bankruptcy case was reopened and since Debtor filed her first amended bankruptcy schedules, Debtor filed amended bankruptcy schedules for a second time, amending Schedules A through J (“Second Amended Schedules”) and Debtor’s Statement of Financial Affairs. Debtor’s Trial Exhibit [, [Second] Amended bankruptcy schedules — 342 — filed as document 44 on 05/06/15, EOF 44. On Debtor’s Second Amended Schedule B, Debtor lists the Annuity with the following, more detailed information: Worker’s Compensation Award: payout as structured settlement annuity from The Hartford as part of settlement of worker’s compensation case number WC 0539172 which were supposed to commence 12/19/2008, but did not commence until 2013. Annual payments of $8381 through and including 12/19/2038. The annuity has no cash surrender value. Listing estimated value of future payments as of 6/11/2013, which are reasonably needed for Debtor’s health, maintenance and support. Location: In insurance company’s possession Id. at 21. On the Second Amended Schedule B, Debtor valued the Annuity at $217,906. Id. With the Second Amended Schedules, for the first time, Debtor filed an amended Schedule C-Property Claimed as Exempt (“First Amended Schedule C”), wherein she claimed an exemption in the Annuity pursuant to California Code of Civil Procedure § 703.140(,b)(10)(C). Id. at 25. II. DISCUSSION A. Burden of Proof on Validity of Debt- or’s Exemption Claim under California Code of Civil Procedure § 703.140(b)(10)(C) On Debtor’s First Amended Schedule C, Property Claimed as Exempt, as part of her Second Amended Schedules, Debtor claimed the Annuity, which she listed as a “Worker’s Compensation Award”, as exempt under California Code of Civil Procedure § 703.140(b)(10)(C). Pursuant to California Code of Civil Procedure § 703.140(b)(10)(C), the debtor may elect to exempt the right to receive “[a] disability, illness, or unemployment benefit.” “Workers’ compensation benefits are generally treated as disability benefits and thus exempt without regard to amount or whether the award is necessary for the support of the debtor (or debtor’s dependents).” 2 March, Ahart and Shapiro, California Practice Guide: Bankruptcy, ¶ 7:626 at 7-81 (2015) (emphasis in original), citing, In re Cain, 91 B.R. 182, 183 (Bankr. N.D. Ga. 1988) (construing 11 U.S.C. § 522(d)(10)(C), which verbatim mirrors the language of California Code of Civil Procedure § 703.140(b)(10)(C); In re LaBelle, 18 B.R. 169, 170 (Bankr. D. Me. 1982) (same); Matter of Evans, 29 B.R. 336, 338 (Bankr. D.N.J. 1983) (same); see also, In re Jones, 446 B.R. 466, 473 (Bankr. D. Kan. 2011) (construing 11 U.S.C. §§ 522(d)(10)(C) and (E), whose language verbatim mirrors California Code of Civil Procedure §§ 703.140(b)(10)(C) and (E), and observing that notwithstanding 11 U.S.C. § 522(d)(10)(E)’s “reasonably necessary” requirement, workers’ compensation benefits are exemptible under 11 U.S.C. § 522(d)(10)(C) because they are inherently limited in amount and thus may be assumed to already be curtailed to an amount reasonably necessary to support the debtor). Nonetheless, regarding whether Debtor can exempt the Annuity under California Code of Civil Procedure § 703.140(b)(10)(C), as claimed on Debtor’s First Amended Schedule C, the court considers whether Debtor or Trustee has the burden of proof on California Code of Civil Procedure § 703.140(b)(10)(C). Under 11 U.S.C. § 522(1), “[u]nless a party in interest objects, the property claimed as exempt on such list is exempt.” Rule 4003(c) of the Federal Rules of Bankruptcy Procedure provides with respect to exemption objections that “the objecting party has the burden of proving that the exemptions are not properly claimed.” However, state law set forth in California Civil Code § 703.580(b) provides for a dif — 343 — ferent burden of proof with respect to exemption objections: “At a hearing under this section, the exemption claimant has the burden of proof.” In In re Carter, 182 F.3d 1027 (9th Cir. 1999), relying upon Rule 4003(c) of the Federal Rules of Bankruptcy Procedure, the Ninth Circuit held that the objecting party has the burden of production and persuasion: A claimed exemption is presumptively valid ... Initially, this means that the objecting party has the burden of production and the burden of persuasion. The objecting party must produce evidence to rebut the presumptively valid exemption. If the objecting party can produce evidence to rebut the exemption, the burden of production then shifts to the debtor to come forward with unequivocal evidence to demonstrate that the exemption is proper. The burden of persuasion, however, always remains with the objecting party. 182 F.3d at 1029 n. 3, citing inter alia, Fed. R. Bankr. P. 4003(c) (also noting “there was sustained discussion and some disagreement in the bankruptcy court and the BAP concerning burdens of proof, production and persuasion”; other citations and quotations omitted); see also, In re Diaz, 547 B.R. 329, 336 (9th Cir. BAP 2016) (discussing the burden of proof under Rule 4003(c) as stated in In re Carter). Subsequently, the United States Supreme Court in Raleigh v. Illinois Department of Revenue, 530 U.S. 15, 120 S.Ct. 1951, 147 L.Ed.2d 13 (2000) held that because the burden of proof is a substantive element of state law, when state law is applied in federal cases, that state’s burden of proof is applicable. 530 U.S. at 20-21, 120 S.Ct. 1951 (“[d]o the State’s right and the taxpayer’s obligation include the burden of proof? Our cases point to an affirmative answer. Given its importance to the outcome of cases, we have long held the burden of proof to be a ‘substantive’ aspect of a claim. That is, the burden of proof is an essential element of the claim itself; one who asserts a claim is entitled to the burden of proof that normally comes with it.” (citations omitted)); see also, In re Diaz, 547 B.R. at 336-337 (discussing the impact of Raleigh v. Illinois Department of Revenue on the use of burden of proof under state law for deciding an exemption objection). Regarding whether a claimed exemption under state law invalidates the burden of proof allocation set forth in Rule 4003(c) of the Federal Rules of Bankruptcy Procedure, to date, “there is no binding authority that explicitly changes the burden allocation set forth in Carter or FRBP 4003(c).” In re Gilman, 544 B.R. 184, 196 (Bankr. C.D. Cal. 2016). As noted in In re Gilman, in post-Raleigh cases, the Ninth Circuit itself has not addressed the issue and although the Bankruptcy Appellate Panel for the Ninth Circuit (“BAP”) has recognized the conflict between the Supreme Court’s holding in Raleigh and the Ninth Circuit’s holding in Carter, “post-Raleigh BAP decisions on exemptions are unpublished, do not address the burden of proof issue or conclude[ ] that either burden allocation would result in the same disposition.” Id. citing, In re Elliot, 523 B.R. 188, 192 (9th Cir: BAP 2014) (applying the Carter burden allocation without addressing California Code of Civil Procedure § 703.580(b)); In re Neff, 2014 WL 448885, slip op. at *8 (9th Cir. BAP 2014) (unpublished decision) (same); In re Karr, 2006 WL 6810996, slip op. at * 5 n. 4 (9th Cir. BAP 2006) (unpublished decision); In re Stanley, 2006 WL 6811019, slip op. at *2 (9th Cir. BAP 2006) (unpublished decision); In re Davis, 323 B.R. 732, 736 (9th Cir. BAP 2005) (same) and 323 B.R. at 742-744 (concurring opinion of Judge Klein, discussing why California Code of — 344 — Civil Procedure § 703.580(b) may be the correct burden); In re Kelley, 300 B.R. 11, 16-17 (9th Cir. BAP 2003) (applying the Carter burden allocation without addressing California Code of Civil Procedure § 703.580(b)). This year in In re Diaz, in the absence of Ninth Circuit authority following Raleigh v. Illinois Department of Revenue, the BAP decided that the reasoning of Raleigh supersedes the rule regarding burden of proof stated in In re Carter when it held that “where a state law exemption statute specifically allocates the burden of proof to the debtor, Rule 4003(c) does not change that allocation.” Nonetheless, as explained below, in the absence of controlling case law from the Ninth Circuit or the Supreme Court, because the court determines that Debtor is entitled to exempt the Annuity under California Code of Civil Procedure § 703.140(b)(10)(C) under either burden of proof allocation, the court need not decide whether Debtor or Trustee has the burden of proof. See, In re Arnold, 471 B.R. 578, 588-590 (Bankr. C.D. Cal. 2012) (setting forth this court’s analysis why BAP decisions are not generally controlling on the bankruptcy courts in this circuit); see also, Zachary v. California Bank & Trust, 811 F.3d 1191, 1193 n. 1 (9th Cir. 2016) (the precedential effect of BAP decisions remains an open question in this circuit). Applying the burden set forth in California Code of Civil Procedure § 703.580(b), placing the burden of proof on the party claiming the exemption, that is, if Debtor has the burden to prove Debt- or’s right to receive a disability benefit as exempt under California Code of Civil Procedure § 703.140(b)(10)(C), based on the evidence that Debtor offered and the court received at trial, this court would determine that Debtor has made the requisite prima fade evidentiary showing that Debtor is entitled to exempt the Annuity under California Code of Civil Procedure § 703.140(b)(10)(C). See, In re Diaz, 547 B.R. at 337, citing inter alia, California Code of Civil Procedure § 703.580(b). First, the undisputed facts set forth in paragraphs 16 and 39 of the Joint Pretrial Stipulation indicate that Debtor has an Annuity, which Hartford Cebesco purchased from the Hartford Life Insurance Company in connection with a structured settlement with Debtor. Second, on Debt- or’s Second Amended Schedule B, Debtor disclosed the asset in question as a “worker’s compensation award: payout as structured settlement annuity as part of worker’s compensation case .... ” Debtor’s Trial Exhibit I, Amended bankruptcy schedules filed as document Ik on 05/06/15, ECF 44, at 21. Third, at trial, in Debtor’s case-in-chief, Debtor testified that she suffered a work-related injury that caused her to be out of work for ten years and that Debtor owned the Annuity when she first visited Collins-Williams’ office for a pre-bankruptcy consultation on June 3, 2013. Trial Testimony of Divine Meda Aubry, January 8, 2016 at 11:29 and 11:38 a.m. No other documentary or oral evidence from Debtor was received at trial regarding the nature and character of the Annuity. Based thereupon, the court finds that the Annuity stems from the work-related injury that caused Debt- or to be out of work for ten years, and thus, the court determines that under California Code of Civil Procedure § 703.580(b), Debtor has met her burden of demonstrating that she is entitled to receive a disability, illness, or unemployment benefit for purposes of claiming an exemption under California Code of Civil Procedure § 703.140(b)(10)(C). Accordingly, the burden of production then shifts to Trustee to produce rebuttal evidence that the Annuity should be characterized as something other than a disability benefit. Because Trustee failed to offer any such — 345 — rebuttal evidence, the court would determine that under the burden allocation set forth in California Code of Civil Procedure § 703.580(b), Debtor’s claim of exemption in the Annuity under California Code of Civil Procedure § 703.140(b)(10)(C) should be allowed. Nonetheless, applying the burden set forth in Rule 4003(c) of the Federal Rules of Bankruptcy Procedure, that is, if Trustee has the burden of persuasion to disprove Debtor’s right to claim the exemption for a disability benefit under California Code of Civil Procedure § 703.140(b)(10)(C), based on the evidence Trustee offered and the court received, this court would determine that Trustee has failed to meet his burden of persuasion that Debtor is not entitled to claim the Annuity as exempt under California Code of Civil Procedure § 703.140(b)(10)(C) because Trustee did not offer any oral or documentary evidence to prove that the Annuity should be characterized as something other than a disability benefit. Furthermore, through admitted facts in paragraphs 16 and 39 in the Joint Pretrial Stipulation, Trustee admits that Debtor has the Annuity, which Hartford Cebesco purchased from the Hartford Life Insurance Company in connection with a structured settlement with Debtor. Accordingly, the court determines that Trustee has not met his burden of persuasion under Rule 4003(c) that the Annuity is not exempt under California Code of Civil Procedure § 703.140(b)(10)(C). Therefore, under either burden of proof allocation, the court determines that Debt- or is entitled to claim the Annuity as exempt pursuant to California Code of Civil Procedure § 703.140(b)(10)(C) in full. B. Equitable Estoppel Notwithstanding the court’s determination that Debtor is entitled to claim the Annuity as exempt under California Code of Civil Procedure § 703.140(b)(10)(C), for the reasons described below, the court determines that Debtor should be equitably estopped from exempting the Annuity under California Code of Civil Procedure § 703.140(b)(10)(C). “[W]hen a debtor claims a state-created exemption, the exemption’s scope is determined by state law, which may provide that certain types of debtor misconduct warrant denial of the exemption.” Law v. Siegel, — U.S.-, -, 134 S.Ct. 1188, 1196-1197, 188 L.Ed.2d 146 (2014) (emphasis in original); accord, In re Lua, 529 B.R. 766, 774 (Bankr. C.D. Cal.), affirmed, 551 B.R. 448, 452 (C.D. Cal. 2015), appeal pending, No. 15-56814 (9th Cir., notice of appeal filed on November 24, 2015). Under California law, five elements must be present for the doctrine of equitable estoppel to apply: (a) a representation or concealment of material facts; (b) made with knowledge, actual or virtual, of the facts; (c) to a party ignorant, actually and permissibly, of the truth; (d) with the intention, actual or virtual, that the ignorant party act on it; and (e) that party was induced to act on it. Simmons v. Ghaderi, 44 Cal.4th 570, 584, 80 Cal.Rptr.3d 83, 187 P.3d 934 (2008), citing, 13 Witkin, Summary of California Law,. Equity, § 191 at 527-528 (2005); accord, In re Lua, 551 B.R. at 453. The party asserting equitable estoppel has the burden of proof. Busching v. Superior Court, 12 Cal.3d 44, 53, 115 Cal.Rptr. 241, 524 P.2d 369 (1974) (“Unless the record affirmatively discloses the existence of a sufficient excuse or the basis for an estoppel.”) (citations omitted). By the Motion, Trustee argues that Debtor’s claimed exemption under Califor — 346 — nia Code of Civil Procedure § 703.140(b)(10)(C) in the Annuity should be disallowed based on the doctrine of equitable estoppel. 1. Representation or Concealment of Material Fact (first element) The party against whom equitable estop-pel is sought must have represented or concealed a material fact. Young v. Horizon West, Inc., 220 Cal.App.4th 1122, 1131-1132, 163 Cal.Rptr.3d 704 (2013); accord, In re Lua, 551 B.R. at 453. Here, Debtor’s First Amended Schedules, filed in this case on April 28, 2014, constitutes a representation by Debtor that she was not claiming an exemption in the Annuity. See In re Lua, 529 B.R. at 776. Additionally, Debtor’s silence on her claim of exemption for her Annuity from April 28, 2014, the date on which her First Amended Schedules were filed, to May 6, 2015, the date on which her Second Amended Schedules claiming the Annuity as exempt property for the first time were filed, constitutes a concealment for purposes of equitable estoppel. Debtor concealed from Trustee and the court that she would file her Second Amended Schedules claiming the Annuity as exempt. The court also finds that the representation and concealment were material because on Debt- or’s Second Amended Schedules, Debtor valued the Annuity at $217,906, by far Debtor’s most valuable asset, which comprises the largest portion of her total assets valued on her Second Amended Schedules at $335,744.09. Furthermore, the materiality of Debtor’s representation of no claim of exemption and concealment of a claim of exemption is underscored by the fact that on Debtor’s First Amended Schedules, Debtor valued the Annuity at $0, which is not the true value of this asset. Moreover, further back in this case, Debtor’s original Schedules, filed on June 25, 2013, constitute a representation by Debtor that she was not claiming an exemption in the Annuity as she had not even listed the Annuity as an asset owned by her as of the petition date. See In re Lua, 529 B.R. at 776. Additionally, Debt- or’s silence on listing the Annuity as an asset or an item of income owned by her as of the petition date and on her claim of exemption for her Annuity from June 25, 2013, the’date on which her original Schedules were filed, to May 6, 2015, the date on which her Second Amended Schedules claiming the Annuity as exempt property for the first time were filed, also constitutes a concealment for purposes of equitable estoppel. Debtor concealed the existence of the Annuity from her bankruptcy attorney, Trustee and creditors so that the Annuity would not be disclosed on her bankruptcy schedules as either an asset or an income item. The court also finds that the representation and concealment were material because on Debtor’s Second Amended Schedules, Debtor valued the Annuity at $217,906, by far Debtor’s most valuable asset, which comprises the largest portion of her total assets valued on her Second Amended Schedules at $335,744.09, which information was not disclosed either on her original bankruptcy petition and schedules and on her first amended bankruptcy schedules. Accordingly, the court determines that Trustee has proven by the preponderance of the evidence that the first element of equitable estoppel, Representation or Concealment of Material Fact, is met. 2. Made with Knowledge of the Facts (second element) The party against whom estoppel is sought must also have had knowledge of the facts. City of Long Beach v. Mansell, 3 Cal.3d 462, 491 and n. 28, 91 Cal.Rptr. 23, 476 P.2d 423 (1970); accord, In re Lua, 551 B.R. at 453. Furthermore, as stated by the — 347 — California Supreme Court in City of Long Beach v. Mansell, [The requirement of actual knowledge of the true facts on the part of the party to be estopped] applies in its full force only in cases where the conduct creating the estoppel consists of silence or acquiescence. It does not apply where the party, although ignorant or mistaken as to the real facts, was in such a position that he ought to have known them, so that knowledge will be imputed to him. In such a case, ignorance or mistake will not prevent an estoppel. 3 Cal.3d at 491 and n. 28, 91 Cal.Rptr. 23, 476 P.2d 423 (citation omitted). Throughout Debtor’s written opposition to the Motion and in her testimony at trial, she asserted that she did not review her initial bankruptcy schedules and her First Amended Schedules before they were filed with the court, nor did she sign any of the accompanying electronic filing declarations. The court observes that the electronic filing declaration attached to the First Amended Schedules, which were filed on April 28, 2014, is a photocopy of the electronic filing declaration attached to Debt- or’s initial schedules, which were filed on June 11, 2013, and based on Debtor’s trial testimony, Debtor did not sign either of the electronic filing declarations. While this constitutes a violation of Local Bankruptcy'Rule 1002-l(f), it does not negate the fact that Debtor ought to have known that she did not claim an exemption in the Annuity on her initial and first amended bankruptcy schedules and that Trustee had the opportunity and intent to collect and liquidate the Annuity as an asset of the bankruptcy estate. At Debtor’s 11 U.S.C. § 341(a) meeting of creditors on July 30, 2013, she testified under oath that she had read and signed her bankruptcy petition, schedules and statements, and was personally familiar with everything contained therein. Yet at trial, Debtor testified that she incorrectly said such at the meeting of creditors because she was nervous and was not aware that she was concealing anything on those documents. Trial Testimony of Divine M. Aubry, January 8, 2016 at 11:55-11:57 a.m. Irrespective of whether Debtor reviewed her original bankruptcy schedules and signed the accompanying electronic filing declaration, through her statements under oath at the 11 U.S.C. § 341(a) meeting of creditors on July 30, 2013, as of that date, Debtor was on notice of her duties and rights under the Bankruptcy Code, including the duty to list the Annuity as an asset on her bankruptcy schedules and to make her claim that it was exempt property. See 11 U.S.C. § 521(a)(1)(B) (stating that the debtor must file a schedule of assets and liabilities “unless the court orders otherwise”); see also, 4 Resnick and Sommer, Collier on Bankruptcy, ¶-521.03[2] at 521-14 and n. 16 (16th ed. 2016) (“The debtor has a duty to prepare schedules carefully, completely and accurately.”), citing, Cusano v. Klein, 264 F.3d 936 (9th Cir. 2001). “A debtor cannot, merely by playing ostrich and burying his head deeply enough in the sand, disclaim all responsibility for statements which he has made under oath.” In re Retz, 606 F.3d 1189, 1199 (9th Cir. 2010) (citation omitted). “Every debtor has a continuing duty to assure the accuracy and completeness of schedules. Postpetition discovery of rights that actually existed at the time of filing must be addressed in the schedules. This implies a duty to amend.” Searles v. Riley (In re Searles), 317 B.R. 368, 378 (9th Cir. BAP 2004), affirmed, 212 Fed.Appx. 589 (9th Cir. 2006); see also, 11 U.S.C. § 521(a)(1); Federal Rule of Bankruptcy Procedure 1007; In re Rolland, 317 B.R. 402, 413 (Bankr. C.D. Cal; 2004) (“Full and comprehensive disclosure is critical to the integri — 348 — ty of the bankruptcy process.”), citing-, Heidkamp. v. Whitehead (In re Whitehead), 278 B.R. 589, 594 (Bankr. M.D. Fla. 2002) (“The veracity of the debtor’s Statement is absolutely essential to the successful administration of the Bankruptcy Code.”). Regarding Debtor’s First Amended Schedules, at trial, Debtor testified that she did not review them before they were filed, nor did she sign the accompanying electronic filing declaration. Trial Testimony of Divine M. Aubry, January 8, 2016 at 12:05-12:07 p.m. Yet Debtor also admitted in her trial testimony that she had input in the First Amended Schedules. Trial Testimony of Divine M. Aubry, January 8, 2016 at 12:06-12:07 p.m. Again, irrespective of whether Debtor reviewed the First Amended Schedules and signed the accompanying electronic filing declaration, through her statements under oath at the 11 U.S.C. § 341(a) meeting of creditors on July 30, 2013, at least on this record as of that date, Debtor was on notice of her duties and rights under the Bankruptcy Code, including the duty to list the Annuity as an asset on her bankruptcy schedules and to make her claim that it was exempt property. Furthermore, beyond the July 30, 2013 11 U.S.C. § 341(a) meeting of creditors, the court observes that Debtor had other sufficient notice of Trustee’s opportunity and intent to collect and liquidate the Annuity as an asset of the bankruptcy estate, information which Debtor sat on until May 6, 2015 when Debtor filed her Second Amended Schedules and claimed an exemption in the Annuity for the first time. For example, Debtor’s testimony that she had input in the First Amended Schedules demonstrates that Debtor had notice that her bankruptcy schedules were being amended before April 28, 2014 to list a previously undisclosed asset, the Annuity, after her creditor, Zwerdling, informed the United States Trustee that Debtor had failed to disclose this asset in Debtor’s bankruptcy petition documents. Debtor did not want Zwerdling to collect on the Annuity after Zwerdling asked for payment on her loan based on Debtor’s agreement to pay Zwerdling back from the annual payments from the Annuity paid to Debtor each December, so instead of paying Zwerdling as Debtor promised from her December 2013 Annuity payment, Debtor used the money for other purposes and had her attorney, Collins-Williams, move to reopen Debtor’s bankruptcy case to amend her bankruptcy schedules to add Zwerdling, a creditor previously known to Debtor, but not previously listed by Debtor on her schedules, to make sure that any debt owed by Debtor to Zwerdling would be discharged. Moreover, the court observes that Debtor had other sufficient notice of Trustee’s opportunity and intent to collect and liquidate the Annuity, including the following: on July 7, 2014, Debtor was served with a copy of Trustee’s application to employ Robert A. Hessling, APC, as Trustee’s general counsel, which expressly states that Trustee sought such services to, among other things, collect and liquidate the Annuity, EOF 27; on July 9, 2014, Debtor was also served with a copy of Trustee’s Notification of Asset Case, ECF 30; and at trial, Debtor testified that she first learned of her First Amended Schedules when Debtor’s deposition was taken by the U.S. Trustee in December 2014. Trial Testimony of Divine M. Aubry, January 8, 2016 at 11:46 a.m. Thus, at a minimum, Debtor ought to have known of her opportunity to claim an exemption in the Annuity such that knowledge should be imputed to her under City of Long Beach v. Mansell, 3 Cal.3d 462, 491 and n. 28, 91 Cal.Rptr. 23, 476 P.2d 423 when the First Amended Schedules were filed in April 2014 on her behalf by her attorney as she admittedly had input in these amended — 349 — schedules and was served with Trustee’s papers to reopen the case and retain counsel to pursue the value of the Annuity shortly thereafter by July 2014. Accordingly, the court determines that Trustee has proven by the preponderance of the evidence that the second element of equitable estoppel, Made with Knowledge of the Facts, is met. 3. To a Party Ignorant of the Truth To invoke equitable estoppel against Debtor, Trustee must also demonstrate that he was “ignorant, actually and permissibly, of the truth.” Simmons v. Ghaderi, 44 Cal.4th at 584, 80 Cal.Rptr.3d 83, 187 P.3d 934; accord, In re Lua, 551 B.R. at 454. Here, the evidence indicates that Trustee had no knowledge or indication that Debtor was going to file her Second Amended Schedules and claim the Annuity as exempt. From Trustee’s conduct following the filing of Debtor’s First Amended Schedules, which includes communications with Debtor’s counsel, Collins-Williams, regarding turnover of the Annuity and collection of the first Annuity payment in December of 2014, and Trustee’s employment of Robert A. Hessling, APC, for the purpose of collecting the Annuity payments and liquidating Trustee’s right, title and interest in the Annuity as a prepetition asset of the bankruptcy estate, the court infers that Trustee was not aware that Debtor intended to claim an exemption in the Annuity. Trustee, who has been on the panel of Chapter 7 Trustees since 2003 and has administered over 15,000 Chapter 7 bankruptcy cases, Trial Testimony of Jason M. Rund, January 8, 2016 at 9:26 a.m., would not have undertaken the above-described actions and incurred thousands of dollars of professional fees and expenses to the bankruptcy estate had Trustee known that Debtor would amend her Schedule C to claim the Annuity as exempt property. Specifically, Trustee’s counsel has incurred $11,287 in professional fees relating to the Annuity as of the date the Motion was filed, June 2, 2015. Trustee’s Trial Exhibit HH; Motion, Declaration of Robert A. Hessling at ¶ 6. Accordingly, the court determines that Trustee has proven by the preponderance of the evidence that the third element of equitable estoppel, To a Party Ignorant of the Truth, is met. 4. With the Intention that the Ignorant Party Act on it Although equitable estoppel requires a finding of intent, City of Long Beach v. Mansell, 3 Cal.3d at 490, 91 Cal. Rptr. 23, 476 P.2d 423, Trustee need not prove that the debtor intended to deceive him to create an equitable estoppel since: it is enough if the party has been induced to refrain from using such means or taking such action as lay in his power, by which he might have retrieved his position and saved himself from loss ... Where the delay in commencing action is induced by the conduct of the defendant it cannot be availed of by him as a defense. Superior Dispatch, Inc. v. Insurance Corporation of New York, 181 Cal.App.4th 175, 186, 104 Cal.Rptr.3d 508 (2010), citing, Lantzy v. Centex Homes, 31 Cal.4th 363, 384, 2 Cal.Rptr.3d 655, 73 P.3d 517 (2003); accord, In re Lua, 529 B.R. at 777. “An estoppel may arise although there was no designed fraud on the part of the person sought to be estopped.” Lantzy v. Centex Homes, 31 Cal.4th at 384, 2 Cal. Rptr.3d 655, 73 P.3d 517; Vu v. Prudential Property & Casualty Insurance Company, 26 Cal.4th 1142, 1152, 113 Cal.Rptr.2d 70, 33 P.3d 487 (2001); see also, Crestline Mobile Homes Manufacturing Co. v. Pacific Finance Corp., 54 Cal.2d 773, 778-779, 8 Cal.Rptr. 448, 356 P.2d 192 (1960) (“Negligence that is careless and culpable conduct is, as a matter of law, equivalent to an — 350 — intent to deceive and will satisfy the element of fraud necessary to an estoppel”). Silence may be used as evidence of fraudulent intent. In re Lua, 529 B.R. at 777, citing, R.D. Reeder Lathing Company, Inc. v. Allen, 66 Cal.2d 373, 378, 57 Cal. Rptr. 841, 425 P.2d 785 (1967). Based on Debtor’s silence about the Annuity in failing to list it as an asset on her original bankruptcy schedules, then listing it on her First Amended Schedules, but not claiming an exemption when she finally listed it as an asset on her First Amended Schedules, and much later claiming it as exempt on her Second Amended Schedules, the court finds that the element of intent is satisfied. Although Debtor claims that she was unaware of the contents of her First Amended Schedules when they Were filed on April 28, 2014, even if that were true, as previously discussed, the court observes that Debtor had other sufficient notice of Trustee’s opportunity and intent to collect and liquidate the Annuity, information which Debtor sat on until May 6, 2015 when Debtor filed her Second Amended Schedules whereby she claimed an exemption in the Annuity for the first time. Trustee relied on Debtor not claiming an exemption and Debtor remained silent despite having notice of Trustee’s opportunity and intent to collect and liquidate the Annuity at least since the meeting of creditors in July 2013. Accordingly, the court determines that Trustee has proven by the preponderance of the evidence that the fourth element of equitable estoppel, With the Intention That the Ignorant Party Act on it, is met. 5. That Party Was Induced to Act on it The element of reliance requires that Trustee change his position in reliance on something said or done by Debtor, resulting in detriment or prejudice to Trustee. State Compensation Insurance Fund v. Workers’ Compensation Appeals Board, 40 Cal.3d 5, 16, 219 Cal.Rptr. 13, 706 P.2d 1146 (1985); accord, In re Lua, 551 B.R. at 455. As previously discussed, Trustee was unaware that Debtor would amend her Schedule C and to his detriment, Trustee relied on Debtor’s decision to wait a year to amend her Schedule C by incurring thousands of dollars of costs in administering the estate before Debtor filed her First Amended Schedule C. When Debtor filed her First Amended Schedule B on April 28, 2014, at which time Debtor did not attempt to claim an exemption in the Annuity, Trustee believed that meaningful value could be realized from the Annuity for unsecured creditors. See Trial Testimony of Jason M. Rund, January 8, 2016 at 9:42-9:43 a.m. and 10:15 a.m. Had Trustee known of Debtor’s intent to claim an exemption in the Annuity, Trustee would not have, among other things, retained the law offices of Robert A. Hessling, APC, to assist him with collecting the Annuity payments and liquidating Trustee’s right, title and interest in the Annuity. Accordingly, the court determines that Trustee has proven by the preponderance of the evidence that the fifth element of equitable estoppel, That Party Was Induced to Act on it, is met. Based on the foregoing, the court determines that Trustee has proven by the preponderance of the evidence that all five elements of equitable estoppel are met and therefore, Debtor’s amended exemption in the Annuity should be disallowed based on application of California’s doctrine of equitable estoppel. C. Prejudice Additionally, Trustee argues that Debtor’s claimed exemption in the Annuity should be disallowed because allowance of the claimed exemption would prejudice Trustee and creditors. Nonetheless, as previously stated, “[W]hen a debtor claims — 351 — a state-created exemption, the exemption’s scope is determined by state law, which may provide that certain types of debtor misconduct warrant denial of the exemption.” Law v. Siegel, 134 S.Ct. at 1196-1197) (emphasis in original); see also, In re Lua, 529 B.R. at 774 (“Where, as here, a debtor claims a state-created exemption, the scope of the exemption—and any basis for denial of the exemption —must be found in state law.”) Trustee has not cited any authority consistent with Law v. Siegel, supra, demonstrating that prejudice is a proper basis for denial of an exemption under California law, nor is the court aware of any such authority as it appears that based on the authorities cited by Trustee, this was a judge-made reason for denial of a state law created exemption set forth in the federal common law, which does not survive the holding of Law v. Siegel. See, In re Lua, 529 B.R. at 772-774. As cogently explained by the court in In re Lua: Bankruptcy Rule 1009 provides that a “schedule ... may be amended by the debtor as a matter of course at any time before the case is closed. Fed. R. Bankr. P. 1009(a)(emphasis added), and the Ninth Circuit has applied this right to the claim of exemptions. See Martinson v. Michael (In re Michael), 163 F.3d 526, 529 (9th Cir. 1998); see also Tyner v. Nicholson (In re Nicholson), 435 B.R. 622, 630 (9th Cir. BAP 2010). Although exemptions and their amendment are liberally construed, a judicially created limit on this latitude and flexibility arose. Bankruptcy courts throughout the country, including courts in the Ninth Circuit, denied leave to amend or disallowed a claimed exemption if the trustee or other party in interest timely objected and showed that either: (1) the debtor acted in bad faith; or (2) creditors were prejudiced. See Michael, 163 F.3d at 529 (adopting the test set forth in Doan v. Hudgins (In re Doan), 672 F.2d 831 (11th Cir. 1982)). The Bankruptcy Code does not mention either “bad faith” or “prejudice” as a basis for disallowing an original or amended exemption. See Arnold v. Gill (In re Arnold), 252 B.R. 778, 784 (9th Cir. 2000)(acknowledging that disallowing amended exemptions based on bad faith or prejudice represents “judge-made exceptions”). Instead, courts relied upon section 105(a) as the source of their equitable power to disallow amended exemptions on those grounds. Nicholson, 435 B.R. at 630. This judicially created power was effectively abrogated by the recent United States Supreme Court decision, Law v. Siegel ... [The Supreme Court held] that the general equitable powers of section 105(a) did not provide authority for judge-made exceptions to explicit mandates of the Bankruptcy Code. Because section 522(k) explicitly prohibits the use of exempt property to satisfy administrative expenses such as attorney fees, the bankruptcy court was not authorized to invoke a judge-made equitable exception to order otherwise. Law, 134 S.Ct. at 1194 (“We have long held that ‘whatever equitable powers remain in the bankruptcy courts must and can only be exercised within the confines of the Bankruptcy Code.”). The Supreme Court emphasized that “federal law provides no authority for bankruptcy courts to deny an exemption on a ground not specified in the Code,” and that any basis for denial of a state law exemption must arise under state law. Id. at 1197-98. In re Lua, 529 B.R. at 772-773. Accordingly, the court determines that Debtor’s claimed exemption in the Annuity — 352 — should not be disallowed on the basis of prejudice to Trustee and creditors. III. CONCLUSION For the foregoing reasons, Trustee’s Motion should be granted and Debtor’s amended claim of exemption in the Annuity should be disallowed. A separate order granting Trustee’s Motion is being entered concurrently herewith. IT IS SO ORDERED..