226 B.R. 714 (S.D.Fla. 1998), 97-8500-CIV, Colwell v. Royal Intern. Trading Corp.

Docket Nº:No. 97-8500-CIV-GOLD.
Citation:226 B.R. 714
Party Name:William Frederick COLWELL, and Ruby Colwell, Appellants, v. ROYAL INTERNATIONAL TRADING CORPORATION, Appellee.
Case Date:October 14, 1998
Court:United States District Courts, 11th Circuit, Southern District of Florida

Page 714

226 B.R. 714 (S.D.Fla. 1998)

William Frederick COLWELL, and Ruby Colwell, Appellants,



No. 97-8500-CIV-GOLD.

Bankruptcy No. 9635148-BKC-SHF.

United States District Court, S.D. Florida, Miami Division.

October 14, 1998

Page 715

[Copyrighted Material Omitted]

Page 716

John P. Tynan, Jupiter, FL, for Appellants.

Michael Bakst, West Palm Beach, FL, for Appellee.


GOLD, District Judge.

THIS CAUSE comes before the Court upon an appeal from the Order Sustaining Objections to Exemptions, entered April 25, 1997 by the United States Bankruptcy Court for the Southern District of Florida. 1 Appellants, William Frederick Colwell and Ruby Colwell ("Appellants") sought to exempt real property from creditors' claims filed in bankruptcy

Page 717

proceedings pursuant to Article X, § 4 of the Florida Constitution. Appellee, Royal International Trading Corporation ("Appellee"), objected to the exemptions on the ground that as a married couple, Appellants were entitled to a homestead exemption on only one of the two residential properties owned individually by Appellants. The Bankruptcy Court sustained the objection.

Jurisdiction of this Court is invoked pursuant to 28 U.S.C. § 158(a). This Court has carefully reviewed the record on this appeal, the parties' briefs, the Order entered by the Bankruptcy Court, and the relevant law. Although this appeal raises a difficult question, an evaluation of the factors for determining the entitlement to homestead exemptions on real property under Florida law reveals that the Bankruptcy Court's Order Sustaining Objection to Exemptions should be reversed.

I. Factual and Procedural Background

The facts in this case are uncontroverted. On December 12, 1996, Appellants jointly petitioned the U.S. Bankruptcy Court for the Southern District of Florida, seeking relief under Chapter 7 of the Bankruptcy Code (the "Code"). It is undisputed that at the time of filing their petition, Appellants were legally married, but had been maintaining separate residences for the preceding three and a half years. 2 William Colwell resided at 124 Sea Steppes Court in Jupiter, Florida. Ruby Colwell resided at 6267 Garrett Street in Palm Beach Gardens, Florida. The respective residences were deeded to Appellants in their individual capacities. The deeds were not held jointly, nor by the entireties.

Because Appellants maintained these separate residences, on which Florida taxing authorities afforded each Appellant a homestead exemption, Appellants sought to exempt their respective properties in the bankruptcy proceeding pursuant to Article X, § 4 of the Florida Constitution. Appellee objected to the dual exemptions. Appellee argued that since Appellants were still married, only one property could be exempted from bankruptcy creditors. Appellants had to choose which property to exempt. The Bankruptcy Court, finding no case law to support dual homestead exemptions for married individuals residing on two distinct, noncontiguous parcels of property, sustained the objections. See In re Colwell, 208 B.R. 85 (Bankr.S.D.Fla.1997).

Appellees have appealed the order of the Bankruptcy Court. They urge that Article X, § 4 of the Florida Constitution provides individual homestead exemptions for a husband and a wife who are separated and residing in individually owned homesteads. After a thorough analysis of Florida law and policy, this Court agrees.

II. Standard of Review

Conclusions of law issued by bankruptcy courts are reviewed de novo. See In re Sublett, 895 F.2d 1381, 1383 (11th Cir.1990). De novo review requires the Court to make a judgment "independent of the bankruptcy court's, without deference to that court's analysis and conclusions." Moody v. Amoco Oil Co., 734 F.2d 1200, 1210 (7th Cir.1984). Where an issue raises a mixed question of law and fact, District Courts are instructed to review a bankruptcy court's determination de novo. See In re Marks, 131 B.R. 220, 222 (S.D.Fla.1991), aff'd, 976 F.2d 743 (11th Cir.1992).

District Courts must give considerable deference to a bankruptcy court's findings of fact, and will not overturn a bankruptcy court's factual findings unless it determines that those findings are clearly erroneous. See In re Chase & Sanborn Corp., 904 F.2d 588, 593 (11th Cir.1990); In re Pepenella, 103 B.R. 299, 300 (M.D.Fla.1988). 3 A finding of fact is clearly erroneous when the record lacks substantial evidence to support it such that an appellate

Page 718

court's review of the evidence results in a firm conviction that a mistake has been made. See Blohm v. Commissioner of Internal Revenue, 994 F.2d 1542, 1548 (11th Cir.1993).

III. Discussion and Analysis

This appeal raises the issue whether a married couple, living separately for an extended period of time in property deeded in their individual capacities, and on which Florida has conferred individual homestead exemptions, can seek to avoid a creditor's claims in bankruptcy proceedings. No Florida court has addressed this specific issue. Although it may appear to be a question of first impression, some precedent exists to support the conclusion that Appellants are entitled to both homestead exemptions.

As a threshold matter, courts must not...

To continue reading