Genovevo Nino v. Moyer
| Decision Date | 18 February 2009 |
| Docket Number | No. 1:08-CV-721.,1:08-CV-721. |
| Citation | 437 B.R. 230 |
| Parties | Genovevo NINO, Appellant, v. Jeff A. MOYER, Appellee. |
| Court | U.S. District Court — Western District of Michigan |
OPINION TEXT STARTS HERE
Genovevo Nino, pro se.
Michael Thomas Culp, Holland, MI, for Appellant.
This matter is before the Court on an appeal from an order of the United States Bankruptcy Court of the Western District of Michigan denying an exemption claimed by Appellant Genovivo Nino 1 , a debtor in Chapter 7 bankruptcy proceedings (“Debtor”). Appellee Jeff A. Moyer is the Chapter 7 bankruptcy trustee (“Trustee”). The parties submitted written briefs and the Court heard oral argument on this matter on January 29, 2009.
Debtor and his wife purchased their residence (the “Property”) in 1997, holding it as tenants by the entireties. In 2006, Debtor suffered a massive heart attack and incurred significant medical expenses as a result. On February 20, 2006, Debtor and his wife transferred their interests in the Property to the wife alone by quitclaim deed (the “First Transfer”). That same day, Debtor received a summons and complaint from Spectrum Health for recovery of unpaid medical expenses. On April 26, 2007, on the advice of bankruptcy counsel, Debtor's wife executed a quitclaim deed to return the Property to Debtor and his wife as entireties property (the “Second Transfer”). On May 9, 2007, Debtor filed his petition for bankruptcy, claiming an exemption in the Property pursuant to 11 U.S.C. § 522(b)(3)(8) and Mich. Comp. Laws §§ 600.5451(1)( o ) and 600.6023a.
The parties differ in their characterizations of the reasons for the First Transfer. Trustee implies that the First Transfer was an attempt to protect the Property from Debtor's creditors, including Spectrum Health. According to Debtor, he undertook the First Transfer without advice of counsel on the belief that it would help his wife avoid probate in the event of his imminent demise. Debtor claims that when he finally consulted with counsel, he was advised to restore the status of the Property as entireties property.
In the bankruptcy proceedings, Trustee filed an adversary proceeding against Debtor's wife seeking to avoid the First Transfer as a fraudulent transfer. The bankruptcy court dismissed the adversary proceeding on the basis that no meaningful relief could be granted because the Property was already part of the bankruptcy estate. Trustee also filed an objection to the claimed exemption. On May 1, 2008, the bankruptcy court issued an opinion and scheduling order; the opinion stated that Debtor would not be entitled to the exemption if the court determined after an evidentiary hearing that the First Transfer was fraudulent. The bankruptcy court held its evidentiary hearing on June 23, 2008. On June 24, 2008, the court entered an order denying the claimed exemption. On June 30, 2008, Debtor filed an appeal with this Court challenging the denial of the exemption.
The Court has jurisdiction to hear this appeal pursuant to 28 U.S.C. § 158(a)(1) (). Trustee argues that Debtor does not have standing to appeal because Debtor's appeal challenges legal conclusions of the bankruptcy court that were decided in the court's May 1, 2008, opinion and order. Trustee argues that Debtor did not file his appeal within ten days of that order in accordance with the Federal Rules of Bankruptcy Procedure. See Fed. R. Bankr.P. 8002 (). Instead, Debtor waited to file his appeal until after the bankruptcy court's June 2008 order denying the claimed exemption.
Generally, an order is final if it “ends the litigation on the merits and leaves nothing for the court to do but execute judgment.” Catlin v. United States, 324 U.S. 229, 233-34, 65 S.Ct. 631, 89 L.Ed. 911 (1945). The purpose of the final judgment rule is to encourage a single appeal of all issues and thereby prevent piecemeal litigation, eliminate delays, and conserve judicial resources. Cunningham v. Hamilton County, 527 U.S. 198, 203-04, 119 S.Ct. 1915, 144 L.Ed.2d 184 (1999). In the bankruptcy context, the rule of finality “is considered in a more pragmatic and less technical way ... than in other situations.” In re Cottrell, 876 F.2d 540, 541-42 (6th Cir.1989). Finality applies “not to the overall bankruptcy case but to the particular adversary proceeding or discrete controversy pursued within the framework cast by petition.”
In re Kessler, 142 B.R. 796, 798 (W.D.Mich.1992). Thus, in the bankruptcy context, an order is final “if it is distinct and conclusive of the substantive rights of individuals.” Id.
Trustee mischaracterizes the appeal and misapplies the applicable law. At issue in this appeal is the validity of Debtor's claimed exemption in the Property. Though the bankruptcy court stated its view of the law in its opinion of May 2008, it did not deny the exemption until June 2008. Trustee argues that Debtor should have appealed within ten days of the bankruptcy court's May 2008 order, but such an appeal would have been premature. The bankruptcy court's interpretation of the applicable law in that order was not conclusive of any substantive rights of Debtor or Trustee. The court had not yet denied or allowed the claimed exemption because factual issues surrounding the First Transfer had not yet been determined. Even though Debtor challenges only the legal basis for denying the exemption on appeal, the decision that he seeks to overturn is the ruling on the exemption itself. The bankruptcy court did not make this ruling until its second order in June 2008. Courts have frequently held that an order denying an exemption in a bankruptcy proceeding is a final, appealable order. Cottrell, 876 F.2d at 542 (citing cases). Trustee would require Debtor to appeal every order of the bankruptcy court determining legal issues before the rights of the parties with respect to the discrete controversy at issue has been finally adjudicated. This would not serve the purposes of the finality rule. Because Debtor filed his appeal within ten days of the bankruptcy court's order denying the claimed exemption, the Court holds that Debtor has standing to pursue this appeal.
On appeal, the bankruptcy court's legal conclusions are reviewed de novo, and its factual findings are reviewed under a clearly erroneous standard. Stamper v. United States (In re Gardner), 360 F.3d 551, 557 (6th Cir.2004).
11 U.S.C. § 522(b)(3)(B). In this case, the “applicable nonbankruptcy law” relied upon by Debtor are Michigan statutes, sections 600.5451(1)( o ) and 600.6023a. These statutes exempt from process “real property, held jointly by a husband and wife as a tenancy by the entirety [.]” 2 The parties do not dispute that, prior to the First Transfer, and after the Second Transfer at the time of filing for bankruptcy, Debtor held the Property as a tenant by the entireties with his wife. Nor do the parties dispute that Debtor claimed an exemption in the Property under § 522(b) of the Bankruptcy Code. However, the bankruptcy court reasoned that the First Transfer had significant consequences:
One consequence of the First Transfer was that as a matter of Michigan law, the Debtor and his wife severed the entireties estate by divesting the Debtor of his interest in the Property. In exchange for this severance, the Debtor should have received half of the Property's value from his wife. This value would then have been available for all of his creditors.... Consequently, if the Debtor received his share of the Property's value, his individual creditors would have been able to levy on the proceeds and apply them to his individual debts.
The Debtor argues that the Second Transfer vitiates the consequences of the First Transfer because it restored the entireties estate and the status quo. This is the Debtor's “no harm, no foul” argument. However, because the Debtor's individual creditors had a right to pursue any value the Debtor might have received from the First Transfer, when the Second Transfer occurred, whatever value the individual creditors could reach was transferred back into property available only to the couple's joint creditors. This prevents me 3 from finding that the Second Transfer was “no harm, no foul.” ...
If ... Debtor was insolvent when he joined in making the First Transfer, then he was not free to favor his wife over his creditors by permitting her to keep his share of the value of the Property that devolved upon him when they severed the entireties estate.
In re Nino, No. DG 07-3398 (citations omitted). The court concluded that, if half the value of the Property was available to creditors after the First Transfer, it would not allow the exemption because Debtor could not, by means of the Second Transfer, augment or create an entireties estate using property that would otherwise be available to creditors, citing Dunn v. Minnema, 323 Mich. 687, 36 N.W.2d 182 (1949) and Newlove v. Callaghan, 86 Mich. 301, 49 N.W. 214 (1891).
The bankruptcy court's decision appears to have two grounds for reasoning that the Property (or part of the value thereof) would be available to creditors after the First Transfer. First, the court reasons that the...
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In re Cory S. Obrien And Mary A. Obrien
...action). A recent appellate decision from this district further considers the parameters of the Wickstrom principles. Nino v. Moyer, 437 B.R. 230 (W.D.Mich.2009) (Bell, J.). In Nino, a debtor and his non-debtor wife purchased real property in 1997 and held it jointly as entireties property.......
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In Re: Barbara Allen Chadwick
...Partnership negates this badge. At least one other court has found a public recording to negate concealment. See Nino v. Moyer, 437 B.R. 230, 238 (W.D. Mich. 2009) (noting that "by recording the quitclaim deeds, there is no indication that Debtor has attempted to conceal either" transfer). ......
- In Re David Grant Mapley, Bankruptcy No. 09-64333.