In re Berger
| Decision Date | 31 May 2013 |
| Docket Number | Case No. 12-72670-FJS |
| Court | U.S. Bankruptcy Court — Eastern District of Virginia |
| Parties | In re: KENT N. BERGER, Debtor. |
This matter comes before the Court upon the "Motion to Dismiss, or, In the Alternative, to Transfer to Another District, for Improper Venue" (the "Motion to Dismiss") filed by the Chapter 7 Trustee, Lawrence H. Glanzer (the "Trustee"). In this case, this Court considers the location of the debtor's domicile for the purpose of determining proper venue. The issue is whether the debtor was domiciled in the Commonwealth of Virginia at the time of the filing of his voluntary petition for bankruptcy. If the debtor was domiciled in Virginia at the time he filed, then the Trustee's Motion to Dismiss must be denied. If the Debtor was not domiciled in Virginia as of the date he filed his voluntary petition, then the Trustee's motion must be granted, and the case will be either dismissed or transferred. For the reasons explained more fully below, the Court finds that the Debtor was domiciled in the Commonwealth of Virginia at the time he filed his voluntary petition for bankruptcy. The Motion to Dismiss is denied and the case will neither be dismissed nor transferred to another jurisdiction.
The Court has jurisdiction over these proceedings pursuant to 28 U.S.C. §§ 157 and 1334 and the general order of reference from the United States District Court for the Eastern Districtof Virginia dated August 15, 1984. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A) and is governed by Federal Rule of Bankruptcy Procedure 1014.
On June 21, 2012, at 4:06 PM EST Kent N. Berger (the "Debtor"), by counsel, filed his voluntary petition for relief under Chapter 7 of Title 11 of the United States Code. Relief was ordered. The Debtor indicated on his Voluntary Petition Official Form Bl in the section entitled "Information Regarding the Debtor - Venue" that "Debtor has been domiciled or has had a residence, principal place of business, or principal assets in this District for 180 days immediately preceding the date of this petition or for a longer part of such 180 days than in any other District."1
The Debtor's Section 341 Meeting of Creditors was held on July 31, 2012. Based upon testimony given by the Debtor at his Section 341 Meeting of Creditors the Trustee brought the instant Motion to Dismiss.
The Motion to Dismiss alleges that the Debtor improperly filed his case in the Eastern District of Virginia, Norfolk Division, and that the Court should either transfer or dismiss the case pursuant to Federal Rule of Bankruptcy Procedure 1014. The Trustee alleges, and the record indicates, that the Debtor was living in Mandan, North Dakota, at the time he filed his voluntary petition in the Eastern District of Virginia, Norfolk Division. The Trustee notes that the Debtor's residential lease in Mandan commenced on October 10, 2011; that the Debtor filed a state income tax return for 2011 in North Dakota; that the Debtor owned no real estate in Virginia; theDebtor had a bank account in North Dakota; and that one of the Debtor's vehicles was in his possession in North Dakota.
The Debtor responded to the Motion to Dismiss, indicating that his intention was not to remain in North Dakota, but rather to return to Virginia as soon as he found employment in the Commonwealth. Moreover, the Debtor stated that he had no objection to the Trustee's Motion to Dismiss. A hearing was scheduled on the Motion to Dismiss on October 10, 2012.
The Debtor and Trustee appeared at the October 10, 2012 hearing. Counsel for United States Surety Company ("Surety") appeared as a creditor and party in interest.2 Upon consideration of the arguments made by the parties, and in consideration of the Debtor's strained circumstances, the Court continued the hearing on the Motion to Dismiss to December 4, 2012. To minimize costs to the Debtor, the Court directed that he be examined under oath by the parties on December 3, 2012.
At the evidentiary hearing on December 4, 2012, the Trustee's earlier allegations were corroborated by documentary evidence and the Debtor's sworn testimony. Prior to putting on evidence at the evidentiary hearing, the Trustee quoted from his Motion to Dismiss, citing to United Co. v. Keenan, No. 1:06cv0071, 2006 U.S. Dist. LEXIS 76125, *9-10 (W.D. Va. Oct. 20, 2006) for the proposition that:
[A] person is 'domiciled' in a location where he or she has established a 'fixed habitation or abode in a particular place, and [intends] to remain there permanently or indefinitely.'" Lew v. Moss, 797 F.2d 747, 749-50 (9th Cir. 1986). Furthermore, a person may change his domicile Gambelli v. United States, 904 F. Supp. 494, 497 (E.D. Va. 1995) (citing Miller v.Lee, 241 F. Supp. 19, 22 (W.D.S.C. 1965)). Based upon well-settled Supreme Court precedent, a new domicile may be established by a showing of (1) physical presence in a new state; and (2) the intent to remain there. See Miss. Band of Choctaw Indians v. Holy field, 490 U.S. 30, 48 (1989) (citing Texas v. Florida, 306 U.S. 398, 424 (1939)).
United Co., 2006 U.S. Dist. LEXIS 76125, at *9-10. The Trustee informed the Court that his argument would focus on the Debtor's inability to establish that he had a residence in the Commonwealth of Virginia and that the Debtor's principal assets were with him in North Dakota. In the sum, the Trustee argued that this evidence would show that the Debtor was not domiciled in the Commonwealth of Virginia even though the Debtor "had a desire at some point to return to Virginia."3
The Debtor argued that cause existed to transfer venue pursuant to 28 U.S.C. § 1412, claiming that if the bankruptcy case were to remain in the Eastern District of Virginia, it would cause him economic hardship in light of wages he would lose and travel expenses he would incur. The Debtor offered no further opening comments.
Surety argued that the issue before the Court was "whether [the Debtor] established a new domicile in North Dakota and whether he had done so prior to the filing of this case."4 Surety represented that its evidence would demonstrate that the Debtor had not established his domicile in North Dakota prior to the filing of the bankruptcy case. Instead, Surety asserted, the Debtor's intent was to return to the Commonwealth of Virginia and he had no intent to remainpermanently in North Dakota at the time he filed his bankruptcy case. The Court agreed with Surety's contention that the issue was one of the Debtor's domicile as of the date of filing and directed the parties to limit their evidence to that issue.
Upon examination by the Trustee, the Debtor confirmed that he did not maintain a residence in Virginia as of the filing date. The Debtor testified that he had resided in Mandan, North Dakota, from October 2011 through the present (December 2012). The Debtor also testified that the address on his bankruptcy petition was that of his brother, where his wife and son had been staying after the marital home was lost to foreclosure and the Debtor moved to Mandan. The Debtor represented that for 2011, he filed a federal tax return, a state tax return for Virginia, and a state tax return for North Dakota, all of which bore the Debtor's North Dakota address. Upon further questioning, the Debtor affirmed that documents and communication related to his life insurance policy were now sent to his North Dakota address. The Debtor further testified that he obtained a North Dakota driver's license and re-titling one of his vehicles in North Dakota so that he could be placed on his employer's insurance policy in 2012, after the filing date.5
The Debtor confirmed that he took all of his personal possessions with him in the fall of 2011 when he moved to North Dakota and that he no longer owned any real property in the Commonwealth of Virginia. The Debtor testified that at the time of filing he intended to return to Virginia, but that he "did not have a particular place of residence or abode to which to return."6 Counsel for the Debtor had no questions.
Surety's questions to the Debtor established that he resided in Virginia for eighteen years, from approximately 1993 to 2011. The Debtor testified that he left Virginia to find work in North Dakota, while his wife and child remained in Virginia, and he intended to return to Virginia at the earliest opportunity. The Debtor further testified that his intent to return to Virginia did not change following the foreclosure of his marital residence and his family moving into his brother's home. The Debtor also testified that he visited his wife and child in Virginia "as often as possible."7 Finally, Surety elicited from the Debtor that he intended to return to Virginia from North Dakota until his brother left the Commonwealth, after the filing date, at which time his wife and child joined him in North Dakota.
At the conclusion of the evidence, the Trustee argued that as of the filing date, the Debtor was not a resident of Virginia, had no assets in Virginia, and was therefore not domiciled in Virginia. Surety argued that prior to the filing date the Debtor was both a resident and domiciliary of Virginia, and that after leaving Virginia to find work, it was always the Debtor's intent to return to Virginia, and not remain in North Dakota.
At the conclusion of the hearing, the Court found the Debtor to be a credible witness, testifying consistently as to his intent to return to Virginia at the time he filed his bankruptcy petition.8 The Court found that "there [was] no evidence that [the Debtor] intended to change his domicile to North Dakota" at or...
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