In re Boyd
| Decision Date | 11 September 1989 |
| Docket Number | Bankruptcy No. 89-07043. |
| Parties | In re William BOYD, IV, Debtor. |
| Court | United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Northern District of Florida |
COPYRIGHT MATERIAL OMITTED
Thomas B. Woodward, Tallahassee, Fla., for debtor.
Ronald A. Mowrey, Tallahassee, Fla., Trustee.
ORDER ON OBJECTION OF TRUSTEE TO DEBTOR'S CLAIMED EXEMPTIONS
This cause comes before the Court on Objection of the Trustee to the Debtor's Claim of exemption pursuant to § 522(b)(2)(B) of the Bankruptcy Code. For the reasons which follow, Trustee's Objection to the Debtor's Claim of Exemption is sustained.
The Debtor, William Boyd, IV, filed his Petition under Chapter 7 of the Bankruptcy Code on February 15, 1989. Schedule B-4 lists as exempt several assets, including real and personal property. One parcel of real property is a condominium, located in Tallahassee, Florida, held in tenancy by the entirety with the Debtor's non-debtor wife. One half of the condominium is owned by the Debtor and his wife and the other half is owned by the Debtor's daughter. The personal property held by the entireties is located at the Debtor's primary residence in Florida. The Debtor also claims as exempt real and personal property located in Georgia, which is owned by the Debtor and his wife as joint tenants with the right of survivorship. The Trustee objects to these exemptions.
The parties have agreed that the Debtor and his wife, a non-debtor, have several joint obligations although they have not enlightened the Court as to the extent of such obligations. The trustee argues that the tenancy by the entirety property is not exempt property and that such property may be administered in the bankruptcy case to satisfy the debts owed to joint creditors.
In opposition, the Debtor contends that both parcels of real property and all of the personal property located at either the Debtor's personal residence in Florida or at the lake house in Georgia is exempt pursuant to § 522 of the Bankruptcy Code.
The parties are not contesting the characterization of the Debtor's Florida property listed in Schedule B-4 as tenancy by the entirety property. The dispute is whether the Debtor's property held in tenancy by the entirety with his non-debtor wife is property of the estate subject to administration.
Initially, this Court recognizes that Florida has opted out of the federal exemption scheme. Fla.Stat. § 222.20 and 222.201 (1987). However, § 522(b)(2)(B) of the Bankruptcy Code exempts from administration property in which the Debtor has an interest as a tenant by the entirety only to the extent that this interest is exempt from process under applicable local law. Under local law it is clear that entireties properties are immune from the claims of creditors who have claims against only one of the tenants. In re Roy, 42 B.R. 102 (Bankr.S.D.Fla.1984). This is because the type of ownership interest gives each tenant full and undivided control of the entire property.
Property held by tenants by the entirety would be exempt from process under Florida law only if no joint creditors existed. Stanley v. Powers, 123 Fla. 359, 166 So. 843 (1936). Where there were joint creditors of both spouses who under Florida law could have levied on properties held by the Debtor and non-debtor spouse as tenants by the entireties, the trustee was entitled to liquidate the debtor's interest in the properties. Bankr.Code, 11 U.S.C.A. § 363(h), 522(b)(2)(B). In re Koehler, 6 B.R. 203 (Bankr.M.D.Fla.1980); In re Geoghegan, 101 B.R. 329 (Bankr.M.D.Fla. 1989).
Under Florida law, the Florida property listed as exempt under Schedule B-4 is not exempt from the process of joint creditors. The property is subject to administration under § 363(h) of the Bankruptcy Code. However, such administration is limited to the extent of the claims held by joint creditors of both Debtor and his nonfiling wife. In re Pepenella, 79 B.R. 76 (Bankr.M.D.Fla.1987). The Debtor's equity in the entireties property above the amount of the joint obligations qualifies for the § 522(b)(2)(B) exemption. In re Geoghegan, 101 B.R. 329 (Bankr.M.D.Fla.1989).
This property subject to administration does not create a special priority class of creditors. If a trustee is permitted to liquidate the properties in question as contemplated by § 363(h), this would not create a sub-class of creditors, joint creditors of the Debtor and his non-filing wife, who would be the only ones entitled to the proceeds of the sale of these properties. This result would be totally contrary to and in violation of the scheme of distribution provided by § 726 of the Bankruptcy Code. This is so because the remaining unsecured...
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