In re Catalano, Case No. 17-45162-399

• Court: United States Bankruptcy Courts. Eighth Circuit. U.S. Bankruptcy Court — Eastern District of Missouri
• Writing for the Court: Barry S. Schermer United States Bankruptcy Judge
• Parties: In re: AL A. CATALANO, Debtor.
• Docket Number: Case No. 17-45162-399
• Decision Date: 16 March 2021

In re: AL A. CATALANO, Debtor.

Case No. 17-45162-399

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION

March 16, 2021

Chapter 7

MEMORANDUM OPINION

This matter comes before me on the objection by Kristin J. Conwell, Chapter 7 trustee (Trustee) to Al A. Catalano's (Debtor) claim of a tenancy by entirety exemption in real property. The Trustee's objection is based on her argument that the Debtor is the sole owner of the property. For the reasons that follow, I sustain the Trustee's objection.

FACTS

The parties filed a joint stipulation of facts (including exhibits) for the purposes of the Trustee's objection.¹ The parties also agreed to waive a hearing and submit the objection on the pleadings without argument. I set forth below facts from the stipulation and the record used for my determination.

The Debtor and his wife, Gloria Catalano, have been married since December 2012. On August 15, 2013, the Debtor purchased from G'Sell Homes, LLC (Seller) a new home located at 1090 Remington Drive in Imperial, Missouri (Property).

The New Home Sale Contract (Sale Contract) used for the purchase of the Property is dated March 6, 2013.² It identifies only the Debtor as the "Purchaser" on page one. On page four of the Sale Contract both the Debtor and his wife signed under the typed word "Purchaser." Although not set forth in the parties' stipulation, two sets of initials appear next to the Seller's warranties in the Sale Contract and we assume one set belongs to Ms. Catalano. The options sheet attached to the Sale Contract (and referenced therein) is also only signed by the Debtor as Purchaser. Only the Debtor signed as Purchaser each of three amendments to the Sale Contract. The commission

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agreement for the Sale Contract refers to the Sale Contract between Seller and the Debtor. And, the Debtor is defined as the "Buyer" and is the only one who signed as "Buyer" in the relationship disclosure addendum which was "entered into only after the contract was negotiated and signed on the same date the New Home Sale Contract(s) was signed." Stipulation ¶ 6.

Both the Debtor and Mrs. Catalano appeared to execute documents at the August 15, 2013 closing of the Property. The Seller executed the general warranty deed to the Property on August 15, 2013. It identifies the Grantee as "Al A. Catalano, a married person."

Only the Debtor signed the promissory note for the loan to purchase the Property. The deed of trust to secure the obligations under the promissory note defines the "Borrower" as "Al A. Catalano and Gloria Catalano, husband and wife." It is executed by both the Debtor and Mrs. Catalano. Both the general warranty deed and the deed of trust were recorded with the office of the recorder of deeds shortly after the closing.

The parties refer in their stipulation to other documents executed at the closing which they believe relate in some way to the Property purchase and either: (1) bear only the Debtor's signature or otherwise pertain only to the Debtor; or (2) are signed by both the Debtor and Mrs. Catalano. I believe each of the documents is irrelevant to my decision. The parties also stipulate to facts that are not relevant to my decision, such as those concerning: (1) communications between the Debtor and the realtor, his lender, and the title company or between the Debtor's lender and the title company; (2) the circumstances of the closing of the sale; (3) customs and practices of the title company; (4) the Debtor's statement of his intent concerning the loan to purchase the Property and the way in which the Property would be titled; (5) the name in which real estate tax assessments have been issued; and (6) sources of payment of the earnest money deposit and down payment for the Property purchase and payment of the promissory note and Property maintenance costs.

The Debtor commenced his bankruptcy case by filing a Chapter 7 bankruptcy petition in July 2017. His case was later converted to Chapter 13 and converted back to

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Chapter 7 in March 2020. For this decision, I look only to the Debtor's claim of a tenancy by the entirety exemption in the Property when his case converted to Chapter 7 in 2020.³

DISCUSSION

The issue before me is whether the Debtor should be allowed to claim a tenancy by the entirety exemption in the Property. This depends upon a determination whether the Debtor's wife is an owner of the Property.

A debtor's interest in property held as tenancy by the entireties is included as property of a debtor's bankruptcy estate. Garner v. Strauss, 952 F.2d 232 (8th Cir. 1991). Bankruptcy Code §541(a)(1) defines property of the bankruptcy estate to include "all legal or equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. §541(a).

"The Bankruptcy Code allows debtors to exempt certain property from their bankruptcy estates, which are otherwise comprised of all the debtor's legal or equitable interests in property." Abdul-Rahim v. LaBarge (In re Abdul-Rahim), 720 F.3d 710, 712 (8th Cir. 2013) (citing 11 U.S.C. §§522(d) and 541(a)). The Trustee bears the burden of proving that the Debtor did not properly claim the exemption. See Fed. R. Bankr. P. 4003(c).

Generally, a debtor may exempt property that is exempt under §522(d), or under applicable state law and federal law other than § 522(d). 11 U.S.C. §§522(b)(1), (2) and (3). Pursuant to MO. REV. STAT. §513.427, Missouri has opted out of the federal bankruptcy law exemption scheme.

The Debtor claimed an exemption under MO. REV. STAT. §§513.475 (Missouri homestead exemption statute) and 513.427 (Missouri opt out statute). The parties stipulated that, after the Debtor's case was converted back to Chapter 7 from Chapter 13, the Debtor "claimed the [Property] as exempt tenancy by the entirety property." Stipulation ¶ 30. Section 522(b)(3)(B) provides an exemption for:

[A]ny interest in property in which the debtor had, immediately before the commencement of the case, an interest as a tenant by the

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