In re Dunnaway

• Decision Date: 06 March 2012
• Docket Number: 11–61974–B–13,11–61580–B–13.,11–17278–B–13,Nos. 11–60514–B–13,s. 11–60514–B–13
• Citation: 466 B.R. 515
• Court: U.S. Bankruptcy Court — Eastern District of California
• Parties: In re Shane DUNNAWAY and Carol Lyn Dunnaway, Debtors.In re Edward Frank Jones, Jr., and Mary Ann Jones, Debtors.In re David Ray Brown and Erin Rose Brown, Debtors.In re Grant Edgar Southwell, Debtor.

466 B.R. 515

In re Shane DUNNAWAY and Carol Lyn Dunnaway, Debtors.In re Edward Frank Jones, Jr., and Mary Ann Jones, Debtors.In re David Ray Brown and Erin Rose Brown, Debtors.In re Grant Edgar Southwell, Debtor.

Nos. 11–60514–B–13

11–17278–B–13

11–61974–B–13

11–61580–B–13.

United States Bankruptcy Court, E.D. California,Fresno Division.

March 6, 2012.

Sarah R. Velasco, Esq., appeared on behalf of the chapter 13 trustee, Michael H. Meyer, Esq.

Patrick Kavanagh, Esq., appeared on behalf of the debtors, Shane and Carol Dunnaway, Edward and Mary Jones, David and Erin Brown, and Grant Southwell.

MEMORANDUM DECISION REGARDING TRUSTEE'S OBJECTION TO EXEMPTIONS

W. RICHARD LEE, Bankruptcy Judge.

Before the court are four identical objections to debtors' claimed exemptions filed by the chapter 13 trustee, Michael H. Meyer, Esq. (the “Trustee”) in the above-referenced cases (collectively, the “Objection”). The Trustee objects to the fact that the debtors have attempted to exempt their interest in one or more firearms as either “household goods” or “ordinarily and reasonably necessary personal property” (collectively, “household property”) under the applicable provisions of California law. The Trustee requests a ruling that essentially prohibits the exemption of all firearms as “household property.” For the reasons set forth below, the Objection will be overruled.

This memorandum decision contains findings of fact and conclusions of law required by Federal Rule of Civil Procedure 52(a), made applicable to this contested matter by Federal Rules of Bankruptcy Procedure 7052 and 9014(c).¹ The bankruptcy court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334 and 157, 11 U.S.C. § 522, and General Orders 182 and 330 of the U.S. District Court for the Eastern District of California. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A) and (O).

Background and Findings of Fact.

Shane & Carol Dunnaway. Shane and Carol Dunnaway (the “Dunnaways”) listed two firearms with an aggregate value of $800 on line 8 of Schedule B in the category of “Firearms and sports, photographic, and other hobby equipment.” The firearms are located at the Dunnaways' residence. They claimed an exemption for their interest in the firearms pursuant to § 703.140(b)(3) of the California Code of Civil Procedure (“C.C.P.”) on Schedule C. These two firearms are described as a “Ruger rifle M77–270” valued at $500 and a “Glock 40 mag handgun” valued at $300. The Trustee does not object to the value of the firearms, only to their categorization as “household property.”

In response to the Trustee's Objection, the Dunnaways filed separate declarations to explain their personal use of the firearms for home protection and for obtaining food. The Dunnaways live in the town of Olancha in Inyo County, a rural area in which, according to the Dunnaways, there are persistent problems with transients and marijuana cultivation. The closest law enforcement station is located 50 to 60 miles away. Carol Dunnaway keeps the handgun for protection while her husband is away working in Los Angeles.

Shane Dunnaway uses the rifle for hunting to supplement his family's food supply. In the past, he has hunted deer, quail, chukar, and duck, and he consumes the meat. He states that other members of the Olancha community own rifles for hunting and handguns for self-protection.

Edward & Mary Jones. Edward and Mary Jones (the “Joneses”) listed four firearms with an aggregate value of $1,000 on line 8 of Schedule B. The firearms are located at the Joneses' address of record in the city of Bakersfield. They claimed an exemption for their interest in the firearms pursuant to C.C.P. § 703.140(b)(3) on Schedule C. These four firearms are described as a “Phoenix Arms 22 pistol,” a “Winchester 12 gauge firearm,” a “7mm Springfield firearm,” and a “Phoenix Arms 380 firearm.”

In response to the Trustee's Objection, Edward Jones filed a declaration explaining that he uses the rifles (without specifying which ones) for hunting deer to supplement his food supply. He is a veteran of the Vietnam War and states that “guns have always been a part of [his] life.”

David & Erin Brown. David and Erin Brown (the “Browns”) listed one firearm, a “Beretta Nova 12 gauge shotgun,” with a value of $450 on line 8 of Schedule B and exempted it on Schedule C pursuant to C.C.P. § 703.140(b)(3). The firearm is located at the Browns' residence.

In response to the Trustee's objection, David Brown filed a declaration to explain that he uses the shotgun for hunting birds, particularly quail, ducks, geese, and chukar, to supplement his food supply. The Browns live in rural Inyo County in the town of Bishop. According to David Brown, it is common for members of the Bishop community to own firearms and use them for hunting.

Grant Southwell. Grant Southwell (“Southwell”) listed two firearms with an aggregate value of $445 on line 8 of Schedule B and claimed an exemption on Schedule C for his interest in the firearms pursuant to C.C.P. § 740.020. These two firearms are described as a “Remington 870 Express Mag 12 Gauge Shotgun” valued at $220 and a “Ruger Black Hawk 357 Firearm” valued at $225. Southwell resides in the city of Bakersfield. He filed a response to the Trustee's Objection but did not attach a declaration to address the location, use, and purpose of his firearms.

Issues Presented.

In each of the four cases, the Trustee argues that the California exemption scheme does not permit the exemption of any firearm under either C.C.P. § 703.140(b)(3) or § 704.020. The Trustee has not objected to the exemptions based on the value or use of the firearms. He also has not presented any evidence to rebut the debtors' declarations or to support his contention regarding the characterization of firearms as something other than “household property.” Rather, the Trustee invites the court to make a ruling that firearms, per se, cannot be included in “household property” exemptible under the above statutes.

Analysis and Conclusions of Law.

California Exemptions. Section 522 of the Bankruptcy Code allows individual debtors to exempt an interest in certain items of personal property from the bankruptcy estate. See § 522(b)(1). While the Code includes a federal exemption scheme under § 522(d), it also permits the states to opt out of the federal scheme and provide their own exemptions for debtors in bankruptcy. See § 522(b)(2). California is one of the states that has chosen to opt out. See C.C.P. §§ 703.130, 703.140; see also In re Talmadge, 832 F.2d 1120, 1122–23 (9th Cir.1987). An individual debtor in bankruptcy in California may choose between two mutually exclusive sets of state exemptions, one for debtors generally and another specifically for debtors in bankruptcy. In re McKown, 203 F.3d 1188, 1189 (9th Cir.2000); see also C.C.P. § 703.140(a).

The rules that govern the exemption of property in California are found in C.C.P. §§ 703.010–704.995. The general exemption statute applicable here is C.C.P. § 704.020, which provides, in pertinent part:

(a) Household furnishings, appliances, provisions, wearing apparel, and other personal effects are exempt in the following cases:

(1) If ordinarily and reasonably necessary to, and personally used or procured for use by, the judgment debtor and members of the judgment debtor's family at the judgment debtor's principal place of residence.

C.C.P. § 704.020 (emphasis added).

Alternatively, the bankruptcy-specific exemptions are found in C.C.P. § 703.140(b). Under the applicable subsection, a debtor is allowed to exempt his or her

interest, not to exceed [$550] in value in any particular item, in household furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments, that are held primarily for the personal, family, or household use of the debtor or a dependent of the debtor.

C.C.P. § 703.140(b)(3) (emphasis added).

Here, the Dunnaways, the Joneses, and the Browns have elected to exempt their firearms as “household furnishings” or “household goods” under C.C.P. § 703.140(b)(3). In contrast, Southwell has elected to exempt his firearms as “ordinarily and reasonably necessary personal property” under C.C.P. § 704.020. Although the two exemption statutes vary slightly in their wording, the analysis of each statute is essentially the same. The two sets of exemptions are intended to be mutually exclusive; however, the expanded description of property in C.C.P. § 704.020 may nevertheless be applied to interpret the terms used in C.C.P. § 703.140(b). See In re Thornton, 91 B.R. 913, 915 (Bankr.C.D.Cal.1988).

Burden of Proof. It is well accepted in the Ninth Circuit that a claimed exemption is presumptively valid. In re Carter, 182 F.3d 1027, 1029 n. 3 (9th Cir.1999) (citations omitted). Once the exemption has been claimed and an objection has been raised, “the objecting party has the burden of proving that the exemptions are not properly claimed.” Fed. R. Bankr.P. 4003(c); In re Davis, 323 B.R. 732, 736 (9th Cir. BAP 2005). This means that the objecting party not only has the burden of producing evidence rebutting the presumptively valid exemption but also the ultimate burden of persuasion. Carter, 182 F.3d at 1029 n. 3. So even if the presumption of validity is rebutted with evidence from the objecting party forcing the debtor to come forward with unequivocal evidence to support the claimed exemption, “[t]he burden of persuasion ... always remains with the objecting party.” Id. Here, the Trustee, as the party objecting to the debtors' exemptions, has the burden of production and persuasion to prove that the debtors improperly exempted their firearms.

Exemption of Firearms. The question of what property a debtor may exempt is determined by state, not federal, law. See In re Herman, 120 B.R. 127, 129 (9th Cir. BAP 1990) (citing Thornton, 91 B.R. at 914); see also In re Eveland, 87 B.R. 117, 121 (Bankr.E.D.Cal.1988) (statin...