In re Egizii
| Decision Date | 09 August 2021 |
| Docket Number | Case No. 20-71187 |
| Parties | IN RE Robert W. EGIZII, Debtor. |
| Court | United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Central District of Illinois |
James Anthony Salinas, Mark D. Skaggs, Office of United States Trustee, Peoria, IL, for U.S. Trustee.
R. Stephen Scott, Springfield, IL, for Debtor.
Before the Court is an Objection to Debtor's Amended Claim of Exemptions filed by Bank of Springfield. Bank of Springfield objects to the Debtor's claim that his interest in a residential condominium in Fort Lauderdale, Florida, is exempt because he holds title to the property, through a land trust, in tenancy by the entirety with his wife. For the reasons set forth herein, the objection of Bank of Springfield will be overruled and the exemption claimed by the Debtor will be allowed.
Robert W. Egizii ("Debtor") filed his voluntary petition under Chapter 11 on October 29, 2020. He scheduled ownership of four parcels of real estate: a residence in Springfield, Illinois, a residence in Pleasant Plains, Illinois, an office building in Springfield, Illinois, and a condominium in Fort Lauderdale, Florida. Relevant to the issues here, the Debtor claimed the Fort Lauderdale condominium, valued at $500,000, as fully exempt because he owns the property, through a land trust, in tenancy by the entirety with his wife. Bank of Springfield objected to the Debtor's claim of exemption in the Fort Lauderdale condominium, asserting that the Debtor may only claim exemptions available under Illinois law and that the condominium is not exempt under any provision of Illinois law.1 The Debtor responded that he is entitled to claim the Fort Lauderdale condominium exempt under Florida law.
In order to expedite resolution of the dispute as to the claim of exemption in the Fort Lauderdale condominium, the attorneys for both the Debtor and Bank of Springfield suggested that they could submit the matter on stipulated facts. They agreed that they would examine both the Debtor and his spouse under oath and submit transcripts in lieu of an evidentiary hearing. The Debtor and Bank of Springfield have now submitted those transcripts, along with a signed declaration of Jill Egizii, the Debtor's wife, and relevant documents regarding the Fort Lauderdale condominium.
Jill Egizii states in her declaration that she and the Debtor purchased the condominium known as 2000 Ocean Drive, Unit 207, Fort Lauderdale, Florida, in 2007. In 2014, they jointly created the Everglades 207 Trust and conveyed the Fort Lauderdale condominium into the Trust. Mrs. Egizii is the trustee of the Trust, and the beneficial interest in the Trust is owned 100% by "Robert W. Egizii and Jill Egizii, Husband and Wife as Tenants by the Entireties." In their testimony, both the Debtor and Mrs. Egizii said that it had been over three years since they had been to Florida and stayed at their condominium. The Debtor has multiple sclerosis, and his ability to travel is limited. Mrs. Egizii said that the condominium was listed for sale but provided no information about the listing agent, listing price, or any offers they might have received.
In addition to the presentation of the transcripts, declaration, and documents, the parties have fully briefed the legal issues. The matter is ready for decision.
This Court has jurisdiction over the issues before it pursuant to 28 U.S.C. § 1334. All bankruptcy cases and proceedings filed in the Central District of Illinois have been referred to the bankruptcy judges. CDIL-Bankr. LR 4.1; see 28 U.S.C. § 157(a). Matters concerning claims against the estate or the exemption of property of the estate are core proceedings. 28 U.S.C. § 157(b)(2)(B). The issues before the Court arise from the Debtor's bankruptcy itself and, at least in part, from the provisions of the Bankruptcy Code and may therefore be decided by a bankruptcy judge. See Stern v. Marshall , 564 U.S. 462, 499, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011).
Any analysis of exemptions in a bankruptcy case begins with § 522. 11 U.S.C. § 522. Exemptions for a variety of assets are specifically provided for in the Code. 11 U.S.C. § 522(d). But those exemptions are only available to debtors if the state law of their domicile has not prohibited such debtors from using them. 11 U.S.C. § 522(b)(2). When a state has prohibited its residents from using the federal exemptions set forth in § 522(d), a combination of exemptions provided for by state, local, and other nonbankruptcy laws may be used. 11 U.S.C. § 522(b)(3). Illinois has prohibited the use of the specific federal exemptions set forth in § 522(d) for its residents. 735 ILCS 5/12-1201.
The Debtor does not dispute that, by reason of the Illinois prohibition against the use of the specific federal exemptions set forth in § 522(d), he is required to use the exemptions set forth in § 522(b)(3). Section 522(b)(3) provides, with limited exceptions not relevant here, for the use of exemptions under applicable state law plus any exemptions available under federal law other than § 522(d). 11 U.S.C. § 522(b)(3)(A). It also provides an exemption for a debtor's interest in property held "as a tenant by the entirety or joint tenant to the extent that such interest ... is exempt from process under applicable nonbankruptcy law[.]" 11 U.S.C. § 522(b)(3)(B). Finally, it provides for the exemption of certain retirement funds. 11 U.S.C. § 522(b)(3)(C). Because the subsections of § 522(b)(3) are connected by the conjunction "and," debtors may use the exemptions provided by all of the subsections; the provision is cumulative, not alternative. In re Holland , 366 B.R. 825, 829 (N.D. Ill. 2007) (citing In re McNeilly , 249 B.R. 576, 580 (B.A.P. 1st Cir. 2000) ; In re Gillette , 248 B.R. 845, 848-49 (Bankr. M.D. Fla. 1999) ).
On his amended schedules, the Debtor claimed his interest in the Fort Lauderdale condominium as exempt under Florida law referencing " Fla. Stat. Ann. § 689.15 and Florida Common Law."2 He argues that Florida law is the applicable nonbankruptcy law that controls his entitlement to an exemption under § 522(b)(3)(B). Bank of Springfield disagrees, asserting that Illinois law should control the Debtor's exemptions even as to real property located outside of Illinois. Both parties acknowledge that a decision on the issue of controlling law will determine the Debtor's right to claim an exemption in his Fort Lauderdale condominium.
Deciding what is applicable nonbankruptcy law is a question, at least initially, of statutory interpretation. Statutory interpretation begins with the language of the statute, "[a]nd where the statutory language provides a clear answer, it ends there as well." Hughes Aircraft Co. v. Jacobson , 525 U.S. 432, 438, 119 S.Ct. 755, 142 L.Ed.2d 881 (1999) (citations omitted); see also United States v. Ron Pair Enterprises, Inc. , 489 U.S. 235, 241, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989). Courts should assume "that a legislature says in a statute what it means and means in a statute what it says there." Connecticut Nat'l Bank v. Germain , 503 U.S. 249, 253-54, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992) (citations omitted). When considering whether statutory language has a plain and unambiguous meaning, courts consider "not only the language itself, but also ‘the context in which it is used, and the broader context of the statute as a whole.’ " Holland, 366 B.R. at 827-28 (quoting Robinson v. Shell Oil Co. , 519 U.S. 337, 341, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997) ). Courts should not "construe a statute in a way that makes words or phrases meaningless, redundant, or superfluous." United States v. Misc. Firearms, Explosives, Destructive Devices and Ammunition , 376 F.3d 709, 712 (7th Cir. 2004) (citation omitted); In re Merchants Grain, Inc. , 93 F.3d 1347, 1353-54 (7th Cir. 1996).
The term "applicable nonbankruptcy law" is used in several provisions in the Bankruptcy Code. "Plainly read, the provision encompasses any relevant nonbankruptcy law, including federal law[.]" Patterson v. Shumate , 504 U.S. 753, 759, 112 S.Ct. 2242, 119 L.Ed.2d 519 (1992) (). The term is not limited to state law. Id. Rather, it is a broad term encompassing any relevant state or federal law. In a dispute involving real estate, relevant law could be (i) the law deemed "controlling by the conflicts principles of the debtor's domicile state," (ii) the law of the state where the property is located, or (iii) "the law of the jurisdiction deemed controlling by federal choice of law principles[.]" Holland , 366 B.R. at 829-30. In the dispute here, the actual choices are Illinois or Florida law, and each option for determining the relevant, controlling law must be considered to decide which of two states’ laws will determine the outcome here.
Illinois follows the Restatement (Second) of Conflict of Laws to resolve conflict-of-law issues. In re Marriage of Adams , 133 Ill. 2d 437, 446, 141 Ill.Dec. 448, 551 N.E. 2d 635, 639 (1990). With respect to disputes involving real estate or "immovables," conflict principles followed by Illinois courts compel the use of the law of the situs of the property. Lake County Trust Co. v. Two Bar B, Inc. , 238 Ill. App. 3d 589, 595, 179 Ill.Dec. 426, 606 N.E. 2d 258, 262 (1992) () ( that a dispute about the distribution of rents and profits related to an Indiana farm lease should be decided by Indiana law). Illinois has long followed "the traditional legal doctrine that the law of the State where the real estate is situated governs the rights of the parties" involved in disputes about such real estate. Id. (citing Dibble v. Winter , 247 Ill. 243, 252, 93 N.E. 145, 149 (1910) ; Smith v. Smith , 174 Ill. 52, 58, 50 N.E. 1083, 1085 (1898) ). Thus, an Illinois...
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