In re Gilica

• Decision Date: 11 May 2015
• Docket Number: Case No. 14–34590
• Citation: 530 B.R. 429
• Parties: In re: Matthew L. Gilica, Susan M. Gilica, Debtors.
• Court: U.S. Bankruptcy Court — Northern District of Ohio

530 B.R. 429

In re: Matthew L. Gilica, Susan M. Gilica, Debtors.

Case No. 14–34590

United States Bankruptcy Court, N.D. Ohio, Western Division.

Signed May 11, 2015

Eric M. Pheneger, Badnell & Dick Co LPA, Lima, OH, for Debtors.

MEMORANDUM OF DECISION ON TRUSTEE'S OBJECTION TO DEBTORS' CLAIM OF EXEMPTION

JOHN P. GUSTAFSON, United States Bankruptcy Judge

This case comes before the court on the Chapter 7 Trustee's (“Trustee”) Objection to Debtor's Claim of Exemption. [Doc. # 14], Debtor Mattew L. Gilica claimed a 1990 Ranger 17 foot boat and a “1993 Mercury Watercraft”¹ as an exempt under the “motor vehicle” exemption provided by Ohio Revised Code Section 2329.66(A)(2).

The legal issue presented here is whether or not the Ohio exemption provision for a “motor vehicle” can be used to exempt a boat with an outboard motor. At the Hearing held on the Trustee's Objection, the parties agreed that the facts in this case are not in dispute. The parties declined the opportunity to provide additional written arguments.

A review of the case law does not reflect any decisions, either state or federal, that specifically address the exemption of a boat under § 2329.66(A)(2) as a “motor vehicle”.

JURISDICTION

Objections to claims of exemptions are core proceedings under 28 U.S.C. § 157(b)(2)(B). The Court has jurisdiction over core proceedings under 28 U.S.C. §§ 1334 and 157(a), and General Order 2012–7, entered April 4, 2012 by the United States District Court for the Northern District of Ohio.

LAW AND ANALYSIS

Exemptions allow a debtor to protect property which is necessary for the survival of both the debtor and the debtor's family. Menninger v. Schramm (In re Schramm), 431 B.R. 397, 400 (6th Cir. BAP 2010) ; In re Gaydos, 441 B.R. 102, 104 (Bankr.N.D.Ohio 2010). Ohio's exemptions are to be construed liberally in favor of the debtor. See, Daugherty v. Central Trust Co., 28 Ohio St.3d 441, 447, 504 N.E.2d 1100, 1104–05 (Ohio 1986). However, Daugherty also states:

[A] liberal construction of R.C. § 2329.66 does not give us license to enlarge this statute or strain its meaning. We have made it clear that “* * * [b]y ‘liberal construction’ is not meant that words and phrases shall be given an unnatural meaning, or that the meaning shall be * * * expanded to meet a particular state of facts.”.... [W]e are not free, in interpreting this statute, simply to rewrite it on grounds we are thereby improving the law.

Daugherty, 28 Ohio St.3d at 447, 504 N.E.2d at 1105 (citations omitted).

“When there is no state law construing a state statute, a federal court must predict how the state's highest court would interpret the statute.” United States v. Simpson, 520 F.3d 531, 535 (6th Cir.2008) ; see also, Combs v. International Ins. Co., 354 F.3d 568, 577 (6th Cir.2004). Relevant data include: state appellate decisions, state supreme court dicta, restatements of law, law review commentaries, and the majority rule among other states. See, Garden City Osteopathic Hosp. v. HBE Corp., 55 F.3d 1126, 1130 (6th Cir.1995) ; Baumgart v. Alam (In re Alam), 359 B.R. 142, 147 (6th Cir. BAP 2006).

In matters of interpretation, the Ohio Supreme Court has held that the court's primary goal must be to give effect to the intent of the legislature. State ex rel. Stoll v. Logan Cty. Bd. of Elections, 117 Ohio St.3d 76, 81, 881 N.E.2d 1214, 1220 (Ohio 2008) (when “construing a statute, our paramount concern is the legislative intent in enacting the statute.”). To determine legislative intent, the starting point is always the language of the statute itself. Id. “Words and phrases shall be read in context and construed according to the rules of grammar and common usage. Words and phrases that have acquired a technical or particular meaning, whether by legislative definition or otherwise, shall be construed accordingly.” O.R.C. § 1.42 ; Bartchy v. State Bd. of Edn., 120 Ohio St.3d 205, 208, 897 N.E.2d 1096, 1102 (Ohio 2008).

In this case, the statute in issue is O.R.C. Section 2329.66(A)(2), which states:

(A) Every person who is domiciled in this state may hold property exempt from execution, garnishment, attachment, or sale to satisfy a judgment or order, as follows:

* * * * * *

(2) The person's interest, not to exceed three thousand two hundred twenty-five dollars² , in one motor vehicle;

1. The Use Of The Term “Motor Vehicle” In The Exemption Statutes Of Other States.

A review of state exemption laws reflects 37 states that provide a general exemption for “motor vehicles”.³ A smaller number of states provide a broader exemption for personal property,⁴ while other states use a different term for their transportation exemption.⁵

It does not appear that any state allows a general exemption in a boat, vessel or watercraft.

Looking more closely at some of the state statutes, additional language suggests that “motor vehicle” does not include a boat, vessel or ship in those states. For example, Florida's motor vehicle exemption provision, Fla. Stat. Ann. § 222.25(1), references the extensive definition of “motor vehicle in § 320.01(1). But the statutory definition does not include a boat. See, Fla. Stat. Ann. § 320.01(1). Utah's definition of “motor vehicle” excludes a recreational vehicle. Utah Code Ann. § 78B–5–506(3)(a)(ii). Oregon uses the term “vehicle”, and then gives specific examples before ending with “motor vehicle”: “(d) A vehicle to the value of $3,000. As used in this paragraph ‘vehicle’ includes an automobile, truck, trailer, truck and trailer, or other motor vehicle.”Or.Rev.Stat. § 18.345(1)(d).

The Texas exemption statute clearly eliminates any argument that “motor vehicle” could include a boat⁶ : “a two-wheeled, three-wheeled, or four-wheeled motor vehicle” for each family member who can use one. Tex. Prop.Code § 42.002(a)(9). In Kentucky, the motor vehicle exemption specifically includes “necessary accessories, including one (1) spare tire....” Ky. Rev. Stat. § 427.010(1).

In the Hawaiian motor vehicle exemption statute, the value of the motor vehicle “shall be measured by established wholesale used car⁷ prices customarily found in guides used by Hawaiian motor vehicle dealers....” Hawaii Rev. Stat. § 651–121(2).

At least two states make use of the term “vessel” in listing items that may be claimed as exempt if they are debtor's “tools of the trade”. California makes a distinction between “one commercial motor vehicle” and a “vessel” in its exemption for personal property used in a trade, business or profession. See, Cal.Civ.Proc.Code. § 704.060(a). Virginia's statute permits the exemption of: “(7) Tools, books, instruments, implements, equipment and machines, including motor vehicles, vessels, and aircraft, which are necessary for the use in the course of the householder's occupation or trade ...”. Va.Code Ann. § 34–26(7). The separate listing of exemption rights in “vessels”⁸ appears to be incompatible with a boat being a motor vehicle under the California and Virginia statutes.

There is also a limitations on at least one state's “motor vehicle” exemption, requiring that the vehicle be used to commute to work. Nebraska's motor vehicle exemption applies when the vehicle is used “to commute to and from his or her principal place of trade or business....” Neb.Rev.Stat. § 25–1556(4).

While these examples of the various state exemption provisions, and the usage of the term “motor vehicle” do not determine the meaning of the Ohio statute, they at least suggest that the term “motor vehicle” does not always include a boat powered by a motor.

2. Court Decisions Interpreting The Term “Motor Vehicle” In The Exemption Statutes Of Other States.

The issue of whether or not a boat is a “motor vehicle” under a state exemption statute is an issue that has been litigated in several bankruptcy courts. These decisions appear to uniformly reject the Debtors' contention that a boat is a “motor vehicle” for exemption purposes.

In a 1987 decision, Iowa's “motor vehicle” exemption provision was held to not include a motorboat. In re Webb, 1987 WL 1416800, 1987 Bankr. LEXIS 2509 (Bankr.S.D.Iowa Sept. 28, 1987). The court stated that common usage and the sense in which the legislature used the term “motor vehicle” did not include a motorboat.

The same result was reached in a decision construing Rhode Island's motor vehicle exemption provision. In re Barbera, 285 B.R. 355 (Bankr.D.R.I.2002). The Barbera court looked at the different statutory treatment given to motor vehicles and vessels, concluding that if the legislature had intended to include “things marine” in the exemption statute, it would have said so. Id., at 357.

Construing Missouri's motor vehicle exemption statute, the bankruptcy court in Worthington held that while a wave runner and a boat could partially satisfy the definition of “motor vehicle”, it was not a “vehicle”. In re Worthington, 2003 WL 22947526, 2003 Bankr. LEXIS 1655 (Bankr.W.D.Mo. Dec. 11, 2003). Because a watercraft does not have wheels and is not a mechanical device designed primarily for use on the highway, it was not a “motor vehicle” under Mo.Rev.Stat. § 513.430.1(5).

Finally, the same issue was litigated under Virginia's motor vehicle exemption statute, with the court reaching the same decision. The Potter court held that the General Assembly did not intend the term “motor vehicle” as used in the exemption statute to include a powerboat. In re Potter, 2009 WL 902415, 2009 Bankr. LEXIS 804 (Bankr.E.D.Va. March 24, 2009).

3. The Use Of The Term “Motor Vehicle” In The Bankruptcy Code.

While the Bankruptcy Code is federal legislation, not state law, the exemption provisions of Section 522 are widely used. The issue of whether a boat is a “motor vehicle” was extensively litigated in the context of Section 523(a)(9) of the Bankruptcy Code. The way that Congress ultimately dealt with debts arising from the operation of a vessel while intoxicated is at least worth noting.

The Bankruptcy Code uses the term “motor vehicle” in three places, in §§ 522(d)(2), 523(a)(9), and the ...