In re Greene

• Decision Date: 27 July 2006
• Docket Number: No. BK-N-05-54727-GWZ.,BK-N-05-54727-GWZ.
• Citation: 346 B.R. 835
• Parties: In re Scott K. GREENE, Debtor.
• Court: U.S. Bankruptcy Court — District of Nevada

346 B.R. 835

In re Scott K. GREENE, Debtor.

No. BK-N-05-54727-GWZ.

United States Bankruptcy Court, D. Nevada.

July 27, 2006.

COPYRIGHT MATERIAL OMITTED

John A. White, Jr., Reno, NV, for Debtor.

MEMORANDUM DECISION ON DEBTOR'S CLAIM OF EXEMPTION

GREGG W. ZIVE, Bankruptcy Judge.

This matter came before the court May 24, 2006 upon creditor Rena Wells' Objection to the Debtor's Claim of Exemption. The parties were advised to file post-hearing briefs and the matter was continued to July 31, 2006. Having considered the record before the court, arguments of counsel and for the reasons set forth below, the court partially sustains and partially overrules the Creditor's objection.

PROCEDURAL HISTORY

A. The First Bankruptcy Case: Chapter 13 (BK 04-52579)

The Debtor, Dr. Scott Greene, purchased a 67-acre parcel of undeveloped land located at 450 Alamosa Drive, Sparks, Nevada (the "Property") in May 1994. Debtor moved a travel trailer onto the Property on August 10, 2004. On August 11, 2004, Debtor recorded a declaration of a homestead with the Washoe County Recorder's Office for a travel trailer and the Property. Just 16 days later, on August 27, 2004, Debtor filed a Chapter 13 petition. Debtor admits he never lived on the property prior to filing the Chapter 13 petition. Debtor admits that until early August 2004, he lived in a single family residence at another location with his former girlfriend.

On October 8, 2004, Rena Wells ("Wells") filed an Objection to Claim of Exemption, asserting that Debtor's homestead was not his bona fide residence and that the travel trailer did not qualify as "a dwelling house" under Nevada homestead law. Alternatively, she argued that even if the exemption applied, the doctrine of judicial estoppel should be invoked. Debtor voluntarily dismissed the Chapter 13 case on February 17, 2005.

On August 11, 2005, Debtor was cited by Washoe County (the "County") for illegally using a recreational vehicle for dwelling purposes. Debtor told authorities that he was no longer using the trailer as a dwelling as he was sleeping in a tent and only used the trailer to shower, store clothes, and keep food in the refrigerator. The County concluded that Debtor was no longer living on the property. Debtor claimed the tent qualified as a "dwelling house."

B. The Second Bankruptcy Case: Chapter 7 (BK 05-54727)

Debtor filed his Chapter 7 petition October 15, 2005. Debtor was cited again, this time for illegal storage of unregistered vehicles on the Property, on November 23, 2005. At the trial in Sparks Municipal Court on May 2, 2006, Debtor asked for a continuance of the hearing, stating that he would vacate the premises. Based on Debtor's representation, the County continued the matter until August 6, 2006. Debtor again claimed the Property as his homestead exemption.

Wells timely filed an Objection to Claim of Exemption April 12, 2006. In addition to challenging the validity of Debtor's homestead, Wells argues that even if valid, the exempted amount must be reduced from $350,000 to $125,000 pursuant to 11 U.S.C. § 522(p)(1) because the homestead was an interest acquired within 1,215 days of the petition.

ISSUES

The issues are: (1) Whether Debtor had a valid homestead under Nevada law when he filed his Chapter 7 bankruptcy petition; (2) Whether the homestead exemption claim, if valid under Nevada law, should be reduced, by 11 U.S.C. § 522(p)(1); and (3) Whether the doctrine of judicial estoppel applies to bar Debtor from the benefit of the homestead exemption. The court now answers affirmatively to the first two questions and negatively to the third.

ANALYSIS

A. Nevada Homestead Law

The purpose of the homestead exemption is to preserve the family home and to strengthen family security and stability for the benefit of the family. The homestead exemption must be construed liberally in favor of the persons for whose benefit it was enacted. Jackman v. Nance, 109 Nev. 716, 857 P.2d 7, 8 (1993).

The validity of any homestead exemption must be evaluated as of the date of the filing of the petition. In re Sullivan, 200 B.R. 682, 684 (Bankr.D.Nev.1996)(citing Myers v. Matley, 318 U.S. 622, 628, 63 S.Ct. 780, 87 L.Ed. 1043 (1943)). The court is compelled to evaluate the facts as of October 15, 2005, the Petition date, to determine if they support the Debtor's homestead exemption claim.

Typically a debtor is precluded from claiming a homestead exemption unless as of the petition date the debtor had perfected his rights under the state exemption statute. Where the property is not exempt under state law, it passes to the trustee for the benefit of the creditors. White v. Stump, 266 U.S. 310, 45 S.Ct. 103, 69 L.Ed. 301 (1924).

In Nevada, a homestead is defined as the property consisting of either a quantity of land, together with the dwelling house thereon and its appurtenances, to be selected by the husband and wife, or either of them, or a single person claiming the homestead. NRS 115.005(2). The homestead exemption extends to the claimant's equity in the homesteaded property up to a maximum of $350,000. NRS 115.010.

To secure the benefits of Nevada's homestead protection, a debtor must record a declaration of homestead. Id. Once properly recorded, the exemption of "a quantity of land, together with a dwelling house" is limited only by the actual residence of the debtor on the premises with the intent to use and claim the property as a homestead. In re Trigonis, 224 B.R. 152 (Bankr.D.Nev.1998). It is axiomatic there cannot be a homestead absent residence. In re Sullivan, 200 B.R. 682, 685 (Bankr.D.Nev.1996). A homestead cannot be carved out of a track of naked land. In re Gallagher, 134 Cal. 96, 66 P. 70, 71 (1901). Only where the parties actually live on a piece of land and make it their bona fide home, will the phrase "dwelling house," as used in the homestead law, be given a liberal construction. Id.

Here, on August 11, 2004, Debtor recorded a declaration of homestead for the 67 acres of land and a travel trailer. Wells argues the homestead was invalid because Debtor did not live on the property when Debtor's first bankruptcy case was filed on August 27, 2004. However, that date is irrelevant because regardless of how tenuous Debtor's homestead was on the date of the filing of Debtor's first bankruptcy case, there exists substantial evidence to support Debtor's actual and continuing residency on the property and his intention to remain there as of the date of the current bankruptcy filing.

First, Debtor has produced three affidavits to support his continuing residency on the property from August 11, 2004 to the present. Ironically, Debtor's residency was further corroborated by Washoe County when the county cited him for using a recreational vehicle for dwelling purposes in violation of the building code a year later on August 11, 2005. Finally, since recording the homestead, Debtor has made significant improvements to the trailer and initiated a plan to improve the property, including entering into an agreement to construct a home on the property.

Pursuant to Fed. R. Bankr.P. 4003(c), the objecting party has the burden of proving the exemptions are not properly claimed. In re Hyman, 123 B.R. 342 (9th Cir. BAP 1991). In this case, Wells has attempted to rebut the prima facie effect of the claimed exemption by asserting that Debtor did not reside at the property when he filed his first bankruptcy petition. Even if the assertion was sufficient to shift the burden of production to Debtor, Debtor has satisfied the burden by the evidence demonstrating his physical occupancy and intent regarding the claimed homestead. Wells has not proven that when Debtor filed the Chapter 7 bankruptcy petition he did not reside at the property with the intent to declare and use the property as his homestead.

Wells further argues the homestead is invalid because Debtor's travel trailer does not fit within the meaning of "dwelling house" pursuant to NRS 115.005. Wells' emphasis on the importance of the term "dwelling house" is misplaced. It appears that the use of the term "dwelling house" in the homestead statute was merely for the purpose of fixing the locus and extent of the exempt property. Smith v. Stewart, 13 Nev. 65, 1878 WL 3811 (1878).

It is well established in Nevada that if a debtor has an interest in real property and actually occupies it as a residence, the mode of occupation and other uses of the property are immaterial. Jackman v. Nance, 109 Nev. 716, 857 P.2d 7 (1993). Other jurisdictions have grappled with similarly unorthodox choices of abode and held them to be valid homesteads as long as the elements of the actual residence were demonstrated.¹

Wells also contends that Debtors' use of the travel trailer was in violation of the County building code and thus the homestead claim is invalid. However, she fails to cite any legal authority in support of her argument.

In a factually similar case, this court overruled an objection by a creditor to a homestead exemption for a fifth-wheel trailer and real property. In re Reilly, Case No. 05-54681, Dkt. No. 28 (entered May 10, 2006). In Reilly, the debtor had lived continuously for eight months in a trailer parked on the property without procuring a building permit prior to filing Chapter 7 petition.

Similarly, here, although he did not have a proper permit for sometime, Debtor has lived on the Property for almost 14 months prior to filing his Chapter 7 bankruptcy petition and continues to do so. All that is required under Nevada law to claim a homestead exemption is for the claimant to identify a quantity of land upon which there is a dwelling house, declare an intent to use and claim the property as a homestead and demonstrate residence at the time the bankruptcy petition is filed. The court finds Dr. Greene satisfied each of these requirements at the time he filed the Chapter 7 bankruptcy case because he has occupied the Property as his principal...