In re Henderson

• Decision Date: 06 May 1996
• Docket Number: Bankruptcy No. 96-40614.
• Parties: In re Kerry Joe HENDERSON, Wendi Ann Henderson, Debtors.
• Court: United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Northern District of Alabama

197 B.R. 147 (1996)

In re Kerry Joe HENDERSON, Wendi Ann Henderson, Debtors.

Bankruptcy No. 96-40614.

United States Bankruptcy Court, N.D. Alabama, Eastern Division.

May 6, 1996.

COPYRIGHT MATERIAL OMITTED

Thomas Semmes, Anniston, AL, for debtors.

MEMORANDUM OPINION

JAMES S. SLEDGE, Bankruptcy Judge.

This case presents an issue not decided in any reported decision of which this Court is aware—whether a bankruptcy court may sua sponte transfer a case which was filed in the wrong district. This matter came before the court on March 26, 1996, for a hearing on the Court's "rule to show cause," entered March 12, 1996. The order required the debtors and the debtors' attorney to appear before the court and "show good cause why this case should not be dismissed out of Court or transferred for improper venue." Debtor Wendi Henderson appeared at the hearing with her attorney. Debtor Kerry Henderson did not attend the hearing.

FINDINGS OF FACT

1. This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334(a), 28 U.S.C. 157(a), and the general order of reference for the Northern District of Alabama, dated July 16, 1984.

2. The debtors filed a joint petition on March 5, 1996.

3. Kerry Henderson listed his address in the petition as "P.O. Box 864 Wedowee, AL 36278." Wedowee is in Randolph County.

4. Wendi Henderson listed her address in the petition as "94 County Road 663 Hanceville, AL 35077." Hanceville is in Cullman County.

5. On March 12, based on the information appearing in the debtors' petition, the court issued a "rule to show cause" why the case should not be transferred or dismissed for its apparently having been filed in an improper district.

6. On March 22, 1996, Wendi Henderson filed a "notice of change of address" specifying that her address was "P.O. Box 864 Wedowee, AL 36278 Randolph County."

7. Kerry Henderson and Wendi Henderson both reside in Randolph County, Alabama, and have done so since August 1995.

8. Kerry Henderson is employed as a teacher at Wedowee High School. Wendi Henderson is not employed. Neither is engaged in a trade or business.

9. The Court takes judicial notice of the fact that the United States Bankruptcy Court for the Northern District of Alabama operates under a general order of reference dated July 16, 1984.

10. The Court takes judicial notice of the fact that the United States Bankruptcy Court for the Middle District of Alabama operates under a general order of reference dated April 25, 1985.

CONCLUSIONS OF LAW

1. Determination under 28 U.S.C. § 157(b)(3).

The first determination the Court must make is whether the Court may properly enter an order in this matter under 28 U.S.C. § 157(b)(1). 28 U.S.C. § 157(b)(3); Marill Alarm Sys. v. Equity Funding, 81 B.R. 119 (S.D.Fla.1987), aff'd 861 F.2d 725 (11th Cir.1988). The Court may hear and determine cases under title 11; the Court may also hear and determine core proceedings arising in or arising under cases under title 11. A proceeding for change of venue is a core proceeding in a title 11 case because it "involves fundamental bankruptcy issues, including, in Chapter 11 cases, a determination of whether a requested transfer would promote the economic and efficient administration of the estate." In re Oceanquest Feeder Service, Inc., 56 B.R. 715, 718 (Bankr. D.Conn.1986), citing Matter of Commonwealth Oil Refining Co., Inc., 596 F.2d 1239, 1247 (5th Cir.1979), cert. denied, 444 U.S. 1045, 100 S.Ct. 732, 62 L.Ed.2d 731 (1980). Accord, In re Waits, 70 B.R. 591 (Bankr. S.D.N.Y.1987); Burlingame v. Whilden (In re Whilden), 67 B.R. 40 (Bankr.M.D.Fla. 1986). The Court concludes, therefore, pursuant to § 157(b)(3), that it may enter an order in this matter because it is a core proceeding arising in a case under title 11.¹

2. Improper venue

The first substantive issue the court must consider is the propriety of the debtors' filing their joint petition in this district. Section 1408 of title 28 governs venue in bankruptcy cases; it provides:

Except as provided in section 1410 of this title, a case under title 11 may be commenced in the district court for the district—

(1) in which the domicile, residence, principal place of business in the United States, or principal assets in the United States, of the person or entity that is the subject of such case have been located for the one hundred and eighty days immediately preceding such commencement, or for a longer portion of such one-hundred-and-eighty-day period than the domicile, residence, or principal place of business, in the United States, or principal assets in the United States, of such person were located in any other district; or

(2) in which there is pending a case under title 11 concerning such person\'s affiliate, general partner, or partnership.

28 U.S.C. § 1408. Under subsection (1), venue is proper in any district in which the debtor's domicile, residence, principal place of domestic business, or principal place of domestic assets has been located for the requisite period.

A debtor may file a petition in the district of his or her residence. 28 U.S.C. 1408(1). Wendi Henderson testified that the debtors' joint residence for the last seven months has been in Randolph County. Randolph County is in the Middle District of Alabama. 28 U.S.C. § 81(b)(3). Venue based on residence in the Northern District of Alabama is, therefore, improper with respect to both debtors.

A debtor may file a petition in the district of his or her domicile. Domicile, as defined in various contexts, is composed of both residence somewhere and the intention to remain there. Domicile is the "place where an individual establishes both physical presence and an intent to remain indefinitely." Melian v. I.N.S., 987 F.2d 1521, 1524 (11th Cir.1993) (interpreting "lawful domicile" in Immigration and Nationality Act, 8 U.S.C.A. § 1182(c)). See also, Manley v. Engram, 755 F.2d 1463, 1466 n. 3 (11th Cir.1985). Domicile is acquired by living in a location "with the intent to make it a fixed and permanent home." Wolinsky v. Bradford Nat. Bank, 34 B.R. 702 (D.Vt.1983), citing Fuller v. Hofferbert, 204 F.2d 592, 597 (6th Cir.1953); In re Deeb, 59 B.R. 661 (Bankr.N.D.Ala.1986). Domicile in a place requires the domiciliary to be "living there, even for a brief period of time, with no definite present intention of later removing therefrom." 26 C.F.R. § 20.0-1(b)(1) (domicile for estate tax). Under the logical principle of simplification, therefore, "residence is a necessary component of domicile." State Farm Mutual Automobile Ins. Co. v. Hanna, 277 Ala. 32, 166 So.2d 872 (1964). "The fact that a person lives at a particular place creates a prima facie presumption that such place is his domicile. The presumption is rebuttable by facts to the contrary." Nora v. Nora, 494 So.2d 16, 18 (Ala.1986). Wendi Henderson presented evidence that the debtors' residence is in Randolph County and presented no evidence to rebut the presumption that the debtors' respective domiciles are also located in Randolph County. Venue based on domicile is proper in the Middle District and improper in the Northern District of Alabama.

The two remaining factors — "principal place of business" and "principal location of assets" — are not relevant here. Neither debtor is in business. Wendi Henderson is not employed and is not engaged in business. Kerry Henderson is not engaged in business. He is employed in Randolph County, which is in the Middle District; however, place of employment is not relevant to a determination of principal place of business. In re Canavos, 108 B.R. 55, 57 (Bankr.E.D.Pa. 1989). The category "principal place of business" is relevant only to a debtor who has a business of his or her own. Id., quoting Higgins v. State Loan Co., 114 F.2d 25, 26-27 (D.C.Cir.1940).

The debtors presented no evidence of the principal location of their assets. The Court notes that it declines to take sua sponte judicial notice of the information contained in the debtors schedules regarding the location of assets. Because the debtors' residence and domiciles are in the Middle District and because no evidence was presented regarding place of business or location of assets, the Court finds venue in the Northern District of Alabama to be improper and finds venue in the Middle District of Alabama to be proper.

3. Transfer to district in which venue is proper.

The second issue is what the Court should do about a petition filed in improper venue. The debtors argue that because Rule 1014 specifies that the court may transfer a case "on timely motion of a party in interest," the court may do so only on such a motion and may not transfer a case sua sponte.

At first blush, the debtors' argument appears to be expressly proscribed by the Code, which provides: "No provision of this title providing for the raising of an issue by a party in interest shall be construed to preclude the court from, sua sponte, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process." 11 U.S.C. § 105(a). This sentence, added in 1984, Pub.L. No. 98-353, § 118, 98 Stat. 344, effectively overrules cases which construed sections providing for the raising of an issue by a party in interest to prevent a court from raising the issue itself. E.g., In re Gusam Restaurant Corp., 737 F.2d 274 (2d Cir.1984). Section 105 now precludes this interpretation of provisions of title 11. Finney v. Smith (In re Finney), 992 F.2d 43 (4th Cir.1993); In re Pedro Abich, Inc., 165 B.R. 5 (D.Puerto Rico 1994); Pleasant Pointe Apartments, Ltd. v. Kentucky Housing Corp., 139 B.R. 828, 831 (W.D.Ky.1992); In re Clark, 107 B.R. 376 (S.D.Fla.1988); In re Petit, 189 B.R. 227 (Bankr.D.Me.1995); In re Miracle Church of God in Christ, 119 B.R. 308 (Bankr.M.D.Fla. 1990). The court is taking the appropriate action of transferring this case to enforce the rules specified in the United States Code, ...