In re Weza, 99-13113-JMD.
| Decision Date | 24 April 2000 |
| Docket Number | No. 99-13113-JMD.,99-13113-JMD. |
| Parties | In re Edward T. WEZA, Jr., Debtor. |
| Court | United States Bankruptcy Courts. First Circuit. U.S. Bankruptcy Court — District of New Hampshire |
Eric Edward Nord, Nixon Peabody LLP, Manchester, NH, for Debtor.
Stephen Booth, Tony Soltani, Dover, NH, for Donald Rott.
The Court has before it an objection filed by Donald Rott (the "Creditor") to the Debtor's claimed exemption in real property located in Massachusetts, which the Debtor owns as a tenant by the entirety with his non-debtor spouse. In Schedule C to his bankruptcy petition, the Debtor claimed an exemption in the property pursuant to "Massachusetts Homestead Exemption of Spouse." The issue before the Court is whether the Debtor is entitled to claim such an exemption under 11 U.S.C. § 522(b)(2).
This Court has jurisdiction of the subject matter and the parties pursuant to 28 U.S.C. §§ 1334 and 157(a) and the "Standing Order of Referral of Title 11 Proceedings to the United States Bankruptcy Court for the District of New Hampshire," dated January 18, 1994 (DiClerico, C.J.). This is a core proceeding in accordance with 28 U.S.C. § 157(b).
The Debtor and his non-debtor spouse purchased property located at 41 Holbrook Avenue in Lowell, Massachusetts as tenants by the entirety in 1962. The Debtor and his wife have not filed an election to create a statutory tenancy by the entirety under Massachusetts General Laws ("M.G.L.") c. 209, § 1A. The parties agree that the Debtor's rights as a tenant by the entirety are governed by Massachusetts common law.
The Debtor and his wife are legally separated pursuant to a court order entered in the mid-1980s. The Debtor has not resided at the property for approximately six years but, rather, the Debtor has resided in New Hampshire. At the time of his bankruptcy filing, the Debtor was domiciled in New Hampshire. The Debtor's wife is domiciled in Massachusetts. She filed a Massachusetts homestead election on November 7, 1997 pursuant to M.G.L. c. 188, § 1A. Because the Debtor's wife is sixty-seven years old, her homestead exemption is in the amount of $200,000. The parties do not dispute that the Debtor has not filed a separate Massachusetts homestead election.
On October 4, 1999, the Debtor filed an individual Chapter 7 bankruptcy petition. The Debtor's wife did not join in the petition. On Schedule A, the Debtor valued his tenancy by the entirety interest in the former marital home as being worth $60,000. In Schedule C, he indicated that the full market value of the former marital home was $120,000 and claimed a $200,000 exemption in the home pursuant to "Massachusetts Homestead Exemption of Spouse." On December 7, 1999, the Creditor filed an objection to the Debtor's claim of exemption. The Court held two hearings on the motion and took the matter under advisement.
The issue before the Court is whether the Debtor is entitled to an exemption in the property under 11 U.S.C. § 522(b)(2). Section 522(b)(2) provides:
11 U.S.C. § 522(b)(2). The Debtor argues that he is entitled to exempt his interest in the property pursuant to section 522(b)(2)(A) and (B). The Creditor of course argues that the Debtor is not entitled to an exemption under either subsection. Pursuant to the Federal Rules of Bankruptcy Procedure, "the objecting party has the burden of proving that the exemptions are not properly claimed." Fed. R. Bankr.P. 4003(c).
The Debtor does not claim an exemption under the so-called "federal exemptions" set forth in section 522(d) of the Bankruptcy Code. Rather, he elected to claim the so-called "state exemptions" provided under section 522(b)(2)(A). The include exemptions available under both applicable state law and federal law other than the Bankruptcy Code. The parties have raised the issue of what state law applies to the claimed homestead exemption in this case. Section 522(b)(2)(A) specifically provides that it is the The Debtor argues that Massachusetts law applies. The Creditor argues that New Hampshire law applies.
Because the Debtor was a domiciliary of New Hampshire for the 180 days preceding his bankruptcy filing, under the plain language of the statute, the law of New Hampshire applies to any claim for a homestead exemption made by the Debtor. See In re Arrol, 170 F.3d 934, 935-36 (9th Cir.1999) (); In re Stockburger, 192 B.R. 908, 910 (E.D.Tenn. 1996) (); Howison v. Hidler (In re Hidler), 192 B.R. 790, 793 (Bankr.D.Me.1996) (); King et al., Collier on Bankruptcy ¶ 522.06 (15th rev. ed. 1998) ("If the debtor chooses the option of claiming exemptions under state law, the state exemption law that applies is that of the state in which the debtor's domicile has been located for 180 days preceding the filing of the petition . . . The court must give effect to those exemptions allowed by the debtor by the law of the state of domicile, and it makes no difference where the property is situated or where the petition initiating a case under title 11 is filed, so long as the property is exempt under the law of the domiciliary state."). The New Hampshire homestead exemption may be utilized by the Debtor to exempt an interest in property located outside New Hampshire because the language of the homestead statute, RSA 480:1, does not limit the homestead exemption to property located in New Hampshire. See Arrol, 170 F.3d at 936 ().
In Schedule C, the Debtor claims a homestead exemption based upon "Massachusetts Homestead Exemption of Spouse." To the extent that the Debtor's claim of homestead exemption under section 522(b)(2)(A) is based upon Massachusetts law, the Creditor's objection must be sustained as the only law applicable according to section 522(b)(2)(A) is the state law "at the place in which the debtor's domicile has been located for the 180 days immediately preceding the date of the filing of the petition," which in this case is New Hampshire.
To the extent that the Debtor's claim of homestead exemption is based upon New Hampshire law, the Creditor's objection must also be sustained. The New Hampshire homestead statute provides that a debtor is entitled to exempt $30,000 worth of his homestead. See RSA 480:1. One of the prerequisites for asserting the New Hampshire homestead exemption is that the debtor reside at the property. See In re Eckols, 63 B.R. 523, 524 (Bankr.D.N.H.1986) (); Currier v. Woodward, 62 N.H. 63 (1882) (). While the Court acknowledges that in other cases in this jurisdiction failure to occupy the home at the time of the bankruptcy filing has not proved fatal to a debtor's claim of homestead exemption, the Court finds that the facts of this case do not warrant applying the exception to the occupancy rule that has arisen through case law. Here, the Debtor is not temporarily absent from the home because of a pending divorce action, see Eckols, 63 B.R. at 527; In re Cilley, 64 B.R. 32, n. 3 (D.N.H.1986), but, rather, it is undisputed that the Debtor and his wife have been legally separated pursuant to a final court order entered sometime in the mid-1980s and that the Debtor has not lived at the property for the past six years. Accordingly, the Debtor is not entitled to claim a homestead exemption in the property pursuant to New Hampshire law.
Pursuant to section 522(b)(2)(B), the Debtor is entitled to an exemption in the property to the extent that his interest as a tenant by the entirety is exempt from process under applicable nonbankruptcy law. Section 522(b)(2)(B) does not limit "applicable nonbankruptcy law" to the law of the debtor's domicile. Rather, the situs of the asset that is held by a debtor as a tenant by the entirety...
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