Larry Russell Homes Company v. Eric Maynor

Case Type:
Case Status:
21-027 (10th Circuit, Feb 03,2022) Not Published
Concluding that the law of the state of a debtor's prepetition domicile governs an exemption claim, the U.S. Bankruptcy Appellate Panel of the Tenth Circuit (BAP) reversed the decision of the U.S. Bankruptcy Court for the Western District of Oklahoma (BC) allowing Eric D. Maynor (DR), a chapter 7 debtor, to claim property in North Carolina, which the BC found to be his prepetition domicile (and where the DR intended to return post-bankruptcy), as his homestead per the exemption laws of Oklahoma, the state where he filed for bankruptcy relief and lived and worked in the preceding two years.
Procedural context:
At the hearing on an objection to the DR's claim of a homestead exemption under Oklahoma law for real property located at 377 Louisiana Drive, Raeford, North Carolina (Property) filed by the Larry Russell Homes Company (LRHC), the BC made two important rulings, First, it denied the DR's request for sanctions due to the DR's failure to comply with the safe-harbor procedures set forth in Bankruptcy Rule 9011. Next, the BC overruled LRHC's objection to the DR's claimed homestead exemption on two grounds: (1) per Bankruptcy Rule 4003(c), and due to LRHC's failure to file a witness and exhibit list, it had not sufficiently demonstrated that North Carolina was not the DR's domicile and that the Property was not the DR's homestead; and (2) although the BC said it did not need to reach the issue, the Oklahoma exemption statute had extraterritorial effect because the statute does not limit the location of the homestead to Oklahoma. The BC entered its formal order on June 25, 2021. LRHC timely appealed, arguing the BC had erred in determining that the Oklahoma exemption statute applied to the Property.
On April 5, 2021, the DR filed his petition. Citing Oklahoma's homestead exemption statues, he claimed a homestead exemption of $78,403 in the Property.. On his bankruptcy income schedule, the DR stated he was employed as a basketball coach in Oklahoma City and had been employed there for two years. LRHC, an unsecured creditor, filed a timely objection to this exemption. It argued the following: (1) the Property was not the DR's principal residence, a requirement under the Oklahoma statute, because the DR had lived and worked in Oklahoma for two years; and (2) the Oklahoma homestead exemption is not available to real property outside of Oklahoma. In response, the DR alleged as follows--(1) the Property was his principal residence; (2) he had lived at the Property until he moved to Oklahoma for work in 2019; and (3) he intended to return to the Property when his employment in Oklahoma ended--and added an accusation of frivolousness, adjoined with a request for sanctions, against LRHC.
Cathleen D. Parker; Terrence L. Michael; and William T. Thurman

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