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Thelma McCoy v. USA

Summarizing by Craig Geno

Paul v. Allred (In re Paul)

No. 12-6068 (BAP 8th Cir., February 28, 2012)
The BAP affirmed the order of the bankruptcy court concluding that the debtor had abandoned the subject property as his homestead and, therefore, was not permitted to claim a homstead exemption in it.
Procedural context:
The debtor appealed the bankruptcy court's order granting summary judgment in favor of the chapter 7 trustee.
In his chapter 7 bankruptcy petition, the debtor listed his address as 126 BillingsAvenue, in Lead, South Dakota ("Billings Avenue) and stated in his Statement of Financial Affairs that he had not resided anywhere other than the Billings Avenue property for three years pre-petition. Among his assets, the debtor listed unencumbered real property located at 117 Sparks Street in Lead, South Dakota, and claimed the property as fully exempt as his homestead, pursuant to Section 43-45-3(2) of the South Dakota Codified Laws. At the debtor's 341 meeting, the debtor testified that he did not live in the Spark Street property on the date of the filing; that he had not lived in the Spark Street property for 14-15 years, and that he had no intent to live in the property. He further testified that the property was rented out, which was consistent with what was reported in his schedules. Following the 341 meeting, the trustee objected to the homestead exemption, arguing that under South Dakota law, real property not actually occupied by the debtor on the date of the filing can be claimed as an exempt homestead only if the debtor has, on the date of filing, an intention to occupy the property. Based on the debtor's testimony, the trustee contended that he was not entitled to the homestead exemption claimed in the subject property. In response to the trustee's motion for judgment on the pleadings (treated by the bankruptcy court as a motion for summary judgment), the debtor disputed the characterization that he had abandoned the Spark Street property, asserting that he was living with his new wife and child in the Billings Avenue property before the marriage and that nothing prohibited him from moving out of that house an into his property on Spark Street. The BAP observed that South Dakota had opted out of the federal exemption scheme as is permitted under Section 522 of the Bankruptcy Code. Thus, the debtor was limited to the exemptions allowed under South Dakota law. Applicable South Dakota law provides, in pertinent part, that "[t]he homestead of every family, resident in this state, as hereinafter defined, so long as it continues to possess a character of a homestead is exempt from judicial sale, from judgment lien, and from all mesne or final process of court ..." Under the standard established by the South Dakota Supreme Court regarding abandonment of a homestead, the BAP noted that "the main question in such cases is the intent of the pary who has ceased to occupy the homestead. No general rule can be laid down as a guide for a court in determining intent, but each case must stand on its own facts." While a long absence is not conclusive proof of intent to abandon, it "is a circumstance which may indicate such an intent in absence of a showing of intent to return." Under this standard, "[t]he real question is: Did the party have a fixed and actual purpose or intent to return and reside on the property, and did that purpose or intent continue to exist to the time in question." In response to the debtor's argument that he had not abandoned ownership of the Spark Street property, the BAP stated that this was not the issue. Rather, the question was whether the debtor had abandoned that property as his homestead. The evidence was that the debtor did not deny that he moved from Spark Street to his wife's home years ago, lived there with his wife and child, and that he had no intent to return to the Spark Street home - either at the time he moved out or at the time he filed his petition. The debtor's statement that nothing prevented him from moving back into the Spark Street property did not state any fixed or actual purpose or intent to return and reside there. The BAP, therefore, agreed with the bankruptcy court's conclusion that the debtor had abandoned the Spark Street property as his homestead and thus could not claim a homestead exemption in it.
Federman, Kressel, and Schermer

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