Golding v. Adamcewicz (In re Golding), CASE No. 19-20465 (JJT)

622 B.R. 8

IN RE: Korry Gilbert GOLDING, Debtor.

Korry Gilbert Golding, Movant

v.Beverly Adamcewicz, Respondent.

CASE No. 19-20465 (JJT)

United States Bankruptcy Court, D. Connecticut, Hartford Division.

Signed August 7, 2020

S. Zaid Hassan, Law Office of Zaid Hassan LLC, Bloomfield, CT, for Debtor.

Anthony S. Novak, Novak Law Office, P.C., Manchester, CT, for Trustee.

RE: ECF Nos. 22, 28, 30, 37, 39

MEMORANDUM OF DECISION ON DEBTOR'S MOTION TO AVOID JUDICIAL LIEN OF BEVERLY ADAMCEWICZ

James J. Tancredi, United States Bankruptcy Judge

I. INTRODUCTION

This matter comes before the Court on Korry Gilbert Golding's (the "Debtor") Motion to Avoid the Judicial Lien of Beverly Adamcewicz ("Adamcewicz"), in which the Debtor seeks, under 11 U.S.C. § 522(f)(1)(A), to avoid a prejudgment attachment lien (the "Lien") against certain real property located at 107–109 Mapleton Street in Hartford, Connecticut (the "Property") that the Debtor claims as his homestead (ECF Nos. 22, 28, 37, the "Motion").¹ The Motion is premised upon the contention that the Lien impairs the homestead exemption to which the Debtor is allegedly entitled to under Conn. Gen. Stat. § 52-352b(t). Adamcewicz, holding a prejudgment attachment lien against the Property in the amount of $450,000, objected to the Motion (ECF Nos. 30, 39, the "Objections"), assailing the integrity of the Debtor's claim and arguing that the Property does not qualify as the Debtor's "homestead" for exemption purposes because Connecticut law precludes the Debtor from legally residing in the Property's basement.

On June 1, 2020, the Debtor testified at an evidentiary hearing on the Debtor's Motion and Adamcewicz's Objections thereto (ECF No. 117). At the conclusion of that hearing, the parties were directed to file supplemental briefings, and, thereafter, the Court took the matter under advisement. For the reasons below, the Court finds that Adamcewicz failed to meet her burden of proving that the Debtor's claimed homestead exemption is improper. The Court further finds that the Debtor has failed to present sufficient evidence as to the fair market value of the Property for lien impairment calculations, and thus, has not met his burden under 11 U.S.C. § 522(f). Accordingly, the Debtor's Motion is DENIED and Adamcewicz's Objection is SUSTAINED in part and OVERRULED in part.

II. JURISDICTION

The United States District Court for the District of Connecticut has jurisdiction over the instant proceedings under 28 U.S.C. § 1334(b), and the Bankruptcy Court derives its authority to hear and determine this matter on reference from the District Court under 28 U.S.C. §§ 157(a) and (b)(1) and the General Order of Reference of the United States District Court for the District of Connecticut dated September 21, 1984. This is a core proceeding under 28 U.S.C. §§ 157(b)(2)(A) and (K).

III. FACTS

1. On March 1, 2018, a prepetition, prejudgment remedy order entered in favor of Adamcewicz against the Debtor in the amount of $450,000 in the Superior Court action Beverly Adamcewicz v. Korry Golding, bearing docket number HHDCV17-5048121-S (the "Superior Court action"). A certificate of attachment related thereto was recorded on the Hartford Land Records on March 22, 2018. On March 13, 2019, after a hearing in damages, a judgment entered in the Superior Court action in favor of Adamcewicz and against the Debtor in the amount of $950,000.²

2. On March 28, 2019 (the "Petition Date"), the Debtor filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code (ECF No. 1).

3. As of the Petition Date, the Debtor was the fee simple owner of the Property.

4. The Property is a two-family residence, with one unit located on the first floor of the Property and one unit located on the second floor. Each unit has two bedrooms and one bathroom. As of the Petition Date, the Debtor resided in the partially finished basement of the Property, which has one bedroom and one bathroom, and rented out both units on the first and second floors. The Property's attic also has one bedroom and one bathroom.

5. A consensual mortgage lien held by New Century Mortgage Corp. also encumbers the Property in the amount of $169,600.

6. On the Debtor's Schedule A, he listed his ownership interest in the Property, which he values at $200,000. On his Schedule C, the Debtor elected the Connecticut state exemptions and claimed the Property as exempt under Conn. Gen. Stat. § 52-352b(t) in the amount of $75,000.

7. The Debtor's Schedule D listed Adamcewicz's secured claim in the amount of $950,000, stemming from the judgment entered in favor of Adamcewicz in the Superior Court action.

8. Adamcewicz filed a Proof of Claim against the Debtor in the amount of $950,000, the basis of which is listed as "Personal Injury Judgment." See Proof of Claim 1.

9. On July 8, 2019, the Debtor filed his first Motion to Avoid Lien (ECF No. 22), seeking to avoid the Lien because it impaired his homestead exemption under Conn. Gen. Stat. § 52-352b(t). To cure various deficiencies with the Motion, the Debtor filed two other Motions to Avoid Lien, the first on July 15, 2019 (ECF No. 28), and the second on July 26, 2019 (ECF No. 37).

10. Although Adamcewicz never objected to the Debtor's claim of the homestead exemption as listed on his Schedules, Adamcewicz did oppose each of the later filed Motions (see ECF Nos. 30, 39, the "Objections"), objecting to the Debtor's entitlement to the exemption and arguing that the Property was not the Debtor's homestead for exemption purposes. This argument, however, was predicated on a Marshal's Return of Service of Process at the Property dated two years before the Petition Date that stated, "tenants at the property ... indicated to me that [the Debtor] does not reside there." See ECF No. 30. When questioned by the Court as to the propriety—or more appropriately, the lack thereof—of filing an objection based on information gathered two years before the Petition Date, Adamcewicz stated there was still a relevant basis for an objection because the Debtor's occupancy of the Property's basement, when the Hartford Ordinances specifically prohibit such a use, provided an alternative basis for the contention.

11. Because Adamcewicz's Objections raised bona fide concerns as to the legitimacy of the Debtor's exemption, the Court directed the parties to provide supplemental briefings on any authorities that would support or rebut the assertion that the Property qualified as a "homestead" under Connecticut law. See ECF No. 53.

12. During the pendency of the Motion, on July 31, 2019, an Order of Discharge entered in the Debtor's case (ECF No. 41).

13. An initial hearing on the Motion was held on August 15, 2019 (ECF No. 46), but was ultimately continued so as to allow the Debtor to re-serve the Motion on Adamcewicz's counsel and to allow the parties to proceed in a procedurally proper manner. The Court set the continued evidentiary hearing date for November 14, 2019 (ECF No. 54).

14. On November 14, 2019, the Debtor filed a consensual Motion to Continue, stating that "[t]here is an imminent possibility of a resolution in this matter between the parties" (ECF No. 58).

15. The same day, Adamcewicz filed a Withdrawal of her Objection to the Debtor's Motion stating that "[a]fter consultation with Debtor's counsel, the matter has been resolved" (ECF No. 59). This proposed withdrawal contemplated an undisclosed settlement that was not approved by the Court.

16. Despite the aforementioned filings, the Court held the hearing on the Debtor's Motion and the Objections thereto as scheduled on November 14, 2019 (ECF No. 60). With respect to the Court's directive that the parties provide evidence as to the legitimacy of the claimed homestead at the hearing, only Debtor's counsel appeared. Pursuant to statements on the record, the hearing was again continued, and the Court set the final hearing date for December 20, 2019.

17. Following the continuation of the November 14 hearing, the Court entered an Order to Show Cause, directing the Debtor to appear at the December 20th hearing and show cause as to the bona fides of his asserted homestead exemption in the Property (ECF No. 61). The Order also directed Adamcewicz to appear at the December 20th hearing and to confer with the United States Trustee (the "UST") as to the facts supporting its Objection. Id. The Court denied Adamcewicz's Motion to Withdrawal its Objection as improper (ECF No. 62).

18. Prior to the final hearing on the Motion, the Court held a status conference, at which time the Court continued the December 20 hearing for another month. In the interim, the Debtor was directed to file at least 3 affidavits describing the location and timing of the Debtor's occupancy of the Property relevant to the claimed homestead exemption.

19. Because of several unforeseen circumstances, including the Covid-19 global pandemic, the hearing on the Debtor's Motion was continued yet again. The parties next appeared before the Court at a status conference held on April 28, 2020 (ECF No. 109).

20. At that status conference, the parties agreed to narrow the issues before the Court, specifically agreeing that there was no material dispute about whether the Debtor occupied the Property as his primary residence as of the Petition Date. The remaining issues to be argued thus pertained to the legality of the Debtor's use of the Property (specifically, his occupancy of the basement) and whether that use had any effect on his claimed homestead exemption. A pretrial order entered, setting the final hearing for June 1, 2020.

21. The evidentiary hearing on the Debtor's Motion ultimately took place on June 1, 2020, whereat both testimonial and documentary evidence was offered on the propriety of the Debtor's use of the basement as the basis for his claimed homestead exemption. Relevant exhibits entered into evidence included: a market appraisal report of the Property with comparable sales of two-family homes, a property assessment card

...