In re Broderick

In re: MARY ANN BRODERICK Debtor

Case No. 14-42104-CJP

UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS

January 31, 2017

Chapter 7

MEMORANDUM OF DECISION

Before the Court is the Objection to Debtor's Claim of Exemption in Property Located at 105 Mason Street, Swansea, MA (the "Objection") filed by the Chapter 7 Trustee, David M. Nickless (the "Trustee"). Through his Objection, the Trustee challenges the exemption in the amount of $14,945.29 claimed by the debtor, Mary Ann Broderick (the "Debtor") pursuant to 11 U.S.C. § 522(d)(1)¹ in her one-half (1/2) remainder interest in property located at 105 Mason Street,² Swansea, Massachusetts (the "Swansea Property"). The Trustee objects to the claimed exemption because neither the Debtor, nor any dependent of the Debtor, uses that property as a residence.³ The Debtor filed a response to the Objection (the "Response"), asserting that she hasan intention to relocate to the Swansea Property and reside there permanently, but is unable to do so because she suffers from serious medical issues that preclude her from relocating. Upon consideration of the documentary evidence and testimonial evidence of the Debtor introduced at the evidentiary hearing in this contested matter and the entire record of proceedings in this case, for the reasons stated below, under the particular facts of this case, the Court shall enter an order overruling the Trustee's Objection.

I. Jurisdiction

An objection under § 522(l) to a debtor's claim of exemption is a core proceeding under 28 U.S.C. § 157(b)(2)(B) over which the Court has jurisdiction pursuant to 28 U.S.C. § 1334(b) and Local Rule 201 of the United States District Court for the District of Massachusetts.

II. Facts

The Debtor filed a voluntary petition under Chapter 7 of the Bankruptcy Code on September 26, 2014 (the "Petition Date"), listing her street address as 6A White Road in Mendon, Massachusetts (the "Mendon Property"). The Trustee conducted the section 341 meeting of creditors on November 3, 2014. The Debtor filed amended schedules, including an amended "Schedule A - Real Property" ("Schedule A") and "Schedule C - Property Claimed as Exempt" ("Schedule C"), and a motion to approve the same (the "Motion to Amend") on January 3, 2015. The Debtor had originally claimed that she owned a contingent life estate in the Swansea Property, but, on her amended Schedule A, the Debtor listed a one-half remainder interest in the Swansea Property valued at $14,945.29. On Schedule C, the Debtor claimed anexemption in the Swansea Property in the amount of $14,945.29 pursuant to § 522(d)(1) (the "Exemption"). The Court (Hoffman, C.J.) allowed the Motion to Amend on February 26, 2015, reserving the Trustee's rights to pursue his Objection to the Exemption, which had been filed on January 16, 2015.

As of the Petition Date, the Debtor testified that she had lived at the Mendon Property for the past 12 years. Prior to the Mendon Property, the Debtor resided in Milford for over 10 years. The Debtor testified that the Swansea Property is her childhood home and that she has not lived there for over thirty years, although she stays there on a regular basis. When questioned by counsel to the Trustee at the hearing, the Debtor repeatedly confirmed that the Swansea Property was not her residence, but testified compellingly that it is her intention to return there permanently when her medical condition permits. She also testified to a current use of the Swansea Property to care for her parents.

The Debtor's parents, George and Olive Ventura reside at the Swansea Property and recorded a Declaration of Homestead for that property in 2005. The Quitclaim Deed granted by the Venturas, which reserved a life estate to each of them, transferred a one-half remainder interest in the Swansea Property, to the Debtor and Susan James, the Debtor's sister, as joint tenants, "without full power to mortgage, sell, convey, or otherwise encumber" the property. See Quitclaim Deed, Ex. 2. The Debtor conceded that the expenses she has included on her Schedule J in this case do not include expenses for care and support of George or Olive Ventura and that her parents are not her dependents.

Due to her parents' failing health and advanced ages, however, the Debtor also testified that they require her assistance for their care needs and that, accordingly, she spendsconsiderable time at the Swansea Property, including certain weekdays when she does not have dialysis treatments, weekends and holidays. The Debtor stated she keeps clothing, cosmetics, and "other sundry items" in Swansea. The Debtor also testified to the support and general cooperation of her sister, who lives in New Hampshire.

It is undisputed that the Debtor suffers from serious, chronic medical conditions. The Debtor credibly testified that the only reason she maintains the Mendon Property is as a convenience and necessity to facilitate her three weekly kidney dialysis treatments for end-stage renal disease, which treatments exhaust her, limiting her ability to drive long distances on days when she undergoes dialysis. She has not renewed a lease at her Mendon property and lives there on a month to month basis. Otherwise, the Debtor stays and sleeps at the Swansea Property.

The Debtor also testified that her husband suddenly passed away in January 2014, an event that was a sea change in her life. Prior to her husband's passing, the Debtor admitted she did not have an intention to move to the Swansea Property, but, after his death and as of the Petition Date, she intended to move to Swansea because her husband's death created significant financial hardships for her and she was concerned with her parents' health issues and care needs. The Debtor further testified that her deteriorating medical condition stemming from a medical procedure that lead to her hospitalization in the intensive care unit put her intention to return to Swansea on hold in the months leading to the Petition Date, but that she still intends to move to and reside in the Swansea Property.

In preparing to return permanently to the Swansea Property, the Debtor testified that she has researched dialysis treatment centers in the area, because a move would necessitate changingher medical care providers. Presently, other than providers in Boston she does not visit on a regular basis, the Debtor's doctors are located near the Mendon Property.

III. Positions of the Parties

The Trustee asserts that the Debtor's Exemption in the Swansea Property must be denied because neither the Debtor nor her dependents used that property as a residence. The Debtor asserts that the Exemption taken is valid based upon her use of the Swansea Property on and prior to the Petition Date and her intention to make the Swansea Property her sole residence, which has been delayed because of serious and chronic medical conditions which prevent her from relocating. Perhaps recognizing the Debtor's acknowledgements that she does not "reside" at the Swansea Property and statements regarding her use of that property, the parties framed the issue on the record as whether the Debtor could demonstrate that she had an intention to reside at the residence permanently because such intention would be enough to bring the Exemption into the ambit of § 522(d)(1).

IV. Discussion

Pursuant to § 522(b)(1), "a Massachusetts debtor may exempt property from the bankruptcy estate under one of two alternative exemptions, electing either the federal bankruptcy exemptions set forth in § 522(d) or the exemptions available under state, federal non-bankruptcy or local law...." In re Williams, 515 B.R. 395, 399 (Bankr. D. Mass. 2014) (quotations omitted). Section 522(l) provides that claimed exemptions are presumptively valid in the absence of an objection. See 11 U.S.C. § 522(l). "'As a policy matter, exemption rights are to be construed liberally in the debtor's favor in view of Congress's goal of providing a meaningful fresh startfor debtors.'" In re Feliciano, 487 B.R. 47, 50 (Bankr. D. Mass. 2013) (quoting In re Griffith, 449 B.R. 909, 911 (Bankr. W.D. Wis. 2011)).

In the context of an exemption objection, the burden of proof is placed upon the party contesting an exemption claimed by a debtor to prove by a preponderance of the evidence that at the time of the filing of the bankruptcy petition, the debtor was not entitled to claim the exemption. See Fed. R. Bankr. P. 4003(c); see also In re Genzler, 426 B.R. 407, 418 (Bankr. D. Mass. 2010) (holding that "[p]ursuant to Fed. R. Bankr. P. 4003(c), the burden is on the trustee as the objecting party to prove the homestead is not properly claimed"). If the objecting party introduces evidence effectively rebutting the exemption, the burden of production shifts to the debtor to produce evidence to demonstrate the claimed exemption is proper, but the burden of persuasion always remains with the objecting party. See, e.g., In re Roberts, 280 B.R. 540, 544-45 (Bankr. D. Mass. 2001).

Section 522(d)(1) provides that "[t]he debtor's aggregate interest, not to exceed $22,975⁴ in value in real property or personal property that the debtor or a dependent of the debtor uses as a residence" is exempt from a debtor's bankruptcy estate. 11 U.S.C. § 522(d)(1). Generally, the Court must interpret the language of a statute according to its plain meaning, unless doing so would lead to an absurd result. See, e.g., Lamie v. U.S. Tr., 540 U.S. 526, 534 (2004) (finding that "[i]t is well established that 'when the statute's language is plain, the sole function of the courts—at least where the disposition required by the text is not absurd—is to enforce it according to its terms.'" (quoting Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A.,530 U.S. 1, 6 (2000))). While the Bankruptcy Code does not specifically define "residence,"⁵ the term is not ambiguous. See Feliciano, 487 B.R. 47, 51; In re Lawrence, 469 B.R. 140, 142 (Bankr. D. Mass. 2012). "According to Black's...