In re Kellogg

620 B.R. 170

IN RE: Joseph Patrick KELLOGG, Debtor.

Case No. 3:19-bk-03254-JAF

United States Bankruptcy Court, M.D. Florida, Jacksonville Division.

Signed June 25, 2020

Bryan K. Mickler, Mickler & Mickler, Albert H. Mickler, Jacksonville, FL, for Debtor.

Jacob A. Brown, Akerman LLP, Jacksonville, FL, for Trustee.

MEMORANDUM DECISION AND ORDER OVERRULING, IN PART, CHAPTER 7 TRUSTEE'S OBJECTION TO DEBTOR'S CLAIM OF EXEMPTION, AND DENYING, IN PART, CHAPTER 7 TRUSTEE'S MOTION FOR TURNOVER OF PROPERTY OF THE ESTATE

Roberta A. Colton, United States Bankruptcy Judge

This Chapter 7 case came before the Court for joint trial on the Chapter 7 Trustee's (the "Trustee") Objection to Debtor's Claim of Exemptions (Doc. 11), Motion for Turnover of Property of the Estate (Doc. 12), and Objection to Debtor's Amendment to Schedule C (Doc. 39). Following trial, the Court sustained the objections and granted the motion, in part, as to all matters except Debtor Joseph Patrick Kellogg's claimed exemption in his 2012 Thor Motor Coach 27' M-25C E450 Ford V10 (the "Motor Home"). As to the Motor Home, which Mr. Kellogg claims as his exempt homestead pursuant to Fla. Const. art. X, § 4 and Fla. Stat. § 222.05,¹ the Court took the matter under advisement.

The Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1334(b) and 157(a). This matter is a core proceeding under 28 U.S.C. § 157(b)(2)(B), (E).

Statement of Facts ²

Mr. Kellogg purchased the Motor Home in June 2017, using a portion of the proceeds from the sale of his then-homestead located at 5540 Lakewood Circle East, Jacksonville, Florida. Mr. Kellogg has maintained the Motor Home as his sole residence since its purchase.

Mr. Kellogg rents, on a month to month basis, a spot for the Motor Home at the Sunny Sands Resort, a mobile home park and campground located in Pierson, Florida ("Sunny Sands"). The spot comes with utility hookups, specifically electrical, water, septic, and cable, which Mr. Kellogg utilizes by connecting to the Motor Home. Mr. Kellogg has rented a spot at Sunny Sands for approximately two and half years. Although he has traveled in the Motor Home away from Sunny Sands during that time, Mr. Kellogg maintained his relationship with the resort as it was "always" his intent to return there. Mr. Kellogg testified that over time, he has been able to upgrade his assigned spot, adding that presently he is in the "best one" and "not going to leave it."

The Motor Home is configured to serve as a residence. There is a bedroom with a queen-sized bed and a sofa bed for additional sleeping space. There is a kitchen with a stove, oven, and microwave. There is also a bathroom and shower area. Further, the Motor Home is equipped with a roof air-conditioning unit, furnace, and water heater. Upon his inspection of the Motor Home, the Trustee's appraiser noted, among other things, dishes in the sink, a coffeemaker, clothes strewn about the interior, and a television that was hooked up.³ It appeared to him that "someone was living there." Although he did not speak to Mr. Kellogg specifically on that point, the appraiser assumed that Mr. Kellogg lived there.

Mr. Kellogg does not own any real property.⁴ He does rent a storage unit in South Daytona.⁵ There, Mr. Kellogg stores various items including furniture once used in his prior homestead. Mr. Kellogg describes these items as "junk."⁶ The Trustee has not inspected the storage unit nor otherwise sought to appraise its contents.

The Motor Home is not permanently affixed to the lot at Sunny Sands. The Motor Home is operable and, prepetition, Mr. Kellogg traveled in it both in and out of state. Since purchasing the Motor Home, Mr. Kellogg has driven it approximately 13,000 miles.⁷ This includes two trips to visit his son in Maine,⁸ a trip to Michigan to care for a dying uncle, and several trips to the Jacksonville area to visit his grandchildren. When he traveled, instead of seeking temporary lodging, Mr. Kellogg continued to reside in the Motor Home. And, he would tow either his truck or motorcycle to use for local transportation.⁹ Mr. Kellogg testified he does not use the Motor Home for "pleasure driving."¹⁰ Importantly, regardless of where he traveled or for how long, Mr. Kellogg would return the Motor Home—his "only home"—to his spot at Sunny Sands.

Mr. Kellogg filed this chapter 7 case on August 26, 2019. He scheduled the Motor Home as his exempt homestead, noting that he used it as his "residence."¹¹ At the time of the filing and all times through the date of trial, the Motor Home has been located at Sunny Sands.

The Trustee argues that the Motor Home cannot qualify as Mr. Kellogg's homestead because it is "inherently mobile" and lacks the requisite degree of physical permanency given Mr. Kellogg's extensive prepetition travels. Mr. Kellogg asserts that the Motor Home is configured for long-term habitation, that it is his sole permanent residence, and that he maintains and always returns to the spot at Sunny Sands, and, thus, the Motor Home qualifies as his homestead.

Discussion

The Court must decide if the Motor Home qualifies as Mr. Kellogg's exempt homestead under Florida law.¹² Florida's generous homestead exemption is rooted in the state constitution and its protections have been extended by the state legislature to cover non-traditional homes.¹³ It is well settled that Florida's homestead exemption is to be liberally construed in favor of the claimant and in favor of its public policy purpose, namely "to promote the stability and welfare of the state" by protecting the family home.¹⁴

In bankruptcy, a debtor's claim of exemption is "presumptively valid."¹⁵ The burden falls to the objecting party to establish that the debtor's exemption is not properly claimed.¹⁶

At issue here is the exemption provided in Fla. Stat. § 222.05, which states:

Any person owning and occupying any dwelling house, including a mobile home used as a residence, or modular home, on land not his or her own which he or she may lawfully possess, by lease or otherwise, and claiming such house, mobile home, or modular home as his or her homestead, shall be entitled to the exemption of such house, mobile home, or modular home from levy and sale as aforesaid.

The Court must determine whether the Motor Home is Mr. Kellogg's "dwelling house" within the meaning of Fla. Stat. § 222.05. The statute does not define the term. Rather, it provides two illustrative examples which indicates "that the legislature intended to enlarge the definition of the term ‘dwelling house’ rather than to limit the term to modular and mobile homes or to list every possible type of dwelling house."¹⁷ And a broad interpretation of the term is consistent with the liberal construction the homestead exemption is to receive.

What qualifies as a "dwelling house" is a fact driven inquiry to be made on an case-by-case basis.¹⁸ Both sides agree that guidance is found in the six factors articulated in In re Yettaw.¹⁹ These are:

1) The Debtor's intent to make the nontraditional abode his homestead.

2) Whether the debtor has no other residence.

3) Whether the evidence establishes a continuous habitation.

4) Whether the debtor maintains at least a possessory right associated with the land establishing a physical presence.

5) Whether the nontraditional abode has been physically maintained to allow long-term habitation versus mobility.

6) Whether the physical configuration of the abode permits habitation, otherwise the physical characteristics are immaterial.²⁰

The list is non-exhaustive, and no one factor is determinative. But principal among the factors is the debtor's intent.²¹

Considering the evidence in light of the liberal standard to be applied, the Court concludes that the Motor Home is Mr. Kellogg's "dwelling house" and, therefore, his exempt homestead. Mr. Kellogg purchased the Motor Home intending to use it as his residence. The Motor Home, by nature, was configured to permit habitation and Mr. Kellogg has maintained it in that fashion. Mr. Kellogg has used it continuously as his residence since its purchase including during periods when he traveled to visit family. Mr. Kellogg has maintained his membership with and rights to a spot at Sunny Sands and, without fail, has returned there after his travels away. On the date of the filing, the Motor Home was in Mr. Kellogg's spot at Sunny Sands attached to utility services. It has not moved since that date up through the date of trial. Finally, Mr. Kellogg has no other residence.

In his attempt to defeat Mr. Kellogg's exemption, the Trustee notes certain statements made either on the bankruptcy petition or during the 2004 Exam. The Court addresses each briefly.

First, the Trustee notes that during his 2004 Exam, Mr. Kellogg stated that recreational vehicles are "not really made to live in" and that he was keeping certain items in storage in case he needed them "for a place to live."²² But these statements must be viewed in context and further considered in light of Mr. Kellogg's testimony at trial. Mr. Kellogg was expressing concern about the Motor Home's longevity given his intent to use it as a full-time residence rather than the occasional use traditionally associated with recreational vehicles. Accordingly, the Court finds these statements do not help the Trustee.

Second, the Trustee highlights that Mr. Kellogg invested only a portion of the proceeds from the sale of his prior homestead to purchase the Motor Home, choosing to spend the rest to live extravagantly.²³ This argument is a bit of a red herring and seemingly intended to discredit Mr. Kellogg. There is no requirement under Florida law that individuals reinvest in full, or in large part, proceeds from the sale of an exempt homestead into a new homestead. Individuals are free to invest such proceeds as they deem fit. However, should an individual decide to reinvest such proceeds into a new homestead, his claim to a continued homestead exemption in the proceeds is limited to the amount...