In re Todd

In re: Laurie A. Todd, Debtor.

Case No. 15-11083

UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF NEW YORK

December 23, 2019

Chapter 7

APPEARANCES:

Laurie A. Todd, Pro Se

Debtor

7838 Mimosa Drive

Port Richey, FL 34668

The Dribusch Law Firm

Attorneys for the Chapter 7 Trustee

1001 Glaz Street

East Greenbush, NY 12061

Nolan Heller Kauffman LLP

Former Attorneys for Laurie A. Todd

80 State Street, 11th Floor

Albany, NY 12207

McElroy, Deutsch, Mulvaney & Carpenter, LLP

Attorneys for Endurance American Insurance Company

88 Pine Street, 24^th Floor

New York, NY 10005

Christian H. Dribusch, Esq.

Francis J. Brennan, Esq.

Kevin S. Brotspies, Esq.

Robert E. Littlefield, Jr., United States Bankruptcy Judge

MEMORANDUM-DECISION AND ORDER

Currently before the Court is the Chapter 7 Trustee's ("Trustee") objection to Laurie Todd's ("Debtor") exemptions claimed under Florida law pursuant to 11 U.S.C. § 522(b)(3)(A). The Court has jurisdiction over this proceeding pursuant to 28 U.S.C. §§ 157(a), (b)(1), and (b)(2).

BACKGROUND AND PROCEDURAL HISTORY

The Debtor commenced a chapter 11 case on May 20, 2015 ("Petition Date") by filing a voluntary bankruptcy petition ("Petition"). The Petition indicates the Debtor resided at 341 Miller Road, Hudson, New York 12534 ("Hudson Property") on the Petition Date. In addition to the Hudson Property, Schedule A/B states that Debtor owns a single-family home located at 7838 Mimosa Drive, Port Richey, Florida 34668 ("Mimosa Drive"). Initially, the Debtor claimed New York law exemptions on Schedule C pursuant to 11 U.S.C. § 522(b)(3)(A). Relevant to this matter, the Debtor claimed the Hudson Property exempt as her homestead and claimed an inherited IRA worth roughly $800,000 as wholly exempt pursuant to New York Civil Practice Law and Rules ("C.P.L.R.") § 5205(c)(1), (2), and/or (5).

Endurance American Insurance Company ("Endurance"), objected to the Debtor's exemption of the inherited IRA. The Debtor submitted an affidavit opposing the objections that states the Hudson Property is her home and principal residence. (Trustee Ex. 2, ECF No. 17.) After multiple failed mediation attempts seeking a global resolution of all issues - of which the inherited IRA exemption was a component - among the Debtor, her creditors, and other parties in interest and several rounds of briefing, the Court entered a Memorandum-Decision and Order on March 23, 2018, finding that the inherited IRA was not exempt under New York law. In re Todd, 585 B.R. 297 (Bankr. N.D.N.Y. 2018). The Debtor appealed to the District Court, and while the matter was being briefed before the Honorable Mae A. D'Agostino, the Debtor amended her Schedule C to claim exemptions under Florida law instead of New York law. There is no dispute that inherited IRAs are completely exempt pursuant to Florida law. See Fla. Stat. § 222.21.

On August 20, 2018, after an evidentiary hearing on the Court's Order to Show Cause for Contempt, and on oral motion of the United States Trustee, the Court converted the Debtor's case to chapter 7 for cause because the Debtor transferred approximately $632,000 out of the bankruptcy estate from June 4, 2018 to August 7, 2018 without court approval and in direct violation of a restraining order.¹ Of the $632,000 that the Debtor dissipated, the Debtorwithdrew $300,000 from the inherited IRA that was the subject of the pending appeal before District Judge D'Agostino. On January 17, 2019, Judge D'Agostino entered a Memorandum-Decision and Order affirming this Court's decision that the inherited IRA is not exempt under New York law. Todd v. Endurance Am. Ins. Co., 596 B.R. 79 (N.D.N.Y. 2019). On February 11, 2019, the Trustee objected to the Debtor's amended Florida exemptions on the basis that the Debtor could only claim exemptions under New York law or federal law pursuant to Section 522(b)(3)(A). Endurance filed papers supporting the Trustee's objection² and the Debtor filed opposition arguing that she was domiciled in Florida sufficiently ahead of her bankruptcy filing to allow her to claim Florida exemptions. On March 19, 2019, the Court held an evidentiary hearing on the issue of domicile at which only the Debtor testified. At the hearing, the parties agreed that the Debtor was domiciled in New York prior to purchasing Mimosa Drive and that the specific issue to be determined by the Court was when, if ever, the Debtor changed her domicile to Florida prior to her bankruptcy case.

The Court issued a post-trial briefing order requiring simultaneous submissions on May 3, 2019, and replies, if any, on or before May 10, 2019. On April 18, 2019, the Debtor filed a letter with the Court which included voluminous communications between herself and her counsel, Mr. Brennan. (ECF No. 412.) On April 24, 2019, Debtor's counsel filed a motion to withdraw as counsel for the Debtor, and, after a hearing on May 1, 2019, the Court granted Mr. Brennan's motion and suspended the briefing schedule. On May 6, 2019, the Court issued an Amended Briefing Order. On May 15, 2019, the Debtor filed a form changing her address toMimosa Drive.³ (ECF No. 432.) The Trustee, Endurance, and the Debtor, pro se, filed briefs, and the Court took the matter under advisement on June 14, 2019.

FINDINGS OF FACT

Based on the evidence in the record and the Debtor's testimony, the Court makes the following findings of fact:

Early life

1. The Debtor was born and raised in New York. (Tr. 83:9-13.)

2. The Debtor went to school in New York. (Tr. 83:14-15.)

3. The Debtor was married and raised her children in New York. (Tr. 83:16-17, 22-23.)

4. The Debtor spent her career working in New York. (Tr. 83:23-84:2.)

Property

5. The Debtor jointly owns the Hudson Property with her husband. (Tr. 104:7-13; Schedule A/B.)

6. The Debtor values the Hudson Property at $359,000. (Schedule A/B, ECF No. 1.)

7. The Debtor purchased Mimosa Drive in February 2011 and she owns it individually. (Tr. 2:19-3:6.)

8. The Debtor values Mimosa Drive at $60,000. (Schedule A/B, ECF No. 1.)

9. Prior to purchasing Mimosa Drive, the Debtor only resided in New York at the Hudson Property. (Tr. 4:2-4.)

Family

10. The Debtor's husband lives in New York. (Tr. 85:13-15.)

11. The Debtor's eldest child, sisters, brother, nieces, and nephews live in New York. (Tr. 84:12-14, 85:6-12.)

Voting, taxes, driver's license, and motor vehicle registration

12. The Debtor voted in New York in 2012, 2015, 2016, and 2017. (Tr. 99:2-12.)

13. The Debtor did not register to vote in Florida until December 2017. (Tr. 99:13-18.)

14. As of the trial on March 19, 2019, the Debtor still had not voted in Florida. (Tr. 99:21-23.)

15. The Debtor filed tax returns in New York for tax years 2012, 2013, and 2014 with the assistance of an accountant located in New York City. (Tr. 105:7-19, 106:24-107:2.)

16. The Debtor had a New York driver's license until June 2018 when she acquired a Florida driver's license. (Tr. 97:11-98:4.)

17. From 2011 and on, the Debtor owned, registered, insured, and operated a car in New York State. (Tr. 92:20-93:9.)

Banking and Professional Relationships

18. Debtor has a bank account in New York with Key Bank. (Sec. 341 Tr. at 45:24-46:3.)

19. In 2011, the Debtor opened a bank account in Florida with Wells Fargo. (Tr. 5:15-23.)

20. The Debtor's investment advisor in 2012, 2013, and 2014 was located in New York. (Tr. 105:20-106:19; Sec. 341 Tr. 70:3-9.)

21. The Debtor had insurance policies in New York and Florida before the Petition Date. ((Tr. 94:22-25, 21:15-18, 37:24-38:16.)

22. The Debtor has a doctor in New York. (Tr. 82:11-15.)

23. The Debtor had the following contact with medical professionals in Florida:

a. Visits to the veterinarian for the Debtor's dogs. (Tr. 6:21-7:3.)

b. Medical care in February 2013 for vertigo. (Tr. 57:9-58:6.)

c. Several routine visits to the Dentist from 2012 to 2015. (Tr. 78:11-23.)

d. Visits to an Oncologist once a year in 2011 and 2012. (Tr. 81:21-82:8.)

Presence within Florida

24. The Debtor filed a declaration of domicile in Florida in 2019. (Tr. 79:3-9, Debtor's Trial Ex. 135.)

25. The Debtor spent time living in both New York and Florida since purchasing Mimosa Drive.

ARGUMENTS

The Trustee and Endurance argue that the Debtor fails to establish a change of domicile from New York to Florida prior to the Petition Date. The Trustee and Endurance assert that the Debtor established, at most, that she had contacts with Florida that are consistent with the contacts she had with New York during the same time period. Further, they claim that the contacts with New York are more significant (family, voting, filing taxes, etc.) and support a finding that it was the Debtor's intent to remain in New York at all times up to the Petition Date. Additionally, Endurance asserts that the Debtor should be denied the ability to amend her exemptions due to the Debtor's bad faith conduct in this case. The Debtor responds that she established her change in domicile through her purchase of Mimosa Drive, her presence in Florida, and maintenance of professional, banking, and insurance relationships. Further, the Debtor claims Endurance's bad faith argument is contrary to the Supreme Court's holding in Law v. Siegel.

DISCUSSION

I. 11 U.S.C. § 522(b)(3)(A)

Pursuant 11 U.S.C. § 522(b)(3)(A),⁴ a debtor may exempt property under "State or local law that is applicable on the date of the filing of the petition . . . ." To discourage debtors fromforum shopping for more favorable exemptions and turning non-exempt assets into exempt assets on the eve of bankruptcy, the debtor's domicile before bankruptcy determines the applicable state law. If a debtor is domiciled in one state for two-years immediately preceding the bankruptcy case, the applicable state law is the law of that state. Id. However, if the debtor's domicile changed during this two-year period, "then the applicable state law is that of the state in which the debtor was domiciled for the 180 days immediately preceding the [two-year] period, or for the longest portion of that 180-day period." Shiu...