McCallan v. Wilkins

1

TIMOTHY THOMAS MCCALLAN, Appellant, v. CARLY B. WILKINS, Appellee.

No. 2:21-cv-377-RAH [WO]

United States District Court, M.D. Alabama, Northern Division

March 30, 2022

MEMORANDUM OPINION AND ORDER

R. AUSTIN HUFFAKER, JR. UNITED STATES DISTRICT JUDGE

This cause is before the Court on Timothy Thomas McCallan's appeal from the bankruptcy court's order finding that McCallan, the debtor, cannot claim a Florida homestead exemption on his residential property in Melbourne, Florida. McCallan also appeals the bankruptcy court's decision to impose an equitable lien on the same property because the property was acquired using funds from a fraudulent debt-consolidation scheme that resulted in a $102, 949 220.72 judgment against McCallan. Having considered the parties' briefs, the relevant law, and the record as designated, the Court finds that the bankruptcy court's opinion is AFFIRMED on both issues.

I. APPELLATE JURISDICTION AND STANDARD OF REVIEW

This Court has jurisdiction pursuant to 28 U.S.C. § 158(a)(1). Venue is proper because an appeal “shall be taken only to the district court for the judicial district in which the bankruptcy judge is serving.” 28 U.S.C. § 158(a)(3).

The district court functions as an appellate court in reviewing decisions of the bankruptcy court. See In re Williams, 216 F.3d 1295, 1296 (11th Cir. 2000) (per curiam). On appeal, the district court reviews the legal conclusions of the bankruptcy court de novo and the bankruptcy court's findings of fact for clear error. In re Piazza, 719 F.3d 1253, 1260 (11th Cir. 2013).

A factual finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed. See United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948); In re Walker, 515 F.3d 1204, 1212 (11th Cir. 2008). That review must be undertaken with due regard “to the opportunity of the bankruptcy court to judge the credibility of the witnesses.” Anderson v. Bessemer City, 470 U.S. 564, 575 (1985). The reviewing court oversteps the bounds of its duty if it undertakes to duplicate the role of the lower court. See Zenith Radio Corp. v. Hazeltine Rsch., Inc., 395 U.S. 100, 123 (1969) (“In applying the clearly erroneous standard to the findings of a district court sitting without a jury, appellate courts must constantly have in mind that their function is not to decide factual issues de novo.”); In re Englander, 95 F.3d 1028, 1030 (11th Cir. 1996) (per curiam) (finding that reviewing court may not make independent factual findings); In re JLJ, Inc., 988 F.2d 1112, 1116 (11th Cir. 1993) (same).

A district court reviews equitable determinations by the bankruptcy court for an abuse of discretion. See In re Kingsley, 518 F.3d 874, 877 (11th Cir. 2008) (per curiam). “The application of an abuse-of-discretion review recognizes the range of possible conclusions the trial judge may reach.” United States v. Frazier, 387 F.3d 1244, 1259 (11th Cir. 2004) (en banc). “[W]hen employing an abuse-of-discretion standard, [the district court] must affirm unless [it] find[s] that the [bankruptcy] court has made a clear error of judgment, or has applied the wrong legal standard.” Id.

II. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

On February 16, 2016, McCallan was found civilly liable in a fraudulent debt-consolidation scheme to the tune of a $102, 949, 220.72 judgment entered against him. See In re Allegro Law, LLC, 545 B.R. 675, 675 (Bankr. M.D. Ala. 2016) (issuing judgment for $102, 949, 220.72 against McCallan and two affiliated companies, Seton Corp. and AmeriCorp., Inc.). That litigation, dating back to 2010, has included contempt findings against McCallan and personal attacks by McCallan's counsel on the presiding bankruptcy judge. See, e.g., In re McCallan, 633 B.R. 903, 905 (Bankr. M.D. Ala. 2021); In re Allegro Law, LLC, No. 10-30631- WRS, 2018 WL 2373639, at *1 (Bankr. M.D. Ala. May 23, 2018) (explaining history of the scheme and judgment).

That monetary judgment also has spun off litigation focused on McCallan's actions to allegedly thwart efforts by the bankruptcy trustee to collect on the judgment. See, e.g., In re Allegro Law, LLC, 608 B.R. 888, 890 (Bankr. M.D. Ala. 2019) (discussing incarceration of McCallan for being in contempt of court over nondisclosure of assets). One object in dispute concerns real property that McCallan and his wife, Jeanne McCallan, purchased in Melbourne, Florida, in 2004, paid off in 2009, and allegedly moved into in the summer of 2014. (Doc. 10-3 at 7, 44, 47, 85-88.) That property became the subject of a dispute when the trustee filed an objection to McCallan's homestead exemption claim as part of his November 18, 2016, Chapter 7 bankruptcy filing. (Doc. 5 at 13; Doc. 10-3 at 94.)

The primary issue in this appeal is whether the bankruptcy court's finding that McCallan established his domicile in Florida on September 7, 2016-too late to take advantage of a homestead exemption in his bankruptcy proceeding-is clearly erroneous. The other issue is whether the bankruptcy court abused its discretion in granting an equitable lien against the Florida property. Each is addressed in turn.

III. DISCUSSION

A) Whether the Bankruptcy Court Clearly Erred When It Found That McCallan Established His Domicile in Florida on September 7, 2016

McCallan first challenges the bankruptcy court's finding that McCallan established his domicile in Florida on September 7, 2016, and not two years earlier in 2014, as he claimed.

As a preliminary matter, contrary to McCallan's assertion, the applicable standard of review on this issue is clear error, not abuse of discretion. See, e.g., In re Felix, 582 B.R. 915, 921 (BAP 6th Cir. 2018) (discussing domicile issue and noting that “the bankruptcy court was compelled “to marshal and weigh evidence, ” and “make credibility judgments, ” and therefore, the decision is reviewed for clear error.”).

In considering the record under the clearly erroneous standard, this Court does not find that the bankruptcy court clearly erred in determining when McCallan first established his domicile in Florida. When McCallan became domiciled in Florida is crucial because under Section 522(b)(3)(A) of the Bankruptcy Code, a debtor is entitled to claim exemptions in the state “in which the debtor's domicile has been located for the 730 days preceding the date of the filing of the petition....” In re Crandall, 346 B.R. 220, 221 (Bankr. M.D. Fla. 2006). Therefore, McCallan's claimed domicile date of the summer of 2014 would allow him to claim the Florida homestead exemption over the rights of the bankruptcy trustee, while a domicile date of September 7, 2016, would not.

Federal common law governs the meaning of “domicile” for purposes of Section 522. See In re Mendoza, 597 B.R. 686, 688 (Bankr. S.D. Fla. 2019). Under such law, a person's domicile is established “by physical presence in a place in connection with a certain state of mind concerning one's intent to remain there.” In re Hodgson, 167 B.R. 945, 950 (D. Kan. 1994), citing Miss. Band of Choctaw Indians v. Holyfield, 490 U.S. 30, 48 (1989). A change in domicile requires physical presence at the new location along with an intention to remain there indefinitely or the absence of any intention to go elsewhere. In re Lordy, 214 B.R. 650, 662 (Bankr. S.D. Fla. 1997); In re Ring, 144 B.R. 446, 449-450 (Bankr. E.D. Mo. 1992), citing Holmes v. Sopuch, 639 F.2d 431, 433 (8th Cir. 1981) (per curiam).

In District of Columbia v. Murphy, the United States Supreme Court discussed several factors applicable to the domicile issue, including current residence; voting registration and practices; location of spouse and family; location of personal and real property; location of brokerage and bank accounts; memberships in churches, clubs, and other organizations; location of the person's doctors, dentist, accountant and lawyers; place of employment or business; driver's license and automobile registration; and payment of taxes. 314 U.S. 441, 455-458 (1941). However, the Supreme Court cautioned that “our mention of these considerations as being relevant must not be taken as an indication of the relative weights to be attached to them, as an implied negation of the relevance of others, or as an effort to suggest a formula to handle all cases that may arise, or the possibility of devising one.” Id. at 458. A court must evaluate all relevant facts and circumstances when determining whether a person has established a new domicile. Hodgson, 157 B.R. at 950-51.

According to McCallan, he established his domicile in Florida in the summer of 2014 when he and his family moved from Northport, New York, to the Florida property to make it their new home. He alleges several facts supporting this assertion, including among others that: McCallan's children were enrolled in Florida schools in 2014; his family consistently lived in the Florida property since 2014; he recorded a Declaration of Domicile with the Clerk of Court for Brevard County, Florida in September 2015; he had family located in the area; he maintained personal property in the Florida home; he and his family maintained membership in a Florida church; he retained legal counsel in Florida; he retained a Florida bookkeeper; he owned and maintained businesses in both New York and Florida; he procured a Florida driver's license in 2011; he registered his vehicles in Florida in 2014; and he paid taxes in Florida and New York. (Doc. 3-3 at 45-60; Doc. 5 at 13-16, 20-25.)

While McCallan's cited facts show that his position as to the date of his Florida domicile is factually supportable and therefore legitimate, the record does not show that the bankruptcy...