Todd v. Chapter 7 Tr.

LAURIE A. TODD, Debtor-Appellant, v. CHAPTER 7 TRUSTEE, andENDURANCE AMERICAN INSURANCE COMPANY, Appellees.

1:20-CV-698 (MAD)

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK

May 24, 2021

APPEARANCES:

OF COUNSEL:

OFFICE OF DAVID G. GOLDBAS

185 Genesee Street, Suite 905

Utica, New York 13501

Attorneys for Debtor-Appellant

DAVID G. GOLDBAS, ESQ.

THE DRIBUSCH LAW FIRM

1001 Glaz Street

East Greenbush, New York 12061

Attorneys for Appellee Chapter 7 Trustee

CHRISTIAN H. DRIBUSCH, ESQ.

McELROY, DEUTSCH LAW FIRM

Morristown New Jersey Office

1300 Mount Kemble Avenue

P.O. Box 2075

Morristown, New Jersey 07962

Attorneys for Appellee Endurance American

Insurance Company

ADAM RAFE SCHWARTZ, ESQ.

TRIF & MODUGNO LLC

89 Headquarters Plaza North, Suite 201

Morristown, New Jersey 07960

Attorneys for Appellee Endurance American

KEVIN S. BROTSPIES, ESQ.

Insurance Company

MCELROY, DEUTSCH, MULVANEY

& CARPENTER

New York Office

225 Liberty Street, 36th Floor

New York, New York 10281

Attorneys for Appellee Endurance American

Insurance Company

NICOLE A. LEONARD, ESQ.

Mae A. D'Agostino, U.S. District Judge:

MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

Laurie A. Todd, Debtor, proceeding under Chapter 7 of the United States Bankruptcy Code, appeals from the judgment of the Bankruptcy Court, entered on June 11, 2020 ordering the liquidation of Debtor's inherited individual retirement account (hereinafter "IRA"). Debtor timely filed a notice of appeal with the bankruptcy court on June 17, 2020. The Court has jurisdiction to consider this appeal, pursuant to 28 U.S.C. § 158(a)(1), as an appeal from a final judgment, order, or decree entered by the United States Bankruptcy Court in this district.

The issue on appeal is whether the liquidation order was void because it ordered the liquidation of exempt property. The Bankruptcy Court ruled that Debtor was not entitled to claim the IRA as exempt under Florida Statutes § 222.21 and denied both Debtor's untimely appeal of the Bankruptcy Court's decision and her request for an extension to file a Notice of Appeal. For the following reasons, this Court affirms.

II. BACKGROUND

Debtor filed a petition for relief pursuant to Chapter 11 of the Bankruptcy Code on May 20, 2015. R. 1-3.¹ The case is currently proceeding under Chapter 7. Id. at 166. Appellee, Endurance American Insurance Company (hereinafter "Appellee Endurance"), filed a Proof of Claim against the Debtor for $1,769,317.00. Id. at 43-44. In her petition, Debtor declared her ownership of real property located at 341 Miller Road, Hudson, New York and at 7838 Mimosa Drive, Port Richey, Florida. Id. at 9. Debtor also declared ownership of an inherited IRA held by Charles T. Schwab & Co. valued at $1,000,000. Id. at 11.

Debtor claimed an exemption for the IRA under N.Y. C.P.L.R. § 5205(c)(1), (2). Id. at 14. On March 23, 2018, the Bankruptcy Court rejected Debtor's use of the exemption. Id. at 166. On July 6, 2018, Debtor amended her Schedule C to claim that the IRA was exempt under Florida law, Fla. Stats. § 222.21. Id. at 660-62. In August 2018, Debtor's case was converted to a Chapter 7. Id. at 166. On February 11, 2019, the Chapter 7 Trustee moved for a denial of the Florida exemption. Id. at 597-611. On March 19, 2019, the Bankruptcy Court held a hearing pursuant to 11 U.S.C. § 522(b) to determine Debtor's domicile for the purpose of applying the Florida exemption. Id. at 193. On December 23, 2019, the Bankruptcy Court determined that Debtor was not a Florida domiciliary and that the exemption was, therefore, inapplicable. Id. at 179-92.

Debtor filed two untimely notices seeking appeal of the Bankruptcy Court's decisions on January 10, 2020. Id. at 148-51. On January 16, 2020, Debtor filed a motion before this Court,seeking an extension of time to file her Notice of Appeal. Id. at 135-36. The Court remanded Debtor's motion to the Bankruptcy Court and her motion was denied as the Bankruptcy Court determined that there was no excusable neglect. Id. at 96-107, 127-31. On June 2, 2020, Debtor filed another Notice of Appeal seeking review by this Court of the Bankruptcy Court's denial of her request for an extension of time in the Northern District of New York. In re Todd, No. 1:20-cv-00612, Dkt. No. 1. This Court dismissed Debtor's appeal that same day for failing to comply with the filing requirements of Rule 8006. In re Todd, No. 1:20-cv-00612, Dkt. No. 4.²

On June 11, 2020, the Bankruptcy Court issued an order authorizing the liquidation of the Debtor's IRA. Dkt. No. 1 at 3-4. The liquidated IRA recovered $800,585.68. Dkt. No. 12 at 7. On June 17, 2020, Debtor filed a Notice of Appeal seeking review of the liquidation order. Dkt. No. 1. On June 24, 2020, Debtor filed this action appealing the Bankruptcy Court's liquidation order and the Bankruptcy Court's determination that Debtor was not a Florida domiciliary. Id.

On November 13, 2020, Debtor filed a brief in support of her appeal. Dkt. No. 12. Appellee Trustee responded to Debtor's appeal on December 21, 2020. Dkt. No. 14. Debtor filed a reply on January 11, 2021. Dkt. No. 15. Debtor asserts that the Bankruptcy Court improperly rejected her claim of a Florida exemption and denied her motion for an extension to file a Notice of Appeal. Thus, Debtor asserts that the liquidation order included properly exempt property, exceeding its authority under § 105(a), and is void. The Court disagrees.

III. DISCUSSION

A. Standard of Review

In reviewing the judgment of a bankruptcy court, a district court reviews findings of fact for clear error and conclusions of law de novo. See In re Vebeliunas, 332 F.3d 85, 90 (2d Cir. 2003). A bankruptcy court's determination is "clearly erroneous when, on consideration of the record as a whole, the court is left with the definite and firm conviction that a mistake has been committed." Hilton v. Wells Fargo Bank, N.A., 539 B.R. 10, 15 (N.D.N.Y. 2015) (citing Zervos v. Verizon N.Y., Inc., 252 F.3d 163, 168 (2d Cir. 2001) (further citations omitted)).

B. December 23, 2019 Decision

1. Debtor's domicile

Debtor asserts that the Bankruptcy Court improperly determined that she was not a Florida domiciliary and therefore unable to claim a Florida bankruptcy exemption. Dkt. No. 12 at 7-10.

A debtor may exempt property under "[s]tate or local law that is applicable on the date of the filing of the petition . . . ." 11 U.S.C. § 522(b)(3)(A). The applicable state law is determined by the debtor's domicile 730 days immediately preceding the date of the filing of the petition for bankruptcy. Id. If, however, the debtor's domicile changed during that period, her domicile is "the place in which the debtor's domicile was located for 180 days immediately preceding the 730-day period or for a longer portion of such 180-day period than in any other place." Id.

The Bankruptcy Code does not define "domicile," however, it is defined by "the general rules of domicile established in federal diversity jurisdiction cases." Shiu Jeng Ku v. Brown (In re Shiu Jeng Ku), BAP No. AZ-16-1174, 2017 WL 2705301, *4 (9th Cir. BAP June 21, 2017). In a diversity action, "[d]omicile is 'the place where a person has his true fixed home and principal establishment, and to which, whenever he is absent, he has the intention of returning.'" Palazzo ex rel. Delmage v. Corio, 232 F.3d 38, 42 (2d Cir. 2000) (quoting Linardos v. Fortuna, 157 F.3d 945, 948 (2d Cir. 1998)). "To effect a change of domicile, two things are indispensable: First, residence in a new domicil; and, second, the intention to remain there. The change cannot be made, except facto et animo. Both are alike necessary. Either without the other is insufficient." Id. (quoting Linardos, 157 F.3d at 948) (internal quotation marks omitted).

"Questions as to a person's 'intent to change, or not to change, his domicile from [one state] to [another]' are 'factual' questions." Id. (quoting Katz v. Goodyear Tire & Rubber Co., 737 F.2d 238, 244 (2d Cir. 1984)) (alterations in original). "A party alleging that there has been achange of domicile has the burden of proving the 'require[d] . . . intent to give up the old and take up the new [domicile], coupled with an actual acquisition of a residence in the new locality,' and must prove those facts 'by clear and convincing evidence.'" Id. (quoting Katz, 737 F.2d at 244) (alterations in original). Review of a decision by a lower court as to whether there has been a change in the party's domicile are reviewed for "clear error." Id.

Debtor asserts that the Bankruptcy Court improperly determined that her domicile was not Florida. Dkt. No. 12 at 8-9. The Court rejects Debtor's assertion as the evidence fails to demonstrate Debtor's intent to remain in Florida at any point during the two years prior to filing her petition. Rather, the evidence demonstrates, at best, part-time residency.

Debtor highlights that she owned property in Florida, which she rehabilitated, paid taxes on, insured, and maintained. Id. at 9. These facts, however, demonstrate no more than the simple obligations of ownership of real property. While Debtor asserts that she spent the majority of her time in Florida, received medical care there, socialized with friends and family there, the Bankruptcy Court noted that during the relevant period, Debtor voted in New York; had a New York license; owned, registered, and operated a car in New York; her husband lived in New York, as did her eldest child, sister, brother, nieces, and nephews; and the only medical care Debtor sought during the relevant period was a routine dentist visit. R. 182-84.

Further, Debtor filed a declaration of domicile in Florida in 2019—after the relevant period and four years after Debtor petitioned for bankruptcy. Id. Finally, as noted by the Bankruptcy Court, while Debtor provided a timeline prepared by her son showing her time inFlorida, Debtor conceded at the March 19, 2019 hearing that it was not accurate and even repeatedly referred to New York as "home." Id.; R. 13, 52, 54, 124,...