In re Demeter

478 B.R. 281, 68 Collier Bankr. Cas. 2d 847, 2012 WL 3780534, 2012 Bankr. LEXIS 4046
CourtUnited States Bankruptcy Court, E.D. Michigan
DecidedAugust 31, 2012
DocketNo. 12-44593
StatusPublished
Cited by12 cases

This text of 478 B.R. 281 (In re Demeter) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Demeter, 478 B.R. 281, 68 Collier Bankr. Cas. 2d 847, 2012 WL 3780534, 2012 Bankr. LEXIS 4046 (Mich. 2012).

Opinion

[283]*283OPINION REGARDING TRUSTEE’S OBJECTION TO DEBTORS’ CLAIM OF EXEMPTIONS UNDER 11 U.S.C. § 522(d)(1)

THOMAS J. TUCKER, Bankruptcy Judge.

In this case, the Chapter 7 Trustee has objected to the Debtors’ claim of exemption in a home that the Debtors own at 5192 U.S. 23, Cheboygan, Michigan (the “Cheboygan Property”). The joint Debtors, James and Glory Demeter, each claim an exemption in the Cheboygan Property as a “residence,” under 11 U.S.C. § 522(d)(1). The Trustee argues that this property does not qualify as property “that the debtor or a dependent of the debtor uses as a residence,” within the meaning of § 522(d)(1), primarily because this property is not the Debtors’ principal residence. The Court held an initial hearing, and then held an evidentiary hearing on July 9, 2012.

This case raises the question whether a bankruptcy debtor who owns two homes as of the petition date, and who has regularly lived in each home part of each year, may claim the “residence” exemption under § 522(d)(1) only in the home which is the debtor’s principal residence; or whether instead, the debtor may claim the exemption in either home. For the reasons stated in this opinion, the Court holds that such a debtor may claim the “residence” exemption in either home. The Court will overrule the Trustee’s objection, and allow Debtor’s § 522(d)(1) exemptions.

I. Jurisdiction

This Court has subject matter jurisdiction over this bankruptcy case and this contested matter under 28 U.S.C. §§ 1384(b), 157(a) and 157(b)(1), and Local Rule 83.50(a) (E.D.Mich.). This contested matter is a core proceeding under 28 U.S.C. §§ 157(b)(2)(A), 157(b)(2)(B), and 157(b)(2)(0). This matter also is “core” because this matter is “created or determined by a statutory provision of title 11,” namely, 11 U.S.C. § 522(d)(1). See generally Allard v. Coenen (In re Trans-Industries, Inc.), 419 B.R. 21, 27 (Bankr.E.D.Mich.2009).

II. Background and facts

Based on the evidence presented at the evidentiary hearing, including the testimony of the Debtors, the Court finds the following facts.

The Debtors, James Demeter and Glory Demeter, are husband and wife, and they filed their joint Chapter 7 petition in this case on February 28, 2012. For many years before filing their petition, and continuing to the present, Debtors have owned two homes. The first is their home in the Detroit area, located at 14249 Greentrees, Riverview, Michigan (the “Riverview Property”). The Debtors’ second home is the property at issue, the Cheboygan Property. Each property consists of a single-family home.

The Debtors purchased the Riverview Property in 1972, when the house was built. The Trustee presented substantial evidence which arguably shows that from 1972 through the petition date, and continuing thereafter, the Riverview Property has been the Debtors’ principal residence. Among other facts tending to show this are that the Debtors have always used the Riverview Property, not the Cheboygan Property, as their only mailing address, and as their home address for many purposes, including voting, as the address on their tax returns, and as the address for receiving all of their bills and bank statements. The Debtors were physically occupying the Riverview Property on the petition date.

[284]*284The Debtors have not claimed any exemption for the Riverview Property, and their Schedules A and D indicate that the balance owing on the mortgage loan on the Riverview Property substantially exceeds the value of that property.1 The creditor holding the mortgage on the Riverview Property moved for and has obtained, without objection, relief from the automatic stay, to enable it to pursue foreclosure against the Riverview Property.2

With respect to the Cheboygan Property, the Debtors listed it in their Schedules as their “Second Residence.”3 The Trustee asserts that this property is a vacation home. The property is located in Northern Michigan, on Lake Huron, and faces toward Mackinac Island, Michigan. The Debtors have owned the Cheboygan Property since 1996. As of the petition date, they had listed that property for sale, for several months, and had received a couple of offers on the property, but had found the offers inadequate and rejected them.

The Debtors’ home in Cheboygan is a 3 bedroom house, is fully furnished, and at all times has had all the basic utilities operating year-round. Debtors keep clothing there, along with other personal property. Debtor James Demeter, whose testimony the Court credits, testified that the Debtors have lived in the Cheboygan house for about half of the year for each year since that they have owned it. Debtors considered the Riverview Property a “starter home,” and lived in Riverview because of work. But the Debtors always considered the Cheboygan Property their home, and had planned to live there full-time ultimately, until recent financial problems prompted them to try to sell the home. James Demeter testified that in the past he had tried to purchase businesses in the Cheboygan area, so that he and his wife could live in the Cheboygan Property full time. Even while working in the Detroit area, James Demeter was able to do some of his work while staying at the Cheboygan Property. And the Debtors always lived in the Cheboygan home for about half of the time each year, and at all times of the year, including winter, and including winter holidays like Christmas and New Years Day. That home was never winterized, and the Debtors never rented it out.

The Court credits the following testimony from James Demeter’s supplemental affidavit, dated June 1, 2012, which was admitted into evidence as Trustee’s Exhibit 18:4

5. Since 1996, my wife and I have spent about half the year at the Cheboy-gan Property. This includes almost the entire summer, as well as weekends and holidays year round. In particular, my wife and I often resided at the Cheboy-gan Property for almost an entire month in and around the Christmas holidays, entertaining various friends and family during those times.
6. There were many instances where my wife continued to reside at the Che-boygan Property during the week, sometimes accompanied by my daughter or others, while I travelled back to the Riverview Property in order to work.

III. Discussion

Section 522(d)(1) provides:

[285]

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Cite This Page — Counsel Stack

Bluebook (online)
478 B.R. 281, 68 Collier Bankr. Cas. 2d 847, 2012 WL 3780534, 2012 Bankr. LEXIS 4046, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-demeter-mieb-2012.