1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF PUERTO RICO 2 IN RE: : CASE NO. 11-06567(ESL) 3 : LYMARI LOZADA RIVERA : 4 Debtor : CHAPTER 13 ____________________________________: 5 6 OPINION AND ORDER 7 This case is before the court upon (i) Debtor’s Motion for Reconsideration (Docket No. 23) 8 of the Order granting the Trustee’s [Unopposed] Objection to [Debtor’s] Exemption under 11 U.S.C. 9 § 522(d)(1) (Docket No. 16); (ii) the Trustee’s Opposition to Debtor’s Motion for Reconsideration 10 (Docket No. 37); and (iii) Debtor’s Short Reply thereto (Docket No. 39). The Trustee sustains that 11 Debtor’s claimed exemption on her real property should be denied because the structure being 12 constructed there is not her residence and thus 11 U.S.C. § 522 (d)(1) is inapplicable. The Trustee 13 also alleges that Debtor’s request for reconsideration should be denied given the strict and narrow 14 criteria adopted by the Court of Appeals for the First Circuit on setting aside orders under Fed. Rs. 15 Civ. P. 59(a) & 60(b). Conversely, Debtor contends that the real property does qualify as her 16 residence under the criteria used by the courts when considering this exemption and that the court 17 should allow the Motion for Reconsideration to review the merits of the homestead controversy 18 because the explanations for her failure to submit a timely answer to the Trustee’s objection 19 constitute excusable neglect under Fed. R. Civ. P. 60(b). For the reasons stated below, the court 20 denies Debtor’s Motion for Reconsideration (Docket No. 16). 21 Procedural Background 22 Debtor filed a voluntary Chapter 13 petition on August 2, 2011 (Docket No. 1) along with her 23 Schedules and Statements of Financial Affairs. In Schedule A, she listed one real property: Lot No. 24 1 measuring 1,164 m² located at Road # 167, Km 1.6, Dejaos Ward, Bayamon, Puerto Rico, where 25 a house is being constructed (the “Real Property”). Only the exterior walls of the house have been 26 built, not the ceiling. Debtor reported the current value of her interest in the Real Property at 27 $33,000.00 with a secured claim on it of $12,208.22. See Schedule A (Docket No. 1, p. 11). In In 28 her description of the Real Property, Debtor indicated that the value lot of land of the Real Property (not the house under construction) at $15,000, and claims to have invested $5,000 in the construction 1 of the house. Id. (Docket No. 1, p. 11). In Schedule C, Debtor claimed a $20,791.78 homestead 2 exemption on the Real Property pursuant to 11 U.S.C. § 522(d)(1). 3 On November 3, 2011, the Trustee filed an Objection to Debtor’s Claim for Exemption (the 4 Objection”, Docket No. 16) arguing that Debtor’s Real Property is not yet a residence because it is 5 still under construction. Consequently, the Debtor is not actually using the Real Property as her 6 primary residence and may not claim a homestead exemption over the same. After due notice and 7 no opposition from Debtor, on November 23, 2011, the Court entered an Order granting the Trustee’s 8 Objection (Docket No. 21 referring to Docket No. 16). 9 On November 28, 2011, the Debtor filed a Motion for Reconsideration of Order Granting 10 [the] Trustee’s Objection to Exemption (the “Motion for Reconsideration”, Docket No. 23) alleging 11 that she intended to file a timely answer to the Objection, but was unable to execute a sworn 12 statement on or before November 23, 2011, the deadline to file an answer, due to personal 13 circumstances. Debtor also alleges that she and her husband began constructing a residence in the 14 Real Property through a personal loan secured by a mortgage, but that the process of construction is 15 currently stayed for lack of funds due to the substantial medical expenses they have had to incur for 16 the healthcare of their son, who has severe cerebral palsy. Debtor acknowledges that she sleeps with 17 her family at her mother’s house, which is adjacent to the Real Property. She argues, however, that 18 for purposes of Section 522(d)(1), the term “homestead” cannot be limited to the place where her bed 19 is located and that the Real Property can be claimed as exempt because the term includes adjacent 20 lots that are used in connection with the residence, such as the land and structure where the Debtor 21 and her family play, clean and park their automobiles, and use as a terrace and storage. Lastly, 22 Debtor avers that pursuant to Fed. Bankr. R. 4003(c), the Trustee has the burden of proof of 23 demonstrating that the exemption is not properly claimed and that the Trustee has not met that 24 burden. 25 After requesting and obtaining an extension of time to reply to Debtor’s Motion for 26 Reconsideration (Docket Nos. 24, 25, 35 & 36), on January 17, 2012, the Trustee filed an Opposition 27 (Docket No. 37) sustaining that the court should not even consider reviewing the merits of the Motion 28 for Reconsideration because the relief afforded under Fed. Rs. Civ. P. 59 & 60 is sparingly granted 2 1 properly viewed as an extraordinary remedy. Regardless, the Trustee also briefed his objection 2 Debtor’s claimed homestead exemption alleging that the Debtor admitted that she and her family 3 not live in the Real Property, that it is not their actual “residence”, but rather their residence is her 4 mother’s house. where they all actually live. The Trustee further asserts that the precedents cited by 5 |/Debtor regarding the broad interpretation of the term “homestead” are not applicable to the instant 6 because of a crucial difference: the debtor in this case does not own both lots, and thus cannot 7 |subsume the two properties. 8 On January 23, 2012, Debtor filed a Short Reply to Trustee’s Opposition (Docket No. 39) 9 indicating that her mishap to execute the sworn statement to submit a timely answer to the Trustee’s 10 ||Objection constituted excusable neglect under Fed. R. Civ. P. 60(b). In addition, Debtor revamped 11 her previous arguments in the Motion for Reconsideration regarding the claimed homestead 12 lexemption. No further sur-replies were filed. 13 Applicable Law & Analysis 14 — Debtor’s Motion for Reconsideration 15 Although Debtor did not denominate any particular rule as the springboard for her Motion for 16 ||Reconsideration (Docket No. 23), she subsequently indicated in her Short Reply that she “is not 17 ||requesting a new trial under Rule 59 of the Federal Rules of Civil Procedure” but was rather 18 requesting the relief from the order granting the Trustee’s objection to the exemption under Rule 19 of the Federal Rules of Civil Procedure” arguing that “answering the Trustee’s [Objection] just 20 |la few days later due to Debtor’s impossibility to execute the sworn statement was excusable neglect 21 warrants the revision of the order” (Docket No. 39, pp. 4-5). 22 Motions to reconsider are not recognized by the Federal Rules of Civil Procedure or the 23 ||Federal Rules of Bankruptcy Procedure in haec verba. See Jiminez v. Rodriguez (In re Rodriguez), 24 B.R. 212, 218-219 (Bankr. D.P.R. 1999), conf’d 17 Fed. Appx. 5 (1* Cir. 2001); Van Skiver v. 25 United States, 952 F.2d 1241, 1243 (10" Cir. 1991); Lavespere v. Niagara Mach. & Tool Works Inc., 26 910 F.2d 167, 173 (5" Cir. 1990), cert. denied 510 U.S. 859, abrogated on other grounds by Little v. 27 Liquid Air Corp., 37 F.3d 1069, 1075-76 (5" Cir. 1994). Rather, federal courts have considered 28 |Imotions so denominated as either a motion to “alter or amend” under Fed. R. Civ. P. 59(e) or a
1 motion for relief from judgment under Fed. R. Civ. P. 60(b). See Fisher v. Kadant, Inc., 589 F.3d 2 505, 512 (1* Cir. 2009) (noting a motion for reconsideration implicated either Fed. R. Civ. Pro. 59(e) 3 for 60(b)); Equity Security Holders’ Committee v. Wedgestone Financial (In re Wedgestone 4 Financial), 152 B.R. 786, 788 (D. Mass. 1993). “These two rules are distinct; they serve different 5 |Ipurposes and produce different consequences. Which rule applies depends essentially on the time 6 |ja motion is served. If a motion is served within [fourteen]' days of the rendition of judgment, the 7 \motion ordinarily will fall under Rule 59(e). If the motion is served after that time, it falls under Rule 8 }60(b).” Van Skiver, 952 F.2d at 1243. The substance of the motion, not the nomenclature used or 9 labels placed on motions, is controlling. Thus, for example, even if filed within the time limit for a 10 |Imotion under Fed. R. Civ. P. 59(e), a motion seeking relief on grounds of excusable neglect will be 11 [treated as a Rule 60(b)(1) motion, because Rule 59(e) does not provide a vehicle for a party to undo 12 own procedural failures. See 12-60 Moore’s Federal Practice Civil § 60.03. Also see United 13 ||States v. $23,000 in U.S. Currency, 356 F.3d 157, 164-165 (1* Cir. 2004) (even if timely filed under 14 Fed. R. Civ. P. 59(e), a motion seeking relief on grounds of excusable neglect will be treated as Fed. 15 |IR. Civ. P. 60(b)(1) motion, because Fed. R. Civ. P. 59(e) does not provide a vehicle for party to undo 16 its own procedural failures); Jennings v. Rivers, 394 F.3d 850, 854-856 (10" Cir. 2005) (a motion 17 |Itimely filed under Fed. R. Civ. P. 59(e) but asserting ground for relief specified under Fed. R. Civ. 18 |IP. 60(b), should be evaluated under standards applicable to Fed. R. Civ. P. 60(b) motions). 19 Having the Debtor expressly waived the remedies provided in Fed. R. Civ. P. 59, the court 20 entertain her Motion for Reconsideration under Fed. R. Civ. P. 60(b), made applicable in 21 |bankruptcy cases by Fed. R. Bankr. P. 9024. Although in her citation of Fed. R. Civ. P. 60(b) Debtor 22 |lemphasized subsections (1) and (6) to apparently seek relief under both [Short Reply, Docket No. 39, 23 5], the Supreme Court has ruled that “clause (6) and clauses (1) through (5) are mutually 24 llexclusive” and thus, a party may not seek relief in a Rule 60(b)(6) motion for any of the reasons 25 |lenumerated in clauses one through five, such as excusable neglect. Liljeberg v. Health Servs. 26 ||Acquisition Corp., 486 U.S. 847, 864 (1988). Also see Ungar v. PLO, 599 F.3d 79, 85 (1* Cir. 2010) 27 28 ' See the most recently amended version of Fed. R. Bankr. P. 9023,
1 motion under Rule 60(b)(6) is appropriate only when none of the first five sections pertain, and 2 section (6) may not be used as means to circumvent those five preceding sections); Gonzalez v. 3 ||Walgreens Co., 918 F.2d 303, 305 (1* Cir. 1991) (“Rule 60(b)(6) applies only to grounds for relief 4 covered by the first five subdivisions of Rule 60(b)”). Consequently, the Court will review the 5 Motion for Reconsideration only for the “excusable neglect” she alleges under Fed. R. Civ. P. 6 |]60(b)(1). 7 Fed. R. Civ. P. 60(b)(1) provides that “the court may relieve a party or a party’s legal 8 |[representative from a final judgment, order, or proceeding for ... mistake, inadvertence, surprise, or 9 llexcusable neglect.” In Pioneer Inv. Serv. Co. v. Brunswick Assoc. Ltd. Partnership, 507 U.S. 380, 10 1395, 113 S. Ct. 1489, 1489, 123 L. Ed. 2d 74, 89 (1993), the Supreme Court held that the 11 |\determination of what constitutes “excusable neglect” is an equitable one, taking into consideration 12 |Icertain factors: (1) the length of the delay and its potential impact on judicial proceedings; (2) the 13 reason for the delay, including whether it was within the reasonable control of the movant; (3) 14 whether the movant acted in good faith; and (4) whether granting the relief will prejudice the 15 jlopposing party. The Supreme Court concluded that “excusable neglect” is a flexible concept that is 16 limited to circumstances beyond the control of the movant. Id. at 388. Prior to the Supreme 17 ||Court’s decision in Pioneer, the First Circuit had held that Fed. R. Civ. P. 60(b) was a vehicle for 18 jlextraordinary relief, and that motions invoking the rule should only be granted under exceptional 19 |lcircumstances. See Lepore v. Vidockler, 792 F.2d 272, 274 (1* Cir. 1986). Subsequently, in Pratt 20 Philbook, 109 F.3d 18 (1* Cir. 1997), the First Circuit incorporated the Pioneer doctrine and has 21 sustained it ever since. See United States v. Union Bank for Sav. & Inv.(JJordan), 487 F.3d 8, 24 (1* 22 ||Cir. 2007). Also see Aja v. Fitzgerald (In re Aja), 441 B.R. 173, 177 (B.A.P. 1* Cir. 2011) 23 |\(upholding the Pioneer test). The most important factor in this test is the reason for the delay, which 24 |lrequires a statement of the reasons and a satisfactory explanation for the delay. Graphic 25 (Communications Int’] Union v. Quebecor Printing Providence, Inc., 270 F.3d 1, 6 (1* Cir. 2001); 26 ||EnvisioNet Computer Servs., Inc. v. ECS Funding LLC, 288 B.R. 163, 166 (D.Me. 2002). No 27 |*excusable neglect” can be determined in the absence of unique or extraordinary circumstances. The 28 |Itrial court has wide discretion to determine the existence of neglect or lack thereof and whether it was
1 llexcusable or not. See Graphic Communs. Int’] Union, Local 12-N , 270 F.3d at 6-7; $23,000 in U.S. 2 Currency, 356 F. 3d at 165 (“[Trial] courts enjoy considerable discretion in deciding motions brought 3 funder Civil Rule 60(b)y”); In re Shepherds Hill Development Co., 316 B.R. 406, 418 (B.A.P. 1* Cir. 4 12004). 5 Taking into consideration the travel and circumstances of the present case, and in interest in 6 |resolving disputes on their merits, the Court finds that Debtor’s failure to timely file an answer to 7 \\Trustee’s Objection was due to excusable neglect under Fed. R. Civ. P. 60(b)(1). Her Motion for 8 ||Reconsideration was filed only 5 days after the Order was entered (Docket Nos. 21 & 23), which the 9 does not find to be a significant delay. Compare with Roldan v. Cooperativa De Ahorro & 10 ||Credito Roosevelt Roads, 2006 Bankr. LEXIS 3913 (Bankr. D.P.R. 2006) (creditor filed a motion 11 vacate the default judgment and an answer to the complaint almost two months after the judgment 12 |lwas entered. The Court found that two months was unexcusable neglect that delayed the 13 |lproceedings.) Moreover, the Court also finds that the Debtor acted in good faith and that her failure 14 execute a sworn statement in a timely manner was justified in consideration of her personal 15 |Icircumstances, including her son’s condition. Finally, this court finds that the Debtor established 16 meritorious arguments in her Motion for Reconsideration to support her position against the Trustee, 17 has not claimed or showed any prejudice from Debtor’s brief delay. The Court also weighs the 18 that Debtor had not previously missed any previous deadlines nor requested extensions of time. 19 |Therefore, the Motion for Reconsideration is granted to the extent of determining Debtor’s excusable 20 |Ineglect. The court now proceeds to review its merits. 21 Exemptions in general 22 When a debtor files a bankruptcy petition, all of his/her/its assets become property of the 23 bankruptcy estate [11 U.S.C. § 541] subject to the debtor’s right to reclaim certain property as exempt 24 11 U.S.C. § 522. Exempt property will be excluded from the bankruptcy estate unless a party 25 interest objects. See 11 U.S.C. § 522(1); Schwab v. Reilly, 130 S. Ct. 2652, 2656; 177 L. Ed. 2d 26 11234, 242 (2010). The mere fact that debtors claim an exemption does not necessarily mean that they 27 |lare entitled to it, since there must be compliance with statutory requirements and then an order of the 28 |/bankruptcy court to that effect. See 9A Am. Jur. 2d Bankruptcy § 1392; In re Rolland, 317 B.R. 402,
1 412 (Bankr. C.D.Cal. 2004); In re Colvin, 288 B.R. 477, 483 (Bankr. E.D.Mi. 2003); Carlucci & 2 ||Legum v. Murray (In re Murray), 249 B.R. 223, 230 (E.D.N.Y. 2000). 3 Property that does not belong to the debtor or property in which the debtor has no interest at 4 ithe time of the filing of the bankruptcy petition generally cannot become part of the bankruptcy estate 5 funder 11 U.S.C. § 541 and consequently cannot be exempted under 11 U.S.C. § 522. 61(C) The homestead exemption 7 Debtor claims a homestead exemption on her Real Property under Section 522(d)(1) of the 8 ||Bankruptcy Code (Docket No. 1, p. 15), which provides as follows: 9 (d) The following property may be exempted under subsection (b)(2) of this section: 10 (1) The debtor’s aggregate interest, not to exceed $ 21,625 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a 11 cooperative that owns property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the debtor or a dependent of the debtor. 11 U.S.C. § 12 522(d)(1) (emphasis added). 13 term “residence” is not defined in the Bankruptcy Code. It is not synonymous of “domicile” 14 |lbecause “the specified enumeration of each in the Code indicates an intention to maintain a legal 15 |ldistinction between them”. In re Marsico, 278 B.R. 1, 4 (Bankr. D.N.H. 2002), quoting from In re 16 Tomko, 87 B.R. 372, 374 (Bankr. E.D. Pa. 1988). In the Tomko, the Court carefully analyzed the 17 |lpurpose behind Section 522(d)(1). It found that prior to the passage of the Bankruptcy Code, debtors 18 |lwere limited to the allowance of exemptions as permitted by the state laws of their domiciliary state. 19 ||Tomko, 87 B.R. at 373. Homestead was a common exemption under most state laws. Id. at 373. The 20 |llegislative history of the Bankruptcy Code then revealed that: 21 subsection (d) [of 11 U.S.C. § 522] specifies the Federal exemptions to which the debtor is entitled. They are derived in large part from the Uniform Exemptions Act, 22 promulgated by the Commissioners of Uniform State Laws in August, 1976. Eleven categories of property are exempted. First is a homestead ... which may be claimed in 23 real or personal property that the debtor or a dependent of the debtor uses as a residence. Id. at 374 (emphasis added), quoting House Report No. 95-595 that accompanied H.R. 24 8200, 95" Cong. 1* Sess. (1977), from which Section 522(d)(1) was derived. 25 Tomko court concluded that because the term “homestead” was used in the legislative history 26 describe or modify the term “residence”, “the purpose of subsection 522(d)(1) was to provide those 27 |\debtors eligible to select the federal exemptions with a homestead exemption, and that the term 28 ||‘residence’ must be interpreted in this light.” 87 B.R. at 374. Also see In re Marisco, 278 B.R. at
1 5 (applying that same analysis). In In re Brent, 68 B.R. 893, 895 (Bankr. D. Vt. 1987), the court 2 explained that “a homestead is a property interest [and] property interests are not created by the 3 Constitution, but by existing rules or understandings that stem from an independent source such as 4 State law.” Accordingly, the Puerto Rico homestead law will be examined in order to determine the 5 meaning of the term “residence” for Section 522 purposes. 6 Because Debtor filed her bankruptcy petition on August 2, 2011, the court will first analyze 7 the Puerto Rico Homestead Act No. 87 of May 13, 1936, as amended through 20032, codified in 8 Chapter 187 of the Puerto Rico Civil Code, 31 L.P.RA. §§ 1851-1857 (the “PR Homestead Act of 9 1936”), which was the governing law at the time3. 10 Section 1 of the PR Homestead Act of 1936, as amended, provided as follows: 11 Every person who is the head of a family shall be entitled to possess and enjoy as a homestead, a property that does not exceed fifteen thousand dollars ($15,000) in value, 12 consisting of a parcel of land and the buildings thereon, of any farm, plantation or parcel of land, owned or lawfully possessed, and occupied as a residence by him or by his 13 family. The homestead right is unrenounceable; and any pact to the contrary shall be declared null, except that said homestead right may be renounced in all cases of 14 mortgages insured or executed in behalf of the Federal Housing Administrator, or in cases of loans to veterans insured or guaranteed by the United States Veterans 15 Administration, and in all cases of mortgages, sharecropping contracts, and promissory notes made in behalf of the Federal Land Bank of Baltimore, the Puerto Rico Production 16 Credit Association, the National Farm Loan Association of San Juan, Puerto Rico, the Small Business Administration, created by Public Law No. 163 of the 83rd Congress of 17 the United States of America, approved June [sic] 30, 1953, and of loans and mortgages secured or granted by the Puerto Rico Housing Financing Authority, and the Farm Credit 18 Corporation and the Farmers Home Administration, and in the cases of conventional mortgages. 31 L.P.R.A. § 1851 (emphasis added). 19 20 2 The PR Homestead Law of 1936 was subsequently amended by the following: Act No. 4 of March 15, 1939 (clarified that every head of a family to posses a homestead of a property up to the value of $500 and provided 21 that said right was unwaivable except in those cases of mortgages insured by or drawn in favor of the Federal 22 Housing Administrator); Act No. 15 of December 31, 1946 (provided that the right to homestead was unwaivable except in those cases of mortgages insured by or drawn in favor of the Federal Housing Administrator or in cases of 23 loans to veterans insured or secured by the United States Veteran’s Administration); Act No. 1 of February 11, 1955 (increased the value of the homestead protection from $500 to $1,500 and added a provision regarding the Federal 24 Land Bank of Baltimore, the Puerto Rico Production Credit Association, and the National Farm Loan Association of San Juan, Puerto Rico); Act No. 1 of April 24, 1957 (added a reference to the Small Business Administration); Act 25 No. 31 of June 15, 1965 (added the phrase “and of loans and mortgages secured or granted by the Housing Bank of Puerto Rico” at end of the section); Act No. 13 of May 28, 1969 (added references to Farm Credit Corporation and 26 Farmers Home Administration); Act No. 116 of May 2, 2003 (amended the section generally, increased the value of the homestead from $1,500 to $15,000 and added the phrase “and in the cases of conventional mortgages” at the 27 end). 28 3 On September 13, 2011, the Homestead Right and Family Home Protection Act [No. 195] was enacted (the “PR Homestead Act of 2011”), which repealed the PR Homestead Act of 1936. 8 Therefore, in Puerto Rico, the homestead can only be claimed by the owner of the real ° property or by the head of household who “lawfully posses” the property. The phrase “lawfully possesses” refers to cases where the property was constructed in someone else’s land with the owner’s consent. See Garcia v. Tribunal Superior, 89 D.P.R. 130, 135 (1963) (analyzing the phrase ° “lawfully possesses” in Section 1 of the PR Homestead Act of 1936). Notwithstanding, a homestead ° cannot be claimed over a leased property. Pagan v. Quinones, 55 D.P.R. 950, 952-953 (1940). A ' homestead can be claimed in contiguous and non-contiguous lots of land owned by the same head of family as long as they are used for the sustainment of the family. Garcia v. Perez, 46 D.P.R. 31, ° 41 (1934) (homestead was declared over the actual residence and three non-contiguous lots of lands ° were declared because the family was occupying and planting crops in the ones that were non- contiguous for their sustainment). In Puerto Rico, a repealed law can be interpreted through its subsequent amended version. See Nadal Arcelay v. Depto. Recursos Naturales, 150 D.P.R. 715, 722 (2000). Therefore, to interpret "4 the PR Homestead Act of 1936, the court will also take into consideration the PR Homestead Act of 2011. Section 3 of the PR Homestead Act of 2011 clarifies that a homestead can be claimed on a residence that belongs to an individual or head of family that is “occupied by him/her or his/her " family exclusively as a principal residence” (emphasis added). The words “principal” and “exclusively” had never been included in the PR Homestead Act of 1936, its predecessors or subsequent amendments until 2011. Furthermore, the PR Homestead Act of 2011’s Statement of °° Reasons indicate that it was enacted to “provide[] better protection to the homes or principal residences of all individuals residing in Puerto Rico and their respective families” (emphasis added). Bankruptcy courts have also interpreted Section 522 ofthe Bankruptcy Code similarly. The term °° “residence [provided in Section 522(d)(1)] at a minimum, denotes occupancy of the premises by the debtor as a principal place of dwelling.” In re Lusiak, 247 B.R. 699, 702 (Bankr. D.N.Oh. 2000) °° (emphasis added). See also In re Healy, 100 B.R. 443, 444 (Bankr. W.D. Wis. 1989) (“occupancy *° requirement is the sine gua non of the homestead exemption”); In re Gandy, 327 B.R. 807, 810 (Bankr. S.D.Tx. 2005) (“Under the plain language of § 522(d)(1), the phrase ‘uses as a residence’
1 denotes occupancy of the proposed exempt property by the debtor.”); Alan N. Resnick & Henry J. 2 Sommer, 4 Collier on Bankruptcy 9522.09[1] (16" ed. 2011) (“Essential to the right to a homestead 3 llexemption is designation and occupancy of the property as a residence.”) “Occupancy” can be actual 4 llor constructive, since absence alone is not sufficient to constitute an abandonment of the homestead. 5 re Lusiak, 247 B.R. at 703. There must be “some positive indication of an intent to occupy the 6 ||premises; an undefined floating intention is inadequate”. Alan N. Resnick & Henry J. Sommer, 4 7 |\Collier on Bankruptcy 522.09[1] (16" ed. 2011). 8 In the case at bar, Debtor acknowledges that she and her family do not “sleep” in the Real 9 |/Property (because the construction of the residential structure has been stayed for lack of funds). She 10 |lsustains, however, that they do “use and occupy” it inasmuch as they “park their cars [there] 11 jleveryday, they clean their cars there, they hang and dry their clothes there, they store their tools and 12 |icleaning products [there], they fixed a swing in the ceiling of the first floor [there] and even rest in 13 la hammock there”. {[§[ 5-8 of Debtor’s Motion for Reconsideration (Docket No. 23, p. 2). Debtor 14 llconcludes that they use the Real Property “as part and complement of their small apartment”, 15 |Ireferring to the space they “sleep” in at her mother’s property that is contiguous to the Real Property, 16 |land that therefore she can claim it as her residence for Section 522(d)(1) purposes. Id. at J] 6 & 9. 17 |\To support her position, Debtor cites the following cases: Fifty v. Nickless (In re Fifty), 293 B.R. 550 18 |\(B.A.P. 1* Cir. 2003), In re Marcus, 08-81050-WRS, In re Marrama, 307 B.R. 332 (Bankr. D. Mass. 19 In re Edwards, 281 B.R. 439 (Bankr. D. Mass. 2002), People’s State Bank v. Stenzel, 301 F. 20 945 (2002); In re Giles, 2011 WL 181387 (Bankr. D. Ark. 2011), In re Hughes, 306 B.R. 683 21 (Bankr. M.D. Ala. 2004); In re McLachlan, 266 B.R. 220 (Bankr. M.D.Fla. 2001). 22 Conversely, the Trustee contends that “Debtor and her dependents’ ‘residence’ or dwelling 23 at her mother’s house” and that “the fact that [they] use the lot and structure under construction to 24 and clean their cars, ... dry their clothes, store their tools and cleaning products and place a 25 |lswing and a hammock” does not detract from fact that they shelter, sleep, eat and basically live at the 26 |ldebtor’s mother’s house, which evidently does not belong to Debtor. § 11 of the Trustee’s 27 ||Opposition (Docket No. 37, p. 4). Consequently, the Trustee concludes that the Real Property is “not 28 |lyet a residence” for the exemption purposes provided in 11 U.S.C. § 522(d)(1). 4] 4-5 of the
1 |Trustee’s Objection (Docket Nos. 16, p. 2 & 37). 2 Based on Debtor’s own factual allegations, this court finds that her principal residence and 3 of dwelling is her mother’s house, not her Real Property. Therefore, she cannot claim a 4 homestead exemption on the contiguous property of a property that does not belong to her. Debtor’s 5 |Iprincipal place of dwelling does not belong to the bankruptcy estate. She cannot claim it as exempt 6 Section 522 and cannot therefore claim the contiguous lots as homestead either. 7 The court notes that in the cases cited by Debtor*, the debtors claiming the homestead 8 |lexemption on their residence’s contiguous parcel(s) actually owned both lots. That also is true in the 9 Rico homestead cases. See Garcia v. Perez, 46 D.P.R. at 41. 10 In the instant case, the Debtor has acknowledged that the property she occupies as a primary 11 |\dwelling is not hers. Thus, she cannot extend a homestead exemption over a real property used in 12 |lconnection with the property where she primarily lives but does not own (i.e. her mother’s property) 13 jland there is no dispute that the Real Property over which she claims the homestead is not currently 14 livable and cannot be used as a primary dwelling. Following that same logic, the Real Property is 15 being used “exclusively as a principal residence” by itself, and cannot be claimed as a homestead 16 |lin its own right. See PR Homestead Act of 2011’s Statement of Reasons. 17 To confront that main difference from her cited caselaw and the instant case, the Debtor 18 |Ibriefly argues that in cases like In re Hughes, 306 B.R. 683, and In re Marrama, 307 B.R. 332, the 19 |icourts permitted a homestead exemption over a property adjacent to a leased property. Short Reply, 20 |Ip. 2 (Docket No. 39). These cases are also distinguishable. In Marrama, the Debtor claimed an 21 exemption on a real property’ over which he had a Homestead Declaration pursuant to Mass. Gen. 22 ||Laws Ch. 188, § 1. A creditor objected the claim sustaining that the debtor had abandoned it. The 23 ||Court’s analysis relied mainly on that Massachusetts’ homestead provision, which is not applicable 24 |Ito the present case. Likewise, in In re Huges, the debtor claimed a $5,000 exemption on a real A 26 * The cases are: Fifty v. Nickless (In re Fifty), 293 B.R. 550, In re Marcus, 08-81050-WRS, In re Marrama, 307 B.R. 332; In re Edwards, 281 B.R. 439, People’s State Bank v. Stenzel, 301 F. 3d 945; In re Giles, 2011 WL 27 || 181387, In re Hughes, 306 B.R. 683; In re McLachlan, 266 B.R. 220, 28 > The real property in that case was rented to two tenants at the time that the opinion was entered, Id. at 336, footnote 2. 11
1 |property under the Alabama Code § 6-10-2 (1975), not under the exemptions provided in Section 522 2 the Bankruptcy Code, and thus in that case “state law governs the real property of th[e] exemption 3 |claim”. Id. at 685. Therefore, In re Hughes is not applicable to the case at bar either. 4 The court finds that Debtor’s Real Property is not her actual principal place of dwelling nor 5 |lis it a real property contiguous to a residence she owns. The Trustee’s Objection is granted to that 6 |jextent and consequently, no homestead exemption can be claimed on the Debtor’s Real Property. 7 \(D) Burden of proof for objections on claimed exemptions 8 The Debtor also alleges that the Trustee has not met his burden to prove that the exemption 9 not properly claimed. Motion for Reconsideration, p. 6 (Docket No. 23). 10 Pursuant to Fed. R. Bankr. P. 4003(c), “the objecting party has the burden of proving that the 11 |lexemptions are not properly claimed.” Thus, the objecting party bears the burden to establish that 12 |Ithe debtor did not create a valid estate of homestead, or alternatively, that it no longer existed at the 13 |Itime of the filing of the bankruptcy. See In re Edwards, 281 B.R. 439, 446 (Bankr. D. Mass. 2002). 14 In the instant case, the Trustee’s Objection is rooted on Debtor’s acknowledgment that she 15 not “live” in the Real Property and that the construction of a structural residence therein has 16 stayed for lack of funds. See Debtor’s Motion for Reconsideration, p. 2. Therefore, he rebutted 17 prima facie effect of the claim of exemption with the acknowledgment that Debtor has not resided 18 Property as a primary dwelling. Debtor’s argument under Fed. R. Bankr. P. 4003(c) is denied. 19 Conclusion 20 In view of the foregoing, Debtor’s claimed homestead exemption on her Real Property under 21 #11 U.S.C. § 522(d)(1) is hereby denied. 22 SO ORDERED. 23 In San Juan, Puerto Rico, this 3“ day of May, 2012. S walle 5 United States Bankruptcy Judge 26 27 28