In re Rommer

549 B.R. 72, 2016 Bankr. LEXIS 1016, 2016 WL 1317684
CourtUnited States Bankruptcy Court, D. Vermont
DecidedMarch 31, 2016
DocketCase #15-10313
StatusPublished
Cited by1 cases

This text of 549 B.R. 72 (In re Rommer) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Vermont primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Rommer, 549 B.R. 72, 2016 Bankr. LEXIS 1016, 2016 WL 1317684 (Vt. 2016).

Opinion

MEMORANDUM OF DECISION

Overruling Objections to the Debtor’s Homestead Exemption, Overruling Objections to the Debtor’s Motion to Avoid Liens, and Granting the Debt- or’s Motion to Avoid Liens

Colleen A. Brown, United States Bankruptcy Judge

The Debtor is a farmer who owns a 3.69-acre parcel of land with three structures: his residence, a garage, and a greenhouse. He seeks to claim all of this property exempt as his homestead in this bankruptcy case, including the portion of his property — the garage and greenhouse — he leases to a corporation he owns, for operation of a wheatgrass business.

The Debtor filed a motion to avoid certain judgment liens against his real property, claiming the liens impaired his homestead exemption. One of the judgment lien holders, Green Mountain Bureau, LLC (“GMB”), objected to the Debtor’s [74]*74right to avoid liens on the rented portion of the property, arguing that portion of the property did not qualify for a homestead exemption. GMB asserts, first, that the Debtor’s equity in the property exceeds the amount an individual may exempt under the Vermont homestead statute, and, second, property used for commercial purposes cannot be exempt as part of the Debtor’s homestead. It concludes that if the land is not exempt, the Debtor cannot avoid liens against it. The Chapter 7 Trustee also objected to the Debtor’s motion, on essentially the same grounds. The Court construes these objections to the motion to avoid liens to also be objections to the Debtor’s claim of a homestead exemption in the portion of the property he leases.

For the reasons set forth below, the Court finds the objections lack merit and the Debtor is entitled to exempt all of the property in question, including the garage, greenhouse, and the property on which they are located. Therefore, the Court overrules the objections to the Debtor’s claim of a homestead exemption in the entire property, overrules the objections to the motion to avoid liens, and grants the Debtor’s motion to avoid liens.

Jurisdiction

The Court has jurisdiction over this motion pursuant to 28 U.S.C. §§ 157 and 1334, and the Amended Order of Reference entered by Chief Judge Christina Reiss on June 22, 2012. The Court declares this contested matter is a core proceeding under 28 U.S.C. § 157(b)(2)(A) and (0), in which this Court may enter a final judgment.

Issues Presented

The first issue is whether the Debtor’s property has equity in excess of the amount which the Debtor may exempt. The second issue is whether the Debtor’s leasing of a portion of the property to a third party, and/or use of a portion of the property for a commercial purpose, extinguishes the Debtor’s right to exempt that portion of property under the Vermont homestead exemption statute. The adjudication of these two issues will resolve the ultimate issue presented: whether the Debtor may avoid the judgment liens against all of his real property, under 11 U.S.C. § 522(f).1

Procedural History

On July 20, 2015, the Debtor filed a motion to avoid the judicial liens of (i) Calvary Investments, LLC, (ii) GMB, (iii) Capital One Bank (USA), N.A., and (iv) Discover Bank, against the Debtor’s real property located at 198 Dodge Road, Ches- ' ter, VT (the “Property”), pursuant to § 522(f) (doc. # 5, the “Motion”). Oh August 3, 2015, GMB filed an objection to the avoidance of its lien (doc. # 8). A hearing on the Motion and GMB’s objection was set for August 14, 2015, but the parties stipulated to continue the hearing to September 4, 2015 (doc. # 12).

A few days before the hearing, on September 1, 2015, GMB filed a supplemental memorandum of law (doe. # 16) in support of its objection. At the September 4 th hearing, the parties presented their arguments, the Court directed the parties to file supplemental briefing, and the hearing was continued to October 9, 2015. Thereafter, the Trustee filed a memorandum of law in opposition to the Motion, the Debtor filed a memorandum of law in support of his Motion, and GMB filed a reply memorandum of law (docs. ##20, 22, 26). Upon review of these filings, the Court [75]*75entered an order sustaining the objections of the Trustee and GMB and limiting the homestead exemption to the portion of the Property not leased to the Debtor’s corporation (doc. #28). However, the Court thereafter vacated the order, sua sponte, after discovering several crucial issues the parties had not briefed and consequently the Court had not considered (doc. # 32, the “Order”). The Court determined it was necessary for the parties to examine and present arguments with regard to the impact, if any, of (1) bankruptcy court homestead exemption decisions involving debtors who, in their individual capacity, rent part of their homestead property to third parties for residential use; (2) bankruptcy court homestead decisions involving debtors who use the property for purposes that are not strictly residential; and (3) cases examining when,- and under what circumstances, a court should engage in reverse piercing of a corporate veil to prevent injustice.2

Pursuant to the Order, the Debtor filed a memorandum of law, GMB filed a response, the Debtor filed a reply, and GMB filed a sur-reply (docs. ## 34, 35, 36, 37, 38). The Court held a hearing on ■ the Motion and objections on December 4 th’ and the matter was then fully submitted.

Factual Background

The material facts are not in dispute. The Debtor’s Property is located at 198 Dodge Road, Chester, VT (docs. ## 5, 22, 34). It has three structures on it:" the Debtor’s residence, a detached garage that has been converted into a bam, and a greenhouse that is attached to the garage (doc. #34). The Property is currently appraised at approximately $190,000 (doc. #35, Ex. A, p. 5) and is encumbered by two mortgages totaling $79,547, leaving the Debtor with equity in the Property of $110,453 (docs. ##5, 34), The appraisal assigns a value of $19,500 to the garage, and points out the garage has been converted into a bam/shed (doc. # 35, Ex. A, p. 3).

The Debtor is a farmer who grows wheat seed and salad greens (docs. ## 22, 34). He leases both the garage and the greenhouse to Green Gourmet, Inc. (“Green Gourmet”), which was incorporated in 1997 (doc. # 34, p. 2), While there is no written lease, Green Gourmet makes monthly rent payments to the Debtor “as [it] is able” (doc. # 34, p. 2). The Debtor is the sole shareholder, officer, and director of Green Gourmet; he is also its sole employee and receives a small salary (doc. #34, p. 6). All of the Debtor’s earned income is derived from the growing of crops in the greenhouse (doc. #1, Schedule I); he grows no crops outside the greenhouse (doc. # 34, p. 1). Also located in the greenhouse is a well that is the sole source and supply of water for the Debt- or’s residence (doc. # 34).3

Discussion

The Debtor claims his entire Property, under the Vermont homestead exemption statute, including the garage and greenhouse, is exempt as his homestead.

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Related

In re Carpenter
559 B.R. 551 (D. Rhode Island, 2016)

Cite This Page — Counsel Stack

Bluebook (online)
549 B.R. 72, 2016 Bankr. LEXIS 1016, 2016 WL 1317684, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-rommer-vtb-2016.