PaineWebber, Inc. v. Murray

260 B.R. 815, 2001 U.S. Dist. LEXIS 4453, 2001 WL 336766
CourtDistrict Court, E.D. Texas
DecidedMarch 30, 2001
Docket1:98-cr-00046
StatusPublished
Cited by21 cases

This text of 260 B.R. 815 (PaineWebber, Inc. v. Murray) is published on Counsel Stack Legal Research, covering District Court, E.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
PaineWebber, Inc. v. Murray, 260 B.R. 815, 2001 U.S. Dist. LEXIS 4453, 2001 WL 336766 (E.D. Tex. 2001).

Opinion

MEMORANDUM OPINION AND ORDER

SCHELL, Distinct Judge.

Creditor-Appellants Painewebber, Inc. and Admiral Insurance Co. (the “Creditors”) both appeal from an order of the bankruptcy court overruling their objections to Debtor-Appellee Michael F. Murray’s (“Murray”) claimed homestead exemption. Furthermore, they seek review of Murray’s Schedule C, specifically his claimed exemptions of a tractor, a riding lawn mower, and a 1992 pickup truck. Under 28 U.S.C. § 158, this district court has jurisdiction over this appeal. For the reasons discussed below, the order of the bankruptcy court is AFFIRMED.

I. BACKGROUND

Murray owns three tracts of land located approximately five miles outside of Telephone, Texas, in Fannin County, which are zoned for agricultural use. Two of the tracts, a 33 acre plot and one 15 acre plot, are contiguous, but a third tract of 147 acres is about a half mile from the other two tracts. A mobile home sits on the 33 acre tract, and such services as utilities and fire and police protection are provided to the site by Fannin County.

Initially, Murray used the 33 acre tract and the mobile home as a hunting lodge. When he retired in 1992 from his job as a stockbroker in Dallas, he began to reside on the 33 acre tract on a permanent basis. Since 1992, Murray has claimed this and the other two tracts as his homestead.

While living on the properties, Murray has, individually or through the help of another, fanned wheat, soybeans, or hay on the properties. On certain occasions, he has leased some of the tracts to a neighbor and entered into a sharecropping arrangement. After accounting for depreciation, however, Murray has made no money on his farming operations. Presently, Murray continues to grow hay on the 33 and 15 acre tracts to supplement his income and to barter for other goods. In addition, he often cuts wood from all three properties, particularly the 147 acre tract. Besides farming related activities, Murray and his wife, the former Gwendolyn Atkinson (“Atkinson”) (collectively “the Mur-rays”), have used the three tracts for various other purposes, including gardening on the 33 acre tract, fishing on the 15 acre tract, and using all three properties for recreational and aesthetic activities such as bird watching and picnicking.

The Murrays were married in 1996. Prior to the marriage, the two signed a prenuptial agreement delineating the lack of obligation on the part of each spouse to support the other. Moreover, each spouse waived and released any homestead rights to the other’s separate property. Furthermore, Atkinson apparently claimed a residence in Highland Park, Texas, as her homestead for ad valorem tax purposes in 1996 and 1997.

On December 2, 1997, Murray filed a voluntary petition under Chapter 7 of the Bankruptcy Code. Atkinson, however, did not join in the petition. Among the items that Murray included in his Second Amended Schedule C of exemptions were the three separate tracts of real property. Murray also claimed a tractor, a riding lawn mower, and a 1992 pickup truck as *821 exempt farming equipment. In late January and early February of 1998, the Creditors objected to these claimed exemptions, and a hearing was held before the bankruptcy judge on May 6, 1998. After hearing testimony from Murray and Atkinson, the bankruptcy judge overruled most of the Creditors’ objections and entered on the record his findings of fact and conclusions of law. Subsequently, the bankruptcy judge filed an order memorializing those rulings.

The Creditors timely appeal and raise the following issues for review:

a) Is [Murray] entitled to exempt all real property and a mobile home listed on his Schedule C (of exemptions), as amended, as a rural homestead under Texas Property Code §§ 41.001 and 41.002?
b) Is [Murray] entitled to exempt a tractor, riding lawn mower, and a 1992 truck listed on his Schedule C of exemptions, as amended, as “farming or ranching vehicles and implements” under Texas Property Code § 42.001(a)(3)?
c) Is [Murray] the “head” of his family for purposes of his rural homestead exemption claim under Texas Property Code §§ 41.001 and 41.002?
d) Does all of the real property described in [Murray’s] Schedule C “support” his family for purposes of [Murray’s] rural homestead exemption claim? 1

Because issues “c” and “d” are necessarily subsumed under issue “a,” the court will address those issues together before discussing issue “b.”

II. STANDARD OF REVIEW

A district court reviews a bankruptcy court’s legal conclusions de novo. 2 But a bankruptcy court’s findings of fact are subject to the clearly erroneous standard. 3 “According to this deferential standard, [a court] should overturn the factual findings of [a] bankruptcy court only when, after review of all the evidence, [the court is] left with a ‘firm and definite conviction’ that the bankruptcy court committed a mistake.” 4 Nevertheless, where a finding of fact is premised on an improper legal standard, it “loses the insulation of the clearly erroneous rule.” 5

III. ANALYSIS

A. Murray May Exempt the Three Tracts and the Mobile Home as a Rural Homestead

The Creditors’ first issue on appeal is whether Murray may exempt the three tracts and the mobile home as a rural homestead under Texas Property Code §§ 41.001 and 41.002. Implicit to this issue are two other issues raised by the Creditors: 1) whether Murray is the head of his family for purposes of the rural homestead exemption and 2) whether all of Murray’s properties support his family.

Homestead exemptions in Texas have their origins in both constitutional 6 *822 and statutory provisions. 7 When interpreting these provisions, a court must liberally construe them to protect the homestead. 8 Indeed, a court “must uphold and enforce the Texas homestead laws even though in so doing [the court] might unwittingly ‘assist a dishonest debtor in wrongfully defeating his creditor.’ ” 9

Under Texas law, a family or single adult may claim either a rural or urban homestead. 10 Section 41.002(a) of the Texas Property Code states that an urban homestead claimant may exempt up to one acre of property if it is used for the purposes of a home or for a business. 11 Accordingly, an urban homestead may be comprised of a residential and/or business homestead.

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Bluebook (online)
260 B.R. 815, 2001 U.S. Dist. LEXIS 4453, 2001 WL 336766, Counsel Stack Legal Research, https://law.counselstack.com/opinion/painewebber-inc-v-murray-txed-2001.