C. KATHRYN PRESTON, Chief Judge.
In this appeal, William C. Aubiel ("Debtor"), appeals the bankruptcy court's order denying his claim of exemption in a 46-foot Sea Ray boat and ordering turnover of the boat to the Trustee. For the reasons stated below, the Panel AFFIRMS the bankruptcy court's order.
The issue on appeal is whether the bankruptcy court erred in finding that, because the boat was not Debtor's primary residence, Debtor was not entitled to a homestead exemption in his boat and must turnover the boat to the Trustee.
Under 28 U.S.C. § 158(a)(1), this Panel has jurisdiction to hear appeals "from final judgments, orders, and decrees" issued by the bankruptcy court. For purposes of appeal, an order is final if it "ends the litigation on the merits and leaves nothing for the court to do but
"A debtor's entitlement to a bankruptcy exemption most often involves a legal question and is reviewed de novo, except where facts are in dispute." In re Hake, No. 407 CV 01091, 2007 WL 2254745, at *1 (N.D.Ohio Aug. 3, 2007) (quotation marks and citation omitted). It is a question of law whether a boat can constitute a primary residence under Ohio's exemption statute. Neither party has challenged the bankruptcy court's legal conclusion that a boat can be a primary residence for which an individual may claim a homestead exemption. And the Ohio homestead exemption statute clearly states that an exemption may be claimed in real or personal property. Ohio Rev. Code § 2329.66(A)(1)(b).
It is a question of fact whether, in this case, Debtor's boat was his primary residence. "Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the witnesses." Lester v. Storey (In re Lester), 141 B.R. 157, 160 (S.D.Ohio 1991) (citing Federal Rule of Bankruptcy Procedure 8013)
Debtor William Aubiel filed a voluntary chapter 7 bankruptcy petition on September 13, 2013. Debtor listed 4637 North 3rd Street Ex. SE, Dennison, Ohio 44621
In July 2012, Debtor's 38-year marriage ended through an Agreed Judgment Entry of Dissolution. As part of the dissolution, Debtor transferred certain pieces of real property to his ex-wife, including their former marital home.
During 2012, Valley Mining, Inc. ("Valley Mining"), which had been founded by Debtor and his ex-wife's family, was also experiencing financial difficulty. On January 23, 2013, Debtor wrote a check to Valley Mining in the amount of $250,000 to try to keep it afloat. This is significant only because the Trustee argues that it is highly unlikely that Debtor invested such a large sum of personal money into a failing company, but lived on a boat 100 miles away from the company's offices. Valley Mining eventually filed bankruptcy as well.
The Trustee timely filed an objection to Debtor's claim of a homestead exemption in the boat and sought turnover of the boat from Debtor. The bankruptcy court held an evidentiary hearing on July 21, 2014. On August 28, 2014, the bankruptcy court issued its Memorandum of Decision and Order Regarding Objection to Claim of Homestead Exemption in 46' Sea Ray Boat. In re Aubiel, 516 B.R. 476 (Bankr. N.D.Ohio 2014). The bankruptcy court held that "the Chapter 7 Trustee has met his burden of proving by a preponderance of the evidence that the Sea Ray boat was not Debtor's residence at the time of filing, and that the Ohio homestead exemption cannot be claimed on that vessel." Id. at 484. Accordingly, the bankruptcy court sustained the Trustee's objection to the exemption and ordered turnover of the boat.
Debtor timely filed this appeal.
The filing of a bankruptcy petition under Chapter 7 of the Bankruptcy Code creates a bankruptcy estate. Under § 541 of the Bankruptcy Code, "property of the estate" consists of "all legal or equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. § 541. However, pursuant to 11 U.S.C. § 522, a debtor may claim an exemption in certain property.
There is a prima facie presumption that an exemption is proper. In re Kimble, 344 B.R. 546, 551 (Bankr. S.D.Ohio 2006) (citations omitted). Therefore, the burden of proof first rests on the party objecting to an exemption. Hamo v. Wilson (In re Hamo), 233 B.R. 718, 723 (6th Cir. BAP 1999) ("The burden is on the trustee to establish, by a preponderance of the evidence, that the exemption should be disallowed."). See also In re Mann, 201 B.R. 910, 915 (Bankr.E.D.Mich.1996) ("The trustee, as the objecting party, has the burden of producing evidence which rebuts the prima facie presumption that the exemption is correct."); In re Rhinebolt, 131 B.R. 973, 975 (Bankr.S.D.Ohio 1991) ("The initial burden of producing evidence to rebut the propriety of a claimed exemption rests on the objecting party." (citing Fed. R. Bankr. P. 4003(c))). "Upon the introduction of sufficient evidence to rebut the prima facie validity of the exemption, the burden shifts to the debtors to demonstrate that the exemption is proper." Rhinebolt, 131 B.R. at 975.
The Trustee objected to Debtor's claim of a homestead exemption in his boat. Ohio's homestead exemption provides:
Ohio Rev. Code § 2329.66(A)(1)(b). See also In re Breece, 487 B.R. 599 (6th Cir. BAP 2013); In re Whitney, 459 B.R. 712, 713 (Bankr.N.D.Ohio 2011).
In re Kimble, 344 B.R. 546, 555 (Bankr. S.D.Ohio 2006). See also In re Felgner, No. 11-32274, 2011 WL 5056994, at *3 (Bankr.N.D.Ohio Oct. 24, 2011). Refining the term "residence" further, the court in In re Lusiak observed that "[t]he term `residence' ... denotes occupancy of the premises by the debtor as a principal place of dwelling." In re Lusiak, 247 B.R. 699, 702 (Bankr.N.D.Ohio 2000) (emphasis added).
At issue in Felgner was the debtors' claim of exemption in certain Michigan real estate. The debtors in that case owned homes in both Ohio and Michigan. The debtors listed the Ohio property as their residence on the date that they filed their petition for relief, but claimed an exemption in the Michigan property pursuant to the Ohio Revised Code. The Michigan property had previously been used as a vacation home. The debtors indicated that their intention was to move into the Michigan property and use it as their primary residence. The bankruptcy court ultimately found that debtors' primary residence on the date of filing was their Ohio home, where they were residing on that date. Noting that a debtor's domicile is determinative of the exemptions available to the debtor, the bankruptcy court used the Supreme Court's test for determining the domicile of the debtors in that case. In discussing the question of domicile, the court observed:
Felgner, 2011 WL 5056994, at *2 (citing District of Columbia v. Murphy, 314 U.S. 441, 455-58, 62 S.Ct. 303, 309-11, 86 L.Ed. 329 (1941)) (additional internal citation omitted).
In the instant appeal, Debtor's domicile is not the issue before the Panel, but rather the question is whether the Sea Ray boat is Debtor's residence. There is a dearth of Ohio case law setting forth factors for consideration in determining whether a property constitutes a debtor's residence. Although the Felgner factors were offered as persuasive in the discussion of a debtor's domicile, they are also useful in determining whether a property may be claimed as a debtor's residence.
Debtor admits that he does not live on his boat year-round. During the
The Trustee asserts that the boat was not Debtor's primary residence at the time of filing. The Trustee argues that at the time of filing Debtor's primary residence was in Tuscarawas County, Ohio, where Debtor's former marital home and place of business are located. The Trustee's evidence includes copies of Debtor's checking account and savings account statements for the period including the date of filing, which show his mailing address as his former marital home. Copies of negotiated checks enclosed with the statements show that Debtor's checks are printed with this same address. The title documentation of the boat also lists Debtor's address as his former marital home. The mailing address reflected on Debtor's tax return filed in 2013 (for the year 2012) is a post office box in Berlin Heights, Tuscarawas County, Ohio, approximately 100 miles away from the marina where the boat is located.
Additionally, the Trustee pointed out that Debtor's own schedules seem to indicate a residence other than the boat: Although Debtor claims he resided on the boat on the date of filing, Debtor listed an $860 per month rent or mortgage payment on Schedule J that is not consistent with the amounts associated with dockage fees. At the evidentiary hearing, Debtor could not explain this line item. Debtor also listed $310 per month for electricity and heat expenses on Schedule J., but the utilities associated with the boat are included in the dockage fees. Again, Debtor did not explain this discrepancy. The Trustee argues that these unexplained expenses on Schedule J strongly indicate that Debtor was maintaining a residence other than the boat. Additionally, the Trustee offered anecdotal evidence that the boat was approximately 100 miles from Debtor's place of business and was named "Relaxation II."
The Panel holds that the bankruptcy court did not err in its determination that the Trustee carried his burden of rebutting the presumption that the exemption was allowable. The Trustee presented strong evidence that Debtor occupies a different residence than the boat. The burden then shifted to Debtor to establish that the boat was his primary residence at the time of filing. The bankruptcy court noted that Debtor presented
Aubiel, 516 B.R. at 482. Debtor attempted to explain that he only used his former marital home as a mailing address and that he simply had not changed the mailing address on any of the accounts. However, he did not attempt to explain the entries for rent and utilities on Schedule J. When asked by the Trustee what documentation he had to show that he lived on the boat, Debtor responded "some mail." (Tr. 69:11-16). However, the only two pieces of correspondence offered into evidence by Debtor were dated well after the petition date. (Tr. Exs. A, C, ECF No. 101). Exhibit A was an envelope from Debtor's ex-wife, addressed to Debtor at the marina. It was postmarked July 17,
The record does not contain any evidence about many of the factors discussed in Felgner. Neither party introduced evidence that shows if and where Debtor is registered to vote, whether he belongs to or attends any churches, clubs or unions, or if he has a doctor's office near the marina. The record is devoid of evidence of the location of Debtor's personal property (other than the boat itself), the addresses on his driver's license and automobile registration, or where he files local tax returns. The Trustee's evidence reveals that Debtor continues to use the former marital home as a mailing address for his bank accounts, and Debtor even listed it on his bankruptcy petition as his mailing address. Accordingly, the Trustee's evidence supports a finding that the boat was not Debtor's residence as of the petition date.
The only evidence Debtor presented on the question of his residence was his own testimony. Therefore, this case came down to whether or not Debtor was believable in his claim that the boat was his primary dwelling place at the time the petition was filed. Noting that Debtor's credibility was tarnished by inaccuracies in his Statement of Financial Affairs and his Schedules,
Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 575, 105 S.Ct. 1504, 1512, 84 L.Ed.2d 518 (1985)
The Panel AFFIRMS the bankruptcy court's determination that Debtor did not use the 46-foot Sea Ray boat as his principal place of residence. Accordingly, Debtor is not entitled to his claim of a homestead exemption in the boat. The Order Denying the Exemption and Ordering
In re Zingale, 451 B.R. 412, 415-16 (6th Cir. BAP 2011), aff'd on other grounds, 693 F.3d 704 (6th Cir.2012).
Ohio Rev. Code Ann. § 2329.66(B). The adjusted dollar amounts do not appear in the text of the statute; however, that information may be accessed by visiting the Ohio Judicial Conference website. Ohio Judicial Conference, http://www.ohiojudges.org/ (follow "Exemptions" hyperlink). The amount of the homestead exemption available to Debtor at the time he filed his Chapter 7 case was $132,900.
