MEMORANDUM OF DECISION ON TRUSTEE'S OBJECTION TO CLAIM OF HOMESTEAD EXEMPTION

MELVIN S. HOFFMAN, Bankruptcy Judge.

On July 14, 1994, the debtor and her husband purchased their home at 35 19th Avenue, Haverhill, Massachusetts and took title as tenants by the entirety. On December 12, 1996, the debtor recorded a Declaration of Homestead on her home pursuant to Mass. Gen. Laws ch. 188, § 1 (2010) at the Essex South District Registry of Deeds. Subsequently, the debtor and her husband divorced and on August 1, 1997, pursuant to their divorce agreement, they recorded a quitclaim deed conveying the property from the debtor and her former or soon to be former husband to the debtor individually. The deed did not expressly reserve the debtor's homestead estate.

On January 3, 2011, the debtor commenced this Chapter 7 case. On Schedule C of her bankruptcy petition, the debtor, invoking the 1996 Declaration of Homestead, claimed an exemption in her home and sought to exempt $86,787 in equity in the property.

On March 11, 2011, the trustee filed an objection to the debtor's homestead exemption claim arguing that pursuant to the applicable version of Mass. Gen. Laws ch. 188, § 7 (2010), the homestead upon which the debtor based her Schedule C exemption had been terminated by the August 1, 1997 conveyance of the home from the debtor and her husband to the debtor individually.1

Mass. Gen. Laws ch. 188, § 7 (2010), provides:

Mass. Gen. Laws ch. 188, § 7 (2010).2

According to the trustee, since the 1997 transfer of the home by the debtor and her husband was a conveyance and the deed did not expressly reserve the debtor's homestead estate, the homestead was terminated. The debtor argues that under the statute the question of homestead termination is a question of fact and the facts would show that the debtor never intended to waive her homestead rights when she took sole title to her home in 1997.

The positions of the parties are in stark and unadorned conflict and the stakes for each considerable. The question boils down to this: Does Mass. Gen. Laws ch. 188, § 7(1) (2010) terminate the debtor's homestead estate because of the 1997 intrafamily transfer of title to her home? Regrettably, it appears that no Massachusetts court has addressed this issue. Accordingly, I must attempt to predict how the Massachusetts Supreme Judicial Court would rule if the issue were before it. Garran v. SMS Fin. V, LLC (In re Garran), 338 F.3d 1, 6 (1st Cir.2003).

First principles of homestead analysis under Massachusetts law require recognition that homesteads are designed to "benefit the homestead declarant and his or her family by protecting the family residence from the claims of creditors." Shamban v. Masidlover, 429 Mass. 50, 53, 705 N.E.2d 1136, 1138 (1999). The laws are based on public policy that favors "preservation of the family home regardless of the householder's financial condition." Dwyer v. Cempellin, 424 Mass. 26, 29, 673 N.E.2d 863, 866 (1996). Considering the public policy and purpose of the statute, the state homestead exemption should be construed liberally in favor of debtors. Id.

Fundamental rules of statutory construction require the court to look "to the particular statutory language at issue, as well as the language and design of the statute as a whole." Sullivan v. Everhart, 494 U.S. 83, 89, 110 S.Ct. 960, 108 L.Ed.2d 72 (1990) (quoting K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291, 108 S.Ct. 1811, 100 L.Ed.2d 313 (1988)). The court "must presume that a legislature says in a statute what it means and means in a statute what it says there." Connecticut Nat'l Bank v. Germain, 503 U.S. 249, 254, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992). The Massachusetts Supreme Judicial Court has recognized as a canon of statutory construction that "the primary source of insight into the intent of the Legislature is the language of the statute." Provencal v. Commonwealth Health Ins. Connector Auth., 456 Mass. 506, 513-14, 924 N.E.2d 689, 694 (2010) (quoting International Fid. Ins. Co. v. Wilson, 387 Mass. 841, 853, 443 N.E.2d 1308, 1316 (1983)). "[S]tatutory language should be given effect consistent with its plain meaning and in light of the aim of the Legislature unless to do so would achieve an illogical result." Provencal, 456 Mass. at 514, 924 N.E.2d 689 (quoting Sullivan v. Brookline, 435 Mass. 353, 360, 758 N.E.2d 110, 115 (2001)).

Giving effect to § 7 consistent with its plain meaning and in light of the aim of the homestead legislation convinces me that the interpretation advanced by the trustee is unsupportable. Section 7 begins "an estate of homestead created under section two may be terminated." (emphasis supplied). The use of the word "may" makes the statute volitional. The word "may" denotes a discretionary power. Provencal, 456 Mass. at 513-514, 924 N.E.2d 689 (citing Brittle v. Boston, 439 Mass. 580, 594, 790 N.E.2d 208, 218-19 (2003) ("may" is permissive, not mandatory); Turnpike Amusement Park, Inc. v. Licensing Comm'n of Cambridge, 343 Mass. 435, 437, 179 N.E.2d 322, 324 (1962) ("The word `may' in a statute commonly imports discretion"); Cline v. Cline, 329 Mass. 649, 652, 110 N.E.2d 123, 125 (1953) (same)).

If every deed conveying property which does not specifically reserve the estate of homestead automatically terminates the homestead, where is the choice or discretion implicit in the word "may?" The language of the statute presupposes an intention on the part of the property owners to terminate the homestead. The substitution of the word "shall" for "may" illustrates how easily the legislature could have, had it chosen to, implemented the result advocated by the trustee. The legislature did not use the mandatory "shall," one presumes in order to avoid causing homestead termination by ambush upon transfers such as the one involving the debtor's home.

Indeed, in the 2010 amendment to Mass. Gen. Laws ch. 188, § 7, the legislature made clear that deeds between spouses or former spouses would not terminate existing homestead estates unless an express release is executed. See Mass. Gen. Laws ch. 188, § 10 (2011).

In In re Hildebrandt, 320 B.R. 40, 46 (1st Cir. BAP 2005), a case involving facts similar but not identical to the one before me,3 the Bankruptcy Appellate Panel for the First Circuit affirmed the bankruptcy court's ruling that a transfer by unrelated tenants in common to one of them individually terminated a prior estate of homestead under Mass. Gen. Laws ch. 188, § 7(1) (2010). The BAP focused exclusively on the language of § 7(1) and concluded correctly that within the confines subsection (1), the intention of the transferors was immaterial to a determination that the homestead was terminated by a conveyance. Reading subsection (1) without reference to the introductory clause that precedes it, however, isolates the subsection from its context. Had the BAP broadened its statutory inquiry to include the introductory clause of § 7 containing the discretionary predicate, it may very well have reached a result consistent with the statutory interpretation adopted here.

The debtor is correct that when a dispute arises as to whether a conveyance has terminated an existing homestead declaration under Mass. Gen. Laws ch. 188, § 7(1) (2010), a determination must be made as to the intention of the transferors. For this reason a hearing will be scheduled for the purpose of allowing the parties to introduce evidence or to stipulate to the facts on this issue.

In addition to objecting to the homestead exemption, the trustee objected to the debtor's claim of exemption in a TD Bank savings account. Subsequent to the objection, the debtor filed an amended Schedule C which revised the exemption claimed in that savings account. It is unclear if the trustee intends to press her objection. Within 14 days of the date of this memorandum, the trustee shall file either a withdrawal of her objection to the exemption of the savings account or an amended objection thereto.

A scheduling order shall issue.