JOHN P. GUSTAFSON, Bankruptcy Judge.
This case is before the court on the Objection of Chapter 7 Trustee Louis Yoppolo to the Debtor's claim of a homestead exemption in a 46 foot Sea Ray boat. [Doc. #10]. An evidentiary hearing was held on July 21, 2014. William C. Aubiel [hereinafter "Debtor" or "Mr. Aubiel"], Debtor's counsel, and the Chapter 7 Trustee appeared in person at the hearing.
The district court has jurisdiction over this Chapter 7 case pursuant to 28 U.S.C. § 1334(a) as a case under Title 11. Bankruptcy cases are referred to this court by the district court under its general order of reference. 28 U.S.C. § 157(a); General Order 2012-7 of the United States District Court for the Northern District of Ohio. The Objection to the Debtor's Claim of Exemption is a core proceeding that this court may hear and determine. 28 U.S.C. § 157(b)(1) and (b)(2)(B). For the reasons that follow, the Chapter 7 Trustee's Objection will be sustained.
The Debtor filed for relief under Chapter 7 on September 13, 2013. [Ex. 1] The Chapter 7 Petition lists "2035 First Street, Pier A Dock 9, Sandusky, OH" in Erie County as the debtor's residence. [Id.]. That is the address where the Debtor's 46 foot Sea Ray boat is docked.
The boat is listed on Schedule B, Question 26, as: "residential boat 46 foot 1988 SeaRay Boat"
The Chapter 7 Trustee filed a timely Objection to the claim of exemption and moved for turnover of the Sea Ray boat. [Doc. #10].
At the Evidentiary Hearing on the Trustee's Objection to Exemption and Motion for Turnover of SeaRay
The Debtor was also asked about the income and expenses listed on Schedules I and J. [Ex. #1]. The Debtor testified that he had no income, other than Social Security, at the time of filing, but had begun driving a truck after filing. At some point after his mining business had collapsed, and before he began truck driving,
The Trustee questioned the expenses on Schedule J, specifically the expense of $860 a month for "rent or home mortgage payment". The Debtor stated that he "did not know what that is". Mr. Aubiel stated that he paid between $7,000 and $8,000 each year to dock his boat. The Debtor could also not explain the $310 per month listed on Schedule J, Line 2a for electricity and heat. He stated that utilities were included as part of the dockage fees. The Debtor was also questioned about the cost of insurance, listed on Schedule J, Line 11d as $350 each month. Mr. Aubiel stated that he actually spent about $100 each month for his auto insurance, and about $600 each year to insure the 46 foot Sea Ray boat.
Finally, the Chapter 7 Trustee went through various documents that reflected the Debtor's address. Specifically, Mr. Aubiel was shown copies of his checking and savings account statements that were sent to his ex-wife's address in Dennison, Ohio from early January of 2013 to November of 2013. [Exs. 10-1 & 10-10]. The Trustee also introduced into evidence the Certificate of Documentation for the Sea Ray boat issued on January 7, 2013, also listing William Aubiel's address as being at the same Dennison, Ohio address, which is located in Tuscarawas County. [Ex. 6]. In addition, the Debtor's 2012 federal income tax return was admitted into evidence as Exhibit 7, showing an address of P.O. Box 152, Uhrichsville, Ohio. Uhrichsville is also located in Tuscarawas County.
Finally, the Debtor was asked to read from an Agreed Judgment Entry of Dissolution in the case of William C. Aubiel, Petitioner, and Kerry I. Aubiel, Petitioner, entered in the Court of Common Pleas of Tuscarawas County, Ohio on July 30, 2012. The first sentence of the first numbered paragraph of the Agreed Judgment Entry states: "1. Both parties have been residents of the state of Ohio and the country of Tuscarawas for at least six (6) months prior to the filing of this action." The Agreed Judgment Entry is signed by William C. Aubiel, William C. Aubiel's domestic relations attorney, and Kerry I. Aubiel, as well as Judge Edward E. O'Farrell. The Agreed Judgment Entry of Dissolution was admitted into evidence as Exhibit 9.
During Mr. Aubiel's testimony, both on examination by the Trustee and his bankruptcy counsel, the Debtor stated that he had lived on the boat for three or four (or more) years. The Sea Ray boat is located in the City of Sandusky, in Erie County, Ohio. Mr. Aubiel stated that he did not live on the boat during the Winter months. The Sea Ray boat is put into storage on or about the 15th of November each year. Debtor stated that while the boat is in storage, he does not live on the boat. No evidence was presented regarding where Mr. Aubiel had lived when he was not able to live on the boat, nor was there any testimony about when he would return to living on the boat when it was taken out of Winter storage.
Upon examination by counsel for the Debtor, Mr. Aubiel stated that he was 68 years old and had been married approximately 37 years prior to his divorce. He had invested $250,000 from his retirement account in an attempt to save Valley Mining, Inc. (hereinafter "Valley Mining"), a company started by his father-in-law. Schedule B shows that Mr. Aubiel asserted a 47% ownership interest in Valley Mining and states that he was the President of the corporation. Debtor testified that he is a high school graduate who started working for Valley Mining many years ago, without any management experience. He stated
Mr. Aubiel further testified that he was taking Xanax, Ativan and blood pressure medication. He also attempted to explain some of the evidence the Trustee had presented about his use of addresses other than the Sea Ray boat, and the misstatements on the Schedules and Statement of Financial Affairs regarding his property and the pre-Petition transfers. He stated that the mailed checking and savings account statements [Exs. 10-1 & 10-10] were not something he looked at because the information was available to him on-line. Further, Mr. Aubiel described his divorce as not being a hostile one. The unlisted oil and gas leases [Exs. 14 & 15] were not being actively used by the lessee, so there were no royalties being generated. The gun and knife collection was not very valuable, and had mostly been received as gifts. Mr. Aubiel stated that he had relied upon his memory in preparing the information for the Schedules and Statement of Affairs, and his ex-wife had been the one who kept books and records.
Counsel for Mr. Aubiel introduced an envelope from a letter Debtor had received from Kerry Aubiel, addressed to William C. Aubiel, care of the Venetian Marina, the location where the Sea Ray boat is docked. The envelope reflects a post mark of July 17, 2014. [Ex. A]. The other exhibit introduced on behalf of the Debtor was a bill for auto insurance, which reflected a mailing date of May 4, 2014. [Ex. C]. The auto insurance bill was mailed to William Aubiel, and reflected a P.O. Box address in Berlin Hts., Ohio. Mr. Aubiel stated that P.O. Box was approximately 15 minutes from the boat, and that was how he received his mail as he was often away from home as a long distance trucker.
In Taylor v. Freeland & Kronz, the United States Supreme Court provided the following regarding the procedure for claiming exemptions:
Taylor v. Freeland & Kronz, 503 U.S. 638, 642, 112 S.Ct. 1644, 1647, 118 L.Ed.2d 280 (1992); see also, 4 Collier On Bankruptcy ¶ 522.05[1], at 522-31 (16th ed. 2013).
Under 11 U.S.C. § 522(b)(1), Ohio has opted out of the federal bankruptcy exemptions established under 11 U.S.C. § 522(d). See, Ohio Rev.Code § 2329.662. Bankruptcy debtors are, therefore, entitled
Under Ohio law, exemptions are to be liberally construed in favor of the debtor. See, Daugherty v. Central Trust Co. of Northeastern Ohio, N.A., 28 Ohio St.3d 441, 446, 504 N.E.2d 1100, 1105 (Ohio 1986). However, the Daugherty court noted: "As in other instances of statutory interpretation, even a liberal construction of R.C. 2329.66 does not give us license to enlarge this statute or strain its meaning. We have made it clear that "* * * [b]y `liberal construction' is not meant that words and phrases shall be given an unnatural meaning, or that the meaning shall be * * * expanded to meet a particular state of facts." Id., at 447, 504 N.E.2d 1100, citing, Dennis v. Smith, 125 Ohio St. 120, 124, 180 N.E. 638 (Ohio 1932); Morris Plan Bank v. Viona, 122 Ohio St. 28, 170 N.E. 650 (Ohio 1930).
As the objecting party, the burden is on the Trustee to establish by a preponderance of the evidence that the Debtor's homestead exemption is not properly claimed. Fed. R. Bankr.P. 4003(c); In re Wengerd, 453 B.R. 243, 246 (6th Cir. BAP 2011); In re Zingale, 451 B.R. 412, 416 (6th Cir. BAP 2011); In re Frederick, 495 B.R. 813, 816 (Bankr.N.D.Ohio 2013); In re Andrews, 301 B.R. 211, 213 (Bankr. N.D.Ohio 2003).
Section 2329.66(A)(1)(b) of the Ohio Revised Code states:
The term "residence" is not defined in O.R.C. Chapter 2329 of the Ohio Revised Code. Meadow Wind Health Center, Inc. v. McInnes, 2000 WL 1055938, 2000 Ohio App. LEXIS 3415 (Ohio App. July 24, 2000). But, courts have interpreted the language "uses as a residence" to mean that the property must be occupied and used as a home. In re Kimble, 344 B.R. 546, 555 (Bankr.S.D.Ohio 2006); In re Flegner, 2011 WL 5056994, 2011 Bankr.LEXIS 4118 (Bankr.N.D.Ohio Oct. 24, 2011).
As stated by the Ohio Supreme Court:
The relevant time frame for determining whether a Chapter 7 debtor has the right to claim a homestead exemption is the date of filing. See, In re Wengerd, 453 B.R. 243, 247-251 (6th Cir. BAP 2011); In re Kyle, 510 B.R. 804, 809-810 (Bankr. S.D.Ohio 2014); In re Pier, 310 B.R. 347, 354 (Bankr.N.D.Ohio 2004); In re Cope, 80 B.R. 426, 427-428 (Bankr.N.D.Ohio 1987); and see White v. Stump, 266 U.S. 310, 313, 45 S.Ct. 103, 69 L.Ed. 301 (1924) ("When the law speaks of property which is exempt and of rights to exemptions, it of course refers to some point of time.... [O]ne common point of time is intended and that is the date of the filing of the petition.").
Courts have struggled with homestead exemption claims that have not involved traditional dwellings. See generally, In re Norris, 413 F.3d 526, 529-530 (5th Cir. 2005)
It does not appear that any Ohio court has directly addressed the issue of a homestead exemption claim on a boat.
The language of the Ohio exemption statute eliminates some of the issues that arise in construing the homestead exemption statutes in other states.
However, recognizing the possibility that a boat may be a homestead under Ohio law does not mean that such a claim does not require something more, in the way of proof, than a more conventional dwelling place. The Ohio exemption statute has a "wild card" provision, with much lower dollar limits, that can be applied to any property owned by a debtor. See, § 2329.66(A)(18). Thus, the Ohio homestead exemption should be applicable only to an item of property that qualifies — it cannot be intended as a larger, second "wild card" exemption provision.
In dealing with homestead exemption claims on non-traditional dwellings, Florida
See, In re Yettaw, 316 B.R. 560, 562-563 (Bankr.M.D.Fla.2004) (citing cases for the listed criteria); see also, In re Schumacher, 400 B.R. 831, 835-836 (Bankr.M.D.Fla. 2008) (applying the criteria to a mobile home).
The court does not adopt these factors for use in deciding Ohio exemption claims. However, they do serve to help focus the inquiry on the differences between a homestead claim on a dwelling built for a residential purpose, and nontraditional dwellings that were not built for that purpose.
Here, the Debtor testified that he resided in the boat for several years, but that is contradicted by the documentary evidence introduced by the Trustee. The question of whether or not the Debtor has no other residence was similarly disputed. In addition to the documentary evidence of another residence submitted by the Trustee, the Debtor admitted that he did not maintain continuous habitation, leaving the Sea Ray boat when it was taken out of the water in mid-November each year. The Debtor maintains a possessory right in the dock space, but there was no evidence presented that the boat did not remain "mobile".
Moreover, the statement regarding residency in the Agreed Judgment Entry of Dissolution [Ex. 9] creates a significant legal problem for the Debtor's position. In the Agreed Judgment Entry, signed by the Debtor and entered by the state court, stated that the Debtor lived in Tuscarawas County, not Erie County where the boat is located. The Sixth Circuit Court of Appeals has applied the judicial estoppel doctrine to bar a party from asserting a position that is contrary to the one that the party has asserted under oath in a prior proceeding, where the prior court adopted the contrary position either as a preliminary matter or as part of a final disposition.
In Javery v. Lucent Technologies, Inc. Long Term Disability Plan for Management or LBA Employees, 741 F.3d 686, 698 (6th Cir.2014), the appellate court excused the failure to list a claim in a Chapter 13 case as an "inadvertent error". Here, the inconsistent position is not based on omission, but rather an affirmative statement signed by the Debtor. Accordingly, it is harder to credit a claim that the specific statement that the Debtor had lived in Tuscarawas County for the previous six months was due to an inadvertent error.
Judicial estoppel has been dispositive in a case involving the claim of a homestead exemption in a non-traditional dwelling. The court in In re Pich held that a debtor seeking to claim a homestead exemption in a 9,744 square foot building originally constructed to house operations of his business was judicially estopped from claiming the exemption. In re Pich, 253 B.R. 562 (Bankr.D.Idaho 2000). Judicial estoppel arose from the inconsistent position taken in the application for rezoning approval, which omitted the intent to reside and sought a "light industrial" classification which expressly excluded residential uses. Id., at 568.
Again, the contradiction here is even more direct. The Agreed Judgment Entry of Dissolution affirmatively states, on the front page, in the first numbered paragraph, that the Debtor had lived in Tuscarawas County for at least the previous six months. Tuscarawas County is located approximately 100 miles from Erie County, where the Sea Ray boat is located. The Entry reflects that the Debtor was represented by counsel, and it bears his signature.
Accordingly, the court finds that judicial estoppel should apply to the statement regarding where the Debtor had lived during the six months prior to the execution of the Agreed Judgment Entry of Dissolution. If judicial estoppel applies, the Debtor is precluded from controverting the facts set forth in the Agreed Judgment Entry of Dissolution, specifically that Tuscarawas County was his residence for the six months prior to July 30, 2012, a little more than a year prior to the filing of the Chapter 7 bankruptcy. The evidence Debtor presented at the Hearing, of continuous residence on the Sea Ray boat in Erie County for three or more years, is inconsistent with the position he took in his dissolution proceeding, that he resided in Tuscarawas County. Debtor did not present evidence, other than his testimony that the boat had been his residence for three or more years, that he used the boat as his residence after July 30, 2012 and before the date he filed bankruptcy on September 13, 2013.
In the alternative, even if the Agreed Judgment Entry of Dissolution is not sufficient to invoke judicial estoppel, either because the statement was somehow an inadvertent mistake or the assertion in the dissolution Entry can be reconciled
In addition, the Trustee presented evidence that Debtor's listed expenses did not appear to relate to the costs associated with the boat. There was no contrary evidence presented by the Debtor as to how the living expenses listed on Schedule J, particularly the $860 a month for rent or mortgage payment and the $310 a month for electricity and heat, were applicable to the use of the Sea Ray boat as a residence. Further, there was a discrepancy between the expenses claimed for insurance in the Schedules, and the insurance expenses Debtor testified to that related to the Sea Ray boat and his vehicle.
The weight to be given to Mr. Aubiel's testimony regarding where he resided is diminished by the inaccuracies in his Chapter 7 Schedules and Statement of Financial Affairs, which were signed under penalty of perjury. Further, the evidence offered by Mr. Aubiel at the Hearing was not relevant to the question of whether he was using the Sea Ray boat as his residence at the time of filing in September of 2013.
Thus, even under just a preponderance of the evidence standard, without consideration of judicial estoppel, the evidence presented by the Trustee was stronger and more persuasive.
Accordingly, the Chapter 7 Trustee has met his burden of proving by the preponderance of the evidence that the Sea Ray boat was not the Debtor's residence at the time of filing, and that the Ohio homestead exemption cannot be claimed on that vessel. However, it appears that the Debtor may not have claimed the full amount of his Ohio "wildcard" exemption under 2329.66(a)(18).
