Acee v. Oneida Savings Bank
529 B.R. 494
N.D.N.Y.2015Background
- Acee is sole shareholder of Boulder Meadows, Vernon National Shooting, Inc., and Stop Seven, with Boulder Meadows owning 300 acres and Stop Seven operating farming activities.
- Acee’s operations include a pheasant hunting venture on Boulder Meadows property and land placed in the CRP; birds are purchased and housed prior to release, and Acee is licensed to make and sell food products using Stop Seven crops.
- Acee and Boulder Meadows filed for Chapter 12 relief on August 31, 2012; OSB and AFCU objected to confirmation of their plans.
- Bankruptcy Judge Davis held in November 2013 that Acee and Boulder Meadows did not qualify as ‘family farmers’ under 11 U.S.C. § 101(18).
- Appellants moved for reconsideration; the court denied that motion in January 2014, prompting this appeal.
- This appeal seeks to determine whether Acee and Boulder Meadows qualify for Chapter 12 protection, focusing on the farm-debt test and related issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper farm-debt test construction | Acee; principal residence debt should not distort farm-debt ratio. | Davis’s method excludes residence debt from numerator and includes in denominator when not farm-related. | Reversed: principal residence debt should be excluded from both numerator and denominator. |
| Acee’s principal residence debt arises from farming | Debt has some connection to farming activities and should arise out of farming. | Bankruptcy court properly found no farming-related use of mortgage proceeds; debt not arise out of farming. | Reversed: Acee’s residence debt did not arise from farming; debt excluded from farm-debt calculation. |
| Application of farm-debt test to Acee | After excluding residence debt, Acee satisfies farm-debt threshold. | Court previously erred in calculation; remaining debt shows insufficient farm-related portion. | Affirmed; Acee satisfies the farm-debt test once residence debt is excluded. |
| Boulder Meadows as a farming operation | Rent collection from farming operations or CRP enrollment supports farming operation status. | Boulder Meadows acted only as landlord; no direct farming operation. | Affirmed; Boulder Meadows is not a farming operation under § 101(18). |
| Boulder Meadows’ Chapter 12 eligibility | Interconnection with Acee warrants treating both debts together for eligibility. | No objection to Boulder Meadows’ eligibility and no basis to revise eligibility ruling for it. | Affirmed; no error in treating Boulder Meadows’ eligibility given lack of objection and joint context. |
Key Cases Cited
- In re Woods, 743 F.3d 689 (10th Cir. 2014) (interpretation of principal residence debt in farm-debt test)
- In re Saunders, 377 B.R. 772 (Bankr.M.D.Ga. 2007) (deals with whether farming-related debt arises from farming operation)
- In re Lamb, 209 B.R. 759 (Bankr.M.D.Ga. 1997) (landlord rent context in farming operation analysis)
- In re Fenske, 96 B.R. 244 (Bankr.D.N.D. 1988) (CRP income and farming operation engagement)
- In re Marlatt, 116 B.R. 703 (Bankr.D.Neb. 1990) (farming activity and related debt reasoning)
- In re Van Air Flying Serv., Inc., 146 B.R. 816 (Bankr.E.D.Ark. 1992) (farming operation status and income characterization)