539 B.R. 24
Bankr. E.D.N.Y.2015Background
- Debtor Annette Apergis owned a Glen Head, NY house purchased in 2005 and moved out in July 2012 to live with her mother at 12 Woodfield while renting the Property to tenants through Feb 2014.
- A state-court creditor (DLJ) obtained a judgment directing sale of the Property and awarding the Debtor a $150,000 homestead exemption by May 1, 2013 state-court order; the Siegels’ motion to intervene in that action was denied.
- The Debtor moved back into the Property in late February/early March 2014, just before a scheduled sheriff’s sale; an involuntary Chapter 7 petition was filed on March 4, 2014, which stayed the sale.
- The bankruptcy court later granted relief from stay and the Property was sold in June 2014; the Debtor claimed a $150,000 homestead exemption on Schedule C after consenting to the petition.
- Creditors Jeffery and Richard Siegel objected, arguing the Debtor lacked intent to permanently reside on the petition date and that she had ceased residence for over a year under N.Y. C.P.L.R. § 5206, so she was not entitled to the exemption.
- The bankruptcy court addressed preclusion/Rooker-Feldman arguments and then analyzed whether, as of the petition date, the Property was the Debtor’s principal residence under § 5206(a).
Issues
| Issue | Plaintiff's Argument (Siegels) | Defendant's Argument (Apergis) | Held |
|---|---|---|---|
| Whether state-court homestead ruling precludes relitigation in bankruptcy (preclusion/Rooker-Feldman) | Galasso order already granted exemption; Siegels were barred from relitigating | State order is not "law of the case" here; Siegels were not parties in state court; Rooker-Feldman inapplicable | Court: preclusion/Rooker-Feldman does not bar bankruptcy consideration; Siegels may object here |
| Whether Debtor occupied the Property as her principal residence on the petition date under C.P.L.R. § 5206(a) | Debtor could not intend permanent residence given imminent foreclosure sale and prior two-year absence | Debtor returned and actually occupied the Property before petition date; occupancy + intent suffice even if temporary | Court: Debtor did occupy and intended to reside on petition date; exemption allowed |
| Whether a >1-year absence from occupancy defeats exemption under § 5206(c) | § 5206(c) prohibits exemption after >1 year of non-occupation absent limited exceptions | § 5206(c) only preserves exemption for up to one year when suspension is due to injury/destruction; plain reading does not bar return and re-occupancy | Court: § 5206(c) does not apply to bar exemption here because Debtor reentered and occupied on petition date |
| Whether knowledge of impending sale negates intent to reside as principal residence | Awareness of impending (foreclosure) sale shows lack of bona fide intent to reside | Knowledge of sale does not per se negate intent; courts allow exemption where debtor actually occupies on petition date | Court: awareness of sale is not dispositive; actual occupancy controls; exemption stands |
Key Cases Cited
- Arizona v. California, 460 U.S. 605 (explains law-of-the-case doctrine)
- Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280 (limits Rooker-Feldman scope)
- Johnson v. De Grandy, 512 U.S. 997 (clarifies federal court appellate-review prohibition)
- In re Bellafiore, 492 B.R. 109 (addresses physical occupancy test for § 5206)
- In re Stanley, 461 B.R. 161 (analyzes intent and occupancy under § 5206)
- In re Scott, 233 B.R. 32 (discusses insufficiency of sporadic occupancy)
- In re Issa, 501 B.R. 223 (examines constructive occupancy and intent)
- In re Martiny, 378 B.R. 52 (permits exemption despite knowledge of pending sale)
- In re Moulterie, 398 B.R. 501 (notes liberal construction of exemptions in debtor’s favor)