562 B.R. 700
Bankr. S.D. Ohio2017Background
- Debtors Austin and Dorothy Felix filed Chapter 7 on January 2, 2015, claiming an Ohio homestead exemption in a Reynoldsburg, Ohio house (purchased 2004, no mortgage at filing) while also owning a Maryland house (purchased 2009, financed with mortgage).
- At the Maryland purchase Debtors signed multiple documents and took steps (MD driver’s license, MD voter registration, MD bank account) stating they would occupy Maryland as their principal residence.
- Debtors operated multiple business entities in Ohio, Maryland, and D.C.; they sold the primary Ohio operating company to their son in 2012 for $1,000. Debtors later disclosed many previously undisclosed entities in amended schedules.
- Trustee objected to the Ohio homestead exemption asserting Debtors were domiciled in Maryland at filing; during the case Debtors changed their position after learning IRS tax liens on the Ohio property were recorded incorrectly and effectively not valid.
- Trial developed credibility issues: contradictory statements at the meeting of creditors, Rule 2004 exam, and trial; multiple counsel; late and multiple schedule amendments; and objective indicia (MD registrations, statements, and entity filings) supporting an intent to domicile in Maryland.
Issues
| Issue | Trustee's Argument | Debtors' Argument | Held |
|---|---|---|---|
| Whether Debtors were domiciled in Ohio at the bankruptcy filing for Ohio exemptions | Debtors were domiciled in Maryland at filing (objective acts and intent to move); exemption therefore not available | Debtors were Ohio domiciliaries and intended to keep Ohio house; tested by neighbor/pastor testimony | Court held Debtors were domiciled in Maryland at filing; sustained Trustee's objection |
| Weight of Debtors’ subjective statements about intent | Statements changing after discovery of recording error are self-serving and not credible | Debtors’ testimony and witnesses claimed Ohio home as dwelling | Court discounted inconsistent/self-serving statements and credited objective indicia of Maryland domicile |
| Use of objective indicia (licenses, voter reg., business filings) | Objective acts (MD license, voter reg., MD business formations, MD occupancy) show intent to domicile in Maryland | Debtors stressed physical presence and ties in Ohio (children, church, neighbors) | Court found objective indicia and contemporaneous statements (MD certifications at purchase) persuasive of MD domicile |
| Relief (administration of estate) | Trustee sought sale of Ohio house if exemption disallowed | Debtors wanted to retain Ohio house and claimed exemption | Court ordered Trustee to sell Ohio house and Debtors to cooperate |
Key Cases Cited
- Mississippi Band of Choctaw Indians v. Holyfield, 490 U.S. 30 (1989) (domicile requires physical presence plus intent to remain)
- District of Columbia v. Murphy, 314 U.S. 441 (1941) (courts may disregard self-serving statements inconsistent with objective facts)
- In re Wengerd, 453 B.R. 243 (6th Cir. BAP 2011) (objecting party bears burden to overcome claimed exemptions)
- In re Aubiel, 516 B.R. 476 (Bankr. N.D. Ohio 2014) (Ohio exemptions limited to domiciliaries under §522(b)(3)(A))
- In re Burns, 218 B.R. 897 (Bankr. N.D. Ind. 1998) (absence from domicile does not defeat domicile if new domicile not acquired)
- Donald v. Curry (In re Donald), 328 B.R. 192 (9th Cir. BAP 2005) (focus on debtor’s subjective intent with objective corroboration)