483 B.R. 50
D. Mass.2012Background
- Debtors Charles and Debra Gentile own a Marlborough, MA residence.
- Aug. 9, 2011: deed from Charles to Debra for $1.00; Sept. 16, 2011: married-couple ownership as tenants by the entirety; both sign and record a Massachusetts homestead declaration with the transfers.
- Debtors filed bankruptcy on Oct. 31, 2011 and Schedule C claimed a $195,667 homestead exemption in the Marlborough property.
- Debtors elected Massachusetts exemptions under § 522(b), including the state homestead exemption up to $500,000.
- Creditors 62-64 Pontiac Street, LLC and Parker Hill Avenue, LLC object to the exemption on multiple grounds; the court determines the § 522(p) cap applies and may be stacked under § 522(m); ultimately the exemption is upheld as valid and not disallowed.
- Court holds the exemption may be stacked to $292,900 under § 522(m), exceeding Schedule C amount, so the objection is overruled.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Massachusetts homestead exemption is valid. | Gentiles: exemption valid under MA statute. | Creditors: potential limits/limitations apply. | Exemption valid under liberal state interpretation. |
| Whether the §522(p) cap limits the exemption to $146,450 (or higher via stacking). | Gentiles: cap can be stacked per §522(m) for joint debtors. | Creditors: cap should cap at §522(p)(l) or $146,450. | Cap applies and may be stacked; total exempt amount $292,900, exceeding debtors' claimed amount. |
| Whether §523(a)(6) or §727(a)(2)(A) objections defeat exemption. | Objections tied to nondischargeability do not bar exemption. | Objections imply discharge issues. | Nondischargeability or denial of discharge do not bar homestead exemption. |
| Whether §522(g) or the allegedly fraudulent transfer affects exemption. | Trustee could avoid transfer; may affect exemption. | No recovery of property by trustee; §522(g) not triggered. | §522(g) not applicable; no recovery of property to bar exemption. |
Key Cases Cited
- In re Rasmussen, 349 B.R. 747 (M.D. Fla. 2006) (§522(p) to plug mansion loophole; inter-spousal transfers trigger cap)
- In re Leung, 356 B.R. 317 (Bankr. D. Mass. 2006) (inter-spousal transfers trigger §522(p) cap when debtor acquires interest)
- Stornowaye Financial Corp. v. Hill (In re Hill), 387 B.R. 339 (1st Cir. 2008/2009) (limits on dischargeability do not negate exemptions)
- In re Levasseur, 482 B.R. 15 (Bankr. D. Mass. 2012) (dischargeability limits do not bar exemptions; §522 context)
- In re Hill, 562 F.3d 29 (1st Cir. 2009) (affirmation of Hill debtors; relevance to §523(a)(6) and exemptions)