525 B.R. 559
Bankr. D. Mass.2015Background
- Mateer filed a voluntary Chapter 13 on July 25, 2012 with a home in Douglas, MA as his sole real property asset valued at $499,712; mortgage debt on that home was $366,677.84 (PNC Bank).
- Mateer claimed a Massachusetts homestead exemption under M.G.L. ch. 188, §1 in the amount of $119,287, equal to the excess of the stated home value over the mortgage debt.
- Mateer did not disclose storm damage to the home (Jan. 2011) or pre-petition insurance claims against Chubb and PNC in schedules or SOFA; the storm damage was not reflected in the home’s listed value.
- PNC, as loss payee, held $115,813.69 in Chubb insurance proceeds on the petition date; Mateer did pursue those proceeds after filing.
- Mateer’s Chapter 13 converted to Chapter 7 on April 10, 2013; the Chapter 7 trustee (Ostrander) investigated deposits and later sought turnover of proceeds; Mateer sought to exempt those proceeds under the homestead exemption.
- Trial occurred on August 26, 2014; the court valued the home at $400,000 and held that $34,384.75 of the insurance proceeds were non-exempt and must be turned over to the trustee; other proceeds were exempt under the Massachusetts homestead statute.
- Judgment (consistent with memorandum) required turnover of non-exempt insurance proceeds; the amended complaint as to PNC was dismissed; discussion included Law v. Siegel and related authorities on exemptions and bad-faith conduct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Mateer may exempt the insurance proceeds under Massachusetts homestead law | Mateer asserts the insurance proceeds are part of the ‘home’ under ch. 188, §1 and thus exempt | Ostrander argues only up to the automatic $125,000 exemption is available and that concealment undermines exemption | Yes, Mateer entitled to Massachusetts homestead exemption up to $125,000, including insurance proceeds; Siegel does not bar state exemptions for this case. |
| Whether concealment of assets affects exemption under Law v. Siegel and related authorities | Concealment should not bar exemption because the asset qualifies under state law and is within statutory limits | Concealment could justify denying or limiting exemptions under prior authorities | Siegel does not permit broad equitable denial of exemptions; state exemption allowed despite concealment; no broad denial for this case. |
| What is the exemptible amount of Mateer’s home and insurance proceeds on petition date | Valuation supports larger exemptible amount | Equity limited by $125,000 automatic homestead and mortgage deficiency reduces exemptible proceeds | Home value $400,000; exempt equity $33,322.16; $125,000 automatic exemption leaves $91,677.84 for insurance proceeds; $34,384.75 of insurance proceeds non-exempt. |
| Whether the insurance proceeds were “received” for exemption purposes on the petition date | Receipt occurred even if proceeds were not in Mateer’s possession personally | Receipt by the debtor on petition date is required | Pre-petition receipt by others (loss payee) does not defeat exemption if debtor retains rights; Canto distinguished; exemption allowed for proceeds under ch. 188, §1. |
Key Cases Cited
- Matter of Yonikus, 996 F.2d 866 (7th Cir. 1993) (fraudulent concealment does not automatically bar exemption under federal law)
- In re Doan, 672 F.2d 831 (11th Cir. 1982) (bad faith conduct and exemptions interplay in some circuits)
- In re St. Angelo, 189 B.R. 24 (Bankr.D.R.I. 1995) (discusses bad-faith conduct and exemptions under state law)
- Law v. Siegel, 134 S. Ct. 1188 (2014) (no general equitable power to deny exemptions based on debtor misconduct; limits on non-statutory denial of exemptions)
- Patriot Portfolio, LLC v. Weinstein, 164 F.3d 677 (1st Cir. 1999) (pre-emption of state-law exemptions by federal bankruptcy law when bankruptcy ensues)
- In re Dickey, 517 B.R. 5 (Bankr. D. Mass. 2014) (discusses state exemptions and Massechusetts UFTA context in Mass. bankruptcy cases)
- In re Canto, 476 B.R. 370 (Bankr. D. Mass. 2012) (receipts and timing under state exemption provisions; distinguishes from present facts)
- Owen v. Owen, 500 U.S. 305 (1991) (pre-emption and interaction of state exemptions with federal bankruptcy law)