450 B.R. 109
8th Cir. BAP2011Background
- Walters and husband owned multiple Iowa and Florida properties; Walters claimed Pleasant Hill, IA as homestead in Schedules C; Bank of the West obtained judgments in 2008 prior to Pleasant Hill acquisition; Walters acquired Pleasant Hill in 2008 using proceeds from Cerromar (Florida) which was previously owned; Walters and husband transferred Cerromar proceeds to the Sloans in 2007-2008 and built the Pleasant Hill house in the Sloans’ name; bankruptcy court sustained bank’s objection to the homestead exemption and this appeal followed
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the bank bears the burden of proof on exemptions. | Walters argues burden lies with objector to prove improper exemption | Bank asserts it bears burden under Rule 4003 and Iowa law | Bank bears burden; however, court upheld bank’s objection on the merits |
| Whether the Pleasant Hill homestead is exempt under Iowa § 561.20 when proceeds came from the old homestead (Cerromar). | Walters contends new homestead acquired with proceeds of old is exempt | Bank argues § 561.20 requires new homestead acquired with old proceeds; funds were commingled | Pleasant Hill not exempt under § 561.20; Cerromar proceeds not preserved for Pleasant Hill |
| Whether Cerromar (Florida) property was Walters’ homestead and thus protectable. | Walters claims Cerromar was her Florida homestead | Bank argues Walters never intended Florida as domicile; Florida property not her homestead | Cerromar not Walters’ homestead; Florida domicile not established; not protected |
Key Cases Cited
- Kukowski v. Wagner (In re Kukowski), 356 B.R. 712 (8th Cir. BAP 2006) (proper construction of exemption arguments; de novo review of law)
- Kaelin v. Bassett (In re Kaelin), 308 F.3d 885 (8th Cir. 2002) (findings of fact reviewed for clear error)
- Barrows v. Christians (In re Barrows), 408 B.R. 239 (8th Cir. BAP 2009) (exemption issues; burden and evidentiary standards)
- Cadlerock Joint Venture II, L.P. v. Sandiford (In re Sandiford), 394 B.R. 487 (8th Cir. BAP 2008) (clarifies burden-shifting in exemption disputes)
- Stenzel v. Peoples' State Bank of Wells (In re Stenzel), 301 F.3d 945 (8th Cir. 2002) (objector must prove exemptions improper; deference to debtor where evidence weak)
- Elliott v. Till, 259 N.W.460 (Iowa 1935) (proceeds reinvestment and intent doctrine for exemptions)
- Blakeslee v. Paul, 238 N.W.447 (Iowa 1931) (support for reinvestment and intent principles)
- Peninsular Stove Co. v. Roark, 63 N.W. 326 (Iowa 1895) (abandonment of immediate purchase of new homestead defeats exemption)
- In re White, 293 B.R. 1 (Bankr. N.D. Iowa 2003) (traceability of funds and exemption preservation in reinvestment)
- Harm v. Hale, 221 N.W. 582 (Iowa 1928) (sufficient showing of reinvestment to preserve exemption)