In Re Boward
MEMORANDUM OF DECISION AND ORDER REGARDING TRUSTEE’S OBJECTION TO DEBTOR’S CLAIM OF EXEMPTION
Bеfore the Court is an objection by the Trustee seeking denial of the Debtor’s claim of exemption in her share of the proceeds from the sale of the Debtor’s former marital residence. For the reasons stated below, the Court sustains thе Trustee’s objection.
BACKGROUND
The basic facts of the matter are not in dispute. The Debtor filed the within case on September 24, 2003 (“Petition Date”). Prior and subsequent events bear upon the matter at hand.
Before the Petition Date, the following occurred. On October 30, 2002, the' Debt- or’s spouse commenced divorce proceedings (not yet completed) in the Califоrnia state court. In February 2003, the Debtor vacated the marital residence (“Marital Residence”) and relocatеd to Massachusetts where she became and has remained resident and gainfully employed. In August, 2003, the Debtor transferred her interest in the Marital Residence to her spouse, whereupon he promptly sold it. From the net sale proceeds, hе paid the Debtor’s share (“Exemption Proceeds”) to one of the Debtor’s judgment creditors who had obtained an attаchment on her interest in the Marital Residence within ninety days of the Petition Date (“Judgment Creditor”). He retained the balancе for himself.
On the Petition Date (or shortly thereafter), the Debtor filed a Form Schedule C in which she claims a $17, 425 exemption in the Exemption Proceeds, citing § 522(d)(1) of the Bankruptcy Code (“Exemption Claim”). Further, she indicated on her petition that she is domiciled or resident in Massachusetts.
After the Petition Date, the Trustee took two actions: first, he objected to the Exemption Claim; and second, he sued the Judgment Creditor to recover the Exemp
At issue is whether the Debtor can properly claim, under Seсtion 522(d)(1), an exemption in her share of the net proceeds from the sale of the Marital Residence in the circumstаnces above noted. DISCUSSION
Section 522(d)(1) affords a debtor the opportunity to elect a federal bankruptcy law еxemption in real property that the debtor “uses as a residence.” 11 U.S.C. § 522(d)(1). The statutory language is free of ambiguity and plаin in its meaning: the debtor must be residing in the property at the time of the commencement of the bankruptcy case. The Cоde does not anywhere define “residence” or “reside,” but bankruptcy courts have construed these terms to mean living in a particular place on more than a transient basis.
E.g., In re Marsico,
Here, two faсtors militate against the Exemption Claim, however flexible the standard employed and however broadly viewed the cirсumstances. First, on the Petition Date, the Debtor had been residing in Massachusetts for eight months pri- or to the Petition Date, not in thе Former Residence; and second, the Debtor had transferred her interest in the Former Residence, and it had been sold, almost two mоnths before the Petition Date. Perhaps in recognition of these facts and their import, at the hearing on the Exemption Objection, the Debtor’s counsel conceded that the § 522(d)(1) exemption was not available to the Debtor. However, he argued that the California state law homestead exemption is available to the Debtor (though she has yet to claim it), tying his concession to a reservation of the Debtor’s right to claim that state law exemption.
With respect to the California state law homestead exemption, the Trustee asks that the Court bar the Debtor from claiming it as a means оf reaching the Exemption Escrow. This request runs afoul of Rule 1009(a) of the Rules of Bankruptcy Procedure, which grants an absolutе right to the Debtor to amend Schedule C “as a matter of course at any time before the case is closed.” The Trustеe’s rationale or justification for such pre-emp-tive strike is his contention that the matter of the Debtor’s entitlement tо such state law exemption has been previously argued by the parties and considered by the Court. While the claim has indеed been the subject of argument at various times before the Court, it has not been fully and fairly presented to or considered by the Court. In the absence of such consideration and determination, the mandate of Rule 1009(a) cannot be deеmed overridden.
Accordingly, while it is clear that the Debtor is not entitled to the Exemption Claim (or the Exemption Escrow by virtue of the Exemption Claim), it is also clear that she retains the right to assert the California state law homestead exemption
ORDER
Upon consideration of the materials submitted, the arguments made at hearing, the record to date and the applicable law, the Court sustains the Trustee’s objection аs follows:
1. The Debtor’s claim of exemption under Section 522(d)(1) of the Bankruptcy Code is denied.
2. The denial of the Debtor’s claim hereunder is without prejudice to the Debtor’s right to amend Schedule C in respect of her election of exemptions 1 and is further without prejudice to the Trustee’s right to object to such amendment and amended exemption claim, any and all of which rights are fully reserved.
Notes
. After the time for objecting to exemptions has passes, an amendment of the schedule of exemptions must be made by motion. See MLBR 1009-1.