Lead Opinion
Opinion
¶ 1 As part of the division of marital property in divorce proceedings, the district court awarded Dean White all interest in a limited liability company, which owned a residential property as its only asset, The primary issue on appeal is whether the district court properly denied Dean’s claim to a homestead exemption in proceeds from the later sale of that residence. Dean - also raises an issue regarding the allegedly improper service of pleadings upon him, and he requests an award of attorney fees on appeal. We affirm the district court’s judgment and deny the request for attorney fees.
BACKGROUND
¶ 2 Dean White and Julie Dawn White
¶ 4 Between the entry of the divorce decree in early 2010 and November 2015, the district court entered various judgments against Dean totaling approximatеly $53,000. Dean failed to satisfy those judgments.
The Charging Order
¶ 5 In an attempt to recover on the judgments, Julie filed a motion in November 2015 seeking a charging order against Dean’s interest in the LLC pursuant to section 48-3a-503 of the Utah Revised Uniform Limited Liability Company Act. The charging order would have, if granted, effectively placed a lien upon Dean’s membership interest in the LLC. See Utah Code Ann. § 48-3a-503(l) (LexisNexis 2015).
¶ 6 Dean responded that the Property was subject to a homestead exemption pursuant to Utah Code sections 78B-5-503 and -504. He represented that he had filed a Homestead Exemption Declaration against the Property about two weeks after Julie filed her motion. In the declaration, he claimed the Property as his primary personal residence, which entitled him under the statute to a $30,000 exemption from judicial liens, execution, or forced sale. Dean asserted that taking into account the mortgage on the Property, its net value amounted to approximately $28,000, or less than the $30,000 statutory cap. And, according to Dean, because the Property was the LLC’s only asset, his homestead exemption preyented Julie from executing on his LLC membership to recover any portion of her judgments against him.
¶ 7 In January 2016, before the hearing scheduled on Julie’s charging order motion, thé LLC sold the Property. Dean then dissolved the LLC. As the LLC’s sole member, Dean received the $8,621.30 in net proceeds from the sale.
¶8 Julie filed a motion asserting that the sale of the Property amounted to a fraudulent transfer under the Utah Fraudulent Transfer Act and requesting that the court either void the sale or “issue a writ of garnishment on any account held in [Dean’s] name to which [Dean] transferred any of the sale proceeds” to allow her to collect on the judgments against him. Dean argued in response that the court should dismiss Julie’s request for a charging order because the LLC had been dissolved and the sale proceeds were covered by the homestead exemption, which left Julie with nothing from which to recover.
¶ 9 The assigned commissioner held a hearing on the parties’ motions. The commissioner determined that the sale of the Property was fraudulent and conducted in bad faith. The commissioner also determined that Dean was not entitled to a homestead exemption, because the Property was held in the LLC’s name, not his, and because a homestead exemption could not be claimed “against a former spouse.” The commissioner recommended that Dean be ordered to pay Julie all net proceeds from the sale of the Property.
¶ 10 Dean objected to the commissioner’s recommendation and requested a hearing before the district court. The district court
¶ 11 The district court denied Dean’s objection, concluding that because the Property was not in Dean’s name, he was not entitled to a homestead exemption in the Property or in the proceeds from its sale. The court also agreed that Wiles precluded Dean from claiming a homestead exemption in connection with divorce proceedings.
The Improper Service Allegation
¶ 12 Dean alleges that Julie failed to properly serve him one legal memorandum and two proposed orders, all related to the district court’s ultimate determination that he was not entitled to the exemption. The memorandum to which he refers was Julie’s reply to his assertion of the homestead exemption. In it she argued that Wiles precluded the homestead exemption from being used against ex-spouses. The two proposed ordei’s were submitted by Julie following, respectively, the charging order hearing before the commissioner and the hearing before the district court on Dean’s objection to the commissioner’s recommendation.
¶ 13 Dean asserts that he notified both the commissioner and the district court that he had not received the legal memorandum or the proposed orders from Julie and requested that she be ordered to provide verification that she had served them. Dean contends that neither the commissioner nor the district court required Julie to provide verification and that, as a result, neither “ever received ... evidence to validate that the emails were actually sent.”
¶ 14 Dean appeals both the district court’s determination that he was not entitled to the homesteаd exemption and its refusal to require Julie to provide verification that she sent him the pleading and two proposed orders.
ISSUES AND STANDARDS OF REVIEW
¶ 16 Dean argues that the district court erred when it determined that he was not entitled to a homestead exemption on the Property. The determination of whether a claimant is entitled to a homestead exemption is a question of law, which we review for correctness. See Houghton v. Miller,
¶ 16 Next, Dean argues that the district court erred when it failed to require Julie to produce verification that she had served him with certain pleadings. We review this kind of decision for abuse of discretion. Cf. Cabaness v. Thomas,
¶ 17 Finally, Dean requests that, should he prevail, we award him attorney fees and costs on appeal and reverse the district court’s award of attorney fees in Julie’s favor. Julie also requests her fees and costs on appeal if she prevails on the basis that she prevailed and was awarded fees below. Because Dean is appearing pro se, he
ANALYSIS
I. The Homestead Exemption
¶ 18 There is no homestead exemption in the common law; homestead rights are instead the product of legislation and are therefore governed by statute—in Utah, the Utah Exemptions Act (the Act). See Utah Code Ann. §§ 78B-5-503 to -504 (LexisNexis 2012); P.I.E. Emps. Fed. Credit Union v. Bass,
¶ 19 Dean contends that the district court erred when it determined that he was not entitled to a homestead exemption. Dean argues that he fulfilled all the statutory requirements for the exemption by occupying the Property as his primary personal residence and that “who or what the property was titled to” is irrelevant.
¶ 20 Dean asserts that he qualifies for an exemption under the “primary personal residence” provision of Utah Code section 78B-5-503(2)(a):
An individual is entitled to a homestead exemption consisting of property in this state in an amount not exceeding: (i) $5,000 in value if the property consists in whole or in part of property which is not the primary personal residence of the individual; or (ii) $30,000 in value if the property claimed is the primary personal residence of the individual.
Utah Code Ann. § 78B-5-503(2)(a) (emphasis added). Dean asserts that he fulfilled “all the criteria” of section 503(2)(a)(ii), “regardless of who or what the Property was titled to,” because the Property was his “primary personal residence; real property; and [he] had all interest in the real property because it was awarded to [him] in the divorce decree.”
¶ 21 It is true tliat the exemption may attach to either “title” or “possession.” Panagopulos v. Manning,
¶ 22 Thus, as we explain below, the homestead exemption is a personal right based upon an individual’s interest in property. This requires that the exemption be claimed by a person as opposed to an entity and that the person claiming the exemption have a legally cognizable interest or estate in the subject property. To prevail on appeal, Dean must therefore persuade us that the fact that the LLC owned and held title to the
A. Ownership of the Property
¶23 The district court ruled that under the Act, Dean was not entitled to a homestead exemption claim where the Property was in the LLC’s name, not Dean’s. Dean contends that the LLC’s title is irrelevant to his entitlement to the exemption. But Dean does not contest that the LLC was the owner of the Property. And we conclude that the identity of the owner is relevant because the Act’s plain language limits entitlement to the exemption to a person, not an entity,
¶ 24 “It is well settled that when faced with a question of statutory interpretation, our primary goal is to evince the true intent and purpose of the Legislature,” and “[t]he best evidence of the legislature’s intent is the plain language of the statute itself.” Marion Energy, Inc. v. KFJ Ranch P’ship,
¶25 Other provisions of the Act itself make it indisputable that the “individual” who may claim the exemption is not an entity. Sill v. Hart,
¶ 26 As a result, Dean’s argument that the LLC’s ownership of the Property was irrelevant fails. Because the LLC holds title and is the owner of the Property, Dean cannot claim entitlement to the exemption based upon title ownership. The LLC itself did not qualify as an “individual” under the Act and therefore could not claim entitlement to the exemption. And although Dean had an interest in the LLC through his membership, Dean does not claim that he. had any ownership interest in the Property by virtue of his membership in the LLC, and the purposeful attenuation of the relationship between the property of an LLC and its members would seem to preclude it. Cf. CFD Payson, LLC v.
B. Possession of the Property
¶ 27 Dean nevertheless argues that еven if he had no title or ownership, his possession and use of the Property as his residence established an interest sufficient to support a homestead exemption claim.
¶ 28 While we do not entirely foreclose the possibility that a debtor in bare possession of property as a residence might theoretically call on the protection of the Act against .a creditor who seeks to execute on whatever interest such possession might represent, we have been unable to find a single case in Utah—nor has Dean pointed us to any— where mere occupancy alone, without some accompanying interest or estatе in the property, was sufficient to support an exemption claim. Rather, even in cases where occupancy appears to be the basis of the claimant's entitlement, the claimant has had an interest in the property beyond simple occupancy.
¶ 29 For example, our supreme court has determined that “where title is not in the debtor, but possession is,” “possession under a lease will sustain a claim of homestead whether-the leasehold is for a long tenure or but a single year,” because “an owner of the leasehold estate is an owner of land” and the leasehold’s purpose is “to secure [a person’s] family a homе.” See Panagopulos v. Manning,
¶ 30 Similarly, in Stucki v. Ellis,
¶31 In the present case, Julie sought to recover her judgments by levying on Dean’s membership interest in the LLC, which held title to the Property; she did not seek to execute on whatever interest Dean might have had in the Property as a result of his possession of it. Nonetheless, Dean apparently claims entitlement to the exemption on the sale proceeds due to his occupancy of the Property. But by the time the district court ruled on the homestead exemption issue, Dean had vacated the Property. Dean has failed to identify any interest he held in the Property prior to sale or in the sale proceeds apart from his earlier occupancy of the Property. In particular, he has failed to provide any evidence that his interest in the Property as an occupant, apparently with permission of the LLC, had any legal substance or tangible value separate from the LLC’s ownership that survived his relinquishment of possession as of the time of sale. Cf. Stucki,
¶ 32 Instead, to support his homestead claim, Dean has handpicked general quotes relating to possession and occupancy from several exemption eases without explaining them applicability to the circumstances of his case or otherwise providing any meaningful analysis. For example, he quotes Houghton v. Miller,
¶ 33 And the fact thаt the homestead Dean now claims is in the proceeds of the Property’s sale rather than in the Property itself does not change the result. Section 78B-5-503(5)(b) provides that “[t]he proceeds of any sale, to the amount of the exemption existing at the time of sale, is exempt from levy, execution, or other process for one year after the receipt of the proceeds by the person entitled to the exemption.” Utah Code Ann. § 78B-5-503(5)(b) (LexisNexis 2012) (emphases added). Dean has not demonstrated any legal interest in the Property at the time of sale separate from the LLC’s ownership that would entitle him to an exemption personally. And he has not argued that he had some individual interest in thе proceeds moi'e tangible than whatever homestead he may have claimed based on his bare occupancy of the Property as a residence up to the time of sale. Rather, below and on appeal, Dean has simply argued that, because the proceeds of roughly $8,000 were below the $30,000 cap on the value of the homestead exemption applicable to property used as a primary residence, they are unavailable to satisfy any judgment. But this argument presupposes
¶ 34 In siim, Dean has not shown that he was entitled to claim a homestead exemption in either the Property or the proceeds of its sale that would shield all or any portion of them from Julie’s attempts to recover her judgments against him,' We therefore affirm the district court’s determination that Dean did not qualify for the homestead exemption due to the LLC’s title ownership of the Property.
II. Improper Service
¶ 35 Dean .next argues that Julie “failed to serve several papers and pleadings” on him. He cites one memorandum and two proposed orders,, all three apparently related to the district court’s ultimate decision to rule in Julie’s favor on the homestead exemption issue. He argues that he requested that both the commissioner and the district court require Julie to produce verification that the pleadings were sent to him via email but that “[n]either the Judge nor Commissioner has ever received some form of evidence to validate that the emails [with the pleading and proposed orders] were actually sent.” However, Dean does not identify any relief he seeks, nor does-he allege any harm he suffered as a result. Rather, he argues that he requested verification of service of certain documents and the court never received any such verification from Julie. But “we will not reverse a judgment merely because there may have been [an] error; reversal occurs only if the error is such that there is a reasonable likelihood that, in its absence, there would have been a result more favorable to the complaining party,” Portfolio Recovery Assocs., LLC v. Migliore,
¶ 36 As a result, Dean must demonstrate that he suffered harm from the district court’s failure to require Julie to provide verification of service. See id. He has not even attempted to do so. We recognize that Dean is appearing pro se, and we therefore accord him “every consideration that may reasonably be indulged.” See Golden Meadows Props., LG v. Strand,
III. Attorney Fees
¶ 37 Finally; Dean requests that we award him attorney fees on appeal, “reverse the fees awarded [to Julie], and award them in [his favor], as a deduction against previous judgments that [Julie] is trying to collect.” As we explained above, see supra ¶17, Dean has appeared pro se and is therefore not entitlеd to an award' of attorney fees. We decline his request for fees on that basis. See Osborne v. Osborne,
¶ 38 Julie also requests her fees on appeal. Julie prevailed below, and the district court awarded her fees based upon Dean’s bad faith. We therefore award Julie her fees on appeal.
CONCLUSION
¶ 39 We conclude that the district court did not err when' it determined that Dean was not entitled to a homestead exemption on the Property or the proceeds from its sale. We also conclude that the district court did not abuse its discretion when it failed to request from Julie verification of proof of service for certain - pleadings. Finally, we award Julie her attorney fees and costs on appeal. Affirmed.
Notes
. Because the parties share the.same last name, we refer to them by their first names for clarity.
. Utah Code section 48-3a-503 provides,
On application by a judgment creditor of a member or transferee [of a limited liability company], a court may enter a charging order against the transferable interest of the judgment debtor for the unsatisfied amount of the judgment. Except as оtherwise provided in Subsection (6), a charging order constitutes a lien on a judgment debtor’s transferable interest and, after the limited liability company has been served with the charging order, requires the limited liability company to pay over to the person to which the charging order was issued any distribution that otherwise would be paid to the judgment debtor.
Utah Code Ann, § 48-3a-5Q3(l). (LexisNexis 2015) (emphasis added). This section further provides that a charging order "does not deprive any member or transferee of the benefit of any exemption laws applicable to the transferable interest of the member or transferee.” Id. § 48-3a-503(7).
. Dean also argues that, as a matter of good pоlicy, we ought to nonetheless interpret the homestead exemption's statutory provisions liberally " 'to accomplish its beneficent purpose.1" (Quoting In re Cornia, No. 13-22364,
. Julie also requests that we "classify all attorney’s fees due and owing in this case as 'family support,' so that the sums may be garnished from Dean’s income.” Julie has provided no legal basis for this request on appeal. However, the court on remand may, in its discretion, address the issue.
Concurrence Opinion
(concurring):
H40T concur with the majority opinion. I write only to identify the fatal flaw in Dean’s argument as I see it.
¶ 41 Dean claims a homestead exemption, Under the Utah Exemptions Act, “‘exemption’ means protection from subjection to a judicial process to collect an unsecured debt.” Utah Code Ann. § 78B-5-502(3) (LexisNexis 2012). Thus, to be exempt from execution, an interest must be of the sort that is subject'to execution. And I cannot see that Dean held any interest in the Property that would be subject to execution. Dean does not claim a freehold estate, a leasehold estate, a future interest, an easement, an equitable interest under a purchase contract, or a beneficial interest under a trust. At most, he was a tenant at will. A tenancy at will could conceivably have some negligible value. See, e,g,, Utah Optical Co, v. Keith,
¶ 42 In any event, the subject of this dispute is not the proceeds of the sale of the Property but the proceeds of the dissolution of the LLC. An LLC is, of course, “an entity distinct from its member or members.” Utah Code Ann. § 48-3a-104(l) (LexisNexis 2015). And here, the LLC, not Dean himself, owned the Property. Julie obtained a charging order against Dean’s transferable interest in the LLC, see id. § 48-3a-503. A member’s interest in an LLC is a “transferable interest,” and a “transferable interest is personal property.” See id. § 48-3a-102(29); id. § 48-3a-601. The homestead exemption’s reach does not extend to personal property but is limited to interests in real property, related watеr rights, a mobile home in which the claimant resides, and. the proceeds of the sale of exempt property for one year. See id. .§ 78B-5-503 (LexisNexis 2012). Thus, the homestead exemption does not protect a transferable interest in an LLC.
¶ 43 In short, Dean held no interest in real property subject to -execution and' thus no interest in real property needing protection from execution. He held an interest in an LLC, which is personal property; the homestead exemption does not protect personal property; therefore,' it does not protect Dean’s interest in the LLC.
. The Utah Exemptions Act does protect specified personal property, but under provisions not at issue here. See, e,g„ Utah Code Ann. § 78B-5-505 (LexisNexis 2012).
