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Michigan Bankruptcy Court Defines Primary Residence

Home » Michigan Bankruptcy Court Defines Primary Residence

 

In re: JAMES LOUIS DEMETER,
and GLORY LEE DEMETER, Debtors.

Case No. 12-44593

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

Signed: June 19, 2012

Chapter 7

Judge Thomas J. Tucker

OPINION AND ORDER REGARDING TRUSTEE’S OBJECTION TO DEBTORS’
CLAIM OF EXEMPTIONS, AND RELATED MATTERS
        This case came before the Court for a hearing on May 23, 2012, on three matters: (1) the Chapter 7 Trustee’s objection to the Debtors’ claim of exemptions (Docket # 26, the “Exemption Objections”); (2) the motion for relief from stay filed by PNC Mortgage (Docket # 20, the “Stay-Relief Motion”); and (3) the Debtors’ motion entitled “Debtors’ Motion to Approve Sale of Property Located at 5192 U.S. 23 Cheboygan, MI 49721″ (Docket # 43, the “Debtors’ Sale Motion”). Currently, each of these matters is scheduled for a further hearing on June 20, 2012 at 9:00 a.m.

The Court will now make a partial ruling regarding the Exemption Objections, and schedule the unresolved portion of the Exemption Objections for evidentiary hearing.

The Debtor James Demeter has claimed exemptions in seven guns. He claims an exemption under 11 U.S.C. § 522(d)(3) for each of the guns, and for three of the guns he claims an additional exemption under 11 U.S.C. § 522(d)(5). The Trustee objects to James Demeter’s claim of exemptions for the guns under § 522(d)(3). The Trustee argues that the Debtor cannot exempt all seven guns under § 522(d)(3), which section applies to “household furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments,

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that are held primarily for the personal, family, or household use of the debtor or a dependent of the debtor.” The Trustee argued that the guns do not qualify as “household goods” because they are “not used to support and facilitate the Debtors’ day-to-day living within their home.”1 Debtors responded by arguing that the guns are “personal goods” because they are used for “personal protection use and/or for recreational use.”2 Debtors also argued that “Mr. Demeter is a certified firearms safety instructor, and therefore can use [the guns] as part of his day-to-day activities within the home.”3

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At the May 23 hearing, counsel for the Trustee stipulated that a gun used for personal protection and security in the Debtors’ home can qualify as “household goods” under § 522(d)(3), but argued that Debtor James Demeter should be allowed an exemption under § 522(d)(3) for no more than two of the guns, namely, whichever two of the guns Mr. Demeter chooses.

The Court agrees with the Trustee’s position as modified and clarified during the May 23 hearing. Any two of the seven guns owned by Mr. Demeter can qualify for exemption under § 522(d)(3) as “household goods. . . that are held primarily for the personal, family or household use of the Debtor or a dependent of the Debtor,” but any more than two guns is excessive and cannot qualify for this exemption. Even defining the term “household goods” liberally, and assuming for purposes of decision that guns are “goods normally found in today’s average household,” more than two guns is more than necessary or appropriate to meet the requirement that this property “support and facilitate day-to-day living within the home, including

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maintenance and upkeep of the home itself.” See In re French, 17,7 B.R. 568 (Bankr. E.D. Tenn. 1995). And this is so even though the Debtors in this case currently own two homes — one in Detroit and one in Cheboygan, Michigan. Debtor’s guns are easily portable; he can take one or two of them with him for protection when he moves between occupying one home to occupying the other home.

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For these reasons, the Court will sustain the Trustee’s objection to exemptions with respect to the guns under § 522(d)(3) in part, and overrule it in part. This Order will not preclude the Debtors from filing an amended Schedule C, claiming an exemption in one or more of the guns under 11 U.S.C. § 522(d)(6).

Accordingly, IT IS ORDERED that:

1. The Exemption Objections (Docket # 26), regarding the Debtor James Demeter’s seven guns, is sustained to the extent Mr. Demeter claims an exemption under 11 U.S.C. § 522(d)(3) in more than two of the guns.
2. The Debtor James Demeter must file an amended Schedule C, choosing which two of the seven guns he wishes to exempt under § 522(d)(3), so that Mr. Demeter will be allowed an exemption in no more than two of the guns under § 522(d)(3). Mr. Demeter must file such amended Schedule C no later than June 25, 2012. If he does not do so, then his exemptions in all seven of the guns under § 522(d)(3) will be deemed disallowed, effective on June 26, 2012.
3. This Order is without prejudice to the right of Debtor James Demeter to file an amended claim of exemption for any or all of the guns under 11 U.S.C. § 522(d)(6), subject to the right of the Trustee and any other party in interest to timely object to such an amended claim of objection.

The Trustee also objected to the Debtors’ claim of exemption, under 11 U.S.C. § 522(d)(1), of the real property at 5192 U.S. 23, Cheboygan, Michigan. The Trustee argues that this property does not qualify as property “that the debtor or a dependent of the debtor uses as a residence,” within the meaning of § 522(d)(1). Having considered the arguments of counsel at

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the May 23 hearing, and all of the written materials filed by the Trustee and the Debtors regarding this claimed exemption, including the Supplemental Brief and the Supplemental Affidavit of James Demeter that were filed by Debtors on June 4, 2012 (Docket # 52), the Court concludes that an evidentiary hearing is necessary. Such evidentiary hearing will give the parties an opportunity to present evidence including, without limitation, evidence concerning the nature and amount of use and occupancy of the Cheboygan property by the Debtors during the time period prior to and on the date of the bankruptcy petition in this case.

Accordingly,

IT IS ORDERED that:

1. The further hearing on the Exemption Objections, currently scheduled for June 20, 2012, is converted into an evidentiary hearing, and is adjourned for that purpose to Monday, July 9, 2012 at 2:00 p.m.

2. The Trustee and the Debtors are each granted leave to conduct discovery regarding the Exemption Objection relating to the § 522(d)(1) issue. Such discovery must be completed no later than July 6, 2012.

3. No later than July 2, 2012, the Trustee on the one hand, and the Debtors on the other hand, must each serve on the other a witness list, exhibit list, and a marked copy of all exhibits that he/they may use at the evidentiary hearing.

4. The parties are encouraged, but not required, to file a list of stipulated facts upon which they can agree. Any such written stipulations must be filed no later than July 6, 2012.

The need for this evidentiary hearing requires the Court to adjourn the June 20 further hearing on the Stay-Relief Motion and the Debtors’ Sale Motion. Accordingly,

IT IS ORDERED that the further hearing on the Stay-Relief Motion (Docket # 20) and on the Debtors’ Sale Motion (Docket # 43), currently scheduled for June 20, 2012 at 9:00 a.m., is adjourned to July 9, 2012 at 2:00 p.m.. The Court intends to decide the § 522(d)(1) exemption

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issue before holding any further proceedings or making any rulings on the Stay-Relief Motion and the Debtors’ Sale Motion.

_________________________
Thomas J. Tucker
United States Bankruptcy Judge
——–

Notes:

1. Exemption Objections (Docket # 26) at ¶ 23.

2. Debtors’ Response to Trustee’s Objections, etc. (Docket # 36) at ¶ 23.

3. Id.
——–

 

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