In re Walter D. Catton, Jr.

Filing 15

District Judge Leo T. Sorokin: ORDER entered. re 1 Bankruptcy Appeal. After careful consideration of the parties briefs and arguments, the Court DENIES Nicklesss appeal(Doc. No. 1) (See attached Order)(Montes, Mariliz)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

In re Walter D. Catton, Jr.
David M. Nickless, Trustee,
Appellant,
v.
Walter D. Catton, Jr.
Appellee.

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Civil No. 15-40044-LTS

ORDER ON BANKRUPTCY APPEAL
November 17, 2015
SOROKIN, J.
Appellant, Trustee David M. Nickless (“Nickless”), appeals “the Order of the Bankruptcy
Court entered on March 5, 2015 overruling the Trustee’s Objection to the Debtor’s Claim of a
Homestead Exemption.” Doc. No. 1; see Doc. No. 1-1 (the Bankruptcy Court’s order). After
Nickless filed his brief, Doc. No. 11, Appellant, debtor Walter D. Catton, Jr., filed a brief
opposing the appeal, Doc. No. 13, to which Nickless filed a reply brief. Doc. No. 14. After
careful consideration of the parties’ briefs and arguments, the Court DENIES Nickless’s appeal. 1
I.

BACKGROUND
A.

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Facts

The Court sees no need for oral argument in this matter. In accordance with Fed. R. Bankr. P.
8019(b)(3), the Court finds that “the facts and legal arguments are adequately presented in the
briefs and record, and the decisional process would not be significantly aided by oral argument.”

The Court draws this recitation of facts primarily from the “Joint Agreed Statement of
Facts” that the parties submitted to the Bankruptcy Judge in the course of litigating this
objection. See Doc. No. 12 at 111-113 (“JSAF”). On June 29, 2014, Catton filed a voluntary
Chapter 7 petition for bankruptcy. Id. ¶ 10. Two days prior, on June 27, he filed, pursuant to
Mass. Gen. Laws ch. 88, a Declaration of Homestead on his primary residence, located at 185
Westford Street, Lowell, Massachusetts (“The Property”). Id. ¶¶ 10, 11.
Catton purchased the Property in 1981, and has used it as his “sole and exclusive
residence” since that time. Id. ¶ 2. It is a two-story building, with Catton’s insurance business
housed on the first floor, and his living quarters on the second. Id. ¶ 3. The Property is in an
Urban Single Family (“USF”) zone that is about one city block in size. Id. ¶ 4. “The zone is
surrounded by an Urban Multi-family (UMF) zone with Traditional Neighborhood Two family
(TTF), Neighborhood Business District (NBF), Traditional Neighborhood Multi-family (TMF)
and [T]raditional Mixed Use (TMU) districts all within a few blocks of the [Property].” Id.
USFs allow “as of right ‘a home occupation that is conducted solely by the occupant’ ‘in a
building that does not exhibit any exterior indication, including signs, of its presence or any
variation from residential appearance.’” Id. ¶ 5 (citing “Sections 4.3.3 and 4.3.4 of City of
Lowell Zoning Ordinance”). With a permit, USFs can also display a sign or name plate, and
may contain three additional employees beyond the resident. Id.
The Property has such a sign on the front façade, stating “Catton Insurance Agency.”
Id. ¶ 6. Each level also has its own entranceway. Id. The City of Lowell’s (“Lowell”)
assessor’s website describes the Property as an office and “having a style of ‘Stores/Apt Com.’”
Id. ¶ 7. The website also lists the total living area as 2,313 out 3,762 gross square feet. Id.
Lowell taxes the Property at a rate of approximately $23.45 per thousand dollars of valuation,

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halfway between the $15.14 and $31.75 per thousand dollars of valuation rates it uses for
residential and business properties, respectively. Id. ¶ 8. On November 21, 2013, Thomas E.
Brown of Brown Associates appraised the Property and “described [it] as a two unit mixed use
property that has typical utility and appeal for the immediate market area.” Id. ¶ 9.
During the year 2014, Catton, per his Schedule I, had only one source of employment
income—he earned $3,752.00, $569 per month, from Lowell for working as a crossing guard
during the school year. Doc. No. 12 at 19, 23. He also received, per month, $1,932 from Social
Security, a $135 pension from Metropolitan Life Insurance Co. (“Met Life”), and $296 in
residual commissions from Liberty Mutual Group, Inc (“Liberty Mutual”). Id. at 19, 23, 24.
Catton’s Statement of Financial Affairs (“SFA”) indicates $1200.00 in residual commission from
Picken Insurance Agency (“Picken”) in 2012, and $19,999.14 from Liberty Mutual that same
year. Id. at 23. In 2013, those numbers were $1,479.83 and $15,737.13, respectively. Id.
Catton’s SFA lists no income from either of these sources in 2014. Id.
B.

Procedural Posture

After Catton claimed an exemption for the Property, see Doc. No. 12 at 12 (listing the
Property as one of several properties Catton claimed as exempt on his Schedule C), Nickless
objected, on August 13, 2014, to that exemption, asserting that the Property was “a mixed use
structure.” Id. at 38-39. After the parties fully briefed the issue before the Bankruptcy Court,
see id. at 38-48, 68-140, that Court, on October 2, 2014, held a hearing on the objection, see id.
at 49-66 (hearing transcript), and, on March 5, 2015, issued a “Memorandum of Decision and

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Order on Trustee’s Objection to Homestead Exemption.” Id. at 141-47. The Order overruled
Nickless’s objection. 2
Nickless timely filed this appeal on March 12, 2015. Doc. No. 1; see Fed. R. Bankr. P.
8002(a)(1) (“Except [for irrelevant scenarios], a notice of appeal must be filed with the
bankruptcy clerk within 14 days after entry of the judgment, order, or decree being appealed.”).
Nickless filed his Appellant’s Brief on May 22, 2015, Doc. No. 11, Catton his Appellee’s Brief
on June 8, 2015, Doc. No. 13, and Nickless his Reply Brief on June 22, 2015. Doc. No. 14.
II.

LEGAL STANDARD
“[W]hen a party chooses to appeal a bankruptcy court’s decision to the district court

pursuant to 28 U.S.C. §158(a), the district court reviews the bankruptcy court’s conclusions of
law de novo.” Davis v. Cox, 356 F.3d 76, 82 (1st Cir. 2004). However, the Bankruptcy Court's
findings of fact will not be set aside “unless clearly erroneous.” In re Tully, 818 F.2d 106, 108
(1st Cir. 1987); 28 U.S.C. § 2075 (“Findings of fact [by the bankruptcy court] shall not be set
aside unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy
court to judge the credibility of the witnesses”). The Court reviews the Bankruptcy Court’s
resolution of mixed questions of law and fact “for clear error unless its analysis was ‘infected by
legal error.’” In re SW Boston Hotel Venture, LLC, 748 F.3d 393, 402 (1st Cir. 2014) (quoting
In re Winthrop Old Farm Nurseries, Inc., 50 F.3d 72, 73 (1st Cir. 1995)).
“The bankruptcy court findings will be considered clearly erroneous if, after a review of
the entire record, we are left with the definite and firm conviction that a mistake has been
committed.” In re R&R Assocs. of Hampton, 402 F.3d 257, 264 (1st Cir. 2005) (emphasis

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Because Nickless challenges a final order, this Court has jurisdiction to hear the appeal. See 28
U.S.C. § 158(a)(1).
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added). If two views of the evidence are possible, the trial judge’s choice between them cannot
be clearly erroneous. Williams v. Poulous, 11 F.3d 271, 278 (1st Cir. 1993). As the Supreme
Court explained:
The rationale for deference to the original finder of fact is not limited to the superiority of
the trial judge's position to make determinations of credibility. The trial judge's major
role is the determination of fact, and with experience in fulfilling that role comes
expertise. Duplication of the trial judge's efforts in the court of appeals would very likely
contribute only negligibly to the accuracy of fact determination at a huge cost in
diversion of judicial resources.
Anderson v. Bressemer City, N.C., 470 U.S. 564, 574-75 (1985).
III.

DISCUSSION
Nickless’s appeal fundamentally centers around one question—did the Bankruptcy Court

properly overrule his objection to Catton’s claim of exemption for the Property? The
Bankruptcy Court relied on two premises in its ruling. First, it held that the mere fact that a
property is not used exclusively as a residence does not preclude such property from being a
single-family dwelling for exemption purposes. Second, it decided that the Property’s
predominant purpose was residential. The Court reviews each of these premises in turn.
A.

Need for Exclusively Residential Usage

Under the Massachusetts Homestead Act, “[t]he estate of homestead of each owner who
is . . . elderly . . . shall be protected . . . against attachment, seizure, execution on judgment, levy
and sale for payment of debts and legacies, except as provided [elsewhere], to the extent of the
declared homestead exemption.” Mass. Gen. Laws ch. 188 § 2(a). This exemption applied to
qualified homeowners, “upon recording of an elderly or disabled person’s declaration of
homestead protection.” Id. Any person sixty-two years of age or older is elderly. Mass. Gen.
Laws ch. 188 § 1.
The statute defines the word “home” as:
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the aggregate of: (1) any of the following: (i) a single-family dwelling, including
accessory structures appurtenant thereto and the land on which it is located; (ii) a 2 to 4family dwelling, including accessory structures appurtenant thereto and the land on which
it is located; (iii) a manufactured home as defined [elsewhere]; (iv) a unit in a
condominium, as those terms are defined [elsewhere], that is used for residential
purposes; or (v) a residential cooperative housing unit established pursuant to [other
chapters]; (2) the sale proceeds as provided in [§ 11(a)(1)]; and (3) the proceeds of any
policy of insurance insuring the home against fire or other casualty loss as provided in
[§ 11(a)(2)].
Id. The statute does not further define either “single-family dwelling” or “dwelling.” The Court
evaluates the Property as of the date Catton filed his petition to determine if it receives an
exemption. See 11 U.S.C. § 522(b)(3)(A); see also In re Webber, 278 B.R. 294, 296 (Bankr. D.
Mass. 2002) (“The Debtor’s right to or eligibility for a particular exemption is fixed and
determined as of the date of his bankruptcy petition.”)
Neither party disputes that Catton is elderly, or that he followed the requisite procedures
for declaring homestead protection. Rather, the core disagreement is whether or not the Property
is a single-family dwelling. Nickless argues that since the Property has mixed uses, it cannot be
a single-family dwelling. See, e.g., Doc. No. 11 at 8 (“The plain, unambiguous, and all-inclusive
definition of ‘home’ in the Homestead Act as rewritten in 2010, does not include a single mixeduse building.”). Catton thinks such exclusivity is unnecessary. See Doc. No. 13 at 20. Because
the Bankruptcy Court’s holding that exclusively residential usage is not required for property to
constitute a dwelling is a legal conclusion, this Court reviews that aspect of the ruling de novo.
In asserting that a mixed-use building cannot be a single-family dwelling, Nickless
emphasizes that the Homestead Act enumerated five structures that warrant classification as a
home, and that mixed-use structures are not on that list. See Doc. No. 11 at 9. Because the
Property is mixed-use, Nickless reasons, Catton cannot successfully claim an exemption. While

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Nickless’s first point (about mixed-use buildings not being in the enumerated quintet) is true as
far as it goes, it does not go as far as Nickless hopes.
Nothing in the statute’s language precludes a mixed-use building from being a singlefamily dwelling, a category clearly on the statutory list. Nickless cites neither case nor statutory
authority for that proposition. Further, when “construing a statute, where a word is commonly
understood, it can be given its ordinary meaning,” Meshna v. Scrivanos, 27 N.E.3d 1253, 1258
(Mass. 2015) (internal quotations and citations omitted), and nothing about the ordinary meaning
of dwelling, “a shelter (as a house) in which people live,” Merriam-Webster’s Collegiate
Dictionary 389 (11th ed. 2005), supports a categorical bar on mixed-use facilities.
Common sense buttresses the Bankruptcy Court’s interpretation. Many people perform
work from their home, some out of a so-called “study,” others at the dining room table, and still
others in particular areas designed for receiving clients or patients. It belies common
understanding to not consider these houses single-family dwellings, yet Nickless’s construction
compels that result. Many children experience their first lesson in entrepreneurship through
selling lemonade in their yard during hot summer days—under Nickless’s reading, such a
lemonade stand would arguably strip its operators’ residence of dwelling status. And if a
homeowner in Foxborough were to rent out her driveway to Patriots fans on Gillette Stadium
game-days, or her teenage daughter operated a lawn mowing and shoveling service out of the
home year-round, it defies intuition to think she no longer lives in a single-family dwelling, yet
Nickless’s interpretation would make it so.
Given both this backdrop, and the Massachusetts Supreme Judicial Court’s admonition,
“[i]n light of the public policy and the purpose of the [Homestead Act], . . . [to] construe[] the
State homestead exemptions liberally in favor of debtors,” Shamban v. Masidlover, 705 N.E.2d

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1136, 1138 (Mass. 1999), the Court holds that the mere use of a residence for non-residential
purposes, at least when the predominant purpose is residential, does not, by itself, preclude an
exemption for the Property. 3
B.

The Property’s Predominant Purpose

In addition to his legal argument, Nickless also asserts that the Bankruptcy Court
incorrectly found that the Property’s residential portion exceeds the size of the commercial
portion. See Doc. No. 11 at 10-13. The Bankruptcy Court came to this conclusion in large part
because “out of the 3,762 total square feet of interior space in the property, 2,313 square feet
(61.5%) represents living area.” Doc. No. 12 at 145. Nickless first argues that the Bankruptcy
Court misunderstood what the term “living area” means. Doc. No. 11 at 17. Instead of meaning
residential living space, Nickless contends that “living area” refers to “the total amount of space
which can be occupied in that building as of the time the record was created, by any lawful
occupant.” Id. Next, he claims that in light of this misunderstanding, Catton “proffered no
evidence to demonstrate the total space comprising [his] apartment, or that it exceeded the space
occupied by [his] insurance agency.” Id. at 18. Accordingly, Nickless reasons, “absent
unequivocal evidence that the second floor was larger than the first floor, [Catton’s] claim of
exemption must fail.” Id. at 19. 4
Even assuming that the Bankruptcy Court was clearly erroneous in using the relative
sizes of living and gross areas to determine the Property’s predominant purpose, and assuming,

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The Court does not attempt to posit how much non-residential use is required to strip a
residence of its dwelling status, as long as the residential use predominates. This holding simply
rejects the proposition that any non-residential use does so.
4
Although “the objecting party has the burden of proving that the exemptions are not properly
claimed,” Fed. R. Bankr. P. 4003(c), once the objecting party produces evidence rebutting the
exemption, the burden of production shifts to the debtor to show why the exemption is proper.
In re Plant, 503 B.R. 224, 229 (Bankr. D. Mass. 2013).
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without deciding, that Nickless proffered sufficient evidence to shift the burden of production to
Catton, the record indicates sufficient grounds for affirmance. See In re R&R Assocs., 402 F.3d
at 264 (noting that courts deciding Bankruptcy Court findings on appeal must “review the entire
record”) (emphasis added). Put another way, the record indicates that the Bankruptcy Court’s
ultimate factual finding, that the Property’s predominant purpose was residential, was not clearly
erroneous.
Most importantly, Catton received almost no money from insurance sales in the recent
past. In 2014, he received residual commissions worth $296 per month. Doc. No. 12 at 19, 23,
24. In the three months he did not work as a crossing guard, this insurance income (which
derived solely from renewal of past sales) amounted to approximately one-eighth of his monthly
income. 5 Because Catton’s insurance business nets him very little money, in both an absolute
and relative sense, and none of that money from the last year came from any new sales, the
record shows that Catton made little, if any, use of the Property’s commercial component.
Catton’s declining income bolsters this finding. He received $21,999.14 in cumulative
residual commissions in 2012, a figure that dropped to $17,216.96 the next year. Id. at 23.
Further, Catton’s SAF lists no insurance income for 2014 thus far. Id. This state of affairs
makes sense, given that 2014 was the year he declared bankruptcy. Both Catton’s general
paucity of income, and its continued decline, further demonstrate that the Property served
primarily as Catton’s residence, especially at the legally relevant time—the date Catton filed his
petition.

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This proportion drops even more, to just over one-tenth, during the nine months Catton does
work as a crossing guard.
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Still more facts buttress the Bankruptcy Court’s finding. Catton lived at the Property for
over three decades. JSAF ¶ 2. And the Property is in an Urban Single Family Zone, which
generally includes only homes. Id. ¶ 4, 5. Additionally, the fact that Lowell’s Zoning Ordinance
allows USFs, with a special permit that Catton had obtained, to contain home occupations,
underscores the absence of the purity requirement that Nickless posits. Id. ¶ 5. Further, Lowell’s
taxation of the Property at a rate exactly halfway between the residential and business rates, id.
¶ 8, points towards the Property being closer to a pure mixed-use facility than Catton asserts, but
does not demonstrate that the commercial purpose predominates. Finally, the fact that Lowell’s
assessor’s website describes the Property as an office in the “Stores/Apt Com.” style, see JSAF
¶ 7, does not defeat Catton’s argument because, at most, it simply is evidence that the property
has mixed uses, and that the assessor felt the office predominated.
Against the backdrop of the Supreme Court’s admonition that an appellate court cannot
reverse the factfinder’s determinations even if “convinced that had it been sitting as the trier of
fact, it would have weighted the evidence differently,” Anderson, 470 U.S. at 574, the Court
cannot hold that the Bankruptcy Court’s finding that the residential purpose of the Property
predominated was clearly erroneous.
IV.

CONCLUSION
For the reasons stated above, Nickless’s appeal (Doc. No. 1) is DENIED.

SO ORDERED.

/s/ Leo T. Sorokin
Leo T. Sorokin
United States District Judge

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