Silverman v. Rasmussen et al

Filing 6

MEMORANDUM AND ORDER - For the foregoing reasons, the Bankruptcy Order is AFFIRMED. The Clerk of the Court is directed to mark this appeal CLOSED. So Ordered by Judge Joanna Seybert on 9/14/11. C/ECF E.D. Bankruptcy Case No. 09-72069 (AST) (Valle, Christine)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-------------------------------X
In re:

E.D. Bankr. Case No.
09-72069 (AST)

JAN RASMUSSEN and CHERYL
RASMUSSEN,

MEMORANDUM & ORDER
10-CV-4173 (JS)

Debtors.
-------------------------------X
APPEARANCES:
For Appellant: Anthony C. Acampora, Esq.
Silverman, Acampora LLP
100 Jericho Quadrangle, Suite 300
Jericho, NY 11753
For Appellees: Craig D. Robins, Esq.
Law Office of Craig D. Robins
180 Froehlich Farm Blvd.
Woodbury, NY 11797
SEYBERT, District Judge:
Appellant Kenneth P. Silverman (the “Trustee”) is Jan
and

Cheryl

Rasmussen’s

(“Debtors”)

Chapter

7

Trustee.

The

Bankruptcy Court denied the Trustee’s motion to disallow the
Debtors’ claimed homestead exemption and the Trustee appealed.
For the reasons that follow, the Bankruptcy Court’s decision is
AFFIRMED.
BACKGROUND
The facts underlying this appeal are straightforward
and undisputed.

Debtors reside at 56 Horn Lane, Levittown, New

York (the “Premises”).
in

the

Premises

Rasmussen’s

They own a vested remainder fee interest

subject

mother,

to

Jeannette.

a

life
The

estate
Premises

owned
is

by

Jan

Debtors’

principal residence; they reside there with Jeannette and pay
her $600 monthly rent.
Debtors filed for Chapter 7 relief on March 27, 2009.
Their remainder interest in the Premises is their only asset.
Debtors claimed a homestead exemption for the Premises, and the
Trustee objected.
In an opinion by United States Bankruptcy Judge Alan
S. Trust, the Bankruptcy Court ruled that Debtors could claim
their

remainder

interest

as

a

homestead.

(Bankruptcy

dated July 20, 2010 (the “Bankruptcy Order”).)

Order

The Bankruptcy

Court reasoned that Debtors’ remainder interest in the Premises
qualified

for

the

exemption

because

New

York’s

homestead

exemption statute, New York Civil Practice Law and Rules Section
5206 (“Section 5206”), does not specify which types of ownership
interests are exemptible.

Inasmuch as a future interest in real

property is descendible, devisable, and alienable to the same
degree as estates in possession, the Bankruptcy Court concluded,
Debtors’

interest

exemptible.

is

an

ownership

interest

and

therefore

In the Bankruptcy Court’s view, this outcome was

particularly apt in light of a court’s duty to construe the
homestead statute in Debtors’ favor to effectuate its purpose.
(See Bankruptcy Order at 6.)

2

DISCUSSION
The
remaindermen

issue
who

in

occupy

this

is

whether

property

real

appeal

as

their

vested

principal

residence and pay rent to the life tenant with whom they share a
home may claim the real property as a homestead exemption under
Section

5206.

The

Bankruptcy

Court,

in

a

case

of

first

impression, concluded in a thoughtful and well-reasoned decision
that they may.

For the reasons that follow, the Bankruptcy

Court’s decision is AFFIRMED.
I. Standard of Review
The Court reviews a Bankruptcy Court’s conclusion of
law de novo.

See, e.g., In re Jackson, 593 F.3d 171, 176 (2d

Cir. 2010).
II. Debtors may Exempt the Premises
New York’s homestead exemption statute, which applies
in this case because New York has “opted out” of the exemptions
listed in the federal Bankruptcy Code, see 11 U.S.C. § 522(b);
N.Y. D.C.L. § 284; see also, e.g., In re Martinez, 392 B.R. 530,
531 (Bankr. E.D.N.Y. 2008), provides in pertinent part:
(a) Exemption of homestead. Property of one
of the following types, not exceeding one
hundred fifty thousand dollars for the
counties of Kings, Queens, New York, Bronx,
Richmond,
Nassau,
Suffolk,
Rockland,
Westchester and Putnam; one hundred twenty3

five thousand dollars for the counties of
Dutchess, Albany, Columbia, Orange, Saratoga
and
Ulster;
and
seventy-five
thousand
dollars for the remaining counties of the
state in value above liens and encumbrances,
owned and occupied as a principal residence,
is
exempt
from
application
to
the
satisfaction of a money judgment, unless the
judgment
was
recovered
wholly
for
the
purchase price thereof:
1. a lot of land with a dwelling thereon . .
. .

N.Y. C.P.L.R. § 5206(a) (emphasis added).

It is undisputed that

Debtors occupy the Premises as their principal residence.

The

only issue, then, is whether Debtors “own” the Premises within
the meaning of this provision.

The Court concludes that they

do.
In interpreting a statute, the Court begins with the
statute’s words.

See Skubel v. Fuoroli, 113 F.3d 330, 335 (2d

Cir. 1997) (“In interpreting a statute, we begin with the text
of

the

statute

meaning

of

omitted).

and

the

apply

words

Nothing

in

the

ordinary,

used.”)
Section

contemporary,

(internal
5206

common

quotations

specifies

what

marks

type

of

ownership interest is required to exempt a particular piece of
real property, and “ownership” is not defined in New York’s
statutes.
argues

that

In re Martinez, 392 B.R. at 531-32.
a

debtor

must

have
4

an

ownership

The Trustee
interest

that

conveys a present right of possession (Trustee Br. at 7), but
such a requirement is not apparent from the face of the statute
and he can point to no authority suggesting that the Court read
one in.1
As the Bankruptcy Court noted, a future interest is an
ownership

interest.

interests

are

E.P.T.L.
(Bankr.

§

Like

descendible,

6-5.1;

E.D.N.Y.

see

estates

in

alienable,

also

1987).

In
In

re
this

possession,

future

devisable.

N.Y.

and

Kreiss,

72

case,

B.R.

933,

although

939

Debtors’

ownership interest is not possessory, they occupy the Premises
as

their

principal

residence.

Debtors,

therefore,

have

satisfied both the “own” and “occupy” requirements of Section
5206.
The Trustee lodges two further protests: first, that
this reading contravenes Section 5206’s “clear and unequivocal
provisions
will

have

homesteads

and

intent”;

impermissible
(the

life

and

second,

that

this

interpretation

consequences--situations

tenant’s

and

1

the

where

remainderman’s)

two
exist

In a footnote to his Reply, the Trustee claims that the
Bankruptcy Court was incorrect in concluding that “neither
exclusive possession nor exclusive ownership are, on the face of
NYCPLR Section 5206(a), required to establish an exemptible
interest.”
(Trustee Reply 2 n.2.)
The Trustee is plainly
wrong.
Section 5206(a), by its terms, does not specify the
circumstances of ownership or occupation required to claim a
homestead exemption.
5

simultaneously on the same property.

The Trustee does not offer

persuasive authority for either argument, and the Court rejects
both.
that

As to the first, the Trustee points to nothing suggesting
Section

intended

to

exemption.

5206’s

drafters
remaindermen

exclude
The

“clearly
from

Court

thinks

the

and

unequivocally”

claiming

opposite

is

a

homestead

true;

had

New

York’s legislature intended to limit the homestead exemption to
those holding a fee simple absolute interest, it could have made
such a limitation explicit.

As to the second, the Trustee has

not offered a persuasive reason why two homesteads existing on
the

same

property

would

be

an

absurd

result

that

ought

to

constrain the Court’s reading of an otherwise plain statutory
text.
As the Bankruptcy Court recognized, this case presents
an issue of first impression in this Circuit and, absent any
controlling
enough

to

authority
say

that

to

the

Debtors

contrary,
satisfy

the

Section

Court

thinks

it

“own

and

5206’s

occupy” language by virtue of their vested future interest in
the Premises and their occupying it as their principal residence
pursuant to an oral lease.
appropriate

both

from

its

This reading of the statute is
plain

text

and

in

light

of

the

principle, also noted by the Bankruptcy Court, that New York’s

6

homestead

exemption

must

be

construed

liberally

in

Debtors’

favor to effectuate the statute’s beneficial purpose.

Cmt. to

N.Y. STAT. § 291 (“[E]xemption laws, though in derogation of the
common

law,

are

to

be

liberally

beneficiary

in

order

to

carry

purpose.”);

see

also

In

re

W.D.N.Y.

2009);

In

re

construed

out

their

Grucza,

Moulterie,

413

398

in

favor

apparent
B.R.

B.R.

96,

501,

of

the

beneficent
97

(Bankr.

504

(Bankr.

E.D.N.Y. 2008).
The Court reaches this conclusion independent of the
small

body

of

caselaw

interpreting

other

states’

homestead

provisions.

Although many of these statutes are similar to New

York’s,

foreign

the

authority

is

conflicting

and

ultimately

unhelpful in understanding the words of Section 526.

Compare In

re Hildebrandt, 432 B.R. 852, 855 (Bankr. N.D. Fla. 2010) (under
Florida law, debtor who lived with life tenant, the debtor’s
aunt, could exempt the property); In re Williams, 427 B.R. 541,
548 (Bankr. M.D. Fla. 2010) (under Florida law, debtor who lived
with life tenant, the debtor’s mother, could exempt property
where the record evidenced debtor’s family ties to, and personal
and financial contributions to, the home); In re Kimble, 344
B.R. 546, 549 (Bankr. S.D. Ohio 2006) (remaindermen who lived
with live tenant pursuant to an oral lease could exempt the

7

property); with In re Lingerfelt, 180 B.R. 502, 503 (Bankr. E.D.
Tenn. 1995) (“Tennessee law does not permit a remainderman to
claim a homestead exemption in the property to which his or her
remainder interest attaches, even though the remainderman may
reside on it with the permission of the life tenant.”); In re
Plaster, 271 B.R. 202, 206-07 (Bankr. M.D. Fla. 2001) (in case
that pre-dates Hildebrandt and Williams, noting that Florida law
does not apply the homestead exemption to remainder interests in
land).

In its research, the Court has not divined a coherent

rule running through the conflicting cases from other states,
and

it

does

not

rely

on

any

particular

foreign

decision

to

affirm the Bankruptcy Order.
CONCLUSION
For
AFFIRMED.

the

foregoing

reasons,

the

Bankruptcy

Order

The Clerk of the Court is directed to mark this

appeal CLOSED.
SO ORDERED.
/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.
Dated:

is

September 14, 2011
Central Islip, New York

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