Doeling v. Vranicar et al

Filing 10

ORDER by Judge Daniel L. Hovland affirming the Bankruptcy Court's decision.(QF)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NORTH DAKOTA
SOUTHWESTERN DIVISION

Gene W. Doeling, Bankruptcy Trustee
for John J. Vranicar and
Katie D. Vranicar,

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ORDER AFFIRMING
Plaintiff,
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BANKRUPTCY COURT
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vs.
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Case No. 1:12-cv-029
John J. Vranicar and Katie D. Vranicar,
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Defendants.
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______________________________________________________________________________
Bankruptcy trustee Gene Doeling appeals from a the decision of Bankruptcy Court. The
trustee contends the Bankruptcy Court erred when it denied the trustee’s objection to the debtor
utilizing both the exemption found in N.D.C.C. §§ 28-22-02(10) (to exempt equity in a mobile home
in lieu of the homestead exemption) and 28-22-03.1(1) (the exemption of $7,500 available in lieu
of the homestead exemption). For the reasons set forth below, the Court affirms the decision of the
Bankruptcy Court.
The issue presented is whether North Dakota law permits a bankruptcy debtor to claim an
exemption for a mobile home combined with a $7,500 personal property exemption, in lieu of taking
a homestead exemption. John Vranicar and Katie Vranicar, the bankruptcy debtors, did not take the
homestead exemption provided for under North Dakota law. Instead, and in lieu of taking the
homestead exemption, the Vranicars claimed exemptions for their mobile home and the sum of
$7,500. The trustee objected to the Vranicars’ claim for exemptions which was denied. On appeal,
the trustee contends that a bankruptcy debtor may not exempt both a mobile home and the sum of
$7,500, in lieu of the homestead. The Court disagrees.

North Dakota law allows debtors in a Chapter 7 bankruptcy proceeding to exempt certain
assets from judicial process. One of the “absolute exemptions” is the homestead exemption. A
“homestead” in North Dakota is essentially a dwelling along with the land the dwelling sits on.
N.D.C.C. § 47-18-01 defines the exemption available for the homestead:
The homestead of any individual, whether married or unmarried, residing in this state
consists of the land upon which the claimant resides, and the dwelling house on that
land in which the homestead claimant resides, with all its appurtenances, and all
other improvements on the land, the total not to exceed one hundred thousand
dollars, over and above liens or encumbrances or both. The homestead shall be
exempt from judgment lien and from execution or forced sale, exempt as otherwise
provided in this chapter. The homestead may not embrace different lots or tracts of
land unless the lots or tracts of land are contiguous. For purposes of this section,
“contiguous” means two or more tracts of real property which share a common point
or which would share a common point but for an intervening road or right of way.
A debtor may exempt their homestead from a bankruptcy proceeding up to the sum of $100,000.
N.D.C.C. § 28-22-02(7). A debtor may also exempt a mobile home occupied as a residence if the
homestead exemption available under N.D.C.C. § 47-18-01 is not used.
The mobile home exemption is set forth as follows:
In lieu of the homestead, and subject to the same value limitations that exist with
respect to the homestead exemption, any housetrailer or mobile home occupied as
a residence by the debtor or the debtor’s family, except that it is not exempt from
process, levy or sale for taxes levied on it pursuant to chapter 57-55. This section
does not preclude the debtor from claiming a mobile home as a dwelling house as
part of the homestead.
N.D.C.C. § 28-22-02(10). Thus, a debtor may claim a mobile home as part of the homestead
exemption because the law “does not preclude the debtor from claiming a mobile home as a dwelling
house as part of the homestead.” Id. However, if the debtor does not use the homestead exemption,
a debtor may exempt a mobile home in lieu of the homestead, subject to “the same value limitations
that exist with respect to the homestead exemption.” Accordingly, a bankruptcy debtor may exempt

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a mobile home up to the sum of $100,000, either as part of the homestead exemption or in lieu of
the homestead.
Under a separate statute, a bankruptcy debtor may also exempt the sum of $7,500 in lieu of
the homestead exemption. N.D.C.C. § 28-22-03.1(1). The relevant North Dakota statute provides
as follows:
In addition to the exemption from all attachment or process, levy and sale upon
execution, and any other final process issued from any court, otherwise provided by
law, a resident of the state may select:
1. In lieu of the homestead exemption, up to seven thousand five
hundred dollars. This exemption is not available if the resident
exemption claimant, the spouse of the resident exemption claimant,
or other head of the family of the resident exemption claimant has
chosen the homestead exemption provided for under subsection 7 of
section 28-22-02.
N.D.C.C. § 28-22-03.1(1). This statute makes it clear that the $7,500 exemption is not available
when the debtor, the spouse of the debtor, or other head of the family “has chosen the homestead
exemption provided for under subsection 7 of section 28-22-02.” Id. In other words, a debtor may
exempt the sum of $7,500 in lieu of the homestead exemption provided for in N.D.C.C. § 28-2202(7).
The Vranicars claimed an exemption for their mobile home and $7,500 in lieu of the
homestead exemption.

The trustee contends that North Dakota law does not permit these

exemptions. The trustee cites case law holding that a debtor may not take a homestead exemption
and the $7,500 exemption pursuant to N.D.C.C. § 28-22-03.1(1). In re Ptacek, 78 B.R. 986, 990
(Bankr. D.N.D. 1987). By analogy, the trustee contends that because a debtor may not take both a
homestead exemption and the $7,500 exemption, a debtor in bankruptcy should not be permitted to
claim the mobile home exemption and the additional exemption of $7,500. However, the pertinent
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North Dakota statutes explicitly provide that debtors may claim exempt property “in lieu of the
homestead.”
The primary goal when interpreting a statute is to ascertain the legislative intent. Clayburgh
v. Am. West Comty. Promotions, Inc., 2002 ND 98, ¶ 14, 645 N.W.2d 196. The court must give
statutory terms their plain meaning, unless the context dictates otherwise or a term is defined by
statute. N.D.C.C. § 1-02-02. When the language of a statute is clear, the court may not disregard
the plain meaning as a pretext for pursuing the legislative intent because intent is presumed clear
from the face of the statute. Am. West, 2002 ND 98, ¶ 14.
The relevant statutes clearly reveal the North Dakota Legislature intended to distinguish a
“mobile home” from “the homestead.” The law has defined the term homestead to essentially mean
the dwelling along with real estate the dwelling rests on. N.D.C.C. § 47-18-01. A mobile home may
be part of a homestead. North Dakota law permits a debtor to claim a mobile home as part of the
homestead exemption. See N.D.C.C. § 28-22-02(10) (“This section does not preclude the debtor
from claiming a mobile home as a dwelling house as part of the homestead.”). However, a mobile
home is not necessarily a homestead. More important, the North Dakota law recognizes that a
mobile home need not necessarily be a homestead by explicitly permitting a debtor to claim a mobile
home exemption “in lieu of the homestead.” N.D.C.C. § 28-22-02(10). The plain meaning of the
phrase “in lieu of” supports the interpretation that the Legislative Assembly of North Dakota has
distinguished a mobile home from the homestead.
A bankruptcy debtor may exempt “[i]n lieu of the homestead, and subject to the same value

limitations that exist with respect to the homestead exemption, any housetrailer or mobile home
occupied as a residence by the debtor or the debtor’s family[.]” N.D.C.C. § 28-22-02(10). The

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phrase “in lieu of” is commonly defined as “in the place of : instead of.” Merriam-Webster.com (available
at http://www.merriam-webster.com/dictionary/lieu, last visited July 18, 2012). The Court finds that the

law clearly distinguishes a “mobile home” from “the homestead” within Chapter 28-22 of the North
Dakota Century Code. Thus, it is clear the Vranicars may claim an exemption for their mobile home
and the sum of $7,500, in lieu of utilizing the homestead exemption.
North Dakota law also provides that a debtor, like the Vranicars, may exempt $7,500 “in lieu
of the homestead exemption,” then goes on to further specify “[t]his exemption is not available if
the resident . . . has chosen the homestead exemption provided for under subsection 7 of section 2822-02.” N.D.C.C. § 28-22-03.1(1). The law explicitly uses the term “the homestead,” and cites
N.D.C.C. § 28-22-02(7), the homestead exemption statute. The law is silent with respect to the
mobile home exemption. Although the statute does not include the term mobile home or mention
the mobile home exemption, the trustee suggests the Legislature meant “mobile home” by stating
“the homestead.” The Court finds this suggested interpretation to be unpersuasive. North Dakota
law clearly distinguishes between a mobile home and the homestead. The Vranicars claimed an
exemption for their mobile home in lieu of the homestead exemption. Nothing in the text of the
relevant statutes suggests the Vranicars are precluded from also claiming the $7,500 exemption “in
lieu of the homestead.” The Court finds the legislative intent is clear on the face of N.D.C.C. §§ 2822-02(10) and 28-22-03.1(1) in that the Vranicars may exempt their mobile home and $7,500 in lieu
of taking a homestead exemption.

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The Court finds the Bankruptcy Court properly rejected the bankruptcy trustee’s objection
to the Vranicars’ exemption claims. The Court affirms the Bankruptcy Court’s decision.
IT IS SO ORDERED.
Dated this 1st day of August, 2012.

/s/ Daniel L. Hovland
Daniel L. Hovland, District Judge
United States District Court

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