Opinion
NOT FOR PUBLICATION
Argued and Submitted at Pasadena, California: September 22, 2006
Appeal from the United States Bankruptcy Court for the Central District of California. Bk. No. ND 05-12307-RR. Honorable Robin L. Riblet, Bankruptcy Judge, Presiding.
Before: KLEIN, MONTALI, and SNYDER, Bankruptcy Judges.
Hon. Paul B. Snyder, United States Bankruptcy Judge for the Western District of Washington, sitting by designation.
MEMORANDUM
The chapter 7 trustee appeals an order overruling her objection to the debtor's claimed homestead exemption. Finding no error in the bankruptcy court's conclusion that the debtor met the residency requirement for an exempt homestead under California Code of Civil Procedure § 704.710(c), we AFFIRM.
FACTS
In 2001, debtor, Kristina Karr, as joint tenant with her partner, purchased a dwelling in Santa Cruz, California. The debtor and her partner resided at the premises. No declaration of homestead was recorded.
In mid-2004, the debtor began experiencing severe emotional problems, became suicidal, and, in search of recovery, traveled from Santa Cruz to visit family. She left substantially all her personal belongings, including her dog, at the Santa Cruz property in the care of her partner. She did not change her driver's license or voter registration.
Early in 2005, the debtor started staying with her niece in Moorpark, California, where she obtained professional psychological treatment and began taking medication.
The debtor filed a chapter 7 bankruptcy case in August 2005 in the Central District of California, listing her address as Moorpark, California, instead of her Santa Cruz residence, which is in the Northern District of California. In the venue section of the petition form, the debtor checked the box stating that she had been domiciled, or had a residence, or a principal place of business, or principal assets in the Central District for at least 180 days immediately preceding the date of the petition.
On Schedule A, she included her joint-tenancy interest in the Santa Cruz property, with the explanation:
Debtor is on title as Joint tenant on the property but not on mortgage which is currently owed $703,863. Debtor is over 55 years of age and has earned less than $15,000 in the last 12 months. Debtor has owned the property since April, 2001.
Debtor's residence is in Santa Cruz but she has lived for the last several months in Moorpark, California since she has been visiting there with relatives since February, 2005.
The same statement appears on Schedule C, where she claimed a $150,000 homestead exemption in the Santa Cruz property in accordance with California Code of Civil Procedure § § 704.710 - 704.850.
Appellant chapter 7 trustee timely objected to the homestead exemption in the Santa Cruz property, relying principally on the debtor's statement in the venue portion of the petition and the address provided on the petition. The trustee contended that because the debtor did not reside in the Santa Cruz property, either when she filed her bankruptcy case or for the preceding six months, it could not be claimed as an exempt homestead.
The debtor responded that the Santa Cruz property remained her permanent residence throughout her visit with family and that she had resided continuously in the property since 2001.
In support of her position that her presence in Moorpark was merely a family visit for mental health reasons, the debtor presented evidence that substantially all of her personal belongings remained in the Santa Cruz residence, that her driver's license and voter registration continued to be based on that residence, and that her dog remained in Santa Cruz under the care of her partner pending her return.
Following a hearing on February 7, 2006, at which evidence was taken by declaration without objection and without live testimony, the court ruled that the debtor continuously resided at the Santa Cruz property and that she always " intended that Santa Cruz was her home." The court also found that the debtor's extended visit with family, including her niece in Moorpark, was " to get out of town for a little while" and seek treatment for her mental health issues. Hence, the court overruled the trustee's objection to the claimed homestead exemption.
This timely appeal ensued.
JURISDICTION
The bankruptcy court had jurisdiction via 28 U.S.C. § 1334. We have jurisdiction under 28 U.S.C. § 158(a)(1).
ISSUE
Whether the debtor's sojourn disqualified her for the California " automatic" homestead exemption.
STANDARD OF REVIEW
Whether the debtor resided at the Santa Cruz property, for purposes of California homestead law, on the date she filed her bankruptcy petition is a fact-intensive question regarding intent that we review for clear error. Neben & Starrett, Inc. v. Chartwell Fin. Corp. (In re Park-Helena Corp.), 63 F.3d 877, 880 (9th Cir. 1995). A finding of fact is not clearly erroneous if a permissible view of the evidence of record supports the finding. SEC v. Rubera, 350 F.3d 1084, 1094 (9th Cir. 2003). Clear error exists when, after examining the evidence, the reviewing court is left with a definite and firm conviction that a mistake has been committed. Granite State Ins. Co. v. Smart Modular Tech., Inc., 76 F.3d 1023, 1028 (9th Cir. 1996).
DISCUSSION
We review the court's assessment of the evidence probative of the debtor's intent regarding her residence during her sojourn with family for psychological reasons before turning to the application of the law to the facts.
I
The trustee assigns error to the court's factual finding (which was based on state of mind and on other objective evidence), that the Santa Cruz property was her real residence and to its resulting conclusion that the debtor met the residence requirement of California Code of Civil Procedure § 704.710(c) for claiming an automatic homestead exemption.
The general requirement is:
A declared homestead exemption requires the party residing in the dwelling to record a homestead declaration in the county recorder's office. Cal. Civ. Pro. Code § 704.920.
Although the statute requires continuous residence, a debtor does not lose the homestead exemption due to a temporary absence from the property, such as for a vacation or hospital stay. Legislative Committee Comment to Amended Cal. Civ. Proc. Code § 704.710; Redwood Empire Prod. Credit Ass'n v. Anderson (In re Anderson), 824 F.2d 754, 756 (9th Cir. 1987). In other words, the California statute embodies a temporary absence doctrine.
The trustee's evidence in opposition to the homestead exemption was essentially based on two statements appearing on the face of the debtor's petition: identifying her niece's Moorpark address and checking the box in the venue statement that indicated that she had been domiciled, or had a residence, or a principal place of business, or principal assets in the Central District for at least 180 days immediately preceding the date of the petition.
Although the trustee emphasizes the putative admissions made on the face of the petition, the totality of the filed petition and schedules is more equivocal. Schedules A and C, which were filed with the petition, contained statements in which the debtor's residential situation was accurately described. Thus, under a fair reading of the petition and schedules, the factual basis for the debtor's assertion of a homestead exemption in the Santa Cruz property was set forth.
The debtor's evidence, in addition to the statements on Schedules A and C, included the debtor's declaration testimony that she merely intended to visit relatives for a period sufficient to address her psychological issues and then return home to Santa Cruz.
It was also undisputed that the debtor maintained her voter registration and driver license addresses at the Santa Cruz dwelling and that substantially all her personal belongings remained in the Santa Cruz home, as did her dog.
The court believed the debtor's assertions regarding her intent to remain away from her home only temporarily. This determination was consistent with undisputed objective evidence regarding the debtor's official address for purposes of voter registration and the California Department of Motor Vehicles and the location of her personal possessions and her pet. It was also consistent with her statements on Schedules A and C.
We reject the appellant's contention made at oral argument that the lack of oral testimony at the hearing means that we should not apply clearly erroneous review and should not defer to the opportunity of the court to judge the credibility of witnesses. Such review and deference is mandated by Federal Rule of Civil Procedure 52(a), which rule applies to this contested matter, and is reiterated in the bankruptcy appellate rules. Fed.R.Civ.P. 52(a), incorporated by Fed.R.Bankr.P. 7052 & 9014; Fed.R.Bankr.P. 8013. The deferential standard applies even where the trial court relies solely on a written record. Amanda J. ex rel. Annette J. v. Clark County Sch. Dist., 267 F.3d 877, 887 (9th Cir. 2001).
Moreover, the trustee waived the issue by not invoking Federal Rule of Bankruptcy Procedure 9014(d) to insist upon testimony in open court. Although Rule 9014(d) requires that testimony of witnesses with respect to disputed material factual issues in contested matters be taken in the same manner as testimony in an adversary proceeding, the trustee's tactical decision not to insist on testimony in open court reflects a knowing litigation choice by a party who cannot thereafter complain about the consequences of that choice. Fed.R.Bankr.P. 9014(d).
The bankruptcy court believed the debtor and found that the facts supported the conclusion that the Santa Cruz property remained her residence throughout her sojourn and thus met the residency requirements of California Code of Civil Procedure § 704.710(c).
So long as there is evidence in the record that supports the court's factual findings, there is no clear error in those findings. That is the situation in this instance. As noted, not only was the court entitled to believe the debtor, there was objective evidence of the continuous presence of her personal possessions, including her dog, in the subject residence and of her continued use of that residence for voting and her driver license. In light of this accumulation of evidence, we cannot say that the trial court clearly erred.
Moreover, we would reach the same conclusion even if we were applying a more stringent standard of review. As noted, the petition and schedules are not as damaging to the debtor's position as the appellant asserts. Against the assertions on the first page of the petition regarding address and venue, there are the statements made on Schedules A and C that more accurately describe the situation. A fair reading of the schedules supports the debtor's position regarding her homestead residence.
If there is an issue created by the petition and the schedules, it relates to venue. The record suggests that venue under 28 U.S.C. § 1408 may not have been correctly sited in the Central District of California. Incorrect venue, however, does not deprive a court of jurisdiction over a bankruptcy case. 4 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure, § 1063 (3d ed. 2002). The trustee did not make a motion to transfer the case to the Northern District of California. In any event, nothing in the Bankruptcy Code or in California law links bankruptcy venue to entitlement to a homestead exemption.
II
California's homestead exemption laws subdivide into two groups: (1) the " automatic" homestead exemption laws set forth in California Code of Civil Procedure § § 704.710 - 704.850; and (2) the declared homestead exemption laws set forth in California Code of Civil Procedure § § 704.910 - 704.995.1 Because the debtor claimed her exemption under Cal. Code Civ. Pro. § § 704.710 - 704.850, and because she did not record the homestead declaration that is essential for a " declared" homestead, the " automatic" homestead exemption governs this case.
The " automatic" homestead exemption applies to a debtor's principal dwelling in which the debtor resided at the time a creditor's lien attached, and in which the debtor resided continuously until the court determines that the dwelling is a homestead. Cal. Civ. Proc. Code § 704.710(c); Kelley v. Locke (In re Kelley), 300 B.R. 11, 17 (9th Cir. BAP 2003).
The exemption is determined as of the date of the bankruptcy petition. Nadel v. Mayer (In re Mayer), 167 B.R. 186, 189 (9th Cir. BAP 1994). In making that determination, courts consider two factors: (1) the debtor's physical occupancy of the property on the petition date; and (2) the debtor's intention to live there. Kelley, 300 B.R. at 21, citing Ellsworth v. Marshall, 196 Cal.App.2d 471, 474, 16 Cal.Rptr. 588 (1961).
The fact that the debtor did not actually physically occupy the Santa Cruz property on the date of her petition does not automatically prevent her from claiming a homestead exemption. In re Pham, 177 B.R. 914, 918 (Bankr. C.D. Cal. 1994). In 1983, the California statute was amended to delete the word " actually" from the phrase " actually resides" so as to permit a temporary absence doctrine designed to accommodate such situations as a vacation or hospital stay. Cal. Civ. Proc. Code § 704.710; Anderson, 824 F.2d at 756.
The California legislature amended the statute in 1983 to clarify this point:
In In re Bruton, 167 B.R. 923, 926 (Bankr. S.D. Cal. 1994), the court articulated a useful analysis for resolving temporary absence issues that focuses on " whether the debtors demonstrated, rather than merely claimed, their intent to return to their home after the absence." Id.
In this case, the court utilized the Bruton analysis when it reasoned that the evidence demonstrated the debtor's intent was to return to her home in Santa Cruz and merely to visit her niece in Moorpark, rather than to establish another residence. In other words, the debtor's assertions were more than mere claims; rather, they were claims that were consistent with objective evidence and that persuaded the trier of fact that the temporary absence standard was satisfied.
In attempting to distinguish Bruton, the trustee argues from the incorrect premise that the facts in this case demonstrate that the debtor established a new residence in Moorpark. To the contrary, not only are the facts at least ambiguous on the point, the weight of the objective evidence supports the debtor's continued residence in Santa Cruz.
The trustee contends that the " intent" requirement is not " intent to return, " but rather intent that the occupancy at the purported residence be permanent. This is a distinction without a meaningful difference. If the debtor is temporarily absent from the permanent residence when the petition is filed, then intent to return to the residence that the debtor considers permanent is logically relevant in the sense that it is probative of the degree of " temporariness" and of the proposition that one has not ceased residing in the dwelling.
As noted, whether the debtor is entitled to an exemption is determined as of the date of the bankruptcy petition. Mayer, 167 B.R. at 188. Both Kelley and Ellsworth focus on the debtor's physical occupation of the property and the debtor's intention to live at the property. Kelley, 300 B.R. at 21; Ellsworth, 196 Cal.App.2d at 474. Thus, the debtor's intent is measured as of the petition date.
As of the petition date, the debtor was not physically present at the Santa Cruz property, but she had left all her personal belongings there, she left her dog there, and she maintained her Santa Cruz address with the Department of Motor Vehicles and the Santa Cruz County Elections Department. She expressly stated on her bankruptcy petition that her residence is in Santa Cruz, and she had been visiting relatives in Moorpark. There is no substantial evidence to the contrary. Those facts, which are supported by the evidence, support the bankruptcy court's conclusion that the debtor continuously resided at the Santa Cruz property on the petition date.
The debtor was in Moorpark temporarily visiting her niece in an attempt to overcome severe emotional problems. The fact that the visit lasted more than six months does not make the bankruptcy court's findings of fact clearly erroneous. When there are two permissible views of the evidence, the trial court's choice between them is not clearly erroneous. Village Nurseries v. Gould (In re Baldwin Builders), 232 B.R. 406, 409-10 (9th Cir. BAP 1999).
We need not consider who had the burden of proof because, even if the debtor had the burden, we agree that she demonstrated by a preponderance of evidence the residency required to have a California " automatic" homestead in the Santa Cruz dwelling. We note, however, that the burden of proof is uncertain.
CONCLUSION
The bankruptcy court applied the correct law and made findings supported by the evidence. We are not left with a definite and firm conviction that a mistake was made when the court concluded that, for homestead purposes, the debtor resided in the Santa Cruz property on the date she filed her bankruptcy case and is able to claim the Santa Cruz property as exempt as her homestead. There being no error, the order is AFFIRMED.
(c) " Homestead" means the principal dwelling (1) in which the judgment debtor or the judgment debtor's spouse resided on the date the judgment creditor's lien attached to the dwelling, and (2) in which the judgment debtor or judgment debtor's spouse resided continuously thereafter until the date of the court determination that the dwelling is a homestead. ...
Cal. Code Civ. Proc. § 704.710(c).
Sections 704.710 and 704.930 are amended to delete " actually" which appears before " resides" or " resided" in various provisions of the sections. The word " actually" is deleted to avoid a possible construction that a person temporarily absent (such as a person on vacation or in the hospital) could not claim a dwelling exemption for his or her principal dwelling, or file a homestead declaration on his or her principal dwelling, merely because the person is temporarily absent, even though the dwelling is the person's principal dwelling and residence.
17 Cal. L. Revision Comm'n Reports 854 (1983).
Although Federal Rule of Bankruptcy Procedure 4003(c) purports to allocate the burden of proof to the objecting party, doubt about the validity of that rule arises in light the Supreme Court's decision in Raleigh v. Ill. Dep't of Revenue, 530 U.S. 15, 20-21, 120 S.Ct. 1951, 147 L.Ed.2d 13 (2000), holding that the burden of proof in bankruptcy matters is substantive, not procedural, and is governed by applicable nonbankruptcy law. Gonzalez v. Davis (In re Davis), 323 B.R. 732, 740-45 (9th Cir. BAP 2005) (Klein, J., concurring).
California law allocates the burden of proof on a homestead based on the records of the county tax assessor:
If the records of the county tax assessor indicate that there is a current homeowner's exemption or disabled veteran's exemption for the dwelling claimed by the judgment debtor or the judgment debtor's spouse, the judgment creditor has the burden of proof that the dwelling is not a homestead. If the records of the country tax assessor indicate that there is not a current homeowners's exemption or disabled veteran's exemption for the dwelling claimed by the judgment debtor or the judgment debtor's spouse, the burden of proof that the dwelling is a homestead is on the person who claims that the dwelling is a homestead.
Cal. Civ. Proc. Code § 704.780(a)(1). As confirmed at oral argument, the record does not indicate whether the relevant exemptions appear on the records of the county tax assessor for Santa Cruz County.
Nevertheless, the evidence is such that, if the debtor (instead of the trustee) had the burden of proof, she succeeded in carrying it.